CREDIT SAISONINTEGRATEDREPORT 2020

Credit Saison Co., Ltd.
52F Sunshine 60 Bldg., 1-1 Higashi-Ikebukuro 3-chome, Toshima-ku, Tokyo 170-6073, Japan
https://corporate.saisoncard.co.jp/en/Management Philosophy

CONTENTS

We will fulfill our corporate social responsibility by striving to meetthe expectations of all of our customers, shareholders, and business partners.

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We will compete successfully in the market by promoting our three shared

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values: practical implementation of the principles of customer satisfaction as a17leading-edge service company; mutual respect for our interests and those of ourbusiness partners; and developing a corporate culture of creative innovation.

The conceptbehind our logo

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About the Company’s
corporate colors
Saison Blue
Symbolizing people’s happinessand aspirations

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Symbolizing trust, peace of mind,
culture and innovation

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Asset Management Business

Digital Marketing

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Special Feature: Value Co-Creation
through Business

Segment Highlights

Vision and Strategy

Overview of the Medium-termManagement Plan (FY2019–FY2021)

Finance Business

11-Year Summary of Selected
Financial Data

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Credit Saison’s Value Creation Process

Payment Business

Financial Capital Strategy

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Message from the CEO

Message from the COO

STRATEGY

Global Business

VISIONA History of Reforms and Challenges

Solutions Business

FINANCIAL INFORMATION

Saison Green

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SUSTAINABILITY
Credit Saison’s ESG
Management

Human Resource Strategies

Human Resources

Partnerships

Regional Development

Contributing to Society throughthe Management of the Akagi Nature Park

Contributing to the Environment andSociety through Business Activities

Responses to Risks/Opportunities

CORPORATE GOVERNANCE
Special Feature: Incorporation of External Opinions andKnowledge to Improve GovernanceCorporate Governance

Board of Directors/Audit & Supervisory Board Members/Executive Officers

CORPORATE DATA
Major Business Sales Bases

List of Affiliated Companies

Corporate Information/Investor Relations Information

Responsible Officer’s Guarantee/Editor’s Postscript

Editorial Policy

Forward-looking
Statements
Reporting Period

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Credit Saison works diligently to provide its wide range of stakeholders including customers, shareholders and investors with accurate
information in an equitable manner on a timely basis.
In addition to an overview of its operating results and financial standing , the Credit Saison Integrated Report 2020 contains non-financial
information that covers a wide range of environmental, social and governance (ESG) as well as other fields. This report is intended to help ourmany stakeholders to better understand the Company’s efforts to create value over the medium and long term and ensure its sustainable growth.
This report contains information including details of the Company’s management plans, projections, strategies and estimates that are nothistorical facts. This information reflects the beliefs of management based on currently available information. Projections and forward-looking
statements are subject to certain risks and uncertainties. As a result, projections of future performance, the business environment and otherforward-looking estimates might differ materially from actual results.
This Report covers the 2019 fiscal year (FY2019: April 1, 2019 to March 31, 2020). Some activities in FY2020 are described as well.

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VISION

Message from the CEO
Crises and constraints give rise to customer-supported
innovation leading to success over the competition

Hiroshi Rinno

Representative, Chairman and CEO

It is in uncertain times such as these that the essence of a company is put to the test
In last year’s Integrated Report, I mentioned that 2020
would likely become a landmark year in human history,
similar to the Great Depression, which began in 1929. In
fact, due to the pandemic caused by the novel coronavirus(COVID-19) outbreak, the movement of people, goods
and money was stopped in its tracks; the supply chains andeconomies of each country, including automobile factories,
were hit hard; and people were forced to transition to aso-called new normal lifestyle. Although the developmentof drugs and vaccines is being conducted with a senseof urgency around the world, there are still no signs ofa global return to normalcy amid the second and third
waves, and personal consumption is declining at a time
when the future is clouded with uncertainty. Other factors
include the preferential measures for cashless payments
due to the consumption tax rate hike in 2019 and more
people using cards instead of cash from the viewpoint ofhygiene as a measure to prevent COVID-19 infections. In
such times of emergency, I think it is important to revisit ourstarting point. What was Credit Saison’s starting point? In
essence, our foundation was based on the three values that
we advocate as a leading-edge service company, namely,“practical implementation of the principles of customer
satisfaction,” “mutual respect for our interests and those of
our business partners” and “developing a corporate cultureof creative innovation.” Focusing on customers, we will doour utmost to provide better services, improve customer
convenience and win customer support. With the belief

since its founding that Credit Saison should be a company
for society, I have been realizing the creation of customer
value together with our employees.
To my mind, the essence of capitalism involves risktaking and creative destruction. Seiji Tsutsumi, who built up
Seibu Department Stores to become the No. 1 store of its
kind in Japan, broke up the Tokyo Marubutsu department
store into its new PARCO format and converted Midoriya
Department Stores, a retailer specializing in the monthly
installment retail business, into a credit card company,
Seibu Credit. This kind of innovation is the very essence of
creative destruction. So, what is the essence of a company
in a capitalist society? I think that lies in competition. To
compete in delivering good products and good services tocustomers. Also important to this process is marketing thattries to understand what the customer is thinking that he or
she would like to do and the customer’s way of thinking tocreate joy and surprises for them. By continuing to innovateand be supported by our customers, we can emerge
ahead of the competition. Companies that are unable
to continue to innovate lose their growth potential andeventually wither and perish. I believe that the growth wehave achieved so far is due to the numerous innovations
that have emerged from our corporate culture of creative
innovation.
As we are living in an era of uncertainty, our successwith customers, competitiveness and ability to innovate arebeing put to the test.

Innovation born from crises and constraints
Why has Credit Saison been able to continue innovating?
Looking back on the history of the Saison Group, I feel that
it is because of our disadvantaged position in the businessenvironment, the sense of an impending crisis and theraft of restrictions placed on us that we have been able
to grit our teeth, persevere and produce results. These
factors have led to changes in the times. Armed with theexperience of adversity that started in Ikebukuro, Tokyo, adisadvantageous location for a department store and thebranch where I was, we have been carrying out various
innovations through culturally centered brand image
strategies and changing society.
Following a transfer in 1982, I went to work on
converting the monthly installment sales retailer Midoriya,
which had become part of the Saison Group due todeteriorating management in the 1970s, into a credit
card company. In Japan, where credit and bank cards
were beginning to gain in popularity, Midoriya was alatecomer. But I had a specific vision in mind. In the UnitedStates, which I had previously visited, when profferinghigh-denomination bills at cash registers, I had seen theirwatermarks being checked to confirm that they were notcounterfeit, so I had witnessed a card society in which cards3

were trusted more than cash. I was thus convinced that
if we were to create a culture in Japan where cards wereused roughly to the same extent as they were in the UnitedStates, we could survive even if a latecomer.
All you need to survive is to keep creating newthings. Products that are said to be the same as yesterday’s
products are synonymous with retrogression while others
are moving forward. So people have to be constantly
thinking about what will change next. Initially, I had one
lingering doubt. At that time, the credit limit conditionsof credit card companies were that the cardholder be “amanager of some listed company, has been working there
for 10 years or more and owns a house.” Since we aretalking about Japan in the 1980s, it is no exaggeration to
say that most men met these conditions. In contrast, thecustomers I saw at Saison Group department stores andsupermarkets were overwhelmingly women. A man who
is “a manager of some listed company, has been working
there for 10 years or more and owns a house” leaves the
shopping to his wife. Credit cards were being issued tothose who for the most part do not come to department
stores. That was my understanding of the situation. In
that case, if customers who came to the store could write

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VISION

Message from the CEO

their names, addresses and phone numbers on the spot, I
thought they could, following an instant credit screening,
be instantly issued with credit cards for immediate use withno annual membership fee. The credit limits were ¥50,000
for cash advances and ¥100,000 for shopping. Although
there was a risk, most people would be able to repay acredit line in the tens of thousands of yen. It was more
important to have more people using the card than to bewary of risk. With that in mind, I made credit cards available
to women, who in terms of shopping represent the coredemographic. As we also put into practice customer
satisfaction principles, such as offering discounts in theretail industry, we gained a tremendous upsurge of support
from women.
Customer support provides robust added impetus.
At that time, the number of cards issued by the industry’s
top credit card companies stood at about seven million, butfrom the time we started “instant credit screening, instantcard issuance,” the number of cards issued increased byhundreds of thousands every month.
In the face of various constraints in existing society,we thoroughly pursued customer convenience and created
innovations that broke industry taboos. This was the starting
point for the growth of our credit card business.

Lack of a sense of impending crisis is a company’s greatest enemy
I mentioned before that it is easier to innovate and seize
opportunities if you are in a difficult situation. Looked atanother way, it serves as an alarm bell that you could be
immediately overtaken if you are resting on your laurels
in a peaceful environment. Among our employees who
have made great strides toward thepeak of the industry are some whohave come to think that they are
working for a successful company,
but in fact the lack of a sense ofimpending crisis associated withsuch thinking poses the greatest risk
to the Company. The experience of
success bestows a negative elementon humans. If you feel that things
are okay as they are, innovation will
not take place and you will not becompetitive. The belief that we aresuccessful leads to pride; we might start to neglect ourefforts and could be abandoned by our customers. Whatawaits us after a lack of a sense of impending crisis isdefeat in competition.
Since then, the consumer finance industry,including credit cards, has been significantly affected by
the 2008 Supreme Court ruling on overpayment refund
requests, the revision of the Money Lending Business(MLB) Act (implemented in June 2010) and the revisionof the Installment Sales Act (implemented in June 2008).
I was annoyed that the Company,
which had been operating soundly
up until that point, was suddenly
forced into a difficult situation due
to environmental changes, such as
laws and regulations of this kind.
These moves changed the landscapeof the industry, with competitors
becoming affiliated with megabanks
due to financial difficulties. We havemaintained our independence, but
we lack the sense of impending crisis
that “this company is in a very badsituation.” We learned many lessons from this series of
events, and I am constantly telling my employees about
the importance of the three enhancements: In addition tocompetition and innovation, what an organization needs
to survive is a sense of impending crisis.

Sharpen sensitivities and increase a “sense of empathy” from society
Looking around the world, every company is advocating“ESG management” and “SDGs” as if following a trend.
I feel uncomfortable in such a homogeneous climate.
Of course, it is important to do business that is sociallymeaningful and to contribute to society as a result.
However, the essence of a company is to win over thecompetition. I think that we can contribute to society bycreating value for our customers, bringing about innovationand securing success over the competition.
Human resources are the source of this value. It washuman resources, mainly young people in their 30s, whorevived Midoriya when on the verge of bankruptcy anddeveloped the company into the current Credit Saison.
Because humanism as an organizational culture—that is, not5

discriminating on the grounds of educational background,gender, nationality and other factors—has been considereda management idea since Mr. Tsutsumi’s era, from thetime I came to the Company, I have appointed a diverse
range of human resources, regardless of educational
background, gender, nationality or age. In 2017, we
eliminated part-time and contract work and introduced
equal pay for equal work to improve the wages andbenefits of about 2,200 people. I do not like suchclassifications as “non-regular employees” and “fulltime employees” and want to give all employees equal
opportunity and treat them fairly. The younger stages of life
have high consumption needs, and I have been thinking
that consumption and the economy will not improve unlessmeasures are taken to increase the disposable incomeof those generations. That was one of the reasons why I
decided to make everyone a full-time employee.
The ideal I envisage is a company that gives freedom
to the employees who are working there and where every
person’s ideas are reflected in their work. I do not want
Credit Saison to become a company where people only
reluctantly come to work. We carry out in-house venture

programs to speed up the commercialization of ouremployees’ ideas, but to create new services that respondto social needs and changes in the market, it is important
to sharpen well-attuned sensitivities to change. I believethat business sensitivity (BQ), which is a combination of
SQ (sensitivity) with IQ (intelligence) and EQ (humanity), is
the key to gaining the sympathy of society and ensuring
growth in the next generation.

To remain a “leading-edge service company”
The previously mentioned revision of the MLB Act served
as a major turning point, and we made investments forthe next generation, such as rebuilding the core system,
and finally completed the foundation for a new growthstrategy. Taking advantage of this foundation to accomplish
reform and regrowth in the three years from FY2019, we
have formulated and implemented the Medium-termManagement Plan with the vision of becoming a “NeoFinance Company in Asia.”
In the domestic credit card market, in which thenumber of cards owned per person is saturated at 2.6–2.7,
payments using smartphones have been standing out,
and we recognize that the business model with which
we had enjoyed success in the 20th century is becoming
obsolete. In addition, COVID-19’s impact on society has
been enormous, and in a sense, this presents an ideal
opportunity for innovation to occur. Our competitors
are also promoting digital transformation (DX), but there
is a sense of impending crisis that if DX has not been
completed by about 2025, the battle might be lost.
Although the domestic market is saturated, we
will narrow our products and targets and work to further
expand our membership base of 37 million people.
Among them, Generation Z (those born from 1996) is thetarget group on which to focus, and our new targets will
be sole proprietors and settlements for BtoB businesses.
Deeming smartphones to be a major platform, so thatit can be said that “smartphones are Credit Saison,” theweekly Business Strategy Meeting, at which new ideas andinnovations are brought in and free discussions held, has
become established as an internal culture with the goal oflaunching new products and services monthly. We are also
actively hiring talented personnel with digital technology

expertise to promote DX. As it is important for such people
to have a certain amount of freedom and to take on various
challenges, I will commit to fully utilizing these talented
human resources after they join the Company.
However, in the saturated market that is Japan, where
the population is falling due to the declining birthrate andaging population, high growth cannot be expected in theyears to come. What will drive the Company’s growth is ourglobal business in Asia. Including affiliated companies andinvestment destinations, we have already expanded intonine countries: China, India, Singapore, Vietnam, Myanmar,
Indonesia, Cambodia, Thailand and the Philippines. In Asia,
most people cannot receive financial services from banks(the unbanked segment). Depending on the development
stage of each country, I would like us to focus on thefinancial service needs of the local people, help to realize
economic prosperity and lead to the prosperity of eachcountry. Although there are some parts of the original planthat have been delayed due to the COVID-19 pandemic,
we will continue to push forward strongly to secure growthin the Asian market. In overseas expansion, it is of course
important to exercise governance, such as compliance,
but the basic principle will remain what I term “localism.”
In other words, I would like to appoint local personnel
who have the best understanding of the local market andbusiness customs to director and executive positions andleave the running of the business to them, so that every
employee is allowed to do the work that he or she ispassionate about and wants to do. We are calling this “NeoFinance,” but perhaps it will develop into a business that
goes beyond the boundaries of finance. Our management
philosophy is to remain a leading-edge service company,so that does not matter.

With expectations for the next generation
Looking within Japan, I am excited and impressed again by
the limitless untapped potential displayed by the younger
generation, as exemplified by the professional shogi player
Sota Fujii and the athletes in their teens who are competingon the world stage. For Credit Saison’s younger generation
employees, I would like to provide an environment wherecoming to the Company is fun and interesting for themand so that they can evolve on their own while absorbed

in their work and at the same time feel satisfied with thefinancial rewards. To do so, we must have the support ofour customers. We intend to bring to fruition every possible
idea that will likely be supported by our customers. We givethis opportunity to every one of our employees equally.
Also armed with the Company’s diversity, we will remaina leading-edge service company that continues to bringabout innovation as a team.

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VISION

Message from the COO
Utilizing digital-based convenience and human customer
contact points to support the lifelong abundance of ourcustomers from a financial perspective

Masahiro Yamashita
Representative,
Executive President and COO

Q

Tell us about how you saw FY2019 as yourfirst year as President and COO.

As the first year of the Medium-term Management Plan,
in FY2019 we began deploying various measures for the
purpose of providing finance services tailored to the life
cycle and life stage changes among both our corporate
and individual customers under our mission statement of“becoming a finance company advancing with customers
for 50 years.” We also completed our management
integration with Qubitous, a wholly owned subsidiaryengaged in credit card processing contracted services,
on April 1, 2020, which will enable us to advance businessdevelopment that places attention on high quality andspeed through a seamless structure in the future. In
consultation with Hiroshi Rinno as CEO of Credit Saison,
we also worked to enhance governance. Following
our establishment of the Nomination & Remuneration
Committee in June 2019, we adopted an Executive
Officer System in March 2020 to establish an environmentthat will allow the Board of Directors to place greater
focus on its management and supervisory functions.
Similarly, following the Ordinary General Meeting of
Shareholders in June, we reorganized the Board of
Directors to a nine-member structure that includes three
Outside Directors.
In terms of performance, despite having taken
a conservative standpoint for FY2019 based on the
depreciation burden of the new Core System released instages from the fall of 2017 to the fall of 2018, in addition
to steady progress in business itself, our cost-reduction
efforts paid off and placed us on a standing from which
we were able to anticipate increased sales and profits
through the third quarter.
Due to the emergence of the COVID-19 pandemic
during the fourth quarter, however, a larger allowance foruncollectible receivables in the event of an emergency
and increased expenses from accelerating IC chip updates
led business income to close at ¥36.1 billion for the year
compared with ¥52.2 billion the previous fiscal year. This inturn resulted in increased sales and lower profits.

Q

How will you develop business amid theenvironmental changes brought about by
the COVID-19 pandemic?

As with the saying “repeating thought and action 100
times makes for habit,” having been forced to live with
COVID-19 for more than half a year already since the startof 2020 has made it difficult to imagine going back tonormal. Because credit cards are closely tied to customer
spending, the impacts of this situation are clearly reflectedin the numbers, where some parts of the business havebeen hit hard from the decline of in-store shopping
due to temporary closures of department stores andself-restraint in regard to travel, dining out and events,

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whereas other parts of the business have grown robustly
due to stay-at-home demand, such as online shopping,streaming services and online gaming. We must therefore
vary the areas in which we invest management resources
while rapidly ascertaining trends in society within the newnormal of living with COVID-19.
Before the emergence of COVID-19, we werealready advancing the introduction of services thatallow customers to apply for credit cards using theirsmartphones as a means of addressing the advantagesof digital channels. The COVID-19 pandemic has served
to dramatically accelerate the realization of the online,
remote concepts that we had been advancing under thechallenge of addressing consumption that ignores time
constraints and physical distances following the spreadof e-commerce. Specifically, we launched a more evolved
version of SAISON CARD Digital in November 2020. Every
aspect of SAISON CARD Digital, from sign-up to credit
examination, card issuance and card use, is completedusing a smartphone, thus allowing the card number tobe issued in as little as five minutes and serving as digitalcredit that can be issued and used immediately without
ever requiring a physical credit card. As a result, eventhose customers without a Saison Card can receive thebenefits of perks and services on the spot. From a different
vantage point, this means that the sites where customers
use this card also serve as sites where we can provide
services and solicit card applications. This capability goesbeyond simply minimizing transaction opportunity loss
due to time and distance constraints. Instead, it enables
alliances with a wide range of partners by reducing theinitial costs involved in issuing credit cards.
I believe the domestic market has nearly reached
the end of the stage where we can expand the customer
base through large-scale alliances. And I feel thatgoing forward we will grow new membership by moreseamlessly integrating these kinds of refined sites andservices while at the same time advancing measures that
also serve as the face of new credit card solicitation sites.
COVID-19 will serve as the trigger for accelerating theapplication of this digital transformation, so we are
initiating restructuring projects aimed at improving
business operations geared toward improved productivity
and reduced expenses, developing new products andservices, and investing resources in a varied manner.

Q

Tell us about your understanding of thebusiness environment with an outlook
beyond COVID-19.

In the short term, the domestic credit card market willtake a major hit with the consumption slump triggeredby COVID-19. Taking a slightly longer-term perspective,
however, the market will enjoy a tailwind as various
measures are promoted in response to the 40% cashless
payment target for 2025 raised in the “Cashless Vision”
formulated by the Ministry of Economy, Trade and Industry.

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VISION

Message from the COO

Looking abroad, some countries, such as South Korea andSweden, have achieved a cashless payment rate exceeding
90%, so we feel that Japan has the potential to exceed
40%. Although the cashless payment tax return policy
implemented following the consumption tax increase has
ended, I feel that this policy was also important in broadly
spreading the term “cashless” throughout society. As
the need for online, remote interaction grows amid the
COVID-19 pandemic, and as consumption transitions frombrick-and-mortar stores to the Internet as a more generaltrend, I foresee sufficient potential for growth in terms ofcredit cards and electronic payments.
To earn the backing of our customers within thisbusiness climate, I believe we must tirelessly continue toprovide products and services that match the specific life
events, life stages and needs of both our individual andcorporate customers as “a finance company advancing
with customers for 50 years.”

Q

Under this business climate, on whichareas will you focus management resource
allocations?

Although we will invest management resources to provide
services for areas in which customer needs exist, the threeareas on which we will place significant focus are the BtoC
area, primarily for women, younger customers and theaffluent segment; the BtoB area for payments between
companies; and the global area. We will sequentiallyroll out products specialized for women and younger
customers, as well as products limited to customers inspecial areas. There are also many affluent customers
among the Group’s 37 million members.
Given that we have not concentrated on
development of services for the affluent segment until
now, I believe that there is sufficient room to develop
products and services targeted at customers in thissegment. In September 2019, we entered a capital andbusiness alliance agreement with Daiwa Securities Group
Inc., through which we introduce our respective customers
to each other and develop new products. We are also
working together to develop services specialized for theaffluent segment by fusing our respective know-how.
We intend to release the services we develop instages and to expand these while confirming the backingof our customers.

Q

What kinds of services will you deploy in
the BtoB area?

In terms of the BtoB area, the market for payments
between companies alone is said to be around ¥900
trillion–¥940 trillion, but the majority of this has yet to beconverted to electronic payments. It is also importantfor us to consider how to incorporate this significant
market in the future in terms of financing for corporations.
Although corporate credit cards for large companies

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projects have begun to move forward. This system will
centrally manage information and allow us to continue
to propose various products that match customer needs
while also creating synergy between businesses, including
cross-selling based on the fusion of the payment businessand finance business.
are vital for the payment field, small and mediumsized enterprises (SMEs) account for more than 90% ofJapanese companies; even though individual payments
among SMEs might be small, the overall payment
volume is huge. In addition to capital demand amongsole proprietors, which are also members of our credit
cards as individuals, I see other areas of demand fromthese members, including support for the transition toelectronic expense settlement for greater operational
efficiency and to electronic payments with their partners.
I also feel that we can address the various needs of thehundreds of thousands of companies with which we dobusiness, including those for capital demand, payment
methods and credit guarantees.
As with individual customers, we aim to provide
solutions tailored to the growth stage of the specificbusinesses of our corporate customers in a timely manner.

Q

What are the key points for providing
solutions tailored to the specific stages ofindividual and corporate customers?

During our more than 50-year-long relationship withcustomers, the initial touchpoint from which businesswith our individual customers begins in most cases is theissuance of credit cards around the age of 20. From here, we
begin to maintain connections throughout the customer’slife. Over this time, our customers experience various life
events, including employment, entrepreneurship, marriage,
home ownership and car purchases, so when a customer
changes the name and address on a credit card, forexample, we can determine that the customer has married
based on such data. We are therefore developing a platformthat will allow us to predict if a customer plans to buy ahome or a car in the near term, or will need to purchaseinsurance, and to offer products that address the customer’s
needs in a targeted manner at the required timing in eachcase. This is also true for corporate transactions. When we
only have a lease transaction with a corporate customer
at present, for example, we consider what we can do tohelp in terms of capital needs and payment methods andconsider what kinds of other solutions are required at thecurrent stage based on the kinds of past transactions they
have had with our group. I believe that we must identify
this kind of prospective demand and make proposals at
the proper timing.
In the payment business, we built and released a
new Core System and have continued to make various
proposals targeting new affiliate cards and acquisitionsof new contracted services since FY2019, and several

Q

Tell us about the global business.

In just a short time, the global business has grown tooperate in nine countries, primarily in Southeast Asia. In
addition to expanding the number of markets in which
this business operates, I hope to transition from the“sowing stage” to the “harvesting stage” in those markets
in which we already operate.
Although we have seen aspects of the Southeast
Asian market that resemble parts of the Japanese market,
this does not mean the know-how we have accumulated
domestically can be applied as is. Unlike developed
countries that spent years evolving from landlines tosmartphones, for example, many countries in Southeast
Asia have skipped this evolutionary process and seen
smartphones rapidly become the norm. In this regard,
there are two approaches, one for those areas where
we can apply our accumulated know-how as is and one
for those where business development must necessarily
assume the application of new technologies. One of thepatterns for business development in the global business
relies on alliances with local companies. A second patternis business development in cooperation with Japanesecompanies and start-ups that have entered the market
ahead of us, for example, as with Gojo & Company, Inc.,
where we finance business capital and Gojo & Company
deploys a microfinance business in emerging economies.
There is a lot of know-how and knowledge we can absorb
from these tie-up partners, and we will work to establish apresence in these markets by collaborating with the rightpartners instead of striving on our own. Although we willneed to develop these businesses amid the COVID-19
pandemic, we already see the potential for an earnings
base in several of the countries in which we operate.
For example, we have acquired a license from the India
Reserve Bank to launch a digital lending business in India
and we will launch new credit card services in Vietnam in
addition to the installment credit services we already offer
for motorcycles, smartphones and home appliances.

Q

Tell us about how you see the futurebusiness portfolio and revenue structure.

We spent the roughly 10 years through 2018 developing
the new Core System and therefore had to freeze newdevelopment on existing systems during that time.
Amid the limitations this placed on development of thepayment business, we nurtured the finance business into
a second pillar of the Company. In the meantime, I believethat the best business portfolio would be a ratio of 1:1:1
for the payment business, the finance business and theglobal business, which we will realize by growing the
global business into a third pillar of the Company.
Achieving this ratio, however, will take a little moretime because the global business is at the stage ofmoving from sowing seeds to nurturing and harvesting
the results. And given the diversity of ethnicities andbusiness customs faced by the global business, I feel that
we must plan business growth while investigating thedifferent risks. In an era of uncertainty where we cannot
predict what will happen, as shown recently by COVID-19,
I feel that it is best to have a well-balanced earnings basein anticipation of the future.

Q

Tell us your thoughts on ESG.

I believe that our services themselves connect to thesolutions for society’s challenges. This is particularly evident
in the global business. Regarding the unbanked segment,
which is not even able to open a bank account, particularly
in Southeast Asia, I believe that providing support for
financing this segment’s capital needs can do more than justhelp deal with the problems faced by individuals. It can also
contribute to the prosperity of countries in Southeast Asia.
Contributions to resource conservation that arise
from paperless transactions coinciding with the transition
to a cashless society and the Akagi Nature Park, which
is managed from the perspective of preserving a lush
forest for the children of the future, are initiatives forthe environment (E) in Japan that also have a social (S)aspect. As an initiative for the next generation, we havebegun SAISON TEACHER as a program of on-site classes
through which our employees provide financial education
to middle and high school students around Japan.
Evolution in innovation and technology also arises
from the strong desire to solve society’s challenges, so I
feel that we should continue to value the idea of keeping
our attention on social contribution as a company.

Q

Finally, please provide a message to thestakeholders.

As a distribution type credit card company, we havedeveloped our services under market-oriented and clientoriented concepts. Digital transformation is accelerating
today in part through the spread of remote work
triggered by the COVID-19 pandemic. Although we will
also take the lead in pursuing “hi-tech” elements for thisreason, I believe we should continue to value “hi-touch”
elements that are flush with a human sense as well. Given
the tendency to create sterile relationships through the
pursuit of greater efficiency, we aim to provide services
and products that capture needs while staying side-byside with our customers and clients by maintaining agreater sense of human warmth.

10

VISION

A History of Reforms and Challenges
Establishment as a retailer specializing
in installment sales

Reached agreement on a comprehensive alliancewith Idemitsu Kosan Co., Ltd.

2011 July

Started the issuance of NEO MONEY, a prepaid card
exclusively for use by Japanese travelers visiting other countries

2019 Apr.

Concluded the Agreement on Cooperation
with Shibukawa City and the Akagi Nature Park

2004 Feb.

Formed an equity and business tie-up
with Resona Holdings, Inc.

2013 Jan.

Started handling Saison Asset Formation Loans

2019 June2014 May

Established Credit Saison Asia Paciﬁc Pte. Ltd., an overseas
business development and regional headquarters in Singapore

Established the Nomination &Remuneration Committee

2014 July

Commenced the Saison Portal and the UC Portal,
which provide smartphone apps for cardholders

2019 Sept.

2014 Sept.

Saison Asset Management Co., Ltd., formed a capitaland operational alliance with Japan Post Co., Ltd.

Formed a capital business partnershipwith Daiwa Securities Group Inc.

2019 Nov.

2015 May

Formed a capital and business tie-up with Vietnam’s HD Bank;
established HD SAISON Finance Company Ltd.

Started Saison Cardless Payment for instantmembership, instant usage via smartphone2015 June

Established Saison Ventures Co., Ltd.,the ﬁrst corporate venture capital company establishedby a Japanese credit card company

1951 May

Company established as Midoriya Co., Ltd.

1968 June

Listed on the First Section of the Tokyo Stock Exchange

2004 Apr.

1976 Mar.

Formed a capital tie-up with Seibu Department Stores Ltd.
(currently Sogo & Seibu Co., Ltd.)

Formed a strategic alliancewith Takashimaya Company, Limited

2004 Aug.

1980 Aug.

The Company’s name was changed from
Midoriya Department Stores to Seibu Credit Co., Ltd.

Reached an agreement on a strategic business partnership*with Mizuho Financial Group, Inc., Mizuho Bank, Ltd.,and UC CARD Co., Ltd.
(*Partnership terminated in October 2019)

Second establishment,
shift to become a credit card company
1982 Aug.

Started the issuance of the no annual membershipfee Seibu Card
Started instant credit screening, instant card issuanceStarted a nationwide network of Saison Counters
Started the lease business2005 Apr.

Started new credit center Ubiquitous operations

2006 Jan.

Merged with UC Card Co., Ltd. (card issuance business)

2006 June

Formed a comprehensive alliancewith Yamada Denki Co., Ltd.

2006 July

Reached an agreement to form a business alliancewith The Shizuoka Bank, Ltd.

2015 Sept.

Established PT. Saison Modern Finance,
a ﬁnance services company, in Indonesia

2006 Oct.

Launched Eikyufumetsu.com (current Saison Point Mall)
online shopping mall2016 Dec.

Started Point Investment Services for long-term
investment using Saison Eikyufumetsu Points

2006 Nov.

Established a joint venturewith Daiwa House Industry Co., Ltd.

2017 July

Started handling Saison Rent Guarantee Rent Quick2017 Sept.

Abolished employee classiﬁcations;introduced a common HR system underwhich all employees are on indeﬁnite-term contracts

1983 Mar.

“Seibu Card” name changed to SAISON CARD

1985 May

Started the credit guarantee business1988 July

Started the issuance of international credit cards
with VISA and Mastercard

1989 Oct.

The Company’s name was changed to Credit Saison Co., Ltd.

1990 Apr.

Introduced the ﬁrst signature-less payments in Japan

1991 Jan.

Started the afﬁnity card business2009 Mar.

Started handling “Flat 35 loans”

1995 June

Started the issuance of an international credit card with JCB2010 Apr.

1997 Oct.

Started the issuance of the SAISON American Express® Card

Basic agreement reached on a comprehensive businessalliance with SEVEN & i FINANCIAL GROUP CO., LTD.

2002 Feb.

Started Eikyufumetsu Points, which never expire

2010 Apr.

Started operation of the Akagi Nature Park2007 Mar.

Reached an agreement to form a comprehensive
alliance with Yamaguchi Financial Group, Inc.

2007 Oct.

Established Qubitous Co., Ltd., the industry’s ﬁrst
comprehensive processing service specialist(Qubitous integrated by an absorption-type merger
in April 2020)2017 Dec.

Formed a capital tie-up with Grab Holdings Inc.;
established Grab Financial Services Asia Inc.

2018 June

Established Kisetsu Saison Finance (India)
Private Limited in India

2018 Nov.

Partnered with SCG, Mitsui & Co.; reached an agreementon the establishment of SIAM SAISON Co., Ltd., in Thailand

Established an overseas venture capital company,
Saison Capital Pte. Ltd.

Started providing Saison Pocket smartphone
securities service
2019 Dec.

Began accepting applications for the Saison
Cobalt Business American Express® Card2020 Mar.

Introduced an executive ofﬁcer system
Started providing the SAISON TEACHER
visiting lecture ﬁnance education program

2020 Oct.

Started providing Saison Furusato Donations

2020 Nov.

Began accepting applications for the Daiwa
Securities Saison Platinum/American Express® Card
Started providing new SAISON CARD Digital
smartphone-based settlement services
Started the issuance of the Saison Rose Gold
American Express® Card2020 Dec.

Started the issuance of the Saison Gaming Card
Started an impact investment business at
a subsidiary in Singapore

From Establishment to the Early 2000s

From the Early 2000s to 2010

From 2011

From 2019

Period of Business Expansion

Shift in Business Composition

Global Business Begun in Earnest

Intensiﬁcation to Becomea Leading-edge Service Company

The company that is today Credit Saison was established in
May 1951 as Midoriya Co., Ltd., a department store that soldproducts on a monthly installment basis. Due to a
deterioration in its management in the 1970s, the Company
joined the Seibu Distribution Group (later the Saison Group)
and after its second establishment period and shift to being acredit card company, the company name was changed to
Seibu Credit Co., Ltd., in 1980. Since that time, we havelaunched a succession of customer-oriented services that havebroken with generally accepted industry practices andtraditions, including instant credit screening, instant card
issuance, signature-less payments and Eikyufumetsu Points
that never expire. In 2002, Credit Saison achieved the top
position in the industry in terms of four indicators, including
the number of cards issued annually, the number of cards inoperation annually and annual card balance.

Since 2002, in accordance with the active reorganization of
the credit card industry, we have been aggressively forming
strategic alliances related to distribution, ﬁnance and credit
sales, strengthening marketing from both card development
and usage activation aspects, and promoting efforts toimprove added value for cards. In 2006, the Company
merged with UC Card Co., Ltd. (UC member operatingcompany), and maximized the utilization of the management
resources cultivated in its card business. In addition tostrengthening each business, such as in leasing, credit
guarantee and ﬁnance, we worked to expand the fee
business as a new revenue stream, for example, by
establishing the industry’s ﬁrst card processing company.

Aiming to be the No. 1 company in the cashless payment
market, we promoted collaboration management with ourown products and services and alliance partners. At thesame time, we positioned the global business as a future
earnings base and entered the retail ﬁnancial business inline with each country, centered on ASEAN. Using theseproducts and services as tools, we have established acomplex sales system that turns corporations and individuals
into customers. As a non-bank capable of responding tochanges, we shifted to a business model that addresses thevarious payment and ﬁnancial needs of companies andprovides cashless functions for all individuals andcorporations in Japan and elsewhere in Asia.

Facing challenges toward the creationof new value

Established membership base

Historical Context

Expanded fee business as a new revenue stream

Collapse of the bubble economy/Heisei era recession

From a period of high economic growth to the bubble economy

11

2003 Aug.

Shift to new business model

Abenomics

We are promoting a Medium-term Management Plan thathas becoming a Neo Finance Company in Asia as its
management vision. By developing solutions that cover thelife cycles of individuals and corporations, we are facing
challenges as a ﬁnance company that has been working with
its customers for 50 years. By means of 1) a growth strategy
and structural reform in the payment business, 2) digital
innovation and the creation of new businesses, 3) further
expansion of the lease business and ﬁnance business, and 4)
expansion of the earnings base of Credit Saison’s global
business with a view to the future and demonstration ofGroup synergies, the Company is working on sustainablegrowth as a general non-bank.

Tokyo Olympics

Global ﬁnancial crisis

12

VISION

Credit Saison’s Value Creation Process

Common personnel system
for all employees(Wage scales and conditions are consistent
for all full-time employees.)

Professional human resources
well versed in a variety ofﬁelds including credit and ﬁnance
Number of employees

2,981(including 2,169 women)
Expertise and innovation

Ability to develop services
and solutions as
an independent non-bankHighest level of creditworthinessas an independent non-bank
Credit rating

R&I A+(Continuously for 24 years since October 1996)

Sales platform
Industry top class in membershipand customer segment

Advance of cashless payments

Demographic andother social structural changes
Digitalization
Increasing social disparities

Growing asset-formation needs forthe coming “age of centenarians”
Growing need for ﬁnancial services
in Asia ex-Japan

Strong Organization/
Financial Results
Shareholders

Helping individual
members lead avibrant life

ng

lity
abi
p
ca

Wid
paym e ra
en ng
ts e
ch

Around37 million

Number of stores/organizations with
afﬁliate cards issued to
Around200

Branches in Japan Overseas branches

10 branches

9 countries

Number of stores/
organizations with corporate cardand cards for SMEs issued
Around13

50,000 companies

158

One-third

Total return ratio

Payout ratio

31.4 %

Social Value

Six Business Domains
Payment BusinessDirector
independence(outside directors aspercentage of directors)

75.1%

Credit Saison’s Business Model

Business
partners

Solutions Business

The Credit Saison
Financial Platform

R ic h l y v a ri e de
cu stom er b as

Asset Management
Business
Digital Marketing
Finance Business

Creating Valuein Collaboration
with Stakeholders

Medium-term Management Plan

Financial and capital policies

Challenging ourselves to be a ﬁnancecompany advancing with customers
for 50 years

Risk capital management through the
optimal allocation of capital

ESG Management

Strengthening corporate governanceRealizing diversity

Establishment of Nomination &Remuneration Committee
Strengthening of managementmonitoring system

Strengthening engagement between
the Company and its employees
by promoting diversity

72.8%

21.0%

No. of paid leave days approved/
Ratio of paid leave used

Employees

15days 82.5%

Number of press-release topics,
including newly developed services
and solutions, during the ﬁscal year
Administrative
agencies

Framework Underpinning Corporate Value Creation

Promoting diversity

Ratio ofRatio offemale employees female managers

Formation of sustainable
workplace environments

Global Business

(per
e,
so
orat
d o m n al a n d c o r p s e a s )e s t ic a n d o v e rMarketing network focusing
mainly on Japan and ASEAN
Total cardholders (consolidated)

Number of
discussions withshareholders
and investors
Customers

ity
ur
sec
lid
Rock-so tformpla

Sound ﬁnancial base

Climate change

of es
em

Credit know-how nurtured
over the 70 years since
the Company’s founding

Market environment

Proﬁn visioan n of div
cia
l fun erse
ctionsDiverse human resources

Social and environmental
issuesLe
ndi

Sources of ValueContributing to a more convenientand abundant sustainable society

Approx.

50

Environmental Value

Providing businesssolutions to corporate
customers

Regional
communities

Environmental-preservation
activities through operation of
the Akagi Nature Park
Reduction in paper consumption
from the digitalization of
Saison Counter

14

VISION

Vision and Strategy
Transformation and Renewed Growth

Medium-term Management Plan
FY2019–FY2021

For details, see next page.

Medium-term Management Vision

Neo Finance
Company in Asia

Construction of Foundations

Previous Medium-term Management Plan
FY2016–FY2018

Basic Policy

Face the challenge of new business models
Expand the stock business and the fee businessNumerical
Targets

Measures

Change the business model to one that combines ﬁve businesses
via stronger corporate marketing
Face the challenge of becoming“a peerless new ﬁnance company in Asia”
able to overwhelm the competition

Basic Management
Policy for FY2014

Face the challenge of changing the business modelby strengthening corporate marketing

Consolidated ordinary income
for FY2018

Basic Management
Policy for FY201315

Establish a multiple core earnings source structure through“collaboration management using strategic resources”
to become the No. 1 consolidated issuer, accelerate the shift
to non-banking and crystallize Asian strategies(JGAAP)

Results
Consolidated ordinary income
FY2018¥54.1billion(JGAAP)

Evolve into a “non-bank capable of responding to changes”¥60.0 billion

1 Face the challenge of changing the card business model
2 Collaborate strategically via open innovation
3 Enter multilateral alliances centered on the ﬁnance business
4 Develop diverse business throughout Asia

Initiatives Prior to FY2016
Basic Management
Policy for FY2015

Realize innovation and changing business models

Consolidated ordinary income
FY2015¥43.8 billion(JGAAP)

Full migration to Associated Core System
Completed a foundation capable of alliance expansion
and product development

Responsive to diverse customer needs
Payment platform enhancement/
Finance business expansion

Expand the Global Business into more countries
FY2015: Five countries

FY2018: Nine countries

16

VISION

Overview of the Medium-term Management Plan (FY2019–FY2021)
Six business domains to assist in improving customers’ QOL
Medium-term Management Vision

Neo Finance Company in Asia

Householdpurchase/leasing

Shopping

Real estatetransactions

Borrowing

Mission Statement

Asset
Management

Remittances

Become a ﬁnance company advancing with customers
for 50 years

Loan
Financialarrangements
Purchasing

Provide peace of mind and discover the potential in money• Provide house card functions integrated with alliance partners’ customer strategies,
expand the customer base through settlement services• Utilize know-how from Japan, expand ﬁnancial services in high-potential emerging markets in Asia

Solutions Business

Revolving/
installment
payment
volumetransaction
Shopping

Regarding FY2019 (consolidated business income target ¥42.5 billion) as the lowest point,
work toward returning to a growth trajectory over the next three years
FY2018¥52.2 billion(IFRS)

Global BusinessceLoan balan

balance
Guaranteed

revenue
AdvertisingueFees reven

Renovations

Savings

Investment
Asset
management

eventsith life
tune winsnoti
Inheritance
menda
Recom

Welfareconsolidated ordinary income)n balance
Housing loa

revenueinsurancebalance
Revolving

Settlement

Numerical Targets
Consolidated business income (cetrusts balan
Investment

Insurance

Settlement ofexpenses
Operational efﬁciency

Finance Business

Customer afﬁnity(brand fans)

Payment BusinessLife events(start work, marriage, raising children...)Corporate cycle(foundation, growth/maturity, transformation)

Asset Management Business

Digital Marketing

FY2021¥60.0 billion

Diverse lineup of money services for customers(individual/company)(IFRS)

Provide house card functions integrated
with afﬁliated partners’ customer strategies andexpand our customer base through settlement services

Our Aims for the New Medium-term Management Plan and Key Points
Growth strategies and structural reform in the Payment Business

Expand sales of ﬁnancial products
through customer-oriented,
cross-sectional sales between businesses
Utilize know-how from Japan, expand ﬁnancial services
in high-potential emerging markets in Asia

Further acceleration of “revival of card business” and“transformation to a general non-bank”

Payment Business

1 Expand shopping transaction volumes (BtoC ﬁeld)
2 Expand shopping transaction volumes (BtoB ﬁeld)

Payment Business/Solutions Business

3 Expand the shopping revolving/cash advance business
4 Create new businesses and enhance digital marketing

Asset Management Business/Digital Marketing

Further expand the Finance Business as a non-bank
1 Strengthen relationships with partners and expand new alliances

Lease & Finance Segment

FY2018Business Income¥34.5 billion¥52.2 billion(IFRS)(JGAAP)

Finance Business

Expand the earnings base of the Global Business with a view to the future

FY2021Business Income(IFRS) projection¥60.0 billion

Global Business

1 Transition from the “sowing stage” to the “harvesting stage” in countries where we have operations

17

FY2008Operating Revenue

Global Business

Payment

GlobalLease

Finance

Real estate-related

Entertainment

18

STRATEGY

Payment BusinessIn pursuit of customer convenience, Credit Saison isproviding a variety of payment services to advance customer
convenience and meet the needs of its diverse range ofbusiness partners, such as retailers and railways. In addition
to credit cards, we are aiming to remain the No. 1 company inthe cashless payment market for both consumer and corporatetransactions by developing measures—including prepaid cards,
smartphone-based payment systems and mobile point-of-sale(POS) systems—that will contribute to breaking the dominanceof the cash market.

develop new comprehensive financial services that combine the know-how of both companies.
To improve UX, it is essential to improve the efficiency of administrative aspects in accordance with thediversification of payment methods. We are working to expand our processing business by leveraging
our know-how as a card issuer, such as in recruiting members and encouraging use, and the strengthof one-stop contracting from system development to operation that meets the administrative needsof our business partners. At this time, we are not yet able to impart any information about specificprojects, but we are making steady progress toward the acquisition of new projects.
BtoC ﬁeld

Phase 1 SAISON CARD Digital
Phase 2 Daiwa Securities
SAISON PLATINUM AMEX

Phase 3 SAISON ROSE GOLD AMEX
Phase 4 Saison Gaming Card

2021

November 2020
Processing ﬁeld

MarketEnvironment

The credit card payment ratio in Japan is about 20%, which is
4.1%
40.5%
rather low when compared to developed economies overseas.
Pay-easy
However, moves toward a cashless society are advancing
7.6%
through the “40% cashless by 2025” financial policy that the
Account transfer/
Share accounted
government is promoting following the consumption tax rate hike
Direct debit
for by consumer
spending by
and the opening up of the banking system with the intention of
16.3%
payment method
Prepaid card/
creating advanced financial services. In addition to infrastructure
Total ¥296.1 trillion
e-money(FY2019)developments, such as contactless, near field communication (NFC)
9.5%
payments in preparation for the holding of the Tokyo Olympic
Debit card
Credit cardand Paralympic Games, changes in lifestyles brought about by
0.6%
21.3%
the novel coronavirus (COVID-19) pandemic will accelerate these
Note: Calculated by our company based on sources
such as the Ministry of the Economy, Trade and Indusmoves. Meanwhile, payment methods are becoming increasingly
try, Bank of Japan, New Payment Report, Mitsubishi-UFJ
and Consulting, and official documents fromdiversified and now include credit cards, transportation-related and Researchvarious companies and associations. Included in thecreditcard
category is the corporate card payment
distribution type IC cards, QR payments and smartphone payments. amount (estimatedat ¥3 trillion/1% share)
The use of smartphone-based payment services, in particular, is on
the increase due to their benefits, which include the convenience and discount rates at the time ofpurchase they offer consumers, and the lower fees and rapidity of payment they offer companies.
Convenience store payment

Progress of theMedium-termManagement Plan

• As little as ﬁve minutes from application to issuance of a card number
Application, management and settlement all handled with just a smartphone

Japan’s ﬁrst numberless plastic card

The physical cards issued are of a type that does not display the card number,
expiration date or security code•

Optional security features

Push notiﬁcations of card-use information virtually in real time, 24 hours a day• Card use can be restricted by simple smartphone operation

Background to introduction
The smartphone is a “must-haveitem” essential in daily life andresponds to increased needs for
fewer face-to-face meetings andcontactless needs brought about
by COVID-19

And more

2023

2022
Phase 1 Planned

Phase 2 Planned

And more• Customization of a range of consignment according
to the needs of partners

Expansion of new processing partners
utilizing know-how as issuer

Note: Able to choose from complete consignment ofsystem development and operation to partial
consignment, such as risk management, call centers, etc.

• Approaches to existing or new payment providers

Cash, other

Due to the advances being made toward a cashless society, Credit Saison is promoting structural reforms
to provide added value unique to the digital age in the offering of credit that forms the basis of its credit
business. Up to now, we have provided immediate/instant card issuance services for affiliated cards atthe commercial facilities of partner companies, including PARCO Co., Ltd., and Yamada Holdings Co.,
Ltd. However, as an evolution of this, we launched SAISON CARD Digital, which meets customer needs
for immediate/instant use without waiting for a plastic card after signing up, in November 2020.
Characteristics•• Able to accept consignment both on system
Saison’sdevelopment and operation
strengths • Able to share know-how as an issuer(recruiting members, encouraging use, etc.)

Future Issues andInitiatives

Key Performance
Indicators (KPIs)

Realization of UX (User Experience) demanded in the digital age

Smartphone-ready! Card number issued in as little as ﬁve minutes

Processing ﬁeld

Phase 5 Planned

Main Services

Credit Saison is promoting non-face-to-face meetings and non-contact in light of the changes in theenvironment caused by COVID-19 infections. One example is SAISON CARD Digital, which was releasedin November 2020. By issuing a digital card via an app in a minimum of five minutes of completing thecredit card application on a smartphone, this service allows the card’s use for online shopping and forcontactless payments at physical stores. In addition to leading to the growth of the payment businessby continuing to develop services to improve customer convenience while flexibly responding tochanges in the environment, we are aiming to become the Neo Finance Company in Asia, the vision
adopted by Credit Saison, and realize our mission statements: “a finance company advancing withcustomers for 50 years” and “providing peace of mind and discovering potentials in money.”

Indicator

FY2017FY2018

Total number of credit cardholders

26.95 million

26.79 million

26.39 million

Number of active card members

14.98 million

14.90 million

14.96 million

Card shopping transaction value¥4,683.0 billion¥4,788.5 billion¥4,946.9 billion

Cash advances transaction volume¥248.1 billion¥242.9 billion¥237.5 billion

Original

FY2019In alliancePrepaid cards

NEOMONEY MEMBER

Alliance partners
Note: Examples from start of service

Development of alliances using
the characteristics of SAISONCARD Digital:
Smartphone-ready Can be used
immediately Simple and secure

Utilization of SAISON CARD Digitalas an alliance strategic weapon inapproaches to young people

Director’s Message
In 2020, we made steady progress in the digital transformation (DX) of the payment business, which
included the start of the SAISON CARD Digital smartphone-based cardless scheme, the transition fromin-store written application documents and iPads to customers’ own smartphone applications, and theawarding of 3% points for all Saison cardholders linked to payments using PARCO’s app. Although the
COVID-19 infections have inflicted great harm on society, it can be said that the abovementioned moves
were promoted at once in terms of both customer awareness and the need to take corporate action. DX
should be constantly evolving, and we will continue to address improvements from the consumer’s pointof view as the focus of our everyday tasks. Strategically, by strengthening our focus on millennials and
Gen-Z and evolving functions and services by rebranding nonaffiliated (proper) credit cards centered on
Saison AMEX, we will also raise awareness and recognition of the new SAISON brand. At the same time,
we will continue to revitalize the entire payment business, including existing affiliated cards.
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Strengthening of customer base and promoting utilization of its supporting core systems

Expansion of new affiliated networks is indispensable for expanding card shopping transaction value.
In September 2019, we reached agreement with Daiwa Securities Group Inc. on a capital and businessalliance with the aim of developing and providing next-generation comprehensive financial services.
Based on the approximately three million Daiwa Securities Group accounts and our customer base of
37 million card members, we will work to mutually refer customers, develop a new customer base and19

Yoshiaki Miura

Director, Senior Managing Executive Officer, General Manager, Payment Business Division

20

STRATEGY

Solutions Business
By leveraging our expertise in the credit card business, acustomer base of about 37 million users, and the resources ofa wide variety of partners, we are providing business support
services that meet the needs of today’s corporations, including
services supporting a shift toward cashless operations,improved cash flow and enhanced efficiency in expense
reimbursements and other back-office operations at small to
medium-sized businesses, as well as sole proprietor businesses.

MarketEnvironment

Progress of theMedium-termManagement Plan

Japanese companies are now facing a variety ofchallenges, including a shortage in labor because ofa decrease in the working population, how to best
implement work-style reforms and improvements in perperson productivity, and how to best achieve a better
work-life balance for their employees. There are aboutfour million companies in Japan, and it is said that about
90% are small to medium-sized companies. However,
the overall number is declining amid a shortage ofworkers and the aging of the business owners andmanagers. On the other hand, the corporate payment
market in Japan, estimated at about ¥920 trillion,
including a credit card payment market of about ¥3
trillion, still shows room for growth.

Corporate payment market in Japan

Future Issues andInitiatives

To capture cashless support and back-office-related demand in line with the needs and scale ofvarious businesses, it is essential that we not only improve customer satisfaction but also create asystem that can reliably respond to customer needs. As part of our effort to develop user-friendly
corporate products, we are working to revise our services and create new product designs, including
those with expanded credit lines and payment deferral functions.
Moreover, in line with our goal of providing solutions that meet the needs of our customers, we
are working to build a cross-business platform that allows us to make product-based and companybased recommendations. Our goal is to improve the sophistication of our solutions business, including
by providing timely and appropriate corporate financing and lending proposals through constructing
an original credit model based on transaction history (including transaction volume and content),
creating a common ID for all businesses within a given company and achieving the integrated
management of corporate information through the use of affiliated stores and leasing contracts.

Key Performance
Indicators (KPIs)

Credit card shoppingtransaction volume in the
BtoB field

Non-card payments

Card payments

About ¥3 trillion

About ¥917 trillion

Lineup of corporate credit cards

About1.25x

Total value ofcorporate payments

About

¥510

¥920 trillion

billion

FY2017

Source: Credit Saison estimates based on the VISA Worldwide “Japan’s corporate market and Visa strategy” reportand other sources

About

¥580
billion

FY2018

Corporate cards

Large
corporations

Product development
plans for small to
medium-sized corporations

Medium-sizedcorporations

About

¥650
billionSmall corporations

Saison Platinum
AmericanExpress® Card

Sole proprietorships

Saison Cobalt
AmericanExpress® Card

FY2019Main Services

Credit card shopping transaction volume in the BtoB field

As the workforce in Japan continues to shrink, there is a growing need for companies to improve
productivity and reduce labor in operations. In addition to the issuance of corporate cards, we
provide solutions services designed to meet the complex needs of companies in support of the shift
to cashless payments between companies. Thanks to these efforts, credit card shopping transaction
volume increased 10% from the previous fiscal year to more than ¥650 billion.

A world-class expense management
system saving the user from the hassleof expense reimbursement processing

Financing based on future credit card sales
Settlement possible based on pace of sales

Accounts receivable financing
and invoice agency services
Reduces BtoB billing work

Expanding sales in the sole proprietorship and small to medium-sized enterprise (SME) market
We launched two new credit cards in FY2019 for sole
proprietorships and small to medium-sized enterprises.
The first of these is the “freee Saison Platinum
American Express® Card,” which uses a credit model
based on corporate financial and transaction data andtargets sole proprietors and small to medium-sizedbusiness owners using freee’s cloud-based accounting
software.
The second is the “Saison Cobalt BusinessAmerican Express® Card,” a new business card offering
preferential services for BtoB payments that primarily
targets small and medium-sized enterprises, small
businesses, sole proprietors and other businesses,
including start-up companies.

Credit card growth for sole
proprietorships and small to mediumsized companies
Credit card growth forsole proprietorships andsmall to medium-sized companies
More than

30%YoYFor the BtoB ﬁeld as a whole
More than

10 %YoY

Effective in securing payroll
receiving services personnel

Effective in attracting cardholders
A variety of announcement tools for PR postings

Managing Executive Officer‘s Message
Promoting the shift to a cashless system, including in the expansion of shopping transaction volume in
the BtoB field, is an important mission for Credit Saison. In addition to providing cashless solutions, ourbusiness partners are providing solutions aimed at improving the efficiency of back-office operations suchas expense reimbursement. Moreover, there has been an increase in the need for corporate financing,lending and sales support due to the impact from COVID-19. Leveraging the experience we have gained
over the years in the credit card business, our customer base of about 37 million individuals and theresources of our various partners, we will continue to strengthen our business relations by responding to
the needs of our customers as we work toward continued growth alongside these companies.
Our goal is to work in a wide variety of transactions with our corporate customers by achieving
the integrated management of corporate information, including for corporate card issuers, merchantcontractors and leasing companies.

Shunji Ashikaga
21

Reduces transfer fees and improves
efficiency in accounting operations

Managing Executive Officer In Charge of Business Solution Dept.

22

STRATEGY

Asset Management Business
Using credit cards with long service lives as touch points toremain side by side with our customers as they go through life
events in an era where living to 100 has become commonplace,
this business supports members taking their first steps in asset
formation and provides a variety of investment-related solutions
and services that give our customers a trial experience in longterm investing.
In addition to improving asset formation literacy, we arestrengthening our efforts to stimulate interest in financial products
across a wide demographic range, including the younger generation
and women raising children, while at the same time contributing to
the sound development of the financial market as a whole.

MarketEnvironment

support customers’ smooth transition to real investments. We believe the experience of long-term
investment with the added bonus of points will likely contribute to an accelerated flow from savings
to asset formation thanks to an increase in young beginners who have never before invested.

Note: The patent for “Point Investment Services” (No. 6357521) was granted in June 2018.

Future Issues andInitiatives

The Japanese social security system faces several problems, especially as the future of the pension
system becomes increasingly uncertain. Amid this environment, it is increasingly common for people
to believe that the individual must take responsibility in building assets for their own future. “Theidea that ¥20 million” will be necessary for any retirement has recently taken hold in the country, andthere has been growing interest in asset formation around the world. We also note that institutional
support from government, including in the form of the “Tsumitate NISA” tax incentive system and the“iDeCo” pension system, has contributed to heightened interest in Japan in personal investment. Asof the end of December 2019, household financial assets reached about ¥1,903 trillion, but of this,about 52.9% was in “cash and deposits,” showing that there has been relatively little progress in theshift from savings to the formation of assets.

Credit Saison is responding to customers’ heightened interest in and concerns about increasing
their savings, asset formation and investment. Though asset-formation services are conventionallyregarded as geared toward the high-net-worth segment, Credit Saison believes that extending these
services to other segments, such as young people and housewives, is necessary for the expansion of
the investment business and the sound development of the market. Credit Saison is taking several
measures to expand its user base. In addition to augmenting the list of products and services we
handle, we are strengthening our collaboration with partners such as the Daiwa Securities Group,
Smartplus Ltd. and Saison Asset Management Co., Ltd. to expand Saison Pocket.

Key Performance
Indicators (KPIs)

Taking the lead in the industry, the Asset Management Business launched “Point Investment Services”
in December 2016. The number of users reached about 500,000 in the roughly three years since thelaunch of the service. As this service allows customers to simulate the experience of asset management
without the hassle of opening a securities account, it is now one of the top-ranked services on the
Eikyufumetsu Point exchanges, with the value of points under management at about ¥1.0 billion.
When people first begin investing, they often describe the experience as “scary” or“troublesome,” and some are of the belief that they cannot understand the process. We launched“Saison Pocket” in November 2019 to alleviate these concerns and show that investment could
be customer friendly, simple and easy to understand. Customers can open securities accounts
following easy procedures and start amassing investment trust and stock holdings by making cardbased payments. Purchases using Eikyufumetsu Points are also possible, and we will continue toHand-in-hand with the customer’s life cycle
Supporting the customer’s ﬁrst steps in investing in an era
where living to 100 years old is increasingly common
FY2019 results

History of the Asset Management Business
December2016

Launched the Point Investment
Services

September
2018

Launched the Point Investment
Services course

November2019

Launched Saison Pocket,
a smartphone-based
securities service

Ability to accumulate investment
trusts and stocks throughcard-based payments

23

Key points in FY2020
Expand products and services
with a focus on increasing user countStrengthen cooperative efforts with the Daiwa
Securities Group, Saison Asset Management andSmartplus to further expand “Saison Pocket”
as a platform for asset formation
Asset formation platform

Enhanced cooperation

Enhanced cooperation

500,000

About
individuals

300 billion

Funds invested

1 billion

About ¥

Main Services

About ¥

Number of credit card holders

Customer accounts with a balance
About

Progress of theMedium-termManagement Plan

User countLong-term assetformation funds
Balance of assets undermanagement

3million

Net ﬁnancial
assets classiﬁcation

Very afﬂuent¥500 million or more
Afﬂuent¥100 million or more

About

Payment and loan services
for the very afﬂuent

Securities and asset
management services
for cardholders

Daiwa Securities Saison Platinum
American Express Card

26 million
By age group

90s or older

50s or older

Upper mass market¥30
million or more
Mass market
Less than¥30 million

Launched special credit cards
for customers doing business with
Daiwa Securities in November 2020

40s or older
Under 20

Executive Officer’s Message
Said to be a service geared primarily toward the affluent segment, asset formation is often considered bymany customers to be irrelevant to their own lives. At Credit Saison, we are working to enhance operationsin the asset management business domain by listening to questions posed by customers such as, “Howcan I nurture the growth of my own money?” and “How best can I manage my most important assets?”
With this in mind, we have obtained a patent for the Point Investment Services business, which helps ourcustomers who are just starting out in investing. In its third year, the business now has more than 500,000
users. In particular, we are providing new investors, including young people and women, the opportunity
to participate in practice investing exercises before engaging in the real thing. While there are still manycustomers who are moving only a limited number of points, we note that activity is steadily picking up.
We also launched a tie-up with partner Daiwa Securities Group in April 2020. Our goal is to provide
service ideas to our customers through face-to-face and Internet-based consultations. We look forward tocontinuing to offer services that support our customers and manage the assets entrusted to us in a safeand easy-to-understand manner.

Kaori Shimada

Executive Officer In Charge of Asset Management Dept.

24

STRATEGY

Digital Marketing
By fusing IT technology with its financial service knowhow, Credit Saison is providing “high-quality content” and“convenience payment services” for its credit cardholders.
In addition to responding to the changes in customer psychology
and behavior caused by the COVID-19 pandemic, such as “nonface-to-face meetings” and “loss of contact,” we recognize thatDX must be advanced at an accelerated pace to enhance UX.
To solve these problems, we aim to build a foundation for a
growth trajectory by promoting our four DX strategies: paymentbusiness, peripheral services, in-house IT and marketing.

Future Issues andInitiatives

Key Performance
Indicators (KPIs)

In a business environment that is undergoing drastic change due to the rapid progress being madein digitalization, Credit Saison is engaging in DX as a priority management strategy for creating
innovation. Domains driven by digital technology to dramatically alter the customer experience andbusiness streamlining stretch across the Company, starting with credit operations, such as credit
examination and issue, usage, invoicing, development and credit management, to the marketingdomain, consisting of branding, sales promotion and CRM, and on to organizational activities todevelop new businesses that utilize Company resources and raise internal productivity. Through DX,
we are working to create an outstanding service experience for our credit cardholders, partner clients,
card-affiliated stores and all of our customers.
Inho

in

h
ic e r a lesgFour DX
Strategiesri p
P e s erv

Strengthening of Saison Classe,
Saison’s Otsukidama, Point Mall,
Saison Furusato Tax Payment,
data business, etc.
Development of new peripheral servicestenm nessT
eIus

Development of cards in special ﬁelds
SAISON CARD Digital
Development of digital payment functions
Development of cardless loansrketProgress of theMedium-termManagement Plan

In 2019, the size of the market for domestic consumer e-commerce transactions expanded to¥19.4 trillion (a year-on-year increase of 7.7%) and domestic business-to-business e-commercetransactions to ¥353.0 trillion (up 2.5% year on year). The EC conversion rate in all commercial
transactions is increasing, with BtoC at 6.8% (up 0.5% compared with the previous year) and BtoB
at 31.7% (up 1.5% year on year), and the digitalization of commercial transactions continues toprogress. Due to digital technologies progressing in this way, amid the major changes in lifestyles
and business environments, our business is changing rapidly in every respect, including our
products, sales and competitive environment.

P
bu ay
si

MarketEnvironment

Ma

Moving to in-house product development andproduction, starting with the areas of highest
customer contact
Streamlining of in-house infrastructure
Digitalization of call centers

Full-ﬂedged deployment of digital marketing
Full-ﬂedged deployment of social
media marketing
Revision of approaches to appeal toyounger segments

Creation of membership services, concierge functions, new businesses

To bring our credit cardholders’ QOL to a higher level, it is essential to deliver “new information”
and “information that people want to know” at the appropriate time and in a timely manner using
digital technology. We are creating new businesses, such as Saison Classe, Saison’s Otsukidama and
SAISON CARD Digital, to create a customer experience that fully delights and surprises.
Embedding of technology for promotion of DX

To strengthen early efforts with companies that have advanced and innovative technologies toward
the development of services for the digital age, through Saison Ventures we had invested in 29
venture companies as of March 31, 2020. These include venture companies involved in payment,commerce, sharing and new technologies.

25

Securing human resources with expertise in digital technology is essential to respond quickly andaccurately to the rapid changes in that technology. In conjunction with strengthening the recruitmentof engineers, we are working to develop the digitally savvy human resources who will be able to create
digital technology as a customer experience that fully delights and surprises. At the same time, toeffectively utilize the information entrusted to us by our customers, we will work to further strengthen
compliance, such as by appropriately managing the information that is received into our care based on
the Personal Information Protection Law.

Indicator

FY2017FY2018FY2019Number of registered “Net Answer” and “At U
Net” internet service members

14.25 million

15.05 million

15.63 million

Cumulative number of downloads of the “Saison
Portal” and “UC Portal” smartphone apps

3.98 million

5.49 million

7.36 million

Four companies

Seven companies

Five companies

Saison Ventures(Number of investee companies)

Main Services(cumulative total: 17)(cumulative total: 24)(cumulative total: 29)

SAISON CARD DigitalThis service enables the issue of a digital card from an app in as little as five minutes after completing acredit card application by smartphone and the card’s immediate use for online
Page 19 Payment Businessshopping and contactless payment at physical stores.
“Saison Furusato Tax Payment” furusato donation website
This service enables use not only from donation applications to donation payments in one stop but also theuse of Eikyufumetsu Points as well as Saison Card and UC Card payments to pay donations. If users log in via
the “Net Answer” and “At U Net” Internet services, basic information such as the names and addresses andcredit card information required for furusato donation payments will be
automatically synced, thereby enabling ease of use.
Saison Classe
Targeting card members who use the “Saison Portal” and “UC Portal” smartphone apps for Saison
Card and UC Card, this service enables customers to earn points by raising their ranking inaccordance with their usage records. Using an app makes it easy to obtain preferential usage andto confirm information on special offers.
Saison’s Otsukidama
For every ¥500 (tax included) spent using Saison and UC cards, cardholders receive a “lottery
ticket that gives them a chance to win ¥10,000 in cash” (a maximum of three tickets per day). The
lottery, in which each ticket obtained gives one chance, takes place on the 15th of every month,and 10,000 people are given a prize of ¥10,000 in cash.
“STOREE SAISON,” a store that accepts Eikyufumetsu Points
This media-type mail-order site introduces products and experiences, both from Japan and overseas, to enrich
the daily lives of customers. Not merely introducing items, the site also tells the stories of how those items cameabout, the struggles that the items’ creators faced in their production and the creators’ own
originality and ingenuity, as well as other matters about which the creators of those items werethinking. Moreover, the site conveys ways to enjoy the items and other information.

Managing Executive Officer’s Message
The Digital Innovation Division has adopted four DX strategies: payment business, peripheral services,
in-house IT and marketing. While aiming to bring these strategies to fruition, in FY2019 we launched theTechnology Center, which is an in-house system development production team for the digital age. This
team hires specialists, such as engineers, data scientists and designers, from outside and trains more than
10 employees in-house as specialists. From credit card examination and issue to in-house organizational
activities, we aim to provide services that will create a customer experience that will delight and surprise
our customers while streamlining our in-house operations by utilizing the power of digital technology.

Kazutoshi Ono

Managing Executive Officer CTO Head of Digital Innovation Division

26

STRATEGY

Finance BusinessThis business is largely centered on the Lease & Rental
Business, the Credit Guarantee Business and the Other
Finance Products Business.
With a firm focus on customer-oriented products, weare building a firm foundation as a non-bank resistant tochanges in the operating environment and diversifying ourrevenue sources by strengthening relationships with ourpartners and providing financial services, including asset
formation loans, in line with the needs of the market.

Key Performance
Indicators (KPIs)

Indicator

FY2017FY2018FY2019Lease & Rental balance of receivables¥295.4 billion¥308.5 billion¥328.1 billion

Credit Guarantee balance of receivables¥342.4 billion¥346.6 billion¥348.9 billion

Asset Formation Loan balance ofreceivables¥341.5 billion¥506.2 billion¥622.1 billion¥593.4 billion¥764.6 billion¥960.9 billion

Flat 35 Loan balance(Including outstanding receivables transferred to
the Japan Housing Finance Agency)

MarketEnvironment

Progress of theMedium-termManagement Plan

Amid an acceleration in the aging of the population and the decline in the birthrate, an era where living
to 100 has become commonplace has brought with it a diversification in finance-related needs, making it
increasingly important to expand services to foreign residents and senior citizens. Moreover, we believethat addressing environmental and social issues by offering environmentally friendly and securityrelated products in line with the goal of realizing a safe and sustainable society will not only create new
business opportunities but also contribute to improving the quality of life of people in general.

Main Services

Lease & Rental BusinessWe are forging ahead with the development of finance leases, business-use installment sales and rentals,
especially for office automation (OA) equipment and LED lighting in line with the capital investment plansof businesses.

The asset balance in the Finance Business surpassed the ¥2 trillion level in FY2019, thanks to not
only an expansion in the financial services offered but also the strengthening of relationships with
our existing partners and expansions into new alliances.

Credit Guarantee BusinessWith a focus on credit guarantees for unsecured personal loans that do not set conditions on the use of funds,
we are working closely with partner financial institutions as we support the promotion of loans to individuals.

Expanding the lineup of financial services

Saison Rent Guarantee Rent Quick* in April 2019 began offering the Point de Yachin Juto Service, whichallows the payment of rent and the next year’s guarantee fees using Eikyufumetsu Points. The FinanceBusiness expanded its lineup of original services in June 2019 with the launch of the self-funded Saison
Flat 35 (guarantee-type) loan, a mortgage product that offers an even lower interest rate than the Saison
Flat 35 (purchase-type) loan.

Flat 35 Loans and Rent Guarantees
We offer Flat 35 loans (purchase-type loans and guarantee-type loans) and are developing lifestyle creation
financial services that include support for everything from rentals to purchases.
Real Estate FinanceOur loan portfolio includes loans provided to individuals to purchase real estate for investment purposes(Saison Asset Formation Loans), loans for renovations, loans for project financing to real estate business
operators (Real Estate Mortgage Loans) and real estate nonrecourse loans.

* Saison Rent Guarantee Rent Quick was launched in July 2017 as a rent guarantee service that makes advance payments on behalf of customers (tenants) related to rent agreements. Eikyufumetsu Points can be earned by paying rent and guarantee fees with a credit card.

Future Issues andInitiatives

27

As a lifestyle creation financial service, we began accepting applications for our alliance card with
Hekikai Shinkin Bank, our partner in the credit guarantee business, in July 2020 with the aim of providing
a wide range of money services that are closely aligned with the life cycles of each of our customers(be they individual or corporate). In line with the goal of merging the payment business and the financebusiness, we will provide financial products to approximately 37 million cardholders in the paymentbusiness and payment-related products to the roughly 330,000 customers in the finance business.
In the Lease & Rental Business, we will work to expand the balance of receivables by developing
new products, including IT/cloud-related products and subscription fees, while also promoting thedevelopment of new markets, including interior construction utilizing business installments.
In addition to existing credit guarantee products for individuals, we will work to develop
financial products for small and medium-sized enterprises, which we believe will lead to the further
revitalization of Japan as a whole, including the country’s more outlying areas.
Within the Other Finance Products Business, we will not only improve customer convenience
using guarantee-type Flat-35 loans and the digitalization of asset formation loans but also focus on
expanding rent guarantee channels through the use of SAISON CARD Digital.
Finally, in addition to developing products for high-net-worth individuals, foreign residents andsenior citizens through utilization of our own big data, we will continue to focus on maximizing profit
by curbing risk and improving efficiency through the use of RPA and IT technologies.

We provide products covering rental contracts and home purchases, and all their associated costs,
responding to the housing-related demand that is the foundation of individual customer lifestyles.
We also assist our customers in the formation of assets through real estate, thus supporting thecreation of affluent and rewarding daily lives.

Director‘s Message
Credit Saison is developing its finance business based on three pillar businesses: “Lease & Rental,”“Credit Guarantee” and “Other Finance Products.” For the Lease & Rental Business, we are forging aheadin sales of OA equipment and kitchen equipment in line with the capital investment plans of businesses,
as well in telecommuting-related products for corporations as they make progress in work-style reforms.
For the Credit Guarantee Business, we specialize in credit guarantees for unsecured personal loans that
do not set conditions on the use of funds, working through partner financial institutions, with which we
collaborate closely in terms of both marketing and credit controls as we strive to acquire new business. We
aim to release new products and services, including owner subleasing guarantees and small, web-basedloans. For the Other Finance Products Business, we are offering unique products and services tailored tocustomer needs—led by Flat 35 loans, asset formation loans and rent guarantees—while endeavoring toaccumulate high-quality assets by building on strengthened relationships with our partners and affiliates.
We aim to launch services specific to medical institutions and will utilize our sales capabilities andnationwide network built up in the card business to provide financial services tailored to market needs
as we put into place a business foundation as a non-bank with diverse sources of revenue and resilient tochanges in the market environment thanks to our strengthened relationships with our partner companies.

Tatsunari Okamoto

Director, Managing Executive Officer, Head of Finance Division

28

STRATEGY

Global Business
Credit Saison’s global business began in 2005, when the
Company entered the market in Shanghai, China. The
Company has entered nine countries, including Vietnam,
Cambodia, Indonesia, Singapore, Thailand and India, since
establishing an overseas headquarters in 2014 aimed at
global business expansion. Credit Saison will realize financial
inclusion and, in turn, contribute to the economic developmentof these regions by leveraging its partnerships with local
companies to provide financial products and solutions tounderserved segments of the population mainly in Southeast
Asia and India who have insufficient access to financial
services from banks and other institutions.

businesses by acquiring licenses in non-bank financial operations and increasing collaboration withlocal companies that have lending know-how.
Securing global personnel is indispensable for expanding our business and moving into new
countries. In addition to the active recruitment of local employees with a variety of cultural values, wewill continue to promote the appointment of executive candidates regardless of whether they are
Japanese. In addition to upgrading the internal control system for each operating company, we arestrengthening our corporate governance system, which includes creating a mutual checking system
involving business supervision and monitoring from the Tokyo headquarters and the Singapore
subsidiary in its capacity as a regional headquarters.

MyanmarMarketEnvironment

Progress of theMedium-termManagement Plan

Amid expectations for an ongoing expansion in both population and GDP, we expect significant
growth in Asia moving forward, although the fact that relatively few people in the region havebank accounts indicates that the current level of financial services being offered might not be
sufficient to meet the needs of all the people. Given these conditions, the spread of smartphones
and rapid progress of digitalization is contributing to new services being developed using thelatest in cutting-edge technologies.

Credit Saison is working to expand its earnings base in future-oriented global business byinvesting in and collaborating with local companies, including those operating in the FinTech
domain, in order to extend its financial services expertise accumulated in Japan to Asian countries
with insufficient financial access.

ThailandUndertaking the business license
application procedures required forthe launch of the microﬁnancebusiness (as of March 2020)

The duplication and diversification of businesses

We established the corporate venture capital company Saison Capital in Singapore in June 2019,and it has begun financing and investing in start-up companies. Saison Capital has already invested
in KoinWorks, a P2P platformer targeting Indonesian SMEs, and Quona, a fund that operates under
the concept of financial inclusion in emerging markets mainly in Central/South America and Africa.
In November 2019, Credit Saison began digital lending operations through Kisetsu Saison
Finance established in India. We have worked to expand our businesses in the Indian digital
lending market, which has grown rapidly due to financing needs among SMEs and individual clients
who have been underserved by banks. In February 2020, Kisetsu Saison Finance undertook new
financing in Gojo & Company, Inc., which provides microfinancing through local subsidiaries andaffiliates in four countries: Cambodia, Myanmar, Sri Lanka and India.

Future Issues andInitiatives

29

We will engage in business selection and concentration in a bid to solidly increase earnings frombusiness platforms built in countries where we have made inroads. Through retail finance provider
HD Saison Finance Company, we are expanding operations in Vietnam mainly in the installment
credit business for items such as motorcycles, smartphones and home appliances while developing
new earnings platforms by establishing a new credit card business. Through digital lending andleasing operator PT. Saison Modern Finance, we will pursue in Indonesia SME and individual financebusinesses in the P2P lending field in partnership with local companies. In India, we aim to expand

SIAM SAISON Co., Ltd.

• Established in November 2018
(Investment ratio 40%)
• Digital credit granting/payment business

Credit Saison Corporation(Shanghai) Limited• Established March 2005
(Investment ratio 100%)• Consulting business

Philippines

India

Undertaking preparations forthe launch of the loan business(as of March 2020)

Kisetsu Saison Finance(India) Private Limited• Established June 2018
(Investment ratio 99.99%)• Digital lending businessTaiwanBangladesh

Areas we areconsidering entering

Singapore

Malaysia

Credit Saison Asia Paciﬁc Pte. Ltd.

• Established May 2014
(Investment ratio 100%)• Overseas business development
and integrated management

Indonesia

Saison Capital Pte. Ltd.

• Established June 2019
(Investment ratio 100%)• Investment and ﬁnancing foroverseas start-ups

Cambodia
Idemitsu Saison
Microfinance(Cambodia) Plc.

Areas where market
entry is completed

Moving into new countries to establish a global business earnings baseIn addition to a steady expansion in our businesses, mainly centered on existing businesses in thenine countries in which we already operate, we are advancing initiatives, such as collaboration
with multinational companies as well as the development of mobile payment systems, AI
credit granting and digital scoring operations, to further complement the strengthening of ourbusinesses in each country.

China

PT. Saison
Modern Finance• Established September 2015 (Investment ratio 82%)
• Digital lending business/leasing business

Idemitsu Saison
Microﬁnance(Cambodia) Plc.

• Established August 2015
(Subsidiary of an afﬁliated company
in which Credit Saison holds a
50% stake)• Loan and installment payments
business

Vietnam
HD SAISON Finance
Company Ltd.

• Established May 2015
(Investment ratio 49%)
• Retail ﬁnance businessDirector’s Message
The spread of the novel coronavirus (COVID-19) mainly in Southeast Asia and India has significantly
affected Credit Saison’s global business. New financing in individual countries was temporarily halted
from early in the year, when the pandemic began to clearly emerge, and we closely watched these trends.
Consequently, we are phasing back operations while monitoring conditions in each country without
incurring severe losses.
Despite these circumstances, demand is brisk in the Company’s main target markets—the middle
class and segments not served by banks—which look poised for further growth after COVID-19 has been
contained. Looking ahead, Credit Saison will accelerate its global business in collaboration with various
local partners in each country to achieve sustainable growth.

Katsumi Mizuno

Director, Senior Managing Executive Officer, Head of Global Business Division30

STRATEGY

Financial Capital Strategy

Growing the three pillars of business in a well-balancedmanner with a priority on maintaining and improving
financial soundness
Shingo Baba

Managing Executive Officer
Head of Corporate Planning Dept., Corporate Risk Management Dept.,
Treasury & Accounting Dept.

Q

Tell us about the basic policy behind theCompany’s financial strategy.

As a non-bank that mainly engages in the Payment
Business, our approach to financing is similar to thatof “purchasing,” which is used by standard services
companies. The degree to which we can cheaply andconsistently procure “purchases” directly connects to
subsequent business activities and affects profitability
in regard to the degree to which we can secure interest
margins. Given this business model, under our financial
strategy we manage the Company with an acuteawareness of our credit rating. Although we received an
A+ (stability) issuer rating from Rating and Investment
Information, Inc. (R&I), we measure the confidence level,
which represents the amount of risk suited to this rating,as 99.75% and engage in risk capital management ina way that allocates the minimum required capital byquantifying this level for each business and affiliatedcompany. Based on the investment allowance derived
in this way, we engage in “growth investments” anddistribute “shareholder returns.” Calculating these enables
us to execute agile decision-making for matters that fallwithin the scope of the investment allowance, even in
the case of high-risk overseas investment and financing
projects or share repurchases, and to prioritize themaintenance and improvement of financial soundness.
One aspect we pay particular attention to inworking to maintain financial soundness is securingliquidity on hand for emergency funds. As a result of
the 2008 global financial crisis, our listed subsidiary
involved in the real estate business fell into management
peril, at which point we fully supported the company’s
management restructuring by assuming all its obligations
and implementing a share exchange to convert thecompany into a fully owned subsidiary. At the time, every
company in Japan faced extreme difficulty in procuring
funds from financial markets, and I am sure everyone
experienced the struggle to surmount the challenge of
securing liquidity on hand for cash. These experiences

31

are part of the reason we work to secure liquidity on handin preparation for emergencies. This lesson has informed
our unshakable financial base amid the current COVID-19
pandemic. Against the more than ¥3 trillion in total assets
held by the Group, we have secured a commitmentline of approximately ¥300 billion, a credit receivables
liquidation limit of approximately ¥180 billion, cash on
hand of approximately ¥100 billion and liquidity on handof approximately ¥580 billion. In addition, because ofactions taken by the Bank of Japan, the Federal Reserve
Board (FRB), the European Central Bank (ECB) and othercentral banks to encourage global-scale monetary easing
policies, we were able to avoid funding challenges
relating to the pandemic. We will continue to maintain thisstance of preparing for emergencies.
Maintaining and improving ﬁnancial soundness(A+ credit rating) through appropriate risk capital management
Knowing the possible risks for each business
Minimizing risks by not depending solely on any business
Improving asset efﬁciency (= proﬁt margin)
Expanding the surplus quota by changing the business portfolio

Distribution of capital surplus

Aggressive investment
in growing ﬁelds
Strategic investments in Japanand overseas(capital alliance/M&A)

Appropriate shareholder
returns
Stable andcontinuous dividends throughexpansion of the revenue base
FY2020
Dividend pershare forecast

Investments in new alliances
in various businesses¥45

Payout ratio
forecast

29.3%

Stock buyback to improve
capital efﬁciency

Q

Summarize the Company’s achievements overthe past 10 years from a financial perspective.

Since the 2008 global financial crisis, the paymentbusiness, which makes up the core of the Group, hasexperienced a business climate that has made operations
a significant challenge, including strengthened legal
regulations, such as revisions to the Money Lending
Business Act and the Installment Sales Act, as well as
Supreme Court rulings on overpayment refund requests.
The biggest challenge was that these changes occurred
while our project to construct a new core system wasunder way, which forced us to temporarily freeze systemdevelopment for new alliances and other endeavors. This,in turn, placed a shackle on the growth of the paymentbusiness. Meanwhile, the Lease & Payment, Credit
Guarantee, Asset Formation Loan, Rent Guarantee andOther Finance businesses expanded significantly during
this period. Looking at our asset makeup (excluding
special asset management), the payment business, which
accounted for roughly 70% of assets 10 years ago, has
now fallen to just under 50%. From the perspective of
income contribution as well, this indicates that we haveshifted from our conventional position of a single footing
to a second pillar of growth, namely the finance business.
Although both the payment and finance businesses
maintain a significant share domestically and have charted
a course to operational stability, we will nurture theglobal business with a focus on Southeast Asia, which isanticipated to have higher growth potential, as a third pillar.

If we look at liabilities, our interest-bearing debt
stood at approximately ¥2.4 trillion as of the end of
March 2020. More than 60% of this debt consists oflong-term funds such as corporate bonds and long-termborrowings procured with a maximum term of 20 years.
To receive the benefits of historically low interest rates
resulting from the Bank of Japan’s negative interest rate
policy, along with the use of commercial paper that canbe procured at almost zero interest, we are advancing thetransition to fixed interest rate procurement as a means ofBalance of interest-bearing debt (non-consolidated)
Debt

Corporate bondCP

Securitization(Billions of yen)

2,500

2,201.1
2,000

1,850.9

40.0

1,500

358.0
305.0

1,951.6

20.0

2,380.2

20.0
511.0

389.5
340.0

415.0

35.0
550.0

467.0

1,000

500

1,147.9

1,202.1

1,255.1

1,328.2

0

(FY)
2016
2017
2018
2019
Note: Securitized borrowings coinciding with the Flat 35 home loan business arecalculated after excluding the interest-bearing debt balance and long-term/fixedratio estimate.

32

STRATEGY

Financial Capital Strategy

reducing future interest rate fluctuation risk while enablingprocurement at low interest rates. At the same time, we
are working to level and diversify repayment terms while
controlling durations to prevent widespread growth in
repayment amounts due to temporary finance needs.

Q

Tell us about the major management
indicators, risk management andinvestment decisions involved in executing
risk capital management.

We have defined business income, ROE and theshareholders’ equity ratio as the major management
indicators for raising corporate value. As an independent
non-bank company, among these, securing a certain
shareholders’ equity ratio is critical to building financial
stability. With this understanding, we consult the opinionsof rating agencies and manage the Company withattention paid to maintaining a 15% shareholders’ equity
ratio over the medium to long term.
In terms of risk management, the ALM Committee
deliberates risk quantification for each business, risk
capital investment policies, the weighted average costof capital (WACC) and the target for return on invested
capital (ROIC). In terms of individual investment proposals,
members of the Investment Strategy Committee withexpertise in financial, digital and global matters, as wellas those involved in finance, accounting, legal affairs andrisk oversight, deliberate on matters from a multifaceted
perspective to first identify risk. Following this, we makethe actual investment decisions at meetings of the
Executive Board and the Board of Directors. In terms ofhigh-value investment and overseas investment proposals,

Trends in management indicators
Medium- to long-term target
ROE of

10 % or more

15%

Shareholders’ Equity Ratio

Proﬁt and loss ﬂuctuation risks are measured by aiming at a conﬁdence level of 99.75% using an Earnings at Risk (EaR) model to maintain an A+ rating.
Remeasurement is performed regularly to reﬂect track record updates and changes on the balance sheet.

Domestically, we foresee a risk of higher interest rates. In
addition to extending procurement terms and switching
to fixed interest rates, we are managing this risk by
diversifying our investors and procurement methods.
These moves will help reduce and eliminate risk throughdiversification in a variety of respects.
Moreover, we will need to investigate measures foreliminating foreign exchange risk as we expand businessin Southeast Asia. Our business is based on a model oftaking credit risk to produce returns, so we must avoid
taking foreign exchange risks that we cannot control.
To a certain degree, we can address foreign exchange
risk by combining foreign exchange contracts andcurrency swaps with yen procurement within Japan. As
the scale of our overseas business expands, however,
we will consider and adopt local fund procurement andmanagement approaches.
From a business portfolio perspective, a higher
reliance on a single business will raise the risk of survival
as a company. In this sense, strengthening the threebusiness pillars I mentioned earlier while maintaining agood balance will be essential. Regarding the domestic
payment and finance businesses, creating a centralized
database founded on the information we acquire throughthese businesses will enable us to make proposals
tailored to customer needs and life events in a timely
manner, and thereby help strengthen both businesses.
The use of AI and DX will also increase the efficiency ofbusiness operations, which I feel will help reinforce themanagement base itself.

Long-term/fixed borrowing ratio (non-consolidated)

ROE(Billions of yen)

500

450

(%)

20

484.7

Long-term borrowing ratio

15

10

33

2012 2013 2014 2015 2016 2017 2018 2019

Lease
Business

CreditGuarantee
Business

FinanceBusiness

Real EstateBusiness

GlobalBusiness

70

60

68.2

67.3

61.8

62.6

5

65.9

Interest rate

Risk factors

Dividends ¥7.0 billion

Bad debt

Minimum required capital¥99.4 billion

Price
ﬂuctuation

Dividend policy

Stable and continuous dividend payments

No dividend cuts in the past even during times of management hardship
Dividend per share

Payout ratio

(Yen)

80

58.3

42.9

59.2
0

29.3

Completion of system migration(second-stage system release) (%)

60

First-stage release of
the associated core system
Completion of the Atrium
restructuring plan

45

43.6

Full implementationof the revised
Money Lending
Business Act
Atrium businessreorganization(spin-off)

16.8

21.6

45
35

45
31.4 29.3

24.1

23.7
13.5

(FY)

0

2016

2017

2018

2019

(FY)

15

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
(55.5) 18.6 12.8 9.4 32.7 25.5 12.6 26.1 42.2 38.3 30.5 22.8 24.0（￥billion）

JGAAP

30

14.9

(forecast)0

Risk capitalsurplusInvestment allowance ¥10.9 billion

Dividend per share and payout ratio

IFRS

0

(FY)

Twenty percent of the consolidated
capital within the risk capital surplus issecured as the minimum required capital(¥99.4 billion).
After excluding the minimum required
capital, an investment allowance (¥10.9
billion) is allocated to high-proﬁt
businesses, growing businesses, newbusinesses or returns to shareholders.

Risk capital allocationfor each business

Our policy is to make stable, continuous dividend
payments to our shareholders. In the past, we havemaintained stable dividends even when recording
losses coinciding with the restructuring of our real estatesubsidiary. We have also maintained a consistent dividend

30

50

FY2019Tell us about the Company’s approach toshareholder returns.

Q

20

60.3

(excludes the impact of adopting IFRS 9)¥379.8 billion

40

66.1

¥ 497.2 billion

etc.

60

80

Risk capital allocation policy

Consolidated capital

Payment
Business

Fixed interest borrowing ratio

(%)

350

0

Assets categorized by businessStart of Atrium
restructuring plan

14.4

4.7

ALM management is introduced to measure risk and allocate risk capital for each business.

Tell us about the risks that have been
ascertained from a financial perspective
and how the Company intends to ensure
against these.

Shareholders’ Equity Ratio of about
Shareholders’ Equity

Capital policy (Risk capital management)

Net incomeQ

we employ the capabilities of outside experts to help
identify potential risks and deliberate the countermeasures
for these at Board of Directors’ meetings.

¥110.3 billion

Return on investment is veriﬁed bymonitoring each business asset, andinvestments are planned by replacing,
reducing and effectively using
inefﬁcient assets.

forecast even during the current COVID-19 pandemic. As
a non-bank, it is important for us to hold a certain levelof shareholders’ equity as part of business operations, so
we will focus on our ability to continue offering a stabledividend without being swayed by performance ortransient factors.
Meanwhile, we will maintain a robust financial
structure that allows us to acquire shareholders’ equity
whenever necessary, while at the same time preparing
to respond agilely at the required timing. In working toraise corporate value, it is also important for us to share
perspectives through close dialogue with creditors, andwe will address shareholder returns in consideration of
the balance between shareholders and creditors.

Q

Finally, please offer a word to thestakeholders.

Our emphasis on finance serves to strengthen thebusiness by stably procuring the funds required for eachbusiness and by allocating capital efficiently and in awell-balanced manner to the three business portfolios,
which combine stability and growth potential. With thestable release of the core system, the payment business isenjoying a tailwind, including the Japanese government’s
stated goal of achieving a cashless payment ratio of
40% by 2025. Although overseas business expansion isriskier than expansion in Japan, under the concept ofrisk capital management, we aim to maximize returns ina way that maintains financial soundness. We have finallyestablished an environment in which we can expand thethree businesses without limitation, so we hope everyone
is looking forward to our future performance.

34

STRATEGYSpecial Feature Value Co-Creation through Business
Global Business
Ensure access to financial services, including microfinance
Promote growth of Micro-SMEs including through access to financial services
Increase the access to financial services, including affordable credit

Social Impact

United Nations
Sustainable
Development Goals(UN SDGs)

Bridging the Financial Inclusion
Gap with Impact Investing

KoinWorks – a P2P Platform Catering to MSMEs

Credit Saison offers customers across Asia financial services and solutions, both directly and in
partnership with local lending institutions, leveraging its deep domain expertise in non-bank financein Japan. Large sections of populations across Southeast Asian countries remain underserved or
unbanked as they lack some or all of the requirements banks have, or fall outside of such banks’parameters for credit. Many of these customers even lack access to simple bank accounts.
With emerging FinTech-enabled non-banks in the region looking to provide credit and otherfinancial services to such individuals and enterprises using innovative sales and underwriting, we see
an immense opportunity in providing wholesale debt to such non-banks, with strong risk-adjusted
returns. With this approach, we look to further financial inclusion by equipping specialized local
lenders with the capital they need to access underserved and unbanked customers.

KoinWorks is a licensed and regulated large P2P (peer-to-peer) lending platform
in Indonesia that enables the flow of credit from individual and institutional
lenders alike to micro, small and medium enterprises, that lack access to credit
from traditional financial institutions such as banks and large non-banks. The
FinTech company utilizes machine-learning to assess borrowers, thus helping
them meet the credit needs that their businesses require to grow. The company
currently serves over 300,000 underserved entrepreneurs in Indonesia.

Credit Saison’s Approach

Business Model and Operations

With the launch of its impact investing* initiative, Credit
Saison looks to harness the power of private capital tocreate long-term positive impact on individuals andenterprises that otherwise lack access to essential banking
and financial services. Credit Saison aims to bridge thegap between underbanked and unbanked individuals andentrepreneurs in emerging and frontier markets and capital
markets by offering high-impact debt capital to specialized
local lending institutions in Southeast Asia and beyond.
Through this initiative, we look to contribute toward
the UN SDGs that aim to ensure equitable access tofinancial services, enable the growth of MSMEs andincrease access to affordable credit in emerging markets.

Credit Saison is looking to build a business model thatwill leverage its own funds to enable the flow of Japanese
impact capital to financial inclusion in emerging markets,
via innovative structures that cater to the risk-adjusted
return expectations of investors, and the liquidity needsof investees. Our multi-disciplinary team in Singapore
with deep experience in this sector has launched a pilot
program of US$10 million, where it will deploy Credit
Saison’s own funds to our target sectors and markets,
together with partners and advisors. Our holistic approachaims to ensure best-in-class investments, with a pipelineof over 300 potential investees in Southeast Asia alone.
Investment
andﬁnancePrevious
investments

Economic return* Impact investing aims to not only generate competitive financial returns, but also
positively impact communities and the environment. The impact investing market
overall is expected to supplement the US$2.5 trillion annual funding gap neededto achieve the 17 UN SDGs that the United Nations has put in place to address
the world’s most pressing social and environmental development challenges.

ImpactInvesting

Solution of social issues

Investors

ReturnInterview(CEO and Co-founder: Benedicto Haryono)

Q1

Very important. Indonesia is a country of opportunities, but even after a few
decades we still haven’t been able to reach our said potential. Of 173 million
adults, 80% of the population are underbanked or unbanked. It makes sensethat people find it hard to invest in the betterment of their lives. We think thatIndonesia is in the concurrent processes of adopting digitalization while at thesame time building its capabilities, and this trend is accelerating due to the effects
COVID-19 has brought.

Q2

Finance

Credit Saison(Singapore)

ReturnWhat is the importance of driving financial inclusion in Indonesia
and how do you see the market evolving?

What is KoinWorks’ mission?

Our mission is to enable people to realize their dreams through affordable andaccessible financing. We are driven by both the desire to deliver impact andthe ambition that we can prove our theory right. We founded KoinWorks on the
belief that the dual mission of profitability and high social impact and we haveconfidence that they are achievable in this model.

Financial
institutions

Charitable
donationsSocial and environmental return

Q3

Development in emerging markets such as Southeast Asia

35

KoinWorks CEO & Co-founder
Project team

Benedicto Haryono

What are some of the challenges you face in catering to the MSMEs
you cater to, and how do you tackle these challenges?

We have many challenges especially in the financial literacy of the entrepreneurs
and also on how to encourage these entrepreneurs to go higher. We actively
conduct education events and share them online, although the latter is the morechallenging of the two as quite a few entrepreneurs are happy where they are anddon’t have higher aspirations.

36

STRATEGYSpecial Feature Value Co-Creation through Business
Payment BusinessSocial Impact

Secure settlement services
Provision of infrastructure

Dialogue

United Nations
Sustainable
Development Goals(UN SDGs)

Aiming to create new value in security
responsibilities as a leading-edge service
company in the “living with COVID” eraEfforts to Realize Safe andSecure Cashless Payments

We interviewed Megumi Yamada, General Manager of
the Credit Examination Center, and Ryuta Nishiyama,
General Manager of the Tokyo Risk Management Center,
who are involved in initial credit examinations and credit
monitoring inspections, respectively.

Due to digitalization, significant progress is being made in the continued transition
to a cashless society. The COVID-19 pandemic has accelerated moves in whichcontactless and remote are regarded as keywords that have brought about majorchanges in our daily lives. Amid such changes, companies are being required torespond to security issues, including new types of fraud, which accompany the
progress of a cashless society. Having introduced new security countermeasuresolutions to eliminate fraud at the initial credit examination stage and during credit
monitoring inspections, Credit Saison is working to realize safe and secure cashless
payments for its customers.

Q1

Yamada: Because of the COVID-19 pandemic, credit
card applications have changed from face-to-face tonon-face-to-face. The latter requires a new identity fraud
elimination mechanism.

Credit Saison’s Approach
We are building a stronger security platform by combining
the credit card screening know-how and experience wehave cultivated over the 70 years since our founding withnew systems in collaboration with partner companies.
Specifically, we are working to eliminate fraud incashless payments by three courses of action: the AI-based

automation of unauthorized credit card use detection,
the introduction of technology to prevent identity fraud
and rogue device detection. Through these efforts, we areproviding our customers with safe and secure payment
environments while contributing to the spread of timely
and contactless payment methods in the new era.

1

Secure payment environments in the cashless era
System for detecting unauthorized
credit card use

A system for the discriminant analysis oftransactions with high fraud risk using a fraud
risk scoring model that utilizes AI (machinelearning) to prevent fraudulent use by third
parties. The automatic learning of
sophisticated fraudulent techniques and theascertaining of the latest trends at an earlystage enable the quick and highly accurate
detection of unauthorized credit card use
from a huge amount of transaction data.

2

Fraud prevention bymeans of device
identiﬁcation
technology

37

AI-based automation ofunauthorized credit carduse detection

Rogue device detection

eKYC

LIQUID eKYC is a new online identity
veriﬁcation service, provided by Liquid Inc.,
which possesses identity veriﬁcation
technology based on biometricauthentication. The service completes theapplication procedure online simply by taking
a picture of the identity veriﬁcation documents
and face image. Combining LIQUID eKYC with
Saison Connect, which links our card
information with API, enables its immediateuse on smartphones (mobile payments) afteran examination is completed without waiting
for the receipt of a plastic card.

A service that detects fraudulent activity on the Internet using
technology that identiﬁes every device used by the customer. By
detecting and preventing fraudulent online card applications andthe use of cards for shopping by impersonating the cardholder,
the service makes it possible to eliminate anxiety about Internet
transactions and provide safe and secure Internet services.

Please tell us about the new challenges with
the COVID-19 pandemic.

3

Prevention of identity
fraud by means offace recognition
technology

Megumi Yamada
General Manager, Credit
Examination Center

Ryuta Nishiyama
General Manager, Tokyo Risk
Management Center

believe that being able to provide the highly convenient
eKYC option has provided new value to our customers.
Yamada: We believe that if we become a pioneer in
the industry and that leads to the widespread use ofsafe and secure cashless payments, we will increase thetrust in the industry. From various surveys, it is clear thatthe image of credit cards invoking unease and distrust
remains deep rooted. We also believe that promoting
cashless payments by putting safety and security first andtaking security measures will provide a safe and highly
convenient payment infrastructure for society.

Please tell us about your security efforts.

Concerning fraud prevention by means of device
identification technology
Yamada: Today, the world has changed dramatically, andthe fraudulent means have diversified compared to what
they were before. I think it is important that we make it sothat cards can be used with peace of mind by eliminating
fraud at both the initial credit examination stage andduring credit monitoring inspections by unprecedented
methods, including the utilization of device information.

Yamada: As a solution against the new types of fraud, weare engaged in efforts that include identifying individual
device information and rejecting applications fromsuspicious devices.

Concerning AI-based automation of unauthorized credit
card use detection

Nishiyama: From before the COVID-19 pandemic until
now, the fraudulent means have changed. I think thatcompanies are required to take continuous measuresagainst fraudulent trends that change according to theexternal environment.

Q2

Nishiyama: I believe that two things are required of
security measures: fraud prevention and the early
detection of any fraud that has taken place. We areworking to improve the accuracy of timely information
distribution and detection so that, as far as possible,
customers will not suffer any financial loss.

Q3

Please tell us about the three strategies foreliminating fraud and the creation of newvalue for customers, industry and society.

Concerning prevention of identity fraud by means offace recognition technology

Yamada: The introduction of eKYC face recognition
technology has made it possible, for the first time in theindustry, to prevent identity fraud in real time even for
non-face-to-face applications.
Nishiyama: eKYC was introduced around the fall of 2019,and it seems that there has been a high degree of interest,for example, in terms of inquiries received, even fromother companies in the same industry. We are expecting
this to be an area in which we can set ourselves apart fromour competitors in the years to come and one in which we
believe we will be able to contribute to the developmentof the industry. For non-face-to-face applications, we

Nishiyama: For our efforts with an AI-based unauthorized
credit card use detection system, which we started in
2019, we have added improvements that have enabled
faster detection. The strength of AI lies in its ability tofind relationships that people will not notice and derive
solutions from those relationships. We will further improve
the accuracy so that customers can use their cards withpeace of mind.

Q4

Please tell us about how you see the future.

Nishiyama: In the years to come, I think it will benecessary to consider efforts to eliminate fraud by sharing
information on fraud within the industry, and even acrossthe industry and society as a whole. In contrast, as credit
is a competitive field, I would like to use Credit Saison’sarsenal of tools as a new initiative in the field of security bydevising ways to set ourselves apart from the rest of theindustry, in the same way that we have with eKYC.
Yamada: By combining the experience value that Credit
Saison has accumulated over the past 70 years with anever-before-seen field of payment, I would like us tobuild a safe and secure cashless society so that customers
can use their cards with peace of mind.

38

FINANCIAL INFORMATION

11-Year Summary of Selected Financial Data
(Millions of yen)

JGAAP1/IFRS 2

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

(Thousands of
U.S. dollars)3

2020

FINANCIAL DATACONSOLIDATED
For the year

At year-end

Per share data(in yen and
U.S. dollars)
Key financial ratios(%)

Operating revenues/Net revenue

306,855

285,712244,009244,405

247,577

259,076

269,919

278,944

292,183

304,855

311,4102,883,426

Selling, general and administrative expenses

246,305

235,758

192,184

187,170

197,852

206,192

221,553

236,661

241,740

220,974

236,910

2,193,611
96,954

Financial costs

24,377

22,577

19,95814,922

13,38812,722

11,772

11,069

9,671

9,878

10,471

Operating income

36,17327,37731,86542,31236,33640,161

36,59331,213

40,771---

Ordinary income/Business profit

39,10633,762

38,59053,214

44,40843,68743,80253,06556,71752,23336,184

335,037

Net income attributable to owners of the parent/
Profit attributable to owners of the parent

18,68012,8299,453

32,77025,552

12,62826,16342,25338,32930,51722,863211,694

Total equity

341,405

347,915355,727

394,868

422,829447,082

418,988446,882

480,669

491,741

485,476

4,495,148

Total assets

2,374,129

2,231,246

2,155,906

2,141,802

2,285,943

2,373,299

2,550,990

2,720,051

2,940,022

3,212,465

3,357,229

31,085,454

Interest-bearing debt

1,776,827

1,657,832

1,409,802

1,359,856

1,468,740

1,557,836

1,729,066

1,857,477

1,957,244

2,203,818

2,413,565

22,347,824

102

70

51

178

139

69

147

259

235

187

143

1.32

1,846

1,880

1,921

2,132

2,283

2,424

2,564

2,725

2,933

3,006

3,102

28.72

Net income per share/
Basic net income per share
Equity per share/Equity attributable toowners of the parent per share
Return on equity (ROE)

5.7

3.8

2.7

8.8

6.3

2.9

6.1

9.8

8.3

6.2

4.7

4.7

Return on assets (ROA)

0.8

0.6

0.4

1.5

1.2

0.5

1.1

1.6

1.4

1.0

0.8

0.8

Equity ratio

14.3

15.5

16.4

18.3

18.3

18.8

16.4

16.4

16.3

15.3

14.4

14.4

NON-CONSOLIDATED
For the year

At year-end

Key financial ratios(%)

Operating revenues

257,924

239,657

210,207204,121205,873219,336

228,713238,637

249,865

259,018

268,020

2,481,667

Selling, general and administrative expenses

205,042

194,194

153,505

149,844

160,927

169,899

186,492

203,038

207,093

215,726

235,794

2,183,278

Financial costs

22,221

19,97718,80916,882

15,11914,066

12,62011,282

9,872

9,748

10,53597,546

Operating income

30,661

25,48437,89337,39429,82635,37029,59924,31632,90033,543

21,690200,833

Ordinary income

33,78728,70641,001

41,52934,87238,44932,61428,21038,871

39,634

28,348262,481Net income

16,137

7,596

5,613

24,147

18,637

11,31525,57021,04522,19025,87533,391

309,176

Total equity

319,712

320,303

322,502349,202367,808

388,470

359,428

374,477

396,831407,533

404,8093,748,231

Total assets

2,200,459

2,097,773

2,059,435

2,051,908

2,200,459

2,287,986

2,468,797

2,623,644

2,831,296

3,107,284

3,210,925

29,730,787

Interest-bearing debt

1,645,206

1,575,231

1,368,154

1,337,201

1,457,001

1,551,189

1,725,891

1,852,551

1,953,740

2,202,839

2,378,401

22,022,231

5.2

2.4

1.8

7.2

5.2

3.0

6.8

5.7

5.8

6.4

8.2

8.2

Return on equity (ROE)
Return on assets (ROA)

0.7

0.4

0.3

1.2

0.9

0.5

1.1

0.8

0.8

0.9

1.1

1.1

Equity ratio

14.5

15.3

15.7

17.0

16.7

17.0

14.6

14.3

14.0

13.1

12.6

12.6

Transaction volume Card shopping

3,844,670

3,953,411

3,402,494

3,547,050

3,852,980

4,089,389

4,258,284

4,476,608

4,683,038

4,788,537

4,946,908

45,804,704
2,199,583

Cash advances

604,347

371,403

266,904

260,089

264,092

277,025

267,723

253,837

248,156

242,980

237,555

Specialty loans

43,76836,514

34,597

32,95045,506

74,687

121,294

212,217

328,300

512,063686,501

6,356,491

Agency services

1,310,419

1,362,275

2,112,431

2,166,062

2,303,998

2,434,824

2,522,242

2,671,710

2,873,183

3,014,831

2,985,255

27,641,250

Leases100,893

94,831

96,852

105,356

114,694

106,801

106,000

108,101

114,569

115,589

127,178

1,177,574

Guarantees

85,63773,37592,837

115,297

126,281

137,335

150,101

159,914

131,922

114,277

101,510

939,907

Others23,38022,895

20,482

23,86930,00533,73233,29832,17730,677

25,77429,001

268,528

6,013,118

5,912,587

6,026,599

6,250,675

6,737,558

7,153,795

7,458,944

7,914,568

8,409,848

8,814,054

9,113,911

84,388,065

2,234

2,265

1,865

1,938

2,007

2,078

2,163

2,289

3,297

3,239

2,981

2,981

(Females)

1,624

1,652

1,306

1,358

1,395

1,447

1,515

1,597

2,483

2,424

2,169

2,169

(Males)

610

613

559

580

612

631

648

692

814

815

812

812

21.6

20.5

20.8

19.0

18.1

20.1

20.9

22.4

21.2

20.8

21.0

21.0

9.5 (54.8)

9.1 (52.1)

8.3 (46.1)

9.1 (49.8)

9.1 (49.9)

9.5 (52.8)

8.2 (45.7)

9.2 (52.4)

10.0 (56.8)

13.1 (72.9)

15.0 (82.5)

15.0 (82.5)

13.6

13.7

14.6

13.2

16.2

15.6

16.1

14.5

11.1

10.2

10.8

10.8

Total transaction volume
NON-FINANCIAL DATA (NON-CONSOLIDATED)
No. of employees

Ratio of female managers (%)
No. of paid leave days approved/
Ratio of paid leave used (%)
Average overtime hours per month

1. Japanese standards were applied until FY2017.
2. International Financial Reporting Standards (IFRS) are applied from FY2018 onward. The Company began applying IFRS No. 9, “Financial Instruments,” on April 1, 2018.

39

3. Japanese yen amounts have been translated into U.S. dollars at the rate of ¥108 = US$1, the approximate exchange rate on March 31, 2020, for the convenience of the reader.

40

FINANCIAL INFORMATIONSUSTAINABILITY

Segment Highlights

Credit Saison’s ESG Management(Millions of yen)

JGAAP1/IFRS 2,3(Thousands of
U.S. dollars)4

2016

2017

2018

2019

2020

2020

204,268

211,633

220,320

228,518

232,441

2,152,231

Operating revenues/Net revenue
Payment Segment
Lease Segment

13,542

13,27812,885

12,586

12,269113,602

Finance Segment

27,32031,07435,41739,231

43,112

399,185

Real Estate-related Business Segment

15,46913,64815,472

18,113

17,227

159,509

Entertainment Business Segment

10,388

10,396

9,288

8,761

8,822

81,685Adjustment(1,070)(1,086)(1,200)(2,357)(2,462)(22,796)

Total net revenue

269,919

278,944

292,183

304,855

311,4102,883,426

8,268

7,971

12,71916,915

6,297

58,306

Operating income/Business profit
Payment Segment
Lease Segment

5,109

4,313

4,349

5,720

2,951

27,324

Finance Segment

15,802

12,817

16,213

19,20918,004

166,704

Real Estate-related Business Segment

6,427

4,904

6,401

8,305

6,957

64,417

981

1,199

1,082

2,078

1,969

18,231

3

5

3

3

3

28

36,59331,213

40,771

52,23336,184

335,037

Entertainment Business Segment
Adjustment
Total business profit

Breakdown of income from payment business segment
Card shopping

116,830

124,654

131,827

136,464

140,579

1,301,657

Merchant fees

68,89370,99073,59775,003

77,849720,824

Customer fees

40,08245,60749,94053,091

54,242502,241

Annual fees, etc.

7,854

8,056

8,289

8,368

8,487

78,583

Cash advances

36,65235,47334,74533,08432,932

304,926

Loans on deeds

1,777

1,511

1,329

1,071

844

7,815

Processing/transactions handled
on behalf of other companies’ cards

25,151

25,542

27,03428,22731,014

287,167

Agency services

13,927

13,934

15,045

15,896

12,491

115,657

Payment-related income

8,613

9,219

8,969

11,507

12,297

113,861

202,952

210,336

218,952

226,250

230,160

2,131,111

3,300

3,230

2,900

2,500

2,100

2,100

Total credit service business income

Basic Approach to ESG Management
Based on our “leading-edge service company” management philosophy, we contribute through the everyday
operation of our businesses to resolve problems and move society forward in ways only Credit Saison can byleveraging our unique know-how, management resources and the experiences of our employees. We will createa sustainable society that is even more convenient and prosperous than today’s.

Value Co-Creation
with Stakeholders

SDG Initiatives

To remain as a company on which society depends, wefeel it is important to understand what our stakeholders
demand of us and to reflect these demands in ourservices and business activities. Moreover, from ourperspective, our stakeholders are a critical factor inraising corporate value. We thus feel that always sincerely
addressing their expectations and feedback is essential to
our sustained growth.

Contributing to the SDGs for 2030 is one of the major
goals of Credit Saison. Meanwhile, simultaneously
creating “Social Value” and “Economic Value” is one ofthe obligations placed on companies engaged in global
business. To fulfill these goals and obligations, we are
steadily advancing ESG management. As part of our efforts
to promote ESG management, we are addressing socialand environmental issues from the perspective of the “FivePs” to realize “inclusiveness,” which is an aim of the SDGs.

Contributing to Realizing the SDG Objectives

Becoming a ﬁnance company advancing with customers for 50 years
Implementing ESG Management“Five Ps” to AddressSocial andEnvironmental Issues

Partnership

PlanetWorking together
Prosperity
Eco-friendlinesswith partners
Peace
PeopleRegional promotion
Social contribution
Personnel

SocialEnvironment

Governance

Main card indices (non-consolidated)
New applications (thousands)
New cards issued (thousands)

2,620

2,610

2,440

2,110

1,800

1,800

Total membership (thousands of members)

25,61026,46026,95026,79026,39026,390

Active membership (thousands of members)

14,77014,78014,98014,90014,96014,960Transaction volume(billions of yen and billions of U.S. dollars)

4,526.0

4,730.4

4,931.1

5,031.5

5,184.4

48.0

Shopping

4,258.2

4,476.6

4,683.0

4,788.5

4,946.9

45.8

Cashing

267.7

253.8

248.1

242.9

237.5

2.2

Balance(billions of yen and billions of U.S. dollars)

555.2

594.8

631.3

640.5

645.7

6.0

Card shopping revolving credit balance

338.7

380.8

414.2

422.5

426.8

4.0

Cashing

216.5

214.0

217.1

218.0

218.8

2.0

1. Japanese standards were applied until FY2017.
2. International Financial Reporting Standards (IFRS) are applied from FY2018 onward. The Company began applying IFRS No. 9, “Financial Instruments,” on April 1, 2018.
3. Figures for net revenue and business profit represent the amounts before appropriation of inter-segment transactions.
4. Japanese yen amounts have been translated into U.S. dollars at the rate of ¥108 = US$1, the approximate exchange rate on March 31, 2020, for the convenience of the reader.

41

Value Co-Creation with Stakeholders
Business partners

Shareholders

Administrative
agencies

Employees

Regional
communities

Customers
Climate change

Demographic andother social
structural changes

Social andenvironmental issues

Digitalization

Increasingsocial disparities

42

SUSTAINABILITYPEOPLE

Human Resource Strategies
Continuing to develop humanresource strategies through continued
engagement with all our employees

Q

Kazue Yasumori

Executive Officer, General Manager,
Processing Business Division,
In charge of Screening Center,
Tokyo Risk Management Center,
Osaka Risk Management Center,
Strategic Human Resources Dept.

Q

What is the basic thinking regarding humanresources?

Our basic strategy is focused on promoting thedevelopment of people who can perform to the best of
their abilities, regardless of their academic background,gender, age or nationality. When hiring new graduates, I
often tell them that with enthusiasm and drive, they canpursue any position they want. While some might begeneralists, and others might be specialists, the generalidea is for them to think for themselves as to how theywant to live their lives based on their work at Credit
Saison, and how they can achieve individual growth thatwill contribute not only to organizational growth but also,
more important, to the betterment of society.

Q

To achieve this goal, what kinds of humanresource development measures are you
implementing?

One measure is the career design programs in effect forthe past five years focused on personnel in their 20s, 30s,
40s and 50s. We have been working to enhance each
employee’s interest in the overall Company by providing
opportunities for those employees to listen to experiencesof senior employees while at the same time reaffirming theirstrengths and individual values. As each of the Company’s
eight divisions are highly independent of the others, we
provide opportunities for employees from different areasof work to interact with each other while simultaneously
incorporating the different ideas of midcareer hires andthe perspectives gained by the almost 600 employees
seconded to other companies. We want each employee
to consider his or her own career development, and we
accordingly encourage each to broaden his or her horizons
while continually working to improve.

Q

What are some of the challenges you
face when it comes to employee careerdevelopment?

The 2017 revisions to the human resource system
resulted in the creation of a new framework for specialist
positions, but because the criteria for these positions

43

were left to each department, ambiguity regarding useof the system resulted in it being underutilized in someareas. In the second half of FY2019, we held discussions
with about 80 department heads regarding their humanresource policies, and many of the participants voiced
concerns over how the specialist system was utilized. We
learned that we needed to provide a way for employees,
especially midcareer employees, to move into specialist
positions. Women make up about 75% of our employees,
and I believe women can do more than work in roles
that are subordinate to management positions. There
are many women who have a wealth of experience andknowledge and are highly committed to the Company,
and I believe making good use of the specialist system
can allow these women to make their voices heard andcontribute to real change at the Company.

Q

Is Credit Saison ahead of its competitors
in human resource–related issues such as
equal pay for equal work?

The human resource officers and department heads havea strong understanding of and focus on the utilization ofhuman resources, and I believe the design of our system
is in many respects well ahead of those seen at the othersector companies. We launched equal pay for equal work
this year, but in anticipation of the launch we abolished theemployee classification system in 2017 and introduced acommon human resource system for all employees, underwhich those working on an hourly basis are employedindefinitely and are considered the same as individuals
contributing to the Company as regular employees. I
believe this is an innovative human resource system thatallows an individual to be promoted based solely on his
or her efforts and abilities. We also introduced remote
work on a trial basis in 2016, and we were accordingly able
to shift to that format without much disruption when thegovernment issued its declaration of a state of emergency.
As part of our effort to convince employees to staywith us for as long as possible after being hired, we havecreated a system that offers plenty of work-style options,
including hourly leave and reduced working hours. Our
goal is to increase awareness of these options within thesystem and to encourage the various departments toutilize them increasingly.

Can you tell us about your engagementwith employees, including those overseas?

To start with, we have created a system where employees
once a year can take stock of their careers, including what
they have achieved so far and what they want to achievein the future. In addition, we are developing a humanresource management system that visualizes humanresource–related records from a variety of perspectives.
In addition to sharing the details of an individual’s careerwith the various department heads, we keep a recordof the one-on-one meetings between employees andsupervisors that we recommend take place at least once
each month. We hope to expand these efforts to create
something of a journey map for each employee to thenevaluate his or her progress.
Last year, I was able to meet with the heads of eachdepartment, while also listening to the employees at
10 sales offices from Hokkaido to Kyushu. Through thisexperience, I realized that we need to consider the good
as well as the bad things I heard as we create a humanresource system and human resource development
policies that are in line with the needs of our employees.
Regarding the direction of the Company, I believe it is up
to each of the Company’s 5,000 employees to implement
the ideas put forth by leadership. We accordingly believe
it is important to maintain dialogue with employees as ameans of maintaining engagement. While the spread of
COVID-19 has made face-to-face meetings difficult, we
will continue to conduct these meetings, either online or
through other means.
About 20 employees from Japan have been
assigned to overseas bases. I was able to visit Myanmar
last year to see for myself the living and working
environment. These employees are working with thesame goals in a vastly different environment, one that,for example, involves health concerns and the need for
information that is not readily available due to beingoutside Japan for a long period. To give employees inJapan a sense of the experiences of those individuals, weshare stories on their efforts and activities, as well as thoseof other employees, in our Company newsletter.

Q

How are you working to further instill the
Credit Saison corporate philosophy
and culture?

Due to the highly independent nature of the business
units, we believe it is extremely important to instill anunderstanding of our corporate philosophy and culture
throughout the Company, including at overseas locations.
We launched SWITCH SAISON, an in-house venture
program last year. This system works to commercialize theideas of employees regarding new and useful services
that customers might find attractive. The concept canbe traced to our corporate philosophy, which focuseson Credit Saison not only being a company providing
the world with services created by others but also a
leading-edge service company that proactively offers
new services. Under the system, employees are asked
to provide an explanation in their own words on a single

sheet of paper of the service they are considering andwhy it is not currently available anywhere else in the world.
We received about 300 submissions over a six-month
period last year and have already received about 270 thisyear, which goes to show the vitality and enthusiasm of
our employees. After a review, about 20 are selected tomove on to the presentation stage, which is then followedby discussions with mentors who are already experienced
in the given field. Several proposals are then selected
for presentation in front of management, where they arefurther reviewed for potential commercialization. Someof these ideas have already been commercialized, which
I believe has contributed to other employees coming
forward with their proposals.
We also began holding a companywide awards
ceremony eight years ago. In the past, awards were often
presented on a divisional basis, but we revised our system
so that it not only recognizes achievements but also
promotes the recognition of our fellow employees’ workand the sharing of our corporate vision. This year, we havereceived about 40 candidate entries for the Legend of
Credit Saison award, which is presented to employees for
efforts deemed worthy of recognition. I believe this is one
way we are encouraging our employees to identify thepotential needs of our customers for yet unseen services
that will prove useful in the world at large, and then think
and act accordingly.

Q

Please tell us about the human resource
initiatives you plan to focus on
moving forward.

One area for focus is fostering a culture where women canparticipate more in the workplace. In Japan, life events suchas giving birth and raising a child can still place a heavy
burden on women. I hope we can show women that they
do not have to give up their careers but can pursue themby working in ways that are more suitable to their lives
and responsibilities. For example, I am the first executive
officer with no experience in sales, but I believe bringing insomeone like me with different experiences helps to bringabout a change in the conventional wisdom that statesthings like “if you want to be an executive, you must haveexperience in sales.” I am hoping that we can offer the next
generation of executives career paths that allow them togain experience not from a single business unit, but from avariety of areas, including sales, operations and corporate
management.
As I noted when speaking about promoting theparticipation of women in the workplace, we are also
focused on promoting a diverse range of work styles for
employees who have joined the company as generalists,
including by assisting them in obtaining qualifications in
specialized fields or moving into specialist areas based on
the wealth of experience they have gained. While this idea
still requires some work, including relative to performance
evaluations and standards for shifting to specialist work,
we will continue to work toward promoting diversity by
fostering a culture that rewards hard work and creating
systems that are easy to work within, while simultaneously
developing a workforce that is capable of offering
innovative ideas in line with a changing world.
44

SUSTAINABILITYPEOPLE

Human Resources
To Remain a Company Where Every Employee Creates Value

Common HR system for all employees

Credit Saison values the creation of the systems and the fostering of a corporate culture that enable its
diverse human resources—which differ in terms of gender, education, nationality, background and otherattributes—to make the most of each employee’s individuality and play active roles.
The Company had been pioneering a focus on, for example, promoting the active participation of womenand equal pay for equal work even before many other Japanese companies started to address these areas.
In this section, we would like to showcase and provide an outline of the Company’s efforts and stanceregarding the human resources that serve as the source of improvement for our corporate value.

Working on sustainable growth
as a “leading-edge service company”

Reforming work styles to realize
the streamlining of operations and enable
employees to work more resourcefully

Realizing the “ofﬁce leading to the future” concept
Reforming awareness of work styles

Certiﬁed as a Health andProductivity Management
Organization for 2019
(White 500)
(Three years consecutively)

theradingUpg nvironment
ce E
Ofﬁ

Having abolished company
employee classiﬁcations,decided to adopt an
employee role-based system(Equal pay for equal work)

Co Imprp
or roviate

System before reforms (up to September 2017)

ng alueV

Health
Ma
na
ge
m
en
t

Previously, Credit Saison had been achieving growthby creating an environment in which each individual
could demonstrate his or her individuality and abilities,
regardless of gender, education, nationality or
background. For its sustainable growth, the Company
would need to unleash the full capacity of all its people
and required a venture spirit of always trying to grow.
Therefore, in September 2017, we abolished the previous
employee classifications, which included specialist
workers and mate employees (part-timers), with the goalof “creating an environment and corporate culture thatbolsters the potential of each and every employee.” With
the exception of part-time employees, all employees
are now designated as full-time employees who areindefinitely employed and treated according to theirfunctional roles of responsibility (with equal pay for equalwork). In addition to paying bonuses to all employees,
we have unified all systems, such as defined-contribution
pension plans and welfare programs, into a personnel
system common to all employees.
General work employees

Professional employees

Indeﬁnite-term employment

Indeﬁnite-term employment

Monthly salaryBonusDeﬁned contribution pension planmon HR Sy
Com Emp stem
loyeesfor All

e
m

nt

Ke
yC
hara
cteristics

l
Ba it
e
Lif Inrk- and
o
W em
t
Sys

Bonus

Temporary employees

Mate employees (part-time employees)

Fixed-term employment

Fixed-term employment

Monthly salary

Hourly wage

Currently (from September 16, 2017)
Full-time employees

Indeﬁnite-term employment
Monthly salaryaia nce
tiv
es

lop
eve
rD
Caree

Human Resource
Strategies

Monthly salaryBonusDeﬁned-contribution pension plan

Abolished employee classiﬁcations and moved all employees
to indeﬁnite-term contracts■ Realized equal pay for equal work based on role
■ Bonuses provided to all employees twice a year
■ Uniﬁed all programs, including deﬁned-contribution pension plans
and welfare beneﬁt programs■

Systems and initiatives to achievea work-life balance
Establishing a systemthat allows employees tomake learning a habit
and form their own careers
Career development sheet
One-on-one meetings
Open challenge
Choice-based training

45

Fostering a corporate culture
in which every person can continue
to take on challenge
CS Style
SWITCH SAISONCREDIT SAISON AWARD
CS Style Chips

Creating an environment in which
employees can autonomously
aim for greater productivity,
such as via a ﬂextime system
and working from home
Saison Work-Life Design Unit

For employees to continue working in a vigorous manner,
it is essential to create environments in which they canbalance their lives and work at the various stages in theirlives, such as when providing childcare and nursing
care. We have a broad range of systems in place so that
employees can realize the flexible work styles best fitted
to their individual situations.
• An hourly leave system that allows employees to takepaid leave on an hourly basis• A system for reduced working hours and days that enables
leave to be taken not only for childcare and nursing care
but also for self-development and other reasons• A flextime system that allows employees to work
efficiently without establishing a set number of working
hours per day, only a set number of working hours
per month. All employees are thereby better able toharmonize their work lives with their private lives• A system for working remotely that enables employees
to work regardless of their location• An outside employment system that supports thedevelopment and growth of employees’ own skills, aswell as the formation of parallel careers

When employees return to work after having taken
childcare leave, we conduct career interviews based on astocktaking of their career to date and their medium- tolong-term career plans. In addition to actively reassigning
such employees to positions based on the wishes andaptitudes of the individuals concerned, we support boththeir work and lives through seminars on the themes of“work-life balance” and “career design” geared toward
working mothers.
By offering a variety of systems that help
achieve a work-life balance and further promoting theunderstanding and instilling awareness of those systems
and mechanisms, we will focus on the fostering of anorganization in which every employee can choose thework style that best suits each stage of his or her life andachieve maximum results.

Support for self-reliance in career development
We support autonomous career development and mobility
so that employees can comprehend the roles they are
expected to fulfill and get accustomed to learning about
themselves through reflection. In addition to the Career
Development Sheet, by which employees independently
think about their future careers once a year, we are aiming
for further employee and organizational development.
This we are achieving by having introduced career design
programs by age group and, from 2019, as mechanisms to
support individual career development, human resource
development meetings, at which the development plansof every employee are systematically considered; oneon-one meetings to create an environment in which
supervisors and subordinates can communicate with eachother and take on challenges with peace of mind; andcareer development support that employees consider
independently by themselves.
In addition, once a year, there is the “dream
challenge” system that allows employees to directly reporttheir desire to transfer to a different department to theStrategic Human Resources Department. There is also the“open challenge" system that allows employees to apply for
positions, such as when a new business or new department
is being set up, without having to go through their46

SUSTAINABILITYPEOPLE

Human Resources

out and consolidating the administrative tasks and lightduties that are generated in business departments.
By striving to improve the work environment sothat everyone can play an active role, such as by tailoring
work and job roles to best suit those employees withdisabilities; creating a follow-up system; and establishingflexible work-style options, Credit Saison is creating new
employment opportunities and promoting their success.
We are also working to create an environment conduciveto the job stabilization of people with disabilities by,for example, holding seminars for workplaces andintroducing tools to support their employment.

superiors. Also, once a year, for employees ranked section
chief and above, we prepare a “job competition” whereby
they can state their desired position. All “job competition”
applications are read by the president and utilized as areference in organizational and personnel changes.
Credit Saison has also prepared choice-based training,a program that allows employees to choose the learningthey need for their own training and career development
in line with their own goals.

Promotion of Diversity & Inclusion
With the goal of becoming a company that is adept
at change, we believe it is important to have anorganization that is staffed with a variety of employees
who are pursuing a variety of careers, and to focus on
the activities of each employee and how employees
can best contribute. To that end, we are working tocreate an organization that can take on challenges andenables all its employees, regardless of their gender, age,educational history or personal background, to freely
express their opinions and to face challenges.
In addition, female employees are active in all
occupations and positions, but we are working to createa system, centered on the Strategic Human Resources
Department, to foster a corporate culture based on
mutual understanding in which employees from different
backgrounds can work in a comfortable atmosphereand to the best of their abilities regardless of genderdifferences. Today, regardless of those gender differencesand even while having in place a range of constraints,
Credit Saison has cultivated a corporate culture thatis understanding and supportive of the situations ofcolleagues who aim to balance work with childcare.
Regarding the hiring of people with disabilities, theCompany conducts recruitment activities year round.
In 2018, we opened Saison Farm Toda to grow herbs
and leafy vegetables using IBUKI, an indoor farm-type
employment support service for people with disabilities.
In 2020, we formed the Ubiquitous Office Team to takecharge of the business tasks of each department by cutting‘82 Initiated proactive hiring of womenfor both new graduates and midcareer‘89 Introduced work location courses(countrywide and regional types)

1980

1990

History of promoting the careers of womenSince the 1980s, long before the concepts of“empowering women” and “diversity” became
mainstream, Credit Saison has been actively hiring
women employees to realize their greater participation
in society. Active in a variety of roles, women have beenplaying their part in the Company’s growth.
To realize the participation of women in a broad rangeof roles and positions, we have continued to listen to theopinions of our employees and enhanced our personnel
systems to mitigate the number of female employees
who quit work or abandon their careers due to major life
events, such as marriage or childbirth.

Health management(up to April 15 of the year that the child reaches the
fourth grade of elementary school)‘07 Expanded the scope of counter-restricted
positions to all sales‘07 Introduced the spouse childbirth leave system

2000‘92 Introduced the childcare leave system‘93 Introduced the nursing care leave system‘97 Introduced the childcare and nursing care
reduced working hour system

2010‘17 Introduced a common personnel
system for all employees to befurther active

2017‘12 Extended the nursing care leave system andexpanded the reduced working hours system(expanded reduced working hours options)‘13 Expanded the reduced working hours system(resumption of reduced working hours after returning toregular working hours)'16 Tested the introduction of a remote work system

47

CS Style
For every employee to embody the uniqueness of Credit
Saison, the Company formulated five employee conduct
policies—embrace challenges, question conventional
wisdom, work until the job is finished, elevate teampower and elevate yourself—called “CS Style,” that arecommon to all employees. As action guidelines that leadto the realization of the Company’s “leading-edge service
company” management philosophy, every employee isworking to put CS Style into practice daily.

which produces ideas from across different age groups.
At the same time as providing support through a mentor
program to lead to commercialization and the budgetingof the business development costs, for those projects
that have been adopted we have also realized flexible
personnel changes for their creators.

Recognizing achievements: CREDIT SAISONAWARDS ceremony
Held since 2012, the CREDIT SAISON AWARDS serve as aforum that enables the entire Company to come together
as one and form a strong organization. By sharing thecorporate vision and by praising each other for day-to-day
results in a way that crosses between departments, these
AWARDS encourage a corporate culture in which both
employees and the Company contribute to each other. A
separate award ceremony had been held specifically forthe marketing department prior to 2012, but followingchanges in the surrounding environment this waschanged to the CREDIT SAISON AWARDS in 2012. Thischange served to create opportunities for changing
awareness and behavior with the support of the entire
Company, encouraging a corporate culture that is uniqueto Credit Saison and strengthening the organization.

CS Style Outline

As a company complying with its obligations regarding
mandatory safety considerations, Credit Saison provides
occupational health and safety education to supervisorsand managers as well as employees. At the same time, it is
the Company’s health management policy for employees
to take steps on their own to maintain and improve theirhealth. Working together with industrial physicians andpublic health nurses, the health promotion team within
the Strategic Human Resources Department plays acentral role in promoting activities for maintaining and‘07 Expanded the reduced working hour system

improving employees’ health so that employees canwork enthusiastically and maximize their performance.
Through health and safety promoters assigned to eachbranch office nationwide, Companywide activities andactivities in response to the issues at each office arecarried out. In addition to maintaining a regular healthcheckup participation rate of 100% for all employees,
we are promoting measures to improve the workplaceenvironment, such as by the conducting of stress checks.
The Company is recommending self-investment in healthusing cafeteria points and the taking of wellness leave
every five years. Having been evaluated by externalorganizations, these activities have been recognized underthe 2019 Certified Health & Productivity Management
Outstanding Organizations (White 500) Program jointly
selected by the Ministry of Economy, Trade and Industry(METI) and Nippon Kenko Kaigi.

Management Philosophy

Peer-to-peer bonus system (CS Style Chips)

Leading-edge service company
Value
Practical implementation of the principles of customer satisfaction
Mutual respect for our interests and those of our business partners
Developing a corporate culture of creative innovation
The action guidelines (work style) required of employees
to realize our management philosophy
CS Style

Embracechallenges

Questionconventional
wisdomWork until
the job isﬁnishedElevate teampower

Elevateyourself

Credit Saison is introducing a new version of its peerto-peer bonus system that allows employees to send
incentives to each other for the results and contributions of
those jobs that are not easily recognized on a day-to-day
basis. The giving of chips with words of gratitude and praiseamong employees for actions and initiatives aligned with
CS Style is leading to the stimulation of communication thatcrosses between locations and departments, improvementof motivation and promotion of CS Style practices.

Outline of CS Style Chips
SWITCH SAISON in-house venture program
For the dual purpose of fostering a culture at Credit
Saison in which employees can generate ideas andcreating new services that respond to changes in social
needs and markets, the Company holds its SWITCHSAISON in-house venture program twice a year toquickly make employees’ ideas part of the business.
All employees are eligible to take part in this program,

Great that you successfully used Zoom to hold an
online seminar for customers!
I was under the impression that “you canʼt succeed
without visiting the customer,” but I was able to makecontact with many people at once, so it was a win-win
situation without any effort on the customerʼs part!
Iʼd like to follow your example!
#Embrace challenges#Question conventional wisdom

48

SUSTAINABILITYPEOPLESUSTAINABILITY

Special Feature Examples of Instilling CS Style

Special Feature Example of a SWITCH SAISON idea
becoming part of the Company’s businessWe asked two employees how Credit Saison’s CS Style action guidelines* are demonstrated in their daily work: Kaoru
Ikuno, the manager in charge of business management in the Chubu/Kinki Management Dept., who initiated andproposed a new service for singles under the second phase of the SWITCH SAISON in-house venture program, andEri Fukumoto, shop master of the Kansai Branch Office at the Marine Pia Kobe Mitsui Outlet Park, who received a
CREDIT SAISON AWARD 2019 under the in-house award system and whose operations, such as sales performance andbusiness management, were comprehensively evaluated.

“School Visit: SAISON TEACHER”
Education for the Next Generation and Financial Education* To realize its management philosophy, the Company has summarized the action guidelines (work style) required of employees into five phrases: “embrace challenges, question conventional wisdom, work until the job is finished, elevate team power and elevate yourself.”

Embrace challenges

Elevate team power

Manager in charge ofbusiness management
Chubu/Kinki
Management Dept.

Q1

Is there anything you value in your daily
work tasks regarding CS Style and its values?

Ikuno: When I was hospitalized and feeling anxious
about the future, I did some research and found that there
are many people in society who are feeling that sameanxiety. As Credit Saison aims to be a “finance company
advancing with customers for 50 years,” I gave somethought to a new service for singles and proposed myidea through the in-house venture program.
Fukumoto: As the person responsible for the card counter,
I value “thinking and acting on our own initiative.” We
believe that we can take on the challenges of providing
better customer service by means of “operational
improvements” and “elevating team power” for the very
reason that we come face to face with customers daily.

Q2

What hurdles were there in solving the problems
besetting customers and overcoming thechallenges you faced in the course of your work?

Ikuno: Even if I thought it was a service that would be of
benefit to the customer, I did not know how to formulate
the idea, and thus there were several hurdles toovercome in the steps leading up to the proposal being
put into practice.
Fukumoto: For me to work in a team to solve problems,
the hurdle was not knowing what I should do to change
the mindset of members who were not confident inthemselves or who were afraid of failure and unable totake on challenges.

Q3

Please tell us how you overcame those
hurdles.

Ikuno: Even if I did not understand, the cooperation of
those around me and advice from other departments
stimulated me and became the driving force in thinking

Amid the expanding use of prepaid cards and electronicmoney and the rapid advance of the cashless society,there are concerns about the impact on our sense of
how to use money and our sense of morality, such as theincrease in children in financial straits. Due to the loweringof the age of adulthood in April 2022, there is an urgent
need for children to acquire financial literacy from anearlier stage.

Therefore, in anticipation of the lowering of the age ofadulthood, Credit Saison is offering its “School Visit:
SAISON TEACHER” financial education program for thechildren who will lead the next generation to acquire
financial knowledge. Credit Saison employees will be theinstructors of an original program through which children
can interact and learn through role-play work about
recent trends in cashless payments and the proper usageof credit services.

Eri Fukumoto

Kaoru Ikuno

49

PEOPLE

Shop master of the
Kansai Branch Officeat the Marine Pia Kobe
Mitsui Outlet Park

about how to give form to my idea. I think No. 1 is Credit
Saison’s “strength as a person.”
Fukumoto: We had thorough discussions about theissues among the team members. In that process, I thinkthat the members coming to mutually respect eachother and having their own responsibilities as well as
self-confidence led to me elevating myself and elevating
the team’s power. As a result, last year we were able
to start new initiatives, such as reducing the workload
and improving services to customers by utilizing OJT toquickly enable members to set to work immediately.

Q4

Please tell us how you think your own efforts
have led to you to contribute to the Company.

Ikuno: The number of proposals for SWITCH SAISON is
increasing each time. I would be delighted if, having seen
what I did, more people—even those who are unfamiliar
with making proposals—would propose their own ideas
to the Company. In addition, I think I have created an
opportunity for the Company to turn its attention to the“one person” issues that society is facing.
Fukumoto: The system has been strengthened byeveryone on the team having gained confidence. As ateam, we can make positive proposals and forward-looking
actions while focusing on pursuing customer satisfaction.

Q5

Please tell us about your view of the future.

Ikuno: I will continue to work to provide our customers
with “peace of mind” value.
Fukumoto: To “think and act on our own initiative” inany environment. We aim to be an ever-evolving teamthat looks forward to new challenges, gains a sense ofaccomplishment and fulfillment, and generates a positive
cycle that elevates team power!

Scenes from SAISON TEACHER lectures

Interview with an employee

Realized financial education activities as SWITCH SAISON’s first batch participant
Q1

Why did you think that you would try to make a proposal?

“School Visit: SAISON TEACHER” is a project that was proposed and realized by
the SWITCH SAISON in-house venture program. From my experience working
at Saison Counters, I felt the necessity of financial education for young people.
Having also thought that a new challenge could give shape to my thoughts andfeelings and lead to my own further development, I submitted a proposal.

Q2

Is there anything that you feel or are aware of concerning CS
Style in your daily life?

As Credit Saison has a culture that encourages rising up to challenges andthe support systems for doing so, I feel that an environment that facilitates
the taking on of challenges is in place. While being conscious of actively
incorporating new initiatives without being satisfied with the status quo daily, I
am able to take advantage of the spirit of undertaking challenges, of trying first
without fear of failure.

Q3

What challenges would you like to take on in the future?

As Japan is planning to lower the age of adulthood by a revision of its Civil
Code in April 2022, I want as many children as possible to acquire goodfinancial knowledge. We will continue to make efforts so that children’s futures
will be secure and prosperous by the acquisition of good financial knowledge.

Shiori Abe

CS Planning Department
Joined Credit Saison in 2012. After
Saison Counters work at the Kansai
and Tokai branch offices, became
involved in employee training at theTokyo Branch Office. Having held hercurrent position since 2019, Ms. Abe
promotes financial education activities.

50

SUSTAINABILITY

PARTNERSHIPSUSTAINABILITY

Partnerships

Regional Development

Facing the Challenges in Creating New Financial Services by Open Innovation

Contributing to regional economic development and problem solving in Japan andoverseas through financial services while creating a convenient and plentiful society

Credit Saison is changing its existing business model by means of open innovation that combines our strengths andcorporate assets with the technologies, ideas and services of other companies. At the same time, we are working todevelop new financial services and business collaborations with each company.

Open innovation
Having, for example, established the first corporate venture
capital company in the domestic credit card industry inJune 2015, Credit Saison is promoting an open innovation
strategy while utilizing the retail finance know-how andcustomer base that the Company has cultivated up to now.
Our open innovation strategy is being achieved throughinvestments in and the financing of venture companies thatpossess advanced and innovative technologies in a wide
range of fields, such as FinTech, IoT and AI.

Toward creating “the future of finance”
With the aim of creating “the future of finance,” Credit
Saison entered into a capital and business alliancewith Daiwa Securities Group Inc. in September 2019.
In February 2020, Credit Saison executed a capital
participation in Fintertech Co. Ltd., a subsidiary of Daiwa
Securities Group. Utilizing cutting-edge technologies, suchas investment crowdfunding and blockchain, Fintertech
is promoting the “creation of next-generation financial
services” for the digital native generation. In collaboration
with Daiwa Securities Group, Fintertech is working todevelop and provide next-generation comprehensive

financial services capable of meeting diversifying market
needs through the mutual utilization of customer networks
and the promotion of open innovation.

To contribute to solving social issues
through finance
In February 2020, Credit Saison provided business funds
to Gojo & Company, Inc., a domestic start-up company
engaged in the microfinance business in emerging
countries. Through its seven group companies basedin four countries—Cambodia, Myanmar, Sri Lanka andIndia—Gojo is developing microfinance (microcredits) forthe poor in emerging countries and contributing to therealization of financial inclusion, which is one of the top
global issues. Positioning its global business as a pillar of
its future earnings base, Credit Saison feels a high affinity
with the mission that Gojo has adopted and is deepening
its cooperation with a view to future collaboration.
With Saison Capital, which invests and lends
overseas mainly in the early stages, Credit Saison has
started an investment business targeting promising
start-ups in the world, not only in Asia but also in Africa
and South America. We are working to collaborate withbusinesses in countries where we have already entered
the market and on the early implementation of innovative
business models.

While working on regional economic development and problem solving in ways only Credit Saison can, we willcontinue to take on the challenges of realizing a society that is even more convenient and prosperous than it is today.

Toward the realization of a safe, secure andconvenient cashless societyWith the goal of realizing a cashless society, we are
addressing the building of a variety of payment platforms
that contribute to enhanced convenience for ourcustomers. In addition to issuing plastic cards, including
credit cards and prepaid cards, our efforts have been
focused on next-generation payment systems, including
smartphone-based payment systems and QR code
systems in cooperation with affiliated apps.
In our management of personal information,
we remain in compliance, including with laws andregulations, guidelines and industry rules, and have inplace internal corporate rules. Through internal training
and compliance-related education, we are working toraise and instill awareness of information management,
including the use of the “personal information manager”
qualification established by the Japan Consumer Credit
Association, a qualification that is essentially compulsory
for employees who handle personal information at Credit
Saison. In handling personal information, we are focusing
on providing safe and secure payment environments
while strengthening security. For example, in addition toprotecting our customers’ personal information by having
adopted TLS/SSL (transport layer security/secure socket

Limited partnership (LP)investments in venture funds
Corporate venture
capital (CVC)
subsidiaries

Alliance with
Credit Saison,
introduction of
investment/tie-up candidate
companies

In Japan

Overseas

Investment indomestic
and overseas
seed companies

layer) cryptographic communications technology in theparts of the Web system that store important customer
information, such as card applications and Net Answers,
we are utilizing the latest technologies in our efforts toimprove the accuracy of our fraud detection systems. We
are also striving to prevent the occurrence of “multiple
debtors” due to overuse on the part of customers throughthe careful granting of credit and appropriate follow-up
after credit has been given.

Providing financial services in Asia
In the rapidly growing Asian region, Credit Saison isdeveloping retail financial businesses tailored to eachcountry and aiming to realize financial inclusion for theiremerging middle classes. To contribute to the expansionof the finance business and the development of theregional economy, we are promoting the foundation of
medium- to long-term overseas strategies and businessdevelopment along two axes: business alliances withstrategic partners in each country and investment in andthe financing of promising companies.
• In Vietnam, in addition to launching a new credit cardbusiness, by developing the individual installment
business for motorcycles and home appliances• In Indonesia, by developing the digital lending business

In Japan (Examples)

51

PROSPERITY

Credit cards• In Thailand, by providing BtoB financial services

Appropriate
management of
personal
information• In India, by developing the digital lending businessPrepaid cards

Strengtheningof security
measures

Mobilepayments

Improving
the accuracy of
fraud detection
systems

Underserved segment that is unable to receive
sufﬁcient ﬁnancial services from banks, etc.

Providing ﬁnancial products andﬁnancial solutions in collaboration with local companies

Overseas (Examples)
QR codepayments

Dealing withmultiple debts

Achieving ﬁnancial inclusion and contributing to
the economic development of the countries
in which Credit Saison operates

52

SUSTAINABILITY

PLANET & PEACESUSTAINABILITY

Contributing to Society through the Management of
the Akagi Nature Park

Contributing to the Environment and Society
through Business Activities

Preserving a Lush Forest for the Children of the Future

Utilizing the Company’s Management Resources to Fulfill Corporate Social Responsibility

Credit Saison began managing the Akagi Nature Park in 2010, since which time the Park has received more than
500,000 visitors. Based on the idea of “Preserving a Lush Forest for the Children of the Future,” which also serves as
the management philosophy of the Akagi Nature Park, we are engaged in solving the challenges faced by society inworking to achieve the SDGs.

Credit Saison is working to reduce our environmental footprint through the “digitalization of business activities.”
We also continue to engage in social contribution through “point donation activities” and “support for sportingand cultural activities.”

The Akagi Nature Park serves to strengthen our partnership with Gunma Prefecture and Shibukawa City, and contributes toregional revitalization. For example, the Park was adopted for a series of five posters as part of this year’s Gunma Destination
Campaign. In cooperation with Shibukawa City, during April 2020 we began operating buses on weekdays when the Parkis open in addition to those previously operated only on Saturdays, Sundays and holidays. Using the facilities of the Akagi
Nature Park, we will continue to engage in various activities, including initiatives that help support future generations, suchas environmental conservation, educational and training programs, as well as activities that contribute to the region.

TOPICS

Business Partner Cases

Conclusion of a cooperation agreement with Shibukawa City (April 2019)

Under this agreement, Credit Saison engages in various initiatives that include organizing environmental study
programs for children and parents, using the Akagi Nature Park as a forest therapy site for the purpose ofpromoting health and revitalizing the regional economy by attracting tourists.
The Mayor of Shibukawa City provided the following statement about the Akagi Nature Park initiative.
Since concluding the cooperation agreement between
Shibukawa City and the Akagi Nature Park on April 5, 2019,
Shibukawa City and Credit Saison have deepened theircooperation for the purpose of developing the regional
community. Among these efforts, Credit Saison has
provided significant support for the City’s health promotion
projects and has created opportunities for many of our
citizens to visit the Akagi Nature Park, for example, byorganizing nature observation tours and environmental
study groups. Although the COVID-19 pandemic that we
now face has clouded the future, our citizens can rely on
the Akagi Nature Park as a place to experience nature
throughout the four seasons of spring, summer, fall andwinter while avoiding crowds. I also feel that the Park will
increasingly serve as a place of healing in this time of a newnormal. We will continue to communicate the appeal of the
Akagi Nature Park to our citizens, and I would be pleased
to further deepen our mutual cooperation while effectively
utilizing the resources held by both the Park and the City.
To realize our shared hopes of health, I hope to see the
Akagi Nature Park continue creating new value.

Examples of initiatives with Shibukawa City
Health promotion

Use of the Akagi Nature Park as a venue for walking competitions
and other events intended to promote health among citizens.
The Mizorogi Neighborhood Association “Health Walk” event heldon Sunday, October 11, 2020, attracted 107 participants.

Environmental study groups for parents and children

As part of its efforts to transform into “a city that protects, nurturesand passes on abundant natural environments and diverse climatesto the future,” Shibukawa City held a hands-on Asagimadara(chestnut tiger butterfly) marking event as a means of helping
children gain interest in environmental issues through relatable formsof nature. A total of 10 groups of parents and children (29 people)
from Shibukawa City participated.

November 20, 2020, Tsutomu Takagi, Shibukawa City Mayor

Tourism revitalization

Tsutomu Takagi,
Shibukawa City Mayor

53

PLANET & PEACE

The partnership established “Shibukawa City Micro-tourism” as ameans of revitalizing the tourism industry through the rediscovery
and refinement of the City’s tourism resources.
The City scheduled 35 bus tours as part of 15 courses from October
2020 to March 2021. Of these, 14 tours over 11 courses will visit the
Akagi Nature Park.

Digitalizing business activities
Credit Saison is working to reduce paper consumption
and CO2 emissions by promoting the use of online card
statements and applications.
Reducing paper consumption will connect to lower
CO2 emissions, while digitalization is expected to reduce
CO2 emissions by 500 g per card statement envelope.
Through the expansion of digitalization, we will continue
to both improve customer convenience while promoting
initiatives to manage environmental issues.
During the first half of FY2020, we introduced
digital counters at some shops and promoted thetransition to paperless procedures and labor-saving
operations at Saison Counters. Although we previously
offered in-person “immediate/instant card issuance anduse” services at Saison Counters, we built a remote card
application system for which there is a strong need amid
the COVID-19 pandemic. This was accomplished byintroducing the “Saison Cardless Payment” smartphone
payment service, as well as by transitioning to self-service
card sign-up using QR codes.

Contributing to society through point use
We contribute to local communities through research
donations and the promotion of disaster recovery
assistance through points exchanges and donations
by card. We are also developing investment simulation
services, such as the points management service, as wellas support in life design and financial education, including
by providing investment opportunities.
Since 2016, for example, we have endorsed thegoal of Kanagawa Prefecture to “realize a society in whichpeople and animals can live together in peace.” We havealso helped prevent animal cruelty in Kanagawa Prefecture
in part through donations of more than ¥17 million to
the Kanagawa Prefectural Animal Conservation Center
Construction Fund. In January 2020, we entered a new
Cooperative and Collaboration Agreement with Kanagawa
Prefecture that includes initiatives to protect the lives ofpets, support for future para-athletes, regional revitalization
activities in Kanagawa Prefecture and solutions for society’s
challenges. In addition, we will continue to engage in thisinitiative as a means of cooperating in activities with highsocial value and those that support recovery efforts fromnatural disasters, including reconstruction of Shuri Castle
and COVID-19 countermeasure activity support.

Support for sporting and cultural activities
With the desire to continue to grow alongside Japan’snational soccer team, we have been a supporting company
to the team since 2001 and through a sponsorshipagreement with the Asian Football Confederation (AFC)have supported the soccer community in Asia since2014. We are also committed to supporting the dreamsof children by providing valuable opportunities that falloutside the realm of normal daily activities for those whowill lead the next generation, including as part of our “High
Touch Kids” program, which is held under our philosophyof having children visit sports stadiums to see Japan’s
representatives strive toward victory in person.
Credit Saison has also been a sponsor of
performances in Japan by José Carreras of Spain, one of
the members of the world-renowned The Three Tenors,
since 1999, and welcomed the 20th anniversary of ourrecital sponsorship in 2019. We support José Carreras’
activities in a variety of ways, including through the
donation of funds obtained from commemorative goods
prepared for his annual recitals to the International José
Carreras Leukaemia Foundation, which was founded after
his successful battle with leukemia.
Through these efforts and donations in support ofsporting and cultural activities, we will continue to engage
in corporate social responsibility initiatives geared towarddisaster recovery and research.

54

SUSTAINABILITY

Responses to Risks/Opportunities
The Credit Saison Group’s businesses carry with them several risks, including risks related to the external environment
as well as financial and business aspects. In this context, in addition to continuing to strengthen our response to therisks common to the industry that we have been dealing with so far, there remains the necessity to evaluate any risks
that have emerged due to changes in the external environment from a medium- to long-term perspective and to takecountermeasures. Some of the risks that could significantly influence investor decisions are listed below. The forwardlooking statements contained herein are based on the Credit Saison Group’s judgment as of the date of submission of its
Securities Report (June 18, 2020).

Risks and opportunities that need to be addressed over the medium to long term
Risk

Details
Risks

Intensifying competition due to new entrants into thepayment industry from other industries brought about by
deregulation and technological advances

Opportunities

Development of new business fields and new products/
services through collaborations with other industries

Risks

Deterioration of business performance of businessalliances that form important strategies and business
partners with whom we have a capital relationship,changes of business alliance conditions andcancellation of alliances with partners

Competitive
Environment

Risks common to the industry
Risk

Economic Conditions

Details

Decrease in transaction volumes of credit
cards, loans, credit guarantees and real estate
mortgage loans provided by the Group, anddecline in the loan collection rate due todeterioration of the domestic and overseas
economic environment (employment
environment, household disposable income,personal consumption, etc., due to recession)

Responses
Relationships
with Major
Partners

Calculation by risk capital management (RCM) of
the risk capital required by business to maintainratings and maximization of returns within thescope of the risk capital surplus

Opportunities

Business development utilizing the acquisition ofmemberships through alliances with partner companies
and organizations, expansion and diversification ofservices, product sales channels and customer bases ofboth parties

Risks

Market trends in the countries in which the Company
develops its business, the presence of competitors,
politics, economy, law, culture, religion, customs, foreignexchange rates and various other country risks

Opportunities

Development of existing and new services in countries/
regions where there are many people who do notpossess a bank account and are unable to receive
financial services

Risks

Collateral damage to owned assets and physical injury
to employees due to the occurrence of large-scale
natural disasters such as earthquakes

Overseas
Business
Development

Fund Procurement

Market Risk

Among fund procurement methods, such as
borrowing from financial institutions and theissuing of corporate bonds and commercial
paper (CP), liquidity risk due to the considerable
amount of funding with a procurement period ofless than one year

• Risk of falling prices of investment assets, suchas stocks of listed and unlisted companies,
venture investment funds, bonds, real estate
and real estate funds• Rise in funding interest rates when interest rates
rise

Impairment of Financial
Instruments(Allowance for Doubtful
Accounts)

Various Regulatory and Legal
System Changes

55

Risk of non-repayment of receivables by large
numbers of customers due to changes in thedomestic and overseas economic environment(employment environment, household disposable
income, personal consumption, etc., due torecession)• Risk of increase in the amount of
reimbursement claims from customers withregard to the portion of interest that was higher
than the interest rate ceiling set by the Interest
Rate Restriction Act, interest that within theGroup in Japan was repaid before the revisionof the Act• Risk of having to cease certain services due toregulatory changes, etc.

In fund procurement, maintaining a certain
percentage of long-term and fixed financing;the setting of liquidity enhancement limits, suchas commitment lines; reduction of liquidity riskby promoting diversification by executing direct
procurement, such as corporate bonds andliquidation of receivables

Occurrencesof Large-Scale
Disasters andPandemics

Appropriate management of market risk byintroduction and utilization of RCM and asset andliability management (ALM)

Opportunities

Initiated business structure transformation based onchanges in customer psychology and behavior causedby the COVID-19 pandemic

Risks• System malfunction due to malfunction of in-housedeveloped core systems, communication line failure,etc.
• Decreased trust due to leakage or unauthorized useof, for example, personal information (membership
information) and confidential information due tocyberattack, etc.

SystemRisk andCyberattack
Risk

Ongoing soundness of claims and appropriate
allowance for doubtful accounts by strengthening
credit management systems, such as establishment
and operation of credit management systems
relating to credit limits, credit information
management and internal ratings, as well as
monitoring of credit status• The amount of allowance required at thepresent time is recorded in consideration of thereimbursement record and trends in interest
reimbursement claims• While complying with laws and regulations,prompt responses to service developments inaccordance with new regulations

Opportunities

ActualizationofAdministrative
Risks

Development
and Securingof HumanResources• External sales of core systems in which the Company has
been accumulating know-how for many years• In collaboration with external partners, external sales of
secure payment systems in which use is made of fraud
prevention technology

Risks

Risk of negligence and inappropriate handling ofadministrative tasks due to a large amount of manual
paperwork

Opportunities

Expanding demand for administrative process agencies
at affiliated cards and partners

Risks

Risk of being unable to secure diverse, talented humanresources to provide high-level services to customers anddevelop advanced products and services

Opportunities

New service/product development by securing talent
with expertise in digital technology

Responses• Expansion of customer base by expanding various
payment methods, not only credit card payments but also
contactless and QR/bar code payments• Setting Credit Saison apart from its competitors as a“general non-bank” that provides services that give close
consideration to customers’ life cycles
Page 51 Partnerships• Strengthening of relationships with existing partners• Building of a business model that does not depend
on a specific partner by promoting new alliances withpartners in various companies and industries

Dispersion of country risk by expanding into
multiple countries/regions, risk mitigation throughregular risk analyses and monitoring of countries
in which the Company maintains a presence
Page 29 Global Business• Formulation of a BCP plan and regular confirmation of
its effectiveness, implementation of BCP education andtraining• Improvement of the credit card usage environment bydecentralization of authorization systems to the Kanto
and Kansai regions• Thorough measures to prevent COVID-19 infections,
expansion of payment methods to reduce infection
risk, such as contactless payment and QR/bar code
payments• Development of contingency plans, such as ensuring
the backup of important systems• Development of measures to counter cyberattacks,
such as the strengthening of firewalls, raising employee
information security awareness and minimizing damage
after infection by a computer virus• Appropriate protection measures and systemdevelopment of personal information, as stipulated
under the Personal Information Protection Law,acquisition of Privacy Mark
Page 19 Payment Business

Page 37 Special Feature Value Co-Creation throughBusiness/Payment Business• Creation of an administrative work manual, regularinspection of administrative work status, prevention of
employee errors and fraud, development and operationof a whistleblowing system for early detection of any
illegal activity• Promote automation of administrative work by thesystematization and introduction of robotic process
automation (RPA)
Page 19 Payment Business
Provision of equal opportunities by developing work
systems and common employment patterns that meet
employees’ needs, the securing of excellent humanresources by adopting personnel systems that can utilize
the abilities and characteristics of employees, such as theexecutive officer and specialist/expert systems
Page 43 Human Resource Strategies

56

CORPORATE GOVERNANCE

Special Feature Incorporation of External Opinions andKnowledge to Improve Governancethat you will not be able to sleep the day before a Boardof Directors’ meeting. I believe that a board of directors,
which is a supervisory body, must make people feel
nervous or something bordering on that. In other words,
in terms of the prevention and discovery perspectives,
it is not as a means of discovery that we come up for a
Board of Directors’ meeting. I think it is easier to ensure
management that is in accordance with compliancewhen there is a board of directors that has had adeterrent effect and when there is a meeting body thatis properly activated and functioning to address issues
responsibly. To stimulate discussion, I think it is important
for a board of directors to know in a timely manner thatproper information has been provided and what kind of
massaging methods have been used in the meantime.

Hitoshi Yokokura

Outside Director (Independent)
Partner, Waseda Legal Commons, LPC
Auditor, Minori Audit Corporation

Outside Director
Roundtable Discussion
Q

First, please tell us about the current statusof Credit Saison’s governance and yourevaluation of its Board of Directors.

Togashi: From my experience, having been involvedin corporate management as an outside director atcompanies other than Credit Saison, what I think isimportant for governance is how the subjects to bedeliberated at Board of Directors’ meetings and theinformation necessary for discussion are disseminatedto us in a transparent and timely manner. Including its
global reach, the Company has many affiliated companies
and subsidiaries, and one of the major themes on
this point is how to utilize Group governance acrossdomestic and overseas Group companies. Whether the
information concerning, for example, unlisted affiliatedcompanies and subsidiaries—information that cannot beseen by outside eyes—is steadily provided to enable us
to correctly ascertain the actual management situation.
Regarding operational departments, whether the control
is really being exercised so that scandals such as fraud
do not occur. When looking at cases that have occurredat other companies, there has been intentional fraudcommitted and hidden at head offices, so this is an
important point regardless of the type of business. In

57

Nana Otsuki

Outside Director (Independent)
Executive Officer, Monex, Inc.
Professor, Nagoya University of Commerce and Business Graduate School
Visiting Professor, Faculty of International Politics and Economics,
Nishogakusha University
Audit and Supervisory Board Member, Tokio Marine Holdings, Inc.

general, when expanding overseas, the functions such as
risk management, compliance and audit that underpin
overseas business conditions and business performancetend to be more vulnerable than those at a head office.
Given cases that have been intentionally hidden, if things
are left as they are, one day a case of fraud about which
management itself knew nothing could suddenly come tolight from an entirely unexpected quarter.
Regarding my evaluation of the Company’s Boardof Directors, I have the impression that the materials for
Board of Directors’ meetings are well prepared. On theother hand, an area that could be improved is to shareboth the pros and cons from the discussions of a matterthat occur prior to a Board of Directors’ meeting. Outside
directors are not involved in individual business lines, andthere are areas in which we do not specialize, so adding
such information would make it easier for us to makebetter informed judgments.
Otsuki: I agree with that. The Company has introduced an
executive officer system and clarified the division of roles
between execution and supervision even in organizationalterms. In this regard, we are moving in a direction thatmakes governance more effective. There is an expectationof that, but if information is shared with us in a way thatmakes it easier for the executive side to communicate theprocess of discussion, it will be easier for us to fulfill ourrole as a Board of Directors. I feel another issue is diversity.
I dare to point out that I view one of my own roles is as awoman. However, for the very reason that we have createdNaoki Togashi

Outside Director (Independent)
Representative Director, Japan Representative Partner,
Oliver Wyman Group
Director, NAGAHORI CORPORATION
Trustee, Japan Association of Corporate Executives

a system that focuses not only on gender but also on
nationality and age, as well as on the diversity of individual
knowledge and culture because we are developing avariety of businesses, would it not be better to further
expand diversity? There are people with diverse cultures,and combining different things with each other is thesource of innovation, so I would expect more on that pointin the years ahead.
Yokokura: I have participated from this year, and I am
impressed that the materials for the Board of Directors’
meetings are easy to understand; moreover, theadvantages of making decisions and the advantages anddisadvantages of not making decisions are clearly statedas risks. In an era when the world is changing at sucha tremendous pace, when doing nothing could have asignificant impact on corporate management itself, it
is good that the agenda items submitted are deemed
likely to bring about change. On the other hand, as
you both have said, if you could explain the process of
discussion on the executive side up until the time theagenda is submitted, including the content of reports, ina situation in which the supervisory and executive sides
are separated, I think it would facilitate the benefits ofsupervision.
I also had experience serving on a third-party
committee when problems, such as those related to workand fraud, occurred. At those times, when I looked at thestatements from the people concerned, I was concernedand nervous about that. It is written in a lot of materials

Q

Among the Credit Saison Board of
Directors’ meetings that you have attended,have there been any discussions that left alasting impression?

Togashi: In the past, we have requested that somematters be resubmitted with additional materials,
although they did not have a large monetary impact,because we felt they were important from the perspectiveof the Group’s management. Even though the matterswere sent back for further review, I felt that discussion was
facilitated because the action of sending them back had
been accepted in a flexible manner.
Otsuki: Certainly, I think the Company’s Board of
Directors has lively debate and an ear for dissenting
opinions. What has left a lasting impression on me isthat discussions on management policies, such as the
Medium-term Management Plan, were substantive.
In group management, I think it is important to havecomprehensive discussions in an itemized form, including
the Group companies. Even though we have many Group
companies, I think that the overall targets from the top
down were noted for each business division and Group
company in a consistent form, and we had fulfilling
discussions in an organized manner.
Yokokura: Based on my thus far limited attendance,
I noted at my first meeting that an agenda item wasdecided by a majority after discussion at the Board of
Directors’ meeting and that made a strong impression on
me. It showed me that the Board of Directors’ function
had not been reduced to a mere formality. As this is myfirst year as an outside director, I have been given theopportunity for a briefing from the person in charge
before a Board of Directors’ meeting. Intuitively, as I feellike I am facing a bout of indigestion, I think that if theCompany could provide the materials earlier, I would be
able to better participate in the discussions.

58

CORPORATE GOVERNANCE

Special Feature

Q

Incorporation of External Opinions andKnowledge to Improve GovernanceIn your capacity as outside directors, how do
you anticipate contributing to management?

Togashi: The mission of directors, especially outside
directors, is the supervision of management. ManyJapanese managers expect outside directors to giveoutside opinions, but I think the background factor forthat being seen as a good thing is for the very reason
that their position is one of not being directly involved in
the business itself. Even if you do not have experience inthe same business, there are always situations where thewisdom and experience you have acquired in your career
will be useful or helpful. However, amid the growing
necessity for specialist discussions on business, there is alimit to how much outside directors can comment backed
by a deep understanding of the business. That is why I
think that the mission of outside directors is limited to thesupervision of management.
There are many foreign-affiliated companies thathave in place a market intelligence organization in a
department closely aligned to management. For example,
in Japan the problem of central bank digital currencies
is rapidly becoming an issue. There are units that analyze
and consider the impact on a business of factors notdirectly related to its frontline interests, including withregard to suppressing market trends and the influencethat trends can have on their own companies, over whatkind of timeline and impact such trends can have on acompany and, were such impact to happen, what would
become of card and deposit accounts. Governanceand business strategy are two sides of the same coin,and outside directors provide objective third-party
opinions on governance. In many cases, however, thirdparty analysis and views related to business strategy areprovided by in-house market intelligence units or external
consultants. Therefore, instead of directly asking outside
directors for third-party opinions on business strategy,
they will raise the topic of business strategy at a Boardof Directors’ meeting after having expressed third-party
opinions within the Company through the in-housemarket intelligence unit. Then, if management decides
to pursue risks, it will be easier for outside directors todetermine that “This matter involves risks, understood.”I think that taking such a posture is also effective for
conducting deliberations at Board of Directors’ meetingsin an effective manner.

59

Otsuki: The mission of the outside director is to check
whether the executive side is performing its duties
in a proper manner. The perspectives necessary for
conducting checks are largely based on the knowledge
and experience of the individual and, as a result, some
input might be given as advice to the executive sidealthough the assigned task is to supervise the execution.
As I have been watching the markets for a longtime, I believe that increasing corporate value shouldbe the goal of management and employees alike. It is
my intention to work to verify the kind of direction thatis good for that.
Yokokura: That is a question that I am always asking
myself. One solution is if you speak of execution andsupervision seen from the perspective of the accelerator
and brake pedals. In that case, I think that the role ofstepping on the final emergency brake is the part that is
absolutely expected of outside directors. It is importantthat discussions at Board of Directors’ meetings become
more open with the addition of outside directors, but
perhaps the ultimate goal is management that does not
require stepping on the emergency brake; in other words,
it might be management of the kind that renders outside
directors inconspicuous. Another factor is that I am parttime, so I am unable to gain a thorough knowledge ofthe finer points of a company, but what I do have is athird-party position that is not mired in internal bias. Asan outside director with a professional background, I
think that such perspectives are expected, such as theway of thinking as a lawyer if you are a lawyer and theperspective as an accountant if you are an accountant.
There is a lot of debate about governance, but nomatter how good the system is or how many outside
directors are added, scandals can occur. Rather thancreating a mechanism, the point is how we optimize useof our limited time and fully demonstrate our knowledge
to make what we create function and operate properly.
For that reason, when the background for an agenda item
becomes clear, it is easy to ask questions and there is an
open discussion. As a result, I think we will enter a virtuous
cycle that will lead to the deterrence of fraud.

Q

What are your thoughts about the key
points needed for governance to function
successfully, such as in deterring fraud?

Otsuki: It is said that there is a “fraud triangle”-motivation,
incentive and rationalization-that acts as a contributory
factor in cases of fraud. I think it is important to manage
in such a way that there cannot be any loopholes here. It
is also important to eliminate any framework, including
psychological or organizational, that would increase
the likelihood of opportunities for fraud, and here
the underlying culture is important. In general, I havethe impression that fraud is most likely to occur whensomeone feels detached or disillusioned, so I feel that
dialogue conducted by management team members
themselves is also effective. Holding awards ceremonies
on a nationwide scale every year, the Company conveys
a strong message, and I feel that is effective not only interms of employees fulfilling their potential but also in
minimizing risks such as fraud. Every year, I am impressedby the teams that have worked hard as one to achieve
their goals tearfully receiving their awards while being
spoken to directly by management.
Togashi: Following the bursting of the bubble
economy in Japan, bank fraud was a subject of much
speculation, and one of the reasons was the reductionof bank employees’ salaries. As the reward for work
is remuneration, in this transitional period when themodern employment system is undergoing change, we
can offer remuneration that is a little higher than thatof the competition on the premise of people having
worked hard. It is also possible to clarify that if someone
commits an illegal act, he or she is certain to be punishedand will not be guaranteed lifetime employment. I thinksuch measures would be effective. I personally think thatthe salaries of Japanese companies are too low, andoften the trigger for an employee to commit financial
fraud is a decrease in remuneration or a difference fromthe remuneration expected when assuming lifetime
employment. I think it can be either of these.

Q

We are experiencing major environmental
changes due to the COVID-19 pandemic,
but for your final words, please provide
your hopes for and expectations of Credit
Saison in the years to come.

Yokokura: In what has long been said to be an era ofuncertainty, what has impressed me strongly about the
COVID-19 pandemic are two factors: that the pandemic
broke out not locally but all over the world at thesame time and that society changes completely when
faced with a forced opportunity. To conduct corporate
management without even being able to projectnext year’s trends, I think it is important to make quick
decisions and constantly make course corrections thatbest suit the business environment.

In the same way that dinosaurs became extinct
and mammals survived, I think that it is not the strong
but rather those who are able to respond to change thatwill survive. Therefore, I would want Credit Saison toremain the kind of company that, while maintaining its
core, responds properly to change and itself continues
to change in a nimble and flexible manner. I would also
hope to be of assistance in making that happen.
Otsuki: Sir Isaac Newton is said to have created majorlaws, such as the Law of Universal Gravitation, during aperiod of “remote work” when Cambridge University
was closed due to an outbreak of bubonic plague. Whenhe saw an apple fall in an orchard in his home village, it
seems that he had a flexible idea that he would not have
had at the university. A pandemic itself is unfortunate,
but the COVID-19 outbreak might make it easier to bringabout innovation because people have more time andspend more time away from the office. Taking advantageof the current situation, by which you can see things, notjust your everyday tasks, from a variety of angles, I expect
and certainly want to see how Credit Saison will flexibly
turn its eye toward new and unexpected directions.
Togashi: Including Google, Amazon, Facebook andApple (GAFA), what all companies that have survived
to become game changers have in common is thatthey continue to focus on and specialize in their corebusinesses. Credit Saison now has a network built
around settlement as its core, and in that sense is a little
overstretched, but I think that the core business on which
the Company should be relying remains settlement. I
would like us to retain a philosophy that will be masteredwithout letting go of that core business. When you think
through what a business that earns money by meansof settlements actually is, it is the deferral of payments.
The innovation brought about by credit cards in the
United States in the early 1950s was the introduction of
paper-based letters of credit, which until then had been
conducted between legal entities, into the personal
finance world. Even if the nature of the card changes tosmartphones or plastic-less payments, the core of thecredit card business remains the deferral of payments.
How to make this settlement deferral function profitable
is finance. While thinking through what the “Neo” of “NeoFinance Company” means and valuing a philosophy thatis not the same or similar to that of other companies, I
would like you to thoroughly study and master finance.

60

CORPORATE GOVERNANCE

Corporate GovernanceMatters concerning composition of governing bodies
and organization management

Our basic view on corporate governanceTo realize our basic management policy of obtaining
the understanding and consent of our shareholders bycontinuously improving corporate value over time andcreating innovative services, the Credit Saison Groupis implementing a variety of initiatives to improve andstrengthen our corporate governance in recognition of
the enormous importance of bolstering management
supervisory functions to attain business objectives andenhance management transparency.

Company with Audit& Supervisory Board
Members

Governance System
Number of directors stipulated by the Articles

25

Term of office for directors stipulated by the Articles

1 yearChairman of the Board of Directors

President

Number of directors (of which are outside Directors)

9 (3)Outside directors on the Board

For details, please see our Corporate Governance Reporthttps://corporate.saisoncard.co.jp/en/esg/governance/pdf/
corporate_governance_report_202011.pdf

Appointed

Of outside directors, the number who are “independent directors”

3

Number of Audit & Supervisory Board members stipulated by
the Articles

5

Number of Audit & Supervisory Board members (of which areoutside Audit & Supervisory Board members)

4 (3)Number of outside Audit & Supervisory Board members whoare “independent directors”

3

General Meeting of Shareholders
Election

Monitoring/
Inspection

Board of Directors
Election/Delegation/Supervision

Cooperation

Guidance

Representative
Directors

Audit

Internal Audit Ofﬁce

Appointment/Consultation

Important Committees(Risk Management Committee,
Compliance Committee, etc.)

Report/Advice

Nomination &Remuneration Committee

Delegation of Management Authority

Departments
Monitoring

Corporate Planning Dept.,
Corporate Risk Management Dept., etc.

Guarantee of effectivenessElection

Audit &
Supervisory Board

Timely disclosure and provision of materials

Election

Changes in the Governance Structure

2006 Enforcement of the Companies Act
2014 Formulation of the Stewardship Code2015 Application of the Corporate Governance Code

2006

2015

2016

Separation of management
and execution

2017

2018

2019

2020

2021

Assurance of transparency for appointment/
dismissal of directors and for ofﬁcer remuneration, etc.

Outside Directors
Outside Audit &Supervisory Board
Effectiveness evaluations
for the Board of Directors

Improvement and disclosure of
Board of Directors functions

Management/executive system
Credit Saison (the Company) has adopted the Audit &Supervisory Board (ASB) model, with ASB members,
for its corporate governance system. To ensure we
retain the confidence of our shareholders and otherinvestors, we strive to improve and strengthen corporate
governance by nominating outside directors andoutside ASB members. The Board of Directors andNomination & Remuneration Committee receive advice
and recommendations from outside directors to ensure
the appropriateness of business decision-making. This
enables directors, who are well versed in businessmatters, to maintain and improve management efficiency.

61

Composition of the Directors
Outside33.3%

Internal

66.7%
Independence(ratio of
Outside Directors)

Female

Male

11.1%

88.9%
Diversity(ratio of women)

Implementation
Summary

With the goal of improving the effectiveness of the Board of Directors, the Company implements a self-evaluation-based annual assessment
and analysis for all directors and corporate auditors (including retirees before the expiration of their term of office) elected in the previous
year. A questionnaire is given to each director and auditor covering the following items, with the Board of Directors conducting discussions
based on feedback from the results

Assessment Items(1) Composition of the Board of Directors (2) Management of the Board of Directors (3) Roles and Responsibilities of the Board of Directors

Summary ofAssessment
Results• We have confirmed that the Board of Directors is operating at a generally proper level and that the effectiveness of the Board of Directors
as a whole has been secured.
• Based on the evaluation of the Board of Directors conducted in FY2018, the Nomination & Remuneration Committee was established inJune 2019 to ensure the objectivity and transparency of the functions of the Board of Directors regarding the nomination of Directors, etc.,
and the determination of remuneration, etc. In FY2019, the Nomination & Remuneration Committee met four times to establish criteria
for the appointment process for Directors and remuneration received by Directors. Based on these criteria, the Board of Directors will
decide on appointment of Directors and remuneration to be received by Directors after deliberation by the Nomination & Remuneration
Committee, which will ensure the objectivity and transparency of the Board of Directors.
• As a result of examining the composition of the Board of Directors to facilitate more in-depth discussions with an appropriate numberof members, the Company introduced an executive officer system in March 2020 to separate business execution and management
oversight, further strengthen our corporate governance system and build a system that responds more quickly to changes in the business
management environment.
• In recognition of the need to further invigorate discussions related to improving corporate value at the Board of Directors meetings, theCompany will strive to improve management to further increase effectiveness.

Status of compliance with the Corporate
Governance CodeIntroduction of an executive ofﬁcer system(reduced number of directors from June 2020)

Nomination &Remuneration Committee

As an advisory body to the Board of Directors, theNomination & Remuneration Committee has five members,
the majority of whom are outside directors. The Committee
is chaired by the Company’s Representative Chairman andCEO, and its members are appointed by resolution of theBoard of Directors. The Committee consults with the Boardof Directors about matters related to the appointment anddismissal of directors and the formulation of remuneration
policies for directors, deliberates them and submits reports
about such matters to the Board of Directors.

The effectiveness of the Board of Directors

Corporate Governance Structure

Independent
AuditorNomination & Remuneration Committee

In addition, the ASB is strengthening its
management oversight function by coordinating with thedirectors in charge of the Internal Audit Office and theunit responsible for supervision of internal controls. The
Company also introduced an executive officer system
in March 2020 and aims to further enhance corporate
governance by creating an environment in which theBoard of Directors can concentrate on management
and supervisory functions to respond more quickly tochanges in the business environment. At the same time,
we will be expanding opportunities for the recruitment ofmanagement personnel to foster the development of thenext generation of leaders.

The Credit Saison Group follows all the principles
stipulated in the Tokyo Stock Exchange’s Corporate
Governance Code with the exception of the following:
Supplementary Principles 4.1 (3)Roles and Responsibilities of the Board (1)The business environment in which the Company operates has
been significantly affected by advancements in digital technologies,
including FinTech, and given the expansion in businesses requiring
fresh perspectives, including the establishment of overseas
operations, it might not always be appropriate to establish set
standards based on one-time discussions for the knowledge,
experience and ability required for the Chief Executive Officer(CEO). The Company at present has not formulated specificsuccession plans for the CEO or conducted oversight regarding
such at the Board of Directors. The Credit Saison Group intends
to review how the Board of Directors can effectively oversee
succession plans, including through discussions by the Nomination& Remuneration Committee over succession plan guidelines in linewith the Company’s medium- to long-term strategies.

Supplementary Principle 4.3 (2)Roles and Responsibilities of the Board (3)The business environment in which the Company operates has
been significantly affected by advancements in digital technologies,
including FinTech, and given the expansion in businesses requiring
fresh perspectives, including the establishment of overseas
operations, it might not always be appropriate to establish set
standards based on one-time discussions for the knowledge,
experience, and ability required by the Chief Executive Officer(CEO). The Company at present has not established special

procedures or evaluation criteria for appointing its CEO. The Credit
Saison Group intends to review procedures for properly appointing
qualified CEOs, including through discussions by the Nomination& Remuneration Committee over succession plan guidelines in linewith the Company’s medium- to long-term strategies.

Supplementary Principle 4.3 (3)Roles and Responsibilities of the Board (3)The Company at this time has not established special procedures or
evaluation criteria for the dismissal of the CEO. However, if a CEO, etc.,
causes significant damage to the Group, or violates laws, regulationsor the Articles of Incorporation in a manner that merits dismissal,
the Board of Directors with the participation of outside directors will
deliberate the matter thoroughly before moving to dismiss.

Principle 4.11 Preconditions for Board andAudit & Supervisory Board EffectivenessIn a rapidly changing business environment, the Credit Saison Group
believes it is important to improve the value-creation function of theCompany by ensuring that the Board of Directors is well balanced
in terms of experience, knowledge and special abilities, and notjust in terms of gender or nationality. We have appointed directors
with a sufficient level of diversity that are able to effectively respondto business format changes while leveraging our strengths in linewith our medium- to long-term strategies. At present, the structureof the Board of Directors does not sufficiently take gender andnationality into account. With the Company’s medium- to long-term
strategies in mind, we strive to appoint a diverse range of directors,
including consideration of gender and nationality. The Company’s
independent outside directors are appointed based on the needfor human resources with the knowledge necessary to effectively
contribute to sustainable growth and the enhancement of corporate
value over the medium to long term, including in financial matterssuch as capital efficiency. Our Audit & Supervisory Board members
are appointed based on their experience, abilities and knowledge infinance, accounting and legal affairs.

62

CORPORATE GOVERNANCE

Corporate Governance

63

349

119

14

ASB members (Excluding
outside ASB members)

14

14

−

2

Outside directors

24

24

−

3

Outside ASB members

33

33

−

4

Notes: 1. The total amount of remuneration paid to directors does not include employee
salaries in the case of employees who serve concurrently as executive directors.
2. As of March 31, 2020, the Company had 15 directors and four ASB members.
3. Basic remuneration includes amounts used to purchase the Company’s shares(contribution to the shareholders’ association made up of directors).

Name, classification, total remuneration (consolidated)
and total amount of remuneration (consolidated) bytype of each director, outside director and ASB member

Basic remuneration(approx. 80%)
Set according to position andmanagement responsibility level(includes stock remuneration)

Variable
remuneration(approx. 20%)

Business performance forthe ﬁscal year and degree ofcontribution to business performance

Dialogue with shareholders and investors(IR activities)
Credit Saison endeavors to convey corporate information
to all shareholders and investors in a prompt, fair andeasy-to-understand manner, and actively discloses
business results, financial conditions, strategies and othermatters that the Company believes to be effective inproviding a better understanding of the Company. The
Company is enhancing our IR-related content, such asproviding videos of top management’s presentations at
results briefings, in an effort to ensure that a wide range
of investors, including individual investors, understandour corporate activities. As of the end of September 2020,
approximately 30% of our outstanding shares were held
by foreign shareholders, and the Company is actively andcontinuously working to build relationships with overseas
investors through IR activities, such as explaining ourcorporate activities through telephone conferences andother means.

Results of IR Activities in FY2019
Financial Results Briefing

2

Individual meetings with sell-side analysts/
institutional investors

158

Securities company organized conferences

1

Credit Saison Board of Directors
Risk Management Committee

Action• Companywide Risk Management Policy• Important risk planning, execution,
progress management

UpdateWe omitted listing individuals as there were no
directors, outside directors or ASB members whose total
remuneration exceeded ¥100 million.

Internal Director Remuneration Structureand employees should conduct themselves as standardsof conduct. As a further means of strengthening ourcompliance system, we have disclosed this declarationand code of conduct on the Company’s employee
website, inform employees about our compliance help
desk and hold compliance training sessions to ensure
rigorous adherence to these.
We will continue to study approaches to managementthat best suit the Credit Saison Group considering global
trends in corporate governance and our basic policies for
ensuring the proper functioning of internal controls.

Risk Management System

Risk Management Department
Departments in charge of risk

Check

ReportDepartments and Group companies

Plan

ActionDo

Check
Monitoring/
Reporting

468

Introduction/
Testing

Directors (Excluding
outside directors)

Riskmanagement
planning

Starting in FY2020, the amount paid to each director isdetermined by the Representative Director and CEO
under the authority delegated by the Board of Directors

Classification

To keep improving our corporate value, we identify
the enhancement of corporate governance as a key
management initiative. To this end, we are improving
our internal control systems, strengthening ourrisk management framework and fully adhering tocompliance requirements.
In establishing internal control systems, the Board of
Directors decides on basic policies for such, with the aimof building systems that ensure appropriate and efficient
operations mainly in the Corporate Planning Department,
the unit responsible for overseeing internal controls. As forinternal controls on financial reports, the Corporate Risk
Management Department leads the way in promoting theproper functioning of internal controls in the Company andat our consolidated Group companies, while the Internal
Audit Office carries out independent monitoring.
Regarding risk management, the Risk Management
Committee and Corporate Risk Management Department
lead the way in preventing risks from materializing andin working to minimize the effects on the Company
when they do arise. Accordingly, we strive to maintainour risk management framework by holding regularinternal training sessions for employees in accordancewith “risk management rules,” “rules concerning loss
risk management” and “crisis management rules.” With
respect to various issues within the Group and matters ofcontrol that pose serious risks, the Group Strategy Officeof the Corporate Planning Department leads the way inmonitoring business execution at Group companies andsharing information with the management departments ofGroup companies.
As for our compliance system, we have establisheda Compliance Committee to ensure legal compliance,
fairness and ethical standards in our corporate activities.
In addition to assigning compliance responsibilities to
employees in each department, we issued a declaration
on how the Company should conduct its activities andorganized the ways in which directors, executive officers

Risk
evaluation• Formulation of the remuneration policy and the individual
remuneration package of directors• Other matters raised by the Board of Directors• Formulation, amendment or abolition of basic policies that arenecessary for deliberation of the matters stated above• Other matters deemed necessary by the committee

Total amount of remuneration
Total
by type (Millions of yen)remuneration
Number of(Millions ofpeopleBasic
Bonusesyen)remuneration

Strengthening the compliance and risk
management systems

Risk
aggregation

About Director Remuneration

Credit Saison has established the Director Remuneration
Rules in the Board of Directors as the policy for determining
the amount for director remuneration, etc., and thecalculation method thereof. The director remuneration
system for FY2019 is composed of “basic remuneration,”
which is determined separately for each director basedon a remuneration standard corresponding to his or her
position and management responsibility level and includes
remuneration used to purchase the Company’s sharesas a long-term incentive, and of “variable remuneration(bonuses),” which is calculated based on the results of themutual evaluation made by all directors regarding theCompany’s performance for the individual fiscal year and thedegree of contribution (including future growth strategies)
each director has made to the Company’s performance(outside directors only receive fixed remuneration).
To increase corporate value, variable remuneration(bonuses) uses the growth rate for non-consolidated
ordinary income (excluding transient factors, etc.) as oneof the quantitative performance indicators. In addition, theresults of the evaluation made by all directors, including therecipient directors, regarding the degree of contribution
each director has made to the Company’s performance isused as a qualitative performance indicator.
Variable remuneration (bonuses) is calculated
by multiplying the performance-linked factor for
the quantitative indicator compared to the standard
amount for each position (the year-on-year quantitative
performance indicator) and the performance-linked factor
for the qualitative evaluation (generally 80%–120%). The
performance-linked factor for FY2019 was 92%.
The composition ratio for remuneration is generally
80% for basic remuneration (including remuneration
used to purchase the Company’s shares as a longterm incentive) and 20% for bonuses, where the ratioof bonuses varies in accordance with the Company’s
performance, etc.
Remuneration for Audit & Supervisory Board (ASB)
members consists entirely of fixed remuneration, where
the amount of remuneration for each ASB member isdetermined through consultation among the ASB. This
amount falls within the total amount approved by theGeneral Meeting of Shareholders.
Credit Saison resolved to establish a Nomination
and Remuneration Committee as a voluntary advisorycommittee at the Board of Directors meeting held on
June 7, 2019. Regarding director remuneration, thiscommittee will report on the following matters based on
the submission by the Board of Directors.

to the extent of the scope of such authority and inaccordance with the Director Compensation Regulations.
The Representative Director and CEO shall make suchdetermination based on the criteria for remuneration to bereceived by the Directors as established by the Nomination& Remuneration Committee and based on the results of theevaluations made by all Directors, including the Director
being evaluated, regarding the degree of contribution ofeach Director to our business performance.
For the total amount of the calculation method–based
remuneration for directors, outside directors and ASB
members, resolutions were approved at the 57th Ordinary
General Meeting of Shareholders held on June 23, 2007,
to cap annual remuneration for directors at ¥750 million(annual remuneration for outside directors capped at ¥50
million) and cap annual remuneration for ASB members at¥150 million (salaries paid to executive directors for theirwork as employees are not included in the remunerationcaps). However, at the 70th Ordinary General Meetingof Shareholders held on June 18, 2020, a resolutionof Determination of Remuneration for the Granting ofRestricted Stock to Directors (excluding Outside Directors)
was passed, thereby resolving to cap the total value ofmonetary remuneration paid for the purpose of granting
restricted stock bonuses at ¥150 million annually as part ofthe ¥750 million annual payment cap (annual remuneration
for Outside Directors capped at ¥50 million) for director
remuneration approved at the 57th Ordinary General
Meeting of Shareholders held on June 23, 2007.
The total amount of remuneration for FY2019 fordifferent classifications of directors and ASB members,
along with subtotals for different types of remuneration,
are shown below.

Risk
identiﬁcation

Remuneration for directors and audit &supervisory board members

Financial Results Briefing Held in November 2019

General Meeting of Shareholders

To ensure that shareholders have sufficient time toconsider resolutions, Credit Saison sends the convocation
notice prior to the date specified by law (at least two
weeks before the General Meeting of Shareholders date)and discloses such on the Company’s website and TDnet.

70th Ordinary General Meeting of Shareholders(held June 18, 2020)
Participating shareholders
Ratio of voting rights exercised

47
89.68%

64

CORPORATE GOVERNANCE

Board of Directors/Audit & Supervisory Board Members/
Executive Officers (As of October 1, 2020)
Audit & Supervisory Board Members

Board of Directors

From left:
Hiroaki Igawa
Haruhisa Kaneko
Chie Kasahara
Munehiro Harada

Haruhisa Kaneko

Born in Aug. 1942

Representative, Chairman and CEO
Corporate strategy, global strategy, branding,affiliated companies affairs
Mar. 1982 Joined Credit Saison Co., Ltd.
		General Manager, Credit Business Planning
Dept.
Apr. 1983 Director
June 2000 President and CEO
Mar. 2019 Representative, Chairman and CEO

Masahiro Yamashita

Born in Mar. 1958

Representative, Executive President and COO
Overall management execution, credit card joint
ventures affairs, Head of Public Relations Office,Payment Business Division, Sales Development Division
Apr. 1981 Joined Credit Saison Co., Ltd.
June 2010 Director
Mar. 2019 Representative, President and COO
Mar. 2020 Representative, Executive President and COO

Naoki Takahashi

Born in Aug. 1950

Representative, Executive Vice President and CHO
Promotions of strategies, new businesses, Head ofAudit Office, General Affairs Dept., Strategic Human
Resources Dept., IT Strategy Dept.
Apr. 2005 Joined Credit Saison Co., Ltd. Advisor
June 2005 Managing Director
Mar. 2016 Representative, Executive Vice President
Mar. 2020 Representative, Executive Vice President
and CHO

65

Katsumi Mizuno

Born in Aug. 1969

Director, Senior Managing Executive Officer
Head of Branding Strategy Dept., Processing Business
Division, Global Business Division, In charge of Strategic
Planning Dept.
Apr. 1992 Joined Credit Saison Co., Ltd.
June 2013 Director
June 2020 Director, Senior Managing Executive Officer

Yoshiaki Miura

Born in Sept. 1966

Director, Senior Managing Executive Officer
General Manager, Payment Business Division,
Sales Development Division, In charge of Processing
Development Dept., Affinity Business Dept. No. 1 & 2,
Business Strategy Dept., Alliance Development Dept.
Apr. 1990 Joined Credit Saison Co., Ltd.
June 2016 Director
June 2020 Director, Senior Managing Executive Officer

Tatsunari Okamoto

Munehiro Harada

Born in July 1954

Hiroaki Igawa

Born in Oct. 1958

Chie Kasahara

Born in Sept. 1968

Standing Audit & Supervisory Board
Member (Outside/Independent)

Standing Audit & Supervisory Board
Member (Outside/Independent)

Audit & Supervisory Board Member(Outside/Independent)

Jan. 1990 Joined Credit Saison Co., Ltd.
June 2008 Director
Mar. 2010 Managing Director
Mar. 2015 President, Qubitous Co., Ltd.
		
(Merged with Credit Saison
Co., Ltd. in April 2020)
June 2019 Standing Audit andSupervisory Board Memberof Credit Saison Co., Ltd.
(Present)

Apr. 1978 Entered National Police
AgencyApr. 2012 Director General, Kanto
Regional Police Bureau
June 2013 Managing Director, Nichidenkyo
June 2019 Standing Audit andSupervisory Board Memberof Credit Saison Co., Ltd.
(Present)

Apr. 1982 Entered Ministry of Finance
June 2013 Director-General, Nagoya
Customs
June 2014 Auditor (Regular Employee),
East Nippon Expressway
Company Limited
June 2019 Standing Audit andSupervisory Board Memberof Credit Saison Co., Ltd.
(Present)

Apr. 2000 Registered as an attorneyat law, Dai-Ichi Tokyo Bar
Association (Present)
June 2015 Audit and Supervisory Board
Member (Outside),		
Credit Saison Co., Ltd. (Present)
Jan. 2019 Senior Partner, Atsumi &Partners (Present Atsumi &Sakai) (Present)
June 2019 Audit and Supervisory
Board Member of Achilles
Corporation (Present)

Executive Officers

Front row (from left): Naoki Takahashi, Hiroshi Rinno, Masahiro Yamashita, Katsumi Mizuno
Back row (from left): Naoki Togashi, Tatsunari Okamoto,Yoshiaki Miura, Nana Otsuki, Hitoshi Yokokura

Hiroshi Rinno

Born in Nov. 1956

Standing Audit & Supervisory Board
MemberBorn in Apr. 1967

Director, Managing Executive Officer
Head of Finance Division,
General Manager, Finance Division,
In charge of Leasing & Rental Business Dept.
Apr. 1990 Joined Credit Saison Co., Ltd.
June 2011 Director
June 2020 Director, Managing Executive Officer

Naoki Togashi

Born in Oct. 1960

Outside Director (Independent)
Apr. 2007 Trustee, Japan Association of Corporate
Executives (Present)
June 2014 Director, NAGAHORI CORPORATION(Present)
Apr. 2017 Representative Director,		Japan Representative Partner,
		Oliver Wyman Group (Present)
June 2017 Outside Director, Credit Saison Co., Ltd.
(Present)

Nana Otsuki

Front row (from left):
Kazue Yasumori
Kazutoshi Ono
Shingo Baba
Kaori Shimada
Back row (from left):
Masaki Negishi
Kosuke Mori
Shunji Ashikaga
Keitaro Shigemasa
Yasuyuki Isobe
Naoki Nakayama

Born in Sept. 1964

Outside Director (Independent)
Jan. 2016 Executive Officer, Monex, Inc. (Present)
June 2017 Outside Director, Credit Saison Co., Ltd.
(Present)
Apr. 2018 Professor, Nagoya University of Commerce
and Business Graduate School (Present)
Apr. 2018 Visiting Professor, Facuity of International
Politics and Economics, Nishogakusha
University (Present)
June 2018 Audit and Supervisory Board Member,
Tokio Marine Holdings, Inc. (Present)
Sept. 2019 Trustee, Nishogakusha University (Present)

Hitoshi Yokokura

Born in May 1969

Outside Director (Independent)
Apr. 2014 Partner, Waseda Legal Commons, LPC(Present)
July 2017 Auditor, Minori Audit Corporation (Present)
June 2020 Outside Director, Credit Saison Co., Ltd.
(Present)

Managing Executive Officers
Shingo Baba

Executive Officers
Keitaro Shigemasa Born in Feb. 1965

Yasuyuki Isobe

Head of Corporate Planning Dept.,
Corporate Risk Management Dept.,
Treasury & Accounting Dept.

CIO, In charge of IT Strategy Dept.,
General Manager, IT Strategy Dept.

Head of Credit Division, General Manager,
Credit Division, In charge of Card FinanceDept., Affiliated Store Planning Dept.

Kazutoshi Ono

Kosuke Mori

Born in Jan. 1971

Born in Aug. 1976

CTO, Head of Digital Innovation Division,
General Manager, Digital Innovation Division,
General Manager, Technology Center

Shunji Ashikaga

Born in May 1977

General Manager, Global Business Division,
Being assigned to Credit Saison Asia PacificPte. Ltd. (in charge of India business)
Born in May 1971

Head of Saison AMEX Division, General Manager, Saison AMEX Division, Business
Solution Dept., Credit Guarantee Dept., Corporate Sales in Sales Planning Dept.

Kazue Yasumori

Born in Aug. 1969

Born in Nov. 1973

General Manager, Processing Business
Division, In charge of Screening Center,
Tokyo Risk Management Center, Osaka
Risk Management Center, Strategic Human
Resources Dept.

Naoki Nakayama

Kaori Shimada

Born in Oct. 1966

Head of CS Planning Dept., In chargeof Business Development Dept., AssetManagement Dept.,General Manager, CS
Planning Dept., Business Development Dept.

Masaki Negishi

Born in Sept. 1972

In charge of Corporate Planning Dept.,
Processing Sales Dept., Processing Planning
Dept., Global Strategy Planning Dept.,
General Manager, Corporate Planning Dept.
Born in June 1965

In charge of Finance Planning Dept., Finance Business Dept.
General Manager, Finance Business Dept., Structured Finance Group Dept.

66

CORPORATE DATACORPORATE DATA

Major Business Sales Bases (As of October 1, 2020)

List of Affiliated Companies (* In the order of the Japanese syllabary As of September 30, 2020)

Organization Chart
General Meeting of Shareholders

Head Office
52F Sunshine 60 Bldg., 1-1 HigashiIkebukuro 3-chome, Toshima-ku, Tokyo
170-6073, Japan

Hokkaido Branch Office
3F Sapporo Center Bldg., 2-2, Kita-5-jo
Nishi 6-chome, Chuo-ku, Sapporo City,
Hokkaido 060-0005, Japan

Tohoku Branch Office
7F Sendai Shogin Bldg., 1-24, Chuo
3-chome, Aoba-ku, Sendai City, Miyagi
980-0021, Japan

North Kanto Branch Office
3F ORE Omiya Bldg., 114-1, Miyacho
1-chome, Omiya-ku, Saitama City,
Saitama 330-0802, Japan

East Kanto Branch Office
19F WBG Marive East Tower., 6-1, Nakase
2-chome, Mihama-ku, Chiba City, Chiba
261-7119, JapanTokyo Branch Office
2F Otowa NS Bldg., 10-2, Otowa 2-chome,
Bunkyo-ku, Tokyo 112-0013, Japan

Kanagawa Branch Office
3F Nisso Dai-5 Bldg., 10-39, Kita-saiwai
2-chome, Nishi-ku, Yokohama City,
Kanagawa 220-0004, Japan

Tokai Branch Office

Audit & Supervisory Board

Representative Directors

Audit & Supervisory Board Members

Public Relations Office

Audit Office

Branding Strategy Dept.

Finance DivisionCorporate Planning Dept.

Finance Planning Dept.

Corporate Planning OfficeLeasing & Rental Business Dept.
Operation Center

Strategic Business Planning OfficeGroup Strategic Management Office
Corporate Risk Management Dept.

Business Management Group
Credit Guarantee Dept.
Planning Group

Compliance Office

Sales Group

Treasury & Accounting Dept.

Operation Center

General Affairs Dept.
Strategic Human Resources Dept.
Career Development OfficeFinance Business Dept.
Business Management Group
Structured Finance Group

Customer Satisfaction Planning Dept.

Housing Loan Group

Customer Relations Office

Asset Formation Loan GroupIT Strategy Dept.
Business System Planning Dept.
System Development Dept.
Infrastructure Management Dept.
Processing Business Division

Operation Center
Digital Service Dept.
Product Development Dept.
Digital Platform Development Dept.
Technology CenterTokyo Information Center

Sales Development Division
Sales Planning Dept.

Biling Settlement Center

Corporate Group

Business Center

Management Group

Credit Division

East Japan Management Dept.

Credit Planning Dept.

Hokkaido Branch Office
Tohoku Branch OfficeKansai Branch OfficeOsaka Risk Management Center

Screening Center

East Kanto Branch Office
Tokyo Branch Office

Credit Management Dept.

Kanagawa Branch Office

Payment Business DivisionCorporate Sales Dept. No.1
Chubu/Kinki Management Dept.

Chugoku/Shikoku Branch Office

Processing Development Dept.

5F Otemachi Center Bldg., 8-5, Otemachi
2-chome, Naka-ku, Hiroshima City,
Hiroshima 730-0051, Japan

Affinity Business Dept. No. 1

Kansai Branch Office

Affinity Business Dept. No. 2

Corporate Sales Dept. No. 2

Kyushu Branch Office

Shanghai, China
CREDIT SAISON CORPORATION (SHANGHAI)
LIMITED, No. 909. 9F, No. 409-459 Landmark
East Nanjing Rd., Shanghai, China

Singapore
Credit Saison Asia Pacific PTE. LTD.
16 Collyer Quay #21-01, Income At Raffles,
Singapore 049318

Business Strategy Dept.

Tokai Branch OfficeWest Japan Management Dept.

Business Solution Dept.

Chugoku/Shikoku Branch Office

Card Finance Dept.

Kyushu Branch Office

Alliance Development Dept.

Global Business Division

Affiliated Store Planning Dept.

Global Strategy Planning Dept.

Business Development Dept.

Republic of Singapore1

Asset Management Dept.

Republic of Indonesia3

Saison AMEX Plannning Dept.

Kingdom of Cambodia4

AMEX Business Card Dept.

Kingdom of Thailand5

Product Development Dept.

Republic of the Philippines

Digital Sales Group
1 CS Asia Pacific Pte.
2 Kisetsu Saison FinancePeople’s Republic of China6
Socialist Republic of Vietnam7

Sales Group
3 Saison Modern Finance
4 Idemitsu Saison MicrofinanceOmnibus K.K.

Internet advertisement agency business,marketing consulting business

CASALAGO CO., LTD.

Import and sales of lifestyle goods

Concerto Inc.

Real estate rental business,amusement business

SAISON ASSET MANAGEMENT CO., LTD.

Asset management

Saison Personalplus Co., Ltd.

Temporary staffing business, contracting
business, servicing business

Saison Fundex Corporation

Real estate finance business, credit guarantee
business, loan business

Saison Ventures Co., Ltd.

Identification and investment in start-ups

Saison Insurance Service Inc.

Life/non-life insurance agency business

Credit Saison Asia Pacific Pte. Ltd.

Overseas business development and regional
headquarters in Singapore

Kisetsu Saison Finance (India) Pvt. Ltd.

Digital lending business in India

PT. Saison Modern FinanceDigital lending, payments, points business, andlease business in Indonesia

Saison Capital Pte. Ltd.

Investment in and financing of overseas
startup enterprises
Total of 33 companies

Major Equity-Method Affiliates
Eplus Inc.

Ticket sales

Idemitsu Credit Co., Ltd.

Credit card business, prepaid card business,finance businessShizugin Saison Card Co., Ltd.

Credit card business, credit guarantee business,prepaid card business

Saison Information Systems Co., Ltd.

Financial IT services business, distribution IT
service business, linkage business, HULFT business

Seven CS Card Service Co., LTD.

Credit card business

Daiwa House Financial Co., Ltd.

Credit card business, settlement agency business,loan businessTakashimaya Financial Partners Co., Ltd.

Credit card businessYamada Financial Co., Ltd.

Credit card businessResona Card Co., Ltd.

Credit card business, credit guarantee business

HD SAISON Finance Company Ltd.

Finance business in Vietnam

Republic of India2

Saison AMEX Division

Sales Development Dept.

Housecleaning, installation of residential facilities,
maintenance, ATM-related operations

North Kanto Branch Office
Tokyo Metropolitan Area Management Dept.

Credit Risk Management Dept.

Strategic Planning Dept.

AIR Co., Ltd.

Digital Marketing Dept.

Processing Planning Dept.

Tokyo Risk Management Center

Comprehensive real estate business,
servicing business

Digital Innovation Division

Processing Sales Dept.

Osaka Information Center

Atrium Co., Ltd.

Rent Guarantee Group

System Planning Dept.

Alliance Preparation Office

9F Kyukan Hakata Ekimae Bldg., 19-27,
Hakataekimae 2-chome, Hakata-ku,
Fukuoka City, Fukuoka 812-0011, Japan

Main Consolidated Subsidiaries

Management Conference

4F NMF Nagoya Yanagibashi Bldg., 16-28,
Meieki-minami 1-chome, Nakamura-ku,
NagoyaCity, Aichi 450-0003, Japan

4F Kansai Ubiquitous Bldg., 12-11,
Minamisenba 1-chome, Chuo-ku, Osaka
City, Osaka 542-0081, Japan

67

Board of Directors

Republic of the Union of Myanmar
5 SIAM SAISON
6 世尊商務諮詢

7 HD SAISON FinanceTotal of 32 companies

68

CORPORATE DATACORPORATE DATA

Corporate Information/
Investor Relations Information (As of September 30,2020)

Responsible Officer’s Guarantee/Editor’s Postscript

Stock Information

Responsible officer’s guarantee

Common Stock
Authorized

300,000
thousand shares

Common Stock
Outstanding

185,444thousand shares

Major Shareholders (Top 10)

On publishing the Credit Saison Integrated Report 2020
Equity stake
Number of Shares(thousand)Ownership
Percentage (%)

The Master Trust Bank of Japan Ltd. (trust account)

29,268

18.72

Custody Bank of Japan, Ltd. (trust account)

13,135

8.40

Daiwa Securities Group Inc.

8,050

5.15

Securities Companies

Custody Bank of Japan, Ltd. (trust account 9)

5,855

3.75

HSBC BANK PLC A/C CLIENTS 1

4,694

3.00

Other Corporations

BNYMSANV AS AGENT/CLIENTS LUX UCITS NON TREATY 1

4,067

2.60

Custody Bank of Japan, Ltd. (securities investment trust account)

3,926

2.51

THE BANK OF NEW YORK 133972

3,118

1.99

Mizuho Bank, Ltd.

3,000

1.92

Custody Bank of Japan, Ltd. (trust account 5)

2,879

1.84

Number of
Shareholders

15,184

Individual Investors,
othersInstitution

Financial Institutions

40.34%

4.46%
0.47%
9.39%

Treasury Stock15.69%

Composition of
Shareholders

Foreign Investors

Note: 1. The 29,100,948 treasury shares held by Credit Saison are not included in the above list of major shareholders.
		
2. Ownership percentages are based on the number of outstanding shares excluding treasury shares.

29.65%

Shareholders Memo
Fiscal Year

Period beginning on April 1 and ending on March 31 of the following year

Record Date

Ordinary general meeting of shareholders and year-end dividend payments - March 31
Should any other record date be required, a public notice will be issued in advance.

Ordinary General Meeting of Shareholders

Transfer Agent and Administrator of Special Accounts
Administrative Office of Transfer Agent

Convened each year in June

Sumitomo Mitsui Trust Bank Limited, 1-4-1, Marunouchi, Chiyoda-ku, Tokyo, Japan
Stock Transfer Agency Business Department,
Sumitomo Mitsui Trust Bank Limited, 1-4-1, Marunouchi, Chiyoda-ku, Tokyo, Japan

Stock Transfer Agency Business Department,
Sumitomo Mitsui Trust Bank Limited, 2-8-4, Izumi, Suginami-ku, Tokyo 168-0063, Japan

Mailing Address
Telephone Inquiries

0120-782-031 (9:00-17:00 excluding weekends and holidays)

URL

https://www.smtb.jp/personal/agency/index.html

Method of Public Notice
Stock Listing

Shingo Baba
Managing Executive Officer
Head of Corporate Planning
Dept., Corporate Risk
Management Dept., Treasury &Accounting Dept.

Information disclosure tools

Electronic notice (Credit Saison website)
https://corporate.saisoncard.co.jp/en/public_announcement/

Credit Saison discloses various types of information for our shareholders, investors and all other stakeholders on our website.

8253• IR Information• Business Reporthttps://corporate.saisoncard.co.jp/en/ir/

https://corporate.saisoncard.co.jp/en/ir/business_report/• General Meeting of Shareholders• Integrated Reporthttps://corporate.saisoncard.co.jp/en/ir/meeting/https://corporate.saisoncard.co.jp/en/ir/integrated_report/integrated_report/meeting/Tokyo Stock Exchange

Securities CodeIn March 2020, Credit Saison published our first integrated report in which we
systematically summarized the Company’s financial and nonfinancial information as acommunication tool designed to establish a greater understanding of the Company
among our shareholders, investors and all other stakeholders.
In addition to the 5 Ps of our Sustainability Strategy, namely “People, Partnership,
Prosperity, Planet, Peace,” the Credit Saison Integrated Report 2020 includes new
types of content based on roundtable discussions among the Outside Directors andother forms of interviews in order to expand the range of content beyond reportsof our management strategies, performance and business activities. This approachis taken as a means of ensuring a greater understanding of the Company’s efforts
toward sustainable growth, including those aimed at finding solutions to society’s
challenges and at contributing to communities through business activities.
During the preparation of this Report, we consulted the “International Integrated
Reporting Framework” advocated by the International Integrated Reporting Council(IIRC) and the “Guidance for Collaborative Value Creation” advocated by the Ministryof Economy, Trade and Industry, and edited the reportunder the cooperation of each department in a crossdivisional, companywide effort. I hereby declare that the
preparation process is proper and the details listed herein
are accurate.
Credit Saison shall continue to evolve ourcommunications with all stakeholders and advanceinitiatives to further raise our corporate value through theCredit Saison Integrated Report 2020.

[Notice of Address Change, etc. and Inquiries Relating to Shares] Shareholders who have an account with a securities company are asked to contact the relevant securities company regarding address change and other notices, as well as inquiries.Shareholders who do not have an account with a securities company are asked to call the number indicatedabove for telephone inquiries.
[Special Accounts] For shareholders who were not using the “Hofuri” system (Japan Securities Depository Center, Inc.) prior to the introduction of the electronic share certificate
system, an account (special account) has been opened at Sumitomo Mitsui Trust Bank Limited above as the transfer agent. Inquiries on special accounts should be directed tothe transfer agent at the number indicated above for telephone inquiries.

Corporate Profile
Name

Credit Saison Co., Ltd.

Head Office

52F Sunshine 60 Bldg., 1-1 Higashi-Ikebukuro 3-chome, Toshima-ku, Tokyo 170-6073, Japan

Incorporated

Representative
Listed Stock Exchange
Business
Paid-in Capital

Number of Regular Employees

May 1, 1951

Hiroshi Rinno, Representative, Chairman and CEO
Masahiro Yamashita, Representative, Executive President and COO
Naoki Takahashi, Representative, Executive Vice President and CHO
Tokyo (First Section)

1: Payment Segment (credit card business, servicing (loan collection agency) business, etc.)
2: Lease Segment (lease business)
3: Finance Segment (credit guarantee business and finance-related business)
4: Real Estate-Related Segment (real estate business, real estate leasing business, and servicing (loan collection agency) business,etc.)
5: Entertainment Segment (amusement business, etc.)¥75,929 million
4,415

Note: In addition to our regular employees, we employ temporary and part-time employees, with the average number of non-regular employees per term at 666 (based onconversion to a 7.5-hours workday)

69

Editor’s postscript
Thank you for reading to the end of the Credit Saison Integrated Report 2020.
This year marked the second year of the Medium-term Management Plan, through which we presented our mission
statement of “becoming a finance company advancing with customers for 50 years” in addition to our management
philosophy of being a “leading-edge service company.” In this way, we are undertaking the challenge of becoming a true
finance company that can continue to provide proposals tailored to the life stage of each customer.
Under the key concepts of “evolution” and “connection,” this Integrated Report strives to express our position in aneasy-to-understand manner wherever possible by using illustrations, graphs and data to ensure a better understanding of the“Credit Saison of the past” and the “Credit Saison of the future.” At the same time, it was prepared using new approaches, suchas interview pages and special feature pages. Looking ahead, we will continue to seek the honest opinions of our readers sothat we can further deepen communication with all stakeholders while upgrading and expanding the content of the report.

70

1.

Consolidated Financial Statements(1)

Consolidated Financial Statements

1)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Millions of yen
Note

FY2019FY2018(As of March 31, (As of March 31,
2020)
2019)

Thousands of
U.S. dollars
FY2019(As of March 31,
2020)

AssetsCash and cash
equivalents
Trade and otherreceivables
Inventories
Operational investment
securities
Investment securities

CREDIT SAISONFINANCIAL SECTION 2020
For the Year Ended March31, 2020

Other financial assets
Property, plant andequipment
Right-of-use assets
Intangible assets
Investment property
Investments accounted
for using equity method
Deferred tax assets
Other assets
Total assets

8, 39¥109,761¥82,642$1,008,558

2,565,409

2,393,197

23,572,629

135,380

151,385

1,243,962

48,78939,973448,30960,72491,553557,977

13,905

11,916

127,773

14

29,41429,341

270,27942
15
17

17,565
181,058
61,508–219,972
56,683

161,403
1,663,680
565,183

18,19

77,19892,752

709,35120

47,9108,601¥3,357,229

32,148
10,897¥3,212,465

440,232
79,039$30,848,383

9, 37,
38, 3910
11, 19,39
12, 19,39
13, 37,38, 39-1-

Millions of yen
Note
Liabilities and equity
Liabilities
Trade and otherpayablesFinancial guarantee
liabilities
Bonds and borrowings
Other financial
liabilities
Income taxes payable
Provision for point cardcertificates
Provision for loss oninterest repayments
Other provisions
Deferred tax liabilities
Other liabilities
Total liabilities
EquityShare capital
Capital surplus
Retained earnings
Treasury shares
Other components ofequityTotal equity attributableto owners of parent
Non-controlling interests
Total equity
Total liabilities and equity

21, 38,39

FY2019FY2018(As of March 31, (As of March 31,
2020)
2019)

¥230,927¥314,729

Thousands of
U.S. dollars
FY2019(As of March 31,
2020)$2,121,908

39

10,206

8,305

93,78722, 3923, 38,39
202,413,565

2,203,818

22,177,393

26,61928,441

244,600

9,364

3,120

86,04424

109,938

104,963

1,010,186

24

22,897

17,762

210,396

24
20
26

1,554
903
45,7752,871,753

1,530
1,025
37,0262,720,724

14,284
8,299
420,614
26,387,515

27
27
27
27

75,92985,279384,182(62,881)

75,92985,642
360,303(52,881)

697,687
783,599
3,530,114(577,797)

27, 392,161

22,00419,857

484,670

490,998

4,453,462

805
485,476¥3,357,229

743
491,741¥3,212,465

7,405
4,460,867$30,848,383

2)

CONSOLIDATED STATEMENT OF INCOME

FY2019(April 1, 2019 toMarch 31, 2020)

FY2018(April 1, 2018 toMarch 31, 2019)

Thousands of
U.S. dollars
FY2019(April 1, 2019 toMarch 31, 2020)¥230,160
12,266
43,11262,30748,493¥226,250
12,57939,23142,09850,827$2,114,867
112,713396,149
572,520445,591

Millions of yen
Note
Revenues
Income from the payment business(*1)
Income from the lease business
Income from the finance business
Revenue from the real estate-related business
Revenue from the entertainment business
Finance income

29, 3929, 3929, 3929, 3929
29, 32,
39

771

854

7,086

397,112112,167

371,842
107,2213,648,928
1,030,663

31
39
32, 3946,03039,67185,702
311,410
236,910
39,376
10,471

24,92142,066
66,987
304,855
220,974
34,0889,878

422,960
364,529
787,4902,861,438
2,176,885
361,813
96,217

18

6,442

7,355

59,19533, 3933, 395,585
9,220
27,458
4,813
22,6454,138
5,643
45,763
16,42329,34051,31984,727
252,308
44,230208,078

22,863(218)
22,64530,517(1,176)29,340210,085(2,006)208,078

Total
Of interest income (*2)
Cost of sales
For the real estate-related business
For the entertainment business
Total
Net revenue
Selling, general and administrative expenses
Impairment losses on financial assets
Finance costs
Share of profit of investments accounted for using
equity method
Other income
Other expenses
Profit before tax
Income tax expense
Profit30
30

20

Profit attributable to
Owners of parent
Non-controlling interests
ProfitEarnings per share
Basic earnings per share
Diluted earnings per share

Yen
35
35

¥143.43
142.57

U.S. dollars¥186.84
186.84(*1) As a result of a change to a segment name, “Income from the credit service business” has been renamed to “Income
from the payment business” effective for the fiscal year ended March 31, 2020.
(*2) Pursuant to IFRS 9, interest income is calculated using the effective interest method.

-2-

-3-

$1.32
1.31

RECONCILIATION FROM PROFIT BEFORE TAX TO BUSINESS PROFIT

Profit before tax
Reconciliations (Other income)Reconciliations (Other expenses)
Adjustments for the application of theeffective interest method to financial assets
SubtotalBusiness profit

3)

FY2019(April 1, 2019 toMarch 31, 2020)¥27,458
(917)
8,979

FY2018(April 1, 2018 toMarch 31, 2019)¥45,763–
5,517

Thousands of
U.S. dollars
FY2019(April 1, 2019 toMarch 31, 2020)$252,308(8,429)82,506

663

951

6,099

8,725
36,184

6,469
52,23380,176
332,485

Millions of yen

For details on the reconciliation items, please refer to Note “7. Operating Segments.”

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FY2019(April 1, 2019 toMarch 31, 2020)¥22,645

FY2018(April 1, 2018 toMarch 31, 2019)¥29,340

Thousands of
U.S. dollars
FY2019(April 1, 2019 toMarch 31, 2020)$208,078

Millions of yen
NoteProfitOther comprehensive income
Items that will not be reclassified to profit or loss
Net change in fair value of equity instruments
designated as measured at fair value throughother comprehensive income

34(10,978)(8,963)(100,873)

Share of other comprehensive income ofinvestments accounted for using equity method

18, 34(476)

62(4,382)Items that may be reclassified to profit or loss
Net change in fair value of debt instruments
measured at fair value through othercomprehensive income

34

10

(7)

93

Effective portion of cash flow hedges

34

955

(1,540)

8,782

Exchange differences on translation of foreign
operations

34

(687)

(28)

(6,312)

Share of other comprehensive income ofinvestments accounted for using equity method
Total other comprehensive income, net of tax
Comprehensive income

18, 34(311)

265(2,863)(11,487)
11,157(10,213)
19,127(105,556)
102,521

Owners of parent

11,38920,314

104,651

Non-controlling interests
Comprehensive income(231)
11,157(1,186)
19,127(2,129)102,521Comprehensive income attributable to

-4-

-5-

4)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FY2018 (April 1, 2018 to March 31, 2019)

FY2019 (April 1, 2019 to March 31, 2020)
Note
Balance as of April 1,
2019

Share capital¥75,929

Millions of yen
Equity attributable to owners of parent
Other
CapitalRetained
Treasurycomponents
surplusearnings
sharesof equity¥85,642

ProfitOther comprehensive
income––22,863

27
27

Dividends

28

(0)

27

Balance as of March 31,
2020¥75,929

Note
Balance as of April 1,
2019

Share capital$697,687(363)¥85,279

1,015¥384,182

210,085

Purchase of treasury
shares27

Disposal of treasury
shares27

Dividends

28(67,568)

Transfer from othercomponents of equity toretained earnings

27

76,901(0)Changes in ownershipinterest in subsidiaries–

Balance as of March 31,
2020$697,687(3,340)335,143

ProfitOther comprehensive
income(10,000)(0)(10,000)(10,000)

Comprehensive income

0

Purchase of treasury
shares27

Disposal of treasury
shares27

Dividends

28(5,719)Transfer from othercomponents of equity toretained earnings

27

362

0
(7,353)(8,369)(10,000)¥(62,881)(8,369)¥2,161$(485,905)(7,353)

–

–

(363)

294

(68)

(17,717)294(17,422)¥484,670¥805

Noncontrollinginterests

Total$202,192 $4,511,611¥485,476(2,006)208,078(105,434)(122)(105,556)–(105,434)

104,651(2,129)102,521(91,892)(0)(91,892)

9,332(91,891)$783,599 $3,530,114$(577,797)(76,901)

30,517(0)Changes in ownershipinterest in subsidiaries

00(67,568)––(3,339)

2,707

(632)

(162,800)

2,707(160,092)

478,357(12,491)
476,391

1,965

30,517(1,176)29,340(10,203)(10,203)(10)(10,213)(10,203)

20,314(1,186)

19,127

–

13
–

12

(5,357)(0)Balance as of March 31,
2019¥75,929¥85,642¥360,303¥(52,881)(12,491)

(0)

(362)

Total transactions withowners-7-¥490,849(3,343)0$7,405 $4,460,867¥1,96532,569(0)(91,892)(67,568)$19,857 $4,453,462–$6,827 $4,518,439(105,434)(76,901)–

Total(52,880)

30,517¥488,883

Noncontrollinginterests¥35,91334

Total

210,0851-6-

85,62911,157(3,339)Total transactions withowners75,929Total¥(52,880)(9,148)

Restated balance(11,487)0$786,939 $3,310,696–

22,645¥344,291

(13)

34
–

(218)

¥85,629(231)

210,085

Comprehensive income

22,863¥75,929

Cumulative effect ofaccounting change

11,389Thousands of U.S. dollars
Equity attributable to owners of parent
Other
CapitalRetained
Treasurycomponents
surplusearnings
sharesof equity

Profit¥491,741(11,474)

(363)
–

¥743

Balance as of April 1,
2018(11,474)

8,369

Total transactions withowners¥490,998

Total(11,474)(7,353)

Changes in ownershipinterest in subsidiaries

Other comprehensive
income¥22,004

Total

Share capital–

34

Disposal of treasury
sharesTransfer from othercomponents of equity toretained earnings¥(52,881)

22,863Comprehensive income
Purchase of treasury
shares¥360,303

Note
Noncontrollinginterests

Millions of yen
Equity attributable to owners of parent
Other
CapitalRetained
Treasurycomponents
surplusearnings
sharesof equity

(0)

0

0

(5,719)(5,719)

–

–

13

(36)

(23)

(362)

(5,706)(36)(5,742)¥22,004¥490,998¥743¥491,741

5)

CONSOLIDATED STATEMENT OF CASH FLOWSMillions of yen
Note

Cash flows from operating activities
Profit before tax
Depreciation and amortization
Impairment losses (reversal of impairment losses)
Interest and dividend income
Interest expenses
Share of loss (profit) of investments accounted forusing equity method
Loss (gain) on valuation of investment securities
System transfer cost
Decrease (increase) in trade and other receivables
Decrease (increase) in inventories
Decrease (increase) in operational investment
securities for sale
Increase (decrease) in trade and other payables
Increase (decrease) in provision for point cardcertificates
Increase (decrease) in provision for loss on interest
repayments
Increase (decrease) in financial guarantee liabilities
Other
SubtotalInterest and dividends received
Interest paid
Income taxes refund
Income taxes paid
Net cash used in operating activities-8-

FY2019(April 1, 2019 toMarch 31, 2020)

FY2018(April 1, 2018 toMarch 31, 2019)

Thousands of
U.S. dollars
FY2019(April 1, 2019 toMarch 31, 2020)¥ (6,314)¥(5,673)$(58,022)

19,551

1,458

179,648

20,775–

190,895(20,844)(27,339)(191,534)

101

33

932

(3,277)894(15)
1625,311(12,366)
7,020(1,197)29,654(8,028)

(664)
27
(126)
(40,313)(30,112)
8,216
(146)
150
232,581(113,628)
64,510(11,006)
272,48336
36

16,54439,000(8,000)121,500

152,018
358,357

36

15,000–137,829

36
36
36
36
36
36
36

11,793(59)
155,279(99,208)
81,552(30,042)(4,616)––
115,900(55,364)
94,547(20,026)(603)

108,369(550)
1,426,803(911,595)
749,359(276,045)(42,421)

(111)

(23)

(1,023)0(10,000)(7,353)
167,7760(0)(5,719)242,211

0(91,892)(67,568)
1,541,641

Millions of yen
Thousands of
U.S. dollars
FY2019(April 1, 2019 toMarch 31, 2020)

FY2019(April 1, 2019 toMarch 31, 2020)

FY2018(April 1, 2018 toMarch 31, 2019)¥27,458
28,615
7,176(2,176)
9,824¥45,763
23,660226(2,150)9,245$252,308(6,442)(7,355)(59,195)(89)–(167,403)
16,004

1,054
3,299(252,393)(13,898)(819)–(1,538,211)
147,064(8,832)(1,551)(81,160)(82,072)

18,248(754,139)

4,975

3,643

45,7185,134(5,352)

47,183

1,901
11,261(154,664)
5,037(9,731)
108(10,614)(169,864)

1,260(2,057)(178,356)
4,304(9,325)820(9,882)(192,438)

17,468103,477(1,421,155)
46,290(89,423)997(97,537)(1,560,828)

262,940
65,942(20,002)90,270Note
Cash flows from investing activities
Purchase of investment securities
Proceeds from sales or redemption of investment
securities
Proceeds from sale of shares of subsidiaries andassociates
Purchase of property, plant and equipment, andintangible assets
Proceeds from sale of property, plant andequipment, and intangible assets
Purchase of investment property
Proceeds from sale of investment property
Payments for acquisition of subsidiaries
Proceeds from acquisition of subsidiaries
Proceeds from sale of businesses
Payments for loans receivableCollection of loans receivable
Other
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Net increase (decrease) in commercial papers
Net increase (decrease) in securitized borrowings(short-term)
Proceeds from securitized borrowings (long-term)
Repayments of securitized borrowings (long-term)
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from issuance of bonds
Redemption of bonds
Repayments of lease liabilities
Payments for acquisition of interests in subsidiaries
from non-controlling interests
Proceeds from sale of treasury shares
Payments for purchase of treasury shares
Dividends paid
Net cash provided by financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

8
8

-9-

–
–
–
–

(447)

3

(4,110)27,11882,642
109,761

9,462
73,17982,642

249,186
759,372
1,008,558

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

remeasured at fair value as of the date when the control is lost.

1.

Non-controlling interests in subsidiaries are identified separately from the Group’s interests.
Comprehensive income of subsidiaries is attributed to owners of parent and non-controlling interests,
even if this results in a negative balance in non-controlling interests.

REPORTING ENTITY
Credit Saison Co., Ltd. (the “Company”) is a company located in Japan. The Company’s consolidated
financial statements include the accounts of the Company and its subsidiaries (the “Group”), as well as
the Group’s interests in its associates and joint ventures. The Group is engaged in the following
operations: payment business, lease business, finance business, real estate-related business, andentertainment business. The details of each business are stated in Note “7. Operating Segments.”

When the reporting date of a subsidiary is different from that of the Company, the subsidiary prepares,
for consolidation purposes, additional financial information as of the reporting date of theconsolidated financial statements.
(b)

2.

BASIS OF PREPARATION(1)

Compliance with IFRSThe consolidated financial statements of the Group are prepared in accordance with International
Financial Reporting Standards (IFRS) pursuant to the provisions of Article 93 of Regulations for
Consolidated Financial Statements, as they meet the requirements for a “Specified Company
Complying with Designated International Accounting Standards” as prescribed in Article 1-2 of theRegulation on Terminology, Forms, and Preparation Methods of Consolidated Financial Statements(Ministry of Finance Order No. 28 of 1976).
The consolidated financial statements were approved on June 18, 2020, by Masahiro Yamashita,
Representative, Executive President and Chief Operating Officer (COO).

A joint venture is an entity jointly controlled by two or more parties including the Group under thecontractually agreed sharing of control over economic activities of the joint venture, which exists
only when strategic financial and operating decisions related to the relevant activities require
unanimous consent of the parties sharing control.

(2) Basis of measurement
The consolidated financial statements of the Group have been prepared based on historical cost, except
for certain items such as financial instruments that are measured at fair value. See Note “3. Significant
Accounting Policies” for details.
(3)

3.

The equity method is applied to associates and joint ventures from the date that the Group hassignificant influence to the date that it loses the significant influence. Goodwill recognized uponacquisition (net of accumulated impairment losses) is included in the investment in associates andjoint ventures.

Functional currency and presentation currency
The consolidated financial statements of the Group are presented in Japanese yen, which is thefunctional currency of the Company. Amounts less than one million yen are rounded down to thenearest million yen. Japanese yen amounts have been translated into U.S. dollars at the rate of ¥108.83= U.S.$1, the approximate exchange rate on March 31, 2020, for the convenience of the reader.
Amounts less than one thousand dollars are rounded down to the nearest thousand dollars. Thesetranslations should not be construed as representations that Japanese yen amounts have been or could
be converted into U.S. dollars at that or any other rate.
SIGNIFICANT ACCOUNTING POLICIES

If any accounting policies applied by an associate or a joint venture differ from those applied by theGroup, adjustments are made to the financial statements of the associate or joint venture.
(2)

Business combinations
Business combinations are accounted for by the acquisition method. Consideration transferred ismeasured as the sum of the acquisition-date fair values of assets transferred, liabilities assumed, andequity interests issued by the Company in exchange for control over the acquiree.
Any identifiable assets acquired and liabilities assumed by the Company at the acquisition date arerecognized at fair value as of the acquisition date, except for the following:(1) Basis for consolidation(a)

Associates and joint ventures
An associate refers to an entity over which the Group has significant influence over financial andoperating policy decisions of the entity but does not have control or joint control of the entity. If theGroup holds at least 20% but not more than 50% of the voting rights of an entity, the Group ispresumed to have a significant influence over the entity. Even if the Group holds less than 20% of
the voting rights of an entity, the entity may be considered as an associate of the Group when theGroup can exert significant influence over financial and operating policy decisions or other business
policy decisions of the entity by virtue of an agreement with other investors. Conversely, even if theGroup holds 20% or more of the voting rights of an entity, the equity method is not applied to theentity when it is determined that the Group does not have a significant influence over the entity.

Subsidiaries
Subsidiaries refer to entities controlled by the Group. The Group controls an entity when it is exposed,or has rights, to variable returns arising from its involvement with the entity and has the ability toaffect those returns through its power over the entity. Financial statements of the subsidiaries areincluded in the consolidated financial statements from the date when control is obtained until thedate when control is lost.

・ Deferred tax assets and liabilities, and assets and liabilities arising from employee benefit
contracts
・ Share-based payment arrangements of the acquiree
・ Assets or disposal groups that are classified as held for sale in accordance with IFRS 5, “Noncurrent Assets Held for Sale and Discontinued Operations.”

If any accounting policies applied by a subsidiary differ from those applied by the Group, adjustments
are made to the subsidiary’s financial statements. Intercompany payables and receivables and internaltransactions within the Group as well as unrealized gains or losses arising from internal transactions
within the Group are eliminated in preparing the consolidated financial statements.

The Group measures goodwill as the excess of the aggregate of the consideration transferred and theamount of any non-controlling interests in the acquiree measured at the acquisition date over the netof acquisition-date amounts of identifiable assets acquired and liabilities assumed. Negative goodwill,
if any, is recognized immediately in profit or loss.

Any changes in ownership interest in a subsidiary that do not result in a loss of control are accounted
for as equity transactions. The difference between the amount by which non-controlling interests areadjusted and the fair value of the consideration is directly recognized in equity as interests attributableto owners of parent.

The Group measures non-controlling interests in the acquiree for each business combination, either atfair value or at the proportionate share of the acquiree’s identifiable net assets.

If the Group loses control over a subsidiary, gains or losses associated with the loss of control arerecognized in profit or loss. Any interest retained in the former subsidiary after the loss of control is- 10 -

Transaction costs attributable to business combinations incurred by the Group are expensed as incurred,
except for costs related to the issuance of debt or equity instruments.
As an acquisition of additional non-controlling interests after obtaining control is accounted for as an- 11 -

equity transaction, no goodwill is recognized for such transactions.

debt instruments measured at fair value through other comprehensive income:If the business combination is achieved in stages, the Group remeasures its previously held equity
interest in the acquiree at the acquisition-date fair value and recognizes the resulting gain or loss, ifany, in profit or loss.

・ The financial assets are held within a business model whose objective is achieved by bothcollecting contractual cash flows and selling financial assets.
・ The contractual terms of the financial asset give rise on specified dates to cash flows that aresolely payments of principal and interest on the principal amount outstanding.

(3) Foreign currency translation(a)Foreign currency transactions

Operational investment securities include stocks, investment trusts, and investments in partnerships,
which are held solely for the purpose of investment. Investment securities include stocks,
investment trusts, investments in partnerships held for the purpose of promoting business primarily
through business, and capital alliances.

Foreign currency transactions are translated into the functional currency of each entity of the Groupby using the spot exchange rate at the date of the transaction.
Foreign currency monetary assets and liabilities at the end of the reporting period are translated into
the functional currency using the spot exchange rate at the end of the reporting period.

2)(i) Financial assets measured at amortized cost

Exchange differences arising from translations or settlements are recognized in profit or loss.
Exchange differences arising from the translation of equity instruments measured at fair value
through other comprehensive income are recognized in other comprehensive income.

Financial assets are measured at amortized cost using the effective interest method.
(ii) Debt instruments measured at fair value through other comprehensive income
A gain or loss on debt instruments measured at fair value through other comprehensive income
is recognized in other comprehensive income, except for impairment gains or losses and foreignexchange gains and losses, until the debt instrument is derecognized or reclassified. When thefinancial asset is derecognized, cumulative gain or loss previously recognized in othercomprehensive income is reclassified to profit or loss.

(b) Foreign operations
Assets and liabilities of foreign operations, including any goodwill arising on the acquisition of aforeign operation and any fair value adjustments, are translated into Japanese yen using the spot
exchange rate at the end of the reporting period, while income and expenses are translated into
Japanese yen using average exchange rates during the period.

(iii) Financial assets measured at fair value through profit or loss

Exchange differences arising from the translation of financial statements of foreign operations arerecognized in other comprehensive income.

A gain or loss on financial assets measured at fair value through profit or loss is recognized in
profit or loss.

Upon the disposal of a foreign operation, exchange differences relating to the foreign operation arereclassified to profit or loss as part of the gain or loss on disposal.
(4)

Financial instruments(a)Financial assets

1)

Initial recognition and measurement

Subsequent measurement
After initial recognition, financial assets are measured as follows, depending on their classifications:Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated
into the functional currency using the exchange rate at the date when the fair value was measured.

(iv) Equity instruments measured at fair value through other comprehensive income
A gain or loss on equity instruments designated as those measured at fair value through othercomprehensive income is recognized in other comprehensive income.
Dividends received from such financial assets are recorded in profit or loss under “Other income.”

The Group classifies financial assets into financial assets as measured at amortized cost, fair value
through profit or loss, or fair value through other comprehensive income. The Group determinessuch classification at the time of initial recognition.
The Group recognizes financial assets on the transaction date when it becomes a party to thecontract on such financial instruments.
All financial assets are measured at fair value plus any transaction costs, except for those classified
as financial assets measured at fair value through profit or loss.
Financial assets that meet both of the following conditions are classified as financial assets
measured at amortized cost:
・ The assets are held within a business model whose objective is to hold the assets in order tocollect contractual cash flows.
・ The contractual terms of the financial asset give rise on specified dates to cash flows that aresolely payments of principal and interest on the principal amount outstanding.
Financial assets other than those measured at amortized cost are classified as financial assets
measured at fair value.
Equity instruments measured at fair value are individually designated as measured at fair value
through profit or loss or at fair value through other comprehensive income, and such designation isapplied consistently after the initial recognition.
Debt instruments measured at fair value that meet both of the following conditions are classified as- 12 -

3)

Derecognition of financial assets
Financial assets are derecognized if the contractual rights to receive cash flows from the financial
assets expire, or if the Group has transferred substantially all the risks and rewards of ownership ofthe financial assets. If the Group retains control of a transferred asset, the asset and any liability
associated with the asset is recognized to the extent of its continuing involvement.

4)

Impairment of financial assets
Allowance for doubtful accounts is recognized for expected credit losses on financial assets
measured at amortized cost and debt instruments measured at fair value through othercomprehensive income.
If the credit risk on financial assets at the end of the reporting period has not increased significantly
since initial recognition, allowance for doubtful accounts is measured at an amount equal to theamount of expected credit losses from possible defaults in the next 12 months after the end of thereporting period (12-month expected credit losses). In this case, 12-month expected credit losses
are collectively estimated to measure the allowance for doubtful accounts based on informationsuch as the probability of default, subsequent collection rates, and other reasonable and supportable
information including forward-looking data.
Conversely, if the credit risk on financial assets at the end of the reporting period has increased
significantly since initial recognition, allowance for doubtful accounts is measured at an amountequal to the expected credit losses that result from all possible default events over the expected lifeof such financial assets (lifetime expected credit losses). In this case, allowance for doubtful
accounts is determined by estimating the lifetime expected credit losses related to the collection of- 13 -

such financial assets based on information such as the probability of default, future recoverable
amounts, and other reasonable and supportable information including forward-looking data. In
principle, it is presumed that the credit risk on financial assets has increased significantly whencontractual payments are more than 30 days past due. In assessing whether or not the credit risk has
increased significantly, the Group takes reasonably available and supportable information in
addition to past due information.

of the hedged items arising from the hedged risk.
A hedging relationship is considered to be effective when it meets all the following requirements:
・ There is an economic relationship between the hedged item and the hedging instrument.
・ The effect of credit risk does not dominate the value changes that result from that economic
relationship.

However, for trade receivables that result from transactions that are within the scope of IFRS 15,“Revenue from Contracts with Customers” (IFRS15) and that do not contain a significant financing
component, allowance for doubtful accounts is always recognized at an amount equal to the lifetime
expected credit losses, regardless of whether or not the credit risk has increased significantly sinceinitial recognition.

・ The hedge ratio of the hedging relationship is the same as that resulting from the quantity of thehedged item that the Group actually hedges and the quantity of the hedging instrument that theGroup actually uses to hedge that quantity of hedged item.
The Group prospectively assesses whether the hedging relationships will be effective on an ongoingbasis. Hedge ineffectiveness may arise when the fair value change on the hedging instrument exceeds
or falls below that of the hedged item.

As a general rule, the Group determines that a default has occurred when the contractual paymentof a receivable is 90 days or more past due. When it is determined that there is a default of areceivable, such receivable is deemed to be a credit-impaired receivable.

Hedge ratio is appropriately determined based on an economic relationship between the hedged itemand hedging instrument as well as the Group’s risk management strategies.

The Group directly reduces the gross carrying amount of a financial asset when it has no reasonable
expectations of recovering a financial asset in its entirety or a portion thereof.
(b)

Financial liabilities

1)

Initial recognition and measurement
The Group classifies financial liabilities as subsequently measured at amortized cost, except forderivatives and financial guarantee liabilities. The classification is made at the time of initialrecognition.

If a hedging relationship ceases to meet the hedging effectiveness requirement, but the risk
management objective remains the same, the Group adjusts the hedge ratio so that the hedging
relationship becomes effective again. The Group terminates the hedging accounting if the risk
management objective for the designated hedge relationship is changed.
Hedges that qualify for hedge accounting are classified and accounted for as follows:1)

Debt securities issued by the Group are initially recognized at the date of issuance. All the otherfinancial liabilities are recognized on the transaction date when the Group becomes a party to thecontract of such financial liabilities.
Financial liabilities measured at amortized cost are recognized at an amount after deducting
transaction costs directly attributable to the issuance of the liability.
2)2)

Subsequent measurement

Amortization using the effective interest method as well as gains and losses arising from
derecognition are recognized as “Finance costs” in profit or loss of the period.

The amount posted in other comprehensive income is reclassified to profit or loss when the hedgedtransaction affects profit or loss.

Derecognition of financial liabilities

If a forecast transaction or a firm commitment is no longer expected to occur, cumulative gains orlosses previously recognized in equity through other comprehensive income are reclassified to
profit or loss. If a hedged future cash flow is still expected to occur, the amount previously
recognized in equity through other comprehensive income remains in equity until the future cash
flow occurs.

The Group derecognizes financial liabilities when they are extinguished (i.e., when the obligation
specified in the contract is discharged), canceled, or expire.
(c)

Presentation of financial assets and financial liabilities
Financial assets and financial liabilities offset each other with the net amount presented in the
consolidated statement of financial position only if the Group has a legal right to offset and has theintention to either settle amounts on a net basis or realize the assets and settle the liabilities
simultaneously.

(d)

Derivatives and hedge accounting
The Group utilizes derivatives, such as interest rate swaps, for the purpose of hedging interest raterisk and foreign currency risk. These derivatives are initially recognized at fair value at the date when
the contracts are entered into, and subsequently remeasured at fair value.
At the inception of the hedging relationship, there is formal designation and documentation of thehedging relationship to which the Group plans to apply hedge accounting as well as the Group’s risk
management objective and strategy for undertaking the hedge. That documentation includes
identification of the hedging instrument, the hedged item or transaction, the nature of the risk being
hedged, and the description on how the Group will assess the effectiveness of changes in fair valueof the hedging instruments used in offsetting its exposures to changes in the fair value or cash flows- 14 -Cash flow hedges
The effective portion of gains or losses on hedging instruments is recognized in othercomprehensive income in the consolidated statement of comprehensive income, while theineffective portion is immediately recognized in profit or loss in the consolidated statement ofincome.

After initial recognition, financial liabilities are measured at amortized cost using the effective
interest method, except for derivatives and financial guarantee liabilities.

3)

Fair value hedges
Fair value changes on derivatives are recognized in profit or loss of the consolidated statement ofincome. Fair value changes on hedged items attributable to hedged risks are recognized in profit orloss in the consolidated statement of income with the carrying amounts of the hedged items being
adjusted.

(e)Financial guarantee liabilities
A financial guarantee contract is a contract that requires a contract issuer to make specified payments
to reimburse the holder of a guarantee contract for a loss it incurs because a specified debtor fails to
make payment when due in accordance with the original or modified terms of a debt instrument.
Revenue is recognized by multiplying the balance of guarantee by the guarantee fee rate.
Financial guarantee liability is measured at fair value when the contract is initially signed. Afterinitial recognition, the amount is measured at the higher of the following:- 15 -

1)
2)

The amount of allowance for doubtful accounts calculated in accordance with the section above
titled “Impairment of financial assets”(c)

The initially measured amount less the cumulative amount of revenue recognized in accordancewith IFRS 15(5) Cash and cash equivalents

The estimated useful lives of main assets are as follows:

Cash and cash equivalents comprise cash on hand, demand deposit, and short-term investments withmaturities of three months or less from the purchase date, which are readily convertible into cash andsubject to insignificant risk of changes in value.
(6)

Inventories(9)

Recognition and measurement

10 to 20 years

Investment property

Depreciation is calculated based on the depreciable amount. The depreciable amount is calculated bydeducting the residual value from the acquisition cost, or the amount equivalent to the acquisition cost.
Depreciation is recognized in profit or loss over the estimated useful life of each asset, other than land,by mainly using the straight-line method.

Property, plant and equipment are measured by using the cost model and are stated at acquisition costless accumulated depreciation and accumulated impairment losses. Acquisition cost includes costs
directly attributable to the acquisition of assets and costs involved in dismantling, removing andrestoring. Gain or loss on disposal of an item of property, plant and equipment represents the net
amount of proceeds from disposal less carrying amount, which is recognized in profit or loss.

The estimated useful lives of main assets are as follows:
Investment property

Depreciation(10) Leases

The estimated useful lives of main assets are as follows:(a)

Buildings

28 to 47 years

Other

5 to 10 years(8) Intangible assets

27 to 50 years

An investment property is derecognized on disposal or when the investment property is permanently
withdrawn from use and no future economic benefits are expected from its disposal. Gains or losses
arising from the derecognition are calculated as the difference between the net disposal proceeds andthe carrying amount of the asset and are recognized in profit or loss at the time of derecognition.

Depreciation is calculated based on the depreciable amount. The depreciable amount is calculated bydeducting the residual value from the acquisition cost of the asset. Depreciation is recognized in
profit or loss by mainly using the straight-line method over the estimated useful life of eachcomponent of property, plant and equipment. Land and construction in progress are not subject todepreciation.

Depreciation methods, estimated useful lives, and residual values are reviewed at the end of eachreporting period. Any change is applied prospectively as a change in accounting estimates.
(a)

5 to 15 years

Other

Investment property is property (including property under construction) held to earn rental income orcapital gains, or both. Investment property is measured under the cost model, and is measured at costless accumulated depreciation and accumulated impairment losses.

(7) Property, plant and equipment(b)

SoftwareAmortization methods, estimated useful lives, and residual values are reviewed at the end of eachreporting period, and any change is applied prospectively as a change in accounting estimates.

Inventories are measured at the lower of cost or net realizable value. Net realizable value is determinedat the estimated selling price in the ordinary course of business, less estimated costs for completionand estimated selling expenses. Cost is calculated mainly based on the specific identification method.
(a)Amortization
After initial recognition, intangible assets other than goodwill and software in progress are amortizedover their estimated useful lives under the straight-line method and are recognized in profit or loss,
except for intangible assets with indefinite useful lives.

Leases as a lessee
The Group has adopted IFRS 16, “Leases” (“IFRS 16”), from the current fiscal year. However, basedon the transition requirements, the Group elected not to restate the information, which is presented
as comparative information for the previous fiscal year. Accordingly, comparative information isstated in accordance with IAS 17 “Leases” (“IAS 17”). The accounting policies for the year ended
March 31, 2020 are as follows.
At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contractis, or contains, a lease if the contract conveys the right to control the use of an identified asset for aperiod of time in exchange for consideration.

Goodwill
The Group measures goodwill as the excess of the aggregate of the consideration transferred and theamount of any non-controlling interests in the acquiree measured at the acquisition date over the netof acquisition-date amounts of identifiable assets acquired and liabilities assumed (ordinarily in theirfair value).
Goodwill is not amortized, but is tested for impairment in each reporting period or each time when
there is an indication of impairment.
Impairment losses of goodwill are recognized in the consolidated statement of income and notreversed subsequently.
Goodwill is stated at cost less accumulated impairment losses in the consolidated statement offinancial position.

(b) Intangible assets other than goodwill
Intangible assets acquired individually are measured under the cost model. Intangible assets are statedat cost less accumulated amortization and accumulated impairment losses. Included in costs areborrowing costs to be capitalized.
- 16 -

If a contract is, or contains, a lease, the Group recognizes a right-of-use asset and a lease liability at
the commencement date. The lease liability is measured at the present value of the lease paymentsthat are not paid at the commencement date. The right-of-use asset is measured at cost, which is theamount of the initial measurement of the lease liability, adjusted for any lease payments made at or
before the commencement date, any initial direct costs incurred by the lessee, and any other costs
such as obligations to restore the leased assets to its original condition as required under leaseagreements.
After initial recognition, the right-of-use asset is depreciated over the shorter of the useful life or thelease term under the straight-line method.
Lease payments are allocated to finance costs and repayments of lease liabilities based on the interest
method. Finance costs are recognized in the consolidated statement of income.
However, for short-term leases within a lease term of 12 months or leases for which the underlying
asset is of low value, the right-of-use asset and lease liability are not recognized. The lease payments
are recognized as expenses over the lease term under the straight-line method.

- 17 -

(b)Leases as a lessor

constructive obligation for the payment and a reliable estimate can be made for the amount.

The Group classifies each of its leases as either an operating lease or a finance lease. A lease isclassified as a finance lease if it transfers substantially all the risks and rewards incidental toownership of an underlying asset. A lease is classified as an operating lease if it does not transfer
substantially all the risks and rewards incidental to ownership of an underlying asset.

(13) Accounting policy for significant provisions
A provision is recognized when the Group has a present legal or constructive obligation as a result ofa past event, it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation, and a reliable estimate can be made of the amount of the obligation. When thetime value of money is significant, the estimated future cash flows are discounted to their present value
by using a pretax discount rate that reflects the time value of money and risks specific to the liability.
Unwinding of the discounted amount arising from the passage of time is recognized in profit or loss.

For the finance lease, the Group recognizes assets held under a finance lease in its consolidated
statement of financial position at the commencement date and presents them as a receivable at an
amount equal to the net investment in the lease.
For the operating lease, the Group presents assets subject to operating leases in its consolidated
statement of financial position and recognizes lease payments to be received as income over the leaseterm under the straight-line method in the consolidated statement of income.

(14) Revenue
Centering on the card business, the Group engages in multiple business domains such as the Internet
business, lease business, and finance business. For the purpose of segment reporting, the Group’sbusinesses are divided into five reportable segments: Payment business, Lease business, Financebusiness, Real estate-related business, and Entertainment business. Revenue recognition criteria bysegment are as follows:(11) Impairment of non-financial assets
At the end of each reporting period, the Group reviews the carrying amount of non-financial assets todetermine whether there is any indication of impairment. If any such indication exists, the recoverable
amount of the asset is estimated. Recoverable amounts of goodwill and intangible assets withindefinite useful lives or those not yet available for use are estimated at the same time each year,
regardless of whether or not there is an indication of impairment.
The recoverable amount of an asset or a cash-generating unit is the higher of value in use or fair valueless costs of disposal. In calculating the value in use, the estimated future cash flows are discounted
to their present value by using a pretax discount rate that reflects the time value of money and risks
specific to the asset. Assets that are not tested individually for impairment are integrated into thesmallest cash-generating unit that generates cash inflows through continuing use that are largely
independent of those from other assets or groups of assets. At the time of goodwill impairment testing,cash-generating units to which goodwill is allocated are integrated so that impairment testing is
conducted in a manner that reflects the smallest unit with which goodwill can be associated. Goodwill
acquired in a business combination is allocated to each cash-generating unit that is expected to benefit
from synergies of the combination.

(a)

1)

(12) Employee benefits(a)Revenue is recognized at the time when a credit card is used, which is when service is completed
and the performance obligation is satisfied under the contracts with affiliated stores, who are
customers of the Group.
(ⅱ) Customer fees
Customer fees mainly represent fees received from cardholders for using revolving payments
and other services. As stated in Note “3. Significant Accounting Policies (4) Financial
instruments, (a) Financial assets, 2) Subsequent measurement,” revenue is recognized under
IFRS 9, “Financial Instruments” (“IFRS 9”), using the effective interest method.

(b)(iii) Annual membership fees, etc.
Revenue is recognized over a certain period determined under the contracts with cardholders towhich performance obligation arises for the membership fees received.
2)

3)

Short-term employee benefits
Undiscounted amount of short-term employee benefits is recognized as an expense in the period inwhich the employees render related services.
Expenses for bonuses and paid absences are recognized as a liability at an amount estimated to be
paid based on applicable policies for the bonuses and paid absences when the Group has a legal or- 18 -

Credit card cash advance
Revenue from cash advance services represents fees received from cardholders for using credit card
cash advance via credit cards or loan cards issued by the Group. As stated in Note “3. Significant
Accounting Policies (4) Financial instruments, (a) Financial assets, 2) Subsequent measurement,”
revenue is recognized under IFRS 9 using the effective interest method.

Defined contribution pension plans
The Group adopts defined contribution pension plans. Defined contribution pension plans are postemployment benefit plans under which an employer pays fixed contributions to an independent entity
and has no legal or constructive obligation to pay further contributions. Contributions under thedefined contribution pension plans are recognized in profit or loss in the period in which employees
render the related services.

Credit card shopping(i) Affiliated store fees

Impairment losses are recognized in profit or loss when the carrying amount of an asset or a cashgenerating unit exceeds its recoverable amount. Impairment loss recognized for a cash-generating unit
is first allocated to reduce the carrying amount of goodwill allocated to the unit, and subsequently
allocated to reduce other assets of the unit on a pro-rata basis, based on the carrying amount of each
asset in the unit.
Impairment losses recognized for goodwill are not reversed. Impairment loss recognized in priorperiods for other assets is assessed at the end of each reporting period to determine whether there is
any indication that such impairment losses may no longer exist or may have decreased. If any change
has been made to the estimate used to determine the recoverable amount of an asset, an impairment
loss for the asset is reversed up to the carrying amount of the asset that would have been determined
had no impairment loss been recognized for the asset in prior years (net of any associated depreciation
and amortization expenses).

Payment business
The payment business provides services such as credit card shopping, credit card cash advance, termloans, and processing/agency for other companies’ credit cards and business agency. Revenue
recognition criteria by service are as follows:

Term loans
Revenue from term loans services represents fees received from cardholders or customers who
obtain loans directly from the Group in forms other than credit card cash advance. As stated in Note
“3. Significant Accounting Policies, (4) Financial instruments, (a) Financial assets, 2) Subsequent
measurement,” revenue is recognized under IFRS 9 using the effective interest method.

4)

Processing/agency for other companies’ credit cards and business agency
Processing/agency for other companies’ credit cards are services provided on a contractual basis forprocessing and the use of the Company’s ATMs, for which the Company receives fees from its
partner companies. Business agency refers to card processing and receivables collection businesses
conducted by subsidiaries as outsourcing businesses, which receive fees from their partnercompanies. Revenue is recognized when service is rendered and the performance obligation issatisfied on a contractual basis.
- 19 -

(b)Lease business
Revenue is recognized under IFRS 16, “Leases” (“IFRS 16”). For details, see Note “3. Significant
Accounting Policies, (10) Leases, (b) Leases as a lessor.”(c)

Finance business

1)

Credit guarantees

Deferred tax assets and liabilities are recognized for temporary differences between the carrying
amounts of assets and liabilities in the consolidated statement of financial position and their tax bases,
and for unused tax losses and unused tax credits.

Fees are received when the Group guarantee loans provided by their partner financial institutions.
Revenue is recognized under IFRS 9. For details, see Note “3. Significant Accounting Policies, (4)Financial instruments, (e) Financial guarantee liabilities.”
2)

Finance-related
Fees are directly received from customers who obtain loans directly from the Group. As stated in
Note “3. Significant Accounting Policies, (4) Financial instruments, (a) Financial assets, 2)
Subsequent measurement,” revenue is recognized under IFRS 9 using the effective interest method.

(d)Real estate-related businessFor real estate sales, revenue is recognized when property is delivered to customers, which is whena performance obligation is satisfied. For real estate rentals, revenue is recognized under IFRS 16.

(e)Current tax represents the amount of estimated taxes to be paid or refunded relating to taxable profit
or losses for the current period, using tax rates that have been enacted or substantively enacted by theend of the reporting period, which is adjusted for estimated taxes to be paid or refunded for prior years.

Entertainment business
Revenue is recognized primarily when services are rendered at stores engaged in amusement business,
which is when a performance obligation is satisfied.

Revenues from the above businesses are recognized at an amount reflecting the amount of consideration
to which the Group expects to be entitled in exchange for transferring the goods or services to thecustomer based on the following five-step approach in accordance with IFRS 15, except for interest anddividend income received under IFRS 9 and income from lease arrangements under IFRS 16:
Step 1:

Identify contract(s) with a customer

Step 2:

Identify the performance obligations in the contract

Step 3:

Determine the transaction price

Step 4:

Allocate the transaction price to performance obligations in the contract

Step 5:

Recognize revenue when (or as) the performance obligation is satisfied

Revenue recognized under IFRS 15 is based on contracts with customers, and the amount of revenue
containing variable consideration is immaterial. No significant financing component is included in theamount of promised consideration.
(15) Government Grants
The Group accounts for grants for expenses required to return points to operators and consumers
using cashless payments based on the “Point Reward Project for Consumers using Cashless Payment”
announced by the Payments Japan Association as government grants.
These government grants are recognized when the conditions attached to the issuance of the grants
are satisfied and there is reasonable assurance that the grants will be received. Income related togovernment grants are recognized in profit or loss over the period in which the expenses reimbursedby the grants are recognized, and are deducted from related expenses. The amount of government
grants is finalized after the completion of the government assistance project.
(16) Income taxes
Income taxes consist of current tax and deferred tax, and are recognized in profit or loss, except fortaxes arising from business combinations and items directly recognized in equity or othercomprehensive income.
- 20 -

Deferred tax assets and liabilities are not recognized for temporary differences arising from the initialrecognition of assets and liabilities in transactions other than business combinations that affect neither
accounting nor taxable profit or loss. Deferred tax liabilities are not recognized for taxable temporary
differences associated with investments in subsidiaries and associates when the Company is able tocontrol the timing of the reversal of the temporary differences and it is probable that the temporary
differences will not reverse in the foreseeable future. In addition, deferred tax assets are recognizedfor deductible temporary differences associated with investments in subsidiaries and associates andinterests in joint ventures only to the extent that it is probable that the temporary differences willreverse in the foreseeable future and taxable profit will be available against which the temporary
differences can be utilized. Also, deferred tax liabilities are not recognized for taxable temporary
differences arising from the initial recognition of goodwill. Deferred taxes and liabilities are measured
using tax rates that are expected to be applied when they are reversed in accordance with laws enacted
or substantively enacted at the end of the reporting period.
Deferred tax assets are recognized for unused tax losses and deductible temporary differences to theextent that it is probable that future taxable profit will be available against which the unused tax losses
and deductible temporary differences can be utilized. The carrying amount of a deferred tax asset isreviewed at the end of each reporting period and reduced to the extent that it is no longer probable thattax benefits can be utilized.
Deferred tax assets and liabilities are offset against each other if an entity has a legally enforceable
right to set off tax assets against tax liabilities and when either of the following are met: income taxes
are levied by the same taxation authority on the same taxable entity; or income taxes are levied by thesame taxation authority on different taxable entities, but they either have the intention to settle deferred
tax assets and liabilities on a net basis or plan to settle deferred tax assets and liabilities simultaneously.
(17) Earnings per share
Basic earnings per share are calculated by dividing profit or loss attributable to common stock holdersof the parent entity by the weighted-average number of common stock outstanding adjusted bytreasury shares during the period. Diluted earnings per share are calculated taking into consideration
the effect of all dilutive shares.
(18) Segment information
An operating segment is a component of business activities from which an entity earns revenues andincurs expenses (including transactions with other operating segments). Operating results of all theoperating segments are discrete financial information and are regularly reviewed by the Company’sboard of directors (the “Board of Directors”), who make decisions about resources to be allocated toindividual segments and assess segment performance.
Operating results of a segment reported to the Board of Directors include those directly attributable tothe segment and also those that can be allocated to the segment on a reasonable basis.
(19) Treasury shares
Treasury shares are measured at cost and presented as a deduction from equity. No gain or loss isrecognized on the purchase, sale, or cancellation of treasury shares of the Company. The difference
between the carrying amount and the consideration thereof at the time of sale is recognized as capitalsurplus.
(20) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction, or production of a qualifying
asset are capitalized and form part of the cost of the asset. A qualifying asset is an asset that necessarily
takes a substantial period of time to get ready for its intended use or sale.
- 21 -

Other borrowing costs are recognized as expenses as incurred.

assumed circumstances change.

(21) Business profit
Business profit is determined by adding or subtracting certain reconciliation items to or from profit
before tax.

Details of credit risk management are stated in Note “39. Financial Instruments, (4) Financial risk
management.”(b)

Given the nature and frequency of income and expenses, reconciliations are determined based on ajudgement of whether they can help provide effective comparative information on the Group’s
performance and appropriately reflect how the businesses are managed.

The Group offers rewards programs to credit card holders as their major benefit, under which points
earned based on the amount of credit card purchases can be used toward a variety of items. Provision
for point card certificates is determined by estimating costs that are expected to be incurred in the
future through the point exchange program, considering historical data of point exchanges and otherinformation.

For details on reconciliations, please refer to Note “7. Operating Segments.”
4.

SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS INVOLVING ESTIMATES(1)

Significant accounting estimates and assumptions

Provision for loss on interest repayments is recognized at an amount required in preparation for future
claims for interest repayments, considering historical data on repayments and other information.

The Group makes estimates and assumptions on future events in preparing the consolidated financial
statements in compliance with IFRS. Results of accounting estimates may differ from the related actual
results by nature.

Provisions are determined based on judgments and assumptions made by the Group’s management.
The Group believes that the estimates are significant because these estimates and assumptions may
significantly affect provision amounts if assumed circumstances change.

Estimates and assumptions with risks of significantly affecting the carrying amount of assets andliabilities in the following fiscal year are as follows.
Furthermore, deterioration in the economic situation, such as a slump in personal consumption or
corporate bankruptcies caused by the spread of the novel coronavirus disease, could have a significant
impact on the Group's performance and financial position. The novel coronavirus disease has various
impacts, particularly with regard to the credit risk on receivables held by the Group and the risk of
impairment of non-financial assets. In calculating the impact of these two risks on the Group’s
financial statements, the Group uses macroeconomic variables such as GDP and the unemployment
rate announced by think tanks. The calculation methodology is based on the deterioration ofmacroeconomic variables that correlate with credit risk and the reduction in future cash flows fromthe cash-generating units. In most think-tank scenarios, macroeconomic variables deteriorate in theyear ending March 2021 and recover in the year ending March 2022. Therefore, the Group calculates
the expected negative impacts on its operating performance under such scenarios. The Group adjusts
accounting estimates, such as the allowance for doubtful accounts and impairment of non-financial
assets, if the expected negative impacts relate to those estimates. Although the Group believes thatthese estimates are the best available at the time of preparation of the financial statements, there is ahigh degree of uncertainty in the assumptions used in the estimates. In the event that the novel
coronavirus disease spreads or accompanying changes in the economic situation occur in the future,
the estimates may be revised in the consolidated financial statements from the next fiscal year.
(a)

The nature and amounts of provisions recorded are stated in Note “24. Provisions.”(c)

The contents and amounts of impairment of non-financial assets are stated in Note “16. Impairment
of non-financial assets.
(d)- 22 -

Financial instruments measured at fair value, including derivatives
The Group determines the value of financial assets and liabilities measured at fair value, including
derivatives, using the following: quoted prices in an active market for identical assets or liabilities;
fair values determined by using inputs other than the abovementioned quoted prices that are
observable for the assets and liabilities, either directly or indirectly; or fair values determined byusing valuation techniques that incorporate unobservable inputs. Among others, fair values
determined using valuation techniques that incorporate unobservable inputs are based on
management judgments and assumptions, including appropriate actuarial assumptions andcalculation models. The Group believes that the estimates are material because these estimates andassumptions may significantly affect the fair values of financial instruments if assumed
circumstances change.

The Group recognizes expected credit losses for financial assets measured at amortized cost and debt
instruments measured at fair value through other comprehensive income as the present value ofdifferences between contractual future cash flows that it will receive in accordance with the contractand future cash flows that it expects to receive.

Regarding the probability of default, collection rate of receivables after default, forecast of economic
environment using macroeconomic variables, evaluation of correlation between macroeconomic
variables and expected credit losses, the Group believes that these estimates are significant because
the amount of impairment losses recognized for the financial assets may substantially differ if

Impairment of non-financial assets
The Group conducts impairment testing for property, plant and equipment, intangible assets
including goodwill and investment property. In determining recoverable amounts through the
impairment test, the Group makes certain assumptions on useful lives of assets, future cash flows,
pretax discount rate, long-term growth rate, and other factors. These assumptions are determinedbased on management’s best estimates and judgments; however, the assumptions may be affected byresults of changes in uncertain economic conditions in the future. If the assumptions need to bereviewed, this may significantly affect amounts recognized in consolidated financial statements inthe following fiscal years. As such, the Group believes that the estimates are significant.

Impairment of financial assets measured at amortized cost and debt instruments measured at fairvalue through other comprehensive income

In estimating future cash flows, the Group takes into account not only historical information such as
the possibility of default and the collection rate of receivables after default, but also reasonably
expected future events, and other factors. Specifically, when various macroeconomic variables are
expected to deteriorate in the future and the probability of default of the Group's receivables is
expected to increase, the Group adjusts the probability of default by using macroeconomic variables
such as GDP and unemployment rate, which are correlated with expected credit losses. At eachreporting date, we obtain the most recent future forecast values for macroeconomic variables andconsider whether the estimate needs to be changed.

Provisions
Certain provisions are recognized by the Group, including provision for point card certificates andprovision for loss on interest repayments.

The details and amounts of fair values of financial instruments are stated in Note “39. Financial
Instruments, (3) Fair value measurement of financial instruments.”(e)

Recoverability of deferred tax assets
Deferred tax assets and liabilities are recognized for temporary differences between the carrying
amounts of assets and liabilities in the consolidated statement of financial position and their tax bases.
Deferred tax assets and deferred tax liabilities are calculated using the tax rates expected to be
applicable at the time when the relevant deferred tax assets are realized or deferred tax liabilities aresettled in accordance with laws and regulations enacted or substantially enacted at the end of thereporting period. Deferred tax assets are recognized for all of the deductible temporary differences,
unused tax losses, and unused tax credits to the extent that it is probable that the Group will earnsufficient future taxable profit. Estimates of future taxable profit are based on subjective judgments- 23 -

and assumptions made by the Group’s management, which are supported primarily by business plansapproved by management. The Group believes that the estimates are significant because changes inassumed circumstances or amendment to tax laws in the future may significantly affect the amountsof deferred tax assets and deferred tax liabilities.
The details and amounts of deferred tax assets are stated in Note “20. Income Taxes.”(f)

CHANGES IN ACCOUNTING POLICIESThe Group started applying the following standard from the current fiscal year.
IFRS
IFRS 16

LeasesDescription of new standard and amendments
Amendments in lease accounting

Valuation of goodwill
Goodwill recorded is subject to annual impairment testing, regardless of whether there is anindication of impairment. The recoverable amount of goodwill is determined primarily based on the
projection of future cash flows, expected growth rates, and discount rates. The Group believes theestimates are significant because the determination is based on judgments and assumptions made by
the Group’s management in consideration of the business and market environments, and therefore,
the calculation result of the recoverable amount may significantly differ if assumed circumstanceschange.

(2)5.

Significant judgment when applying accounting policies
In the process of applying the accounting policies of the Group, management makes judgments that
could significantly affect amounts recognized in the consolidated financial statements.
The Group has an interest in structured entities, which are entities that have been designed so thatvoting or similar rights are not the dominant factor in deciding who controls the entity. The Group’s
management is required to determine whether or not it controls such structured entities. The Groupmakes such determination by evaluating all relevant facts and circumstances concerning the interestin the entities.

The Group has adopted IFRS 16, from the current fiscal year. IFRS 16 supersedes previous IAS 17 forlessees of a lease transaction. IFRS 16 introduces a single lease accounting model for lessees, which
requires a lessee to recognize a right-of-use asset and a lease liability for all leases with a lease term of
more than 12 months, unless the underlying asset is of low value. The recognized lease liability shallbe measured at the present value of the remaining lease payments, discounted using the lessee’s
incremental borrowing rate at the date of initial application. The weighted average of the lessee’s
incremental borrowing rate applied to lease liabilities recognized in the consolidated statement offinancial position at the date of initial application is 0.56％. In addition, when recognizing a leaseliability, the Group recognizes a right-of use asset in an amount (any prepaid or accrued lease payments
has been modified) equal to the lease liability, therefore there is no impact on retained earnings. Leaseliabilities are included in bonds and borrowings.
In adopting IFRS 16, the Group applies a method of recognizing the cumulative effect of initiallyapplying this standard at the date of initial application (the modified retrospective approach), which ispermitted as a transition method, rather than retrospectively adjusting each prior reporting period
presented.
In addition, considering the administrative burden, the Group applies the following practical expedients.
・ The Group will rely on its previous assessment under IAS 17 and IFRIC 4 “Determining whether
an Arrangement contains a Lease” and will not reassess whether a contract is, or contains, a leaseat the date of initial application.
・ A lease previously classified as operating leases applying IAS 17 may exclude initial direct costs
from the measurement of the right-of-use asset at the date of initial application
・ A lessee may use hindsight, such as in determining the lease term if the contract contains options
to extend or terminate the lease
A reconciliation of the operating lease commitments disclosed applying IAS 17 to the lease liabilities
recognized in the consolidated statement of financial position at the date of initial application is asfollows:
Millions of yen

Operating lease commitments disclosed as ofMarch 31,2019
Operating lease commitments disclosed as ofMarch 31,2019（discounted using theThousands of U.S.
dollars¥2,526$23,219

2,220

20,3991,584
18,729(46)
22,486

14,557
172,096(430)
206,622

incremental borrowing rate）
Finance lease obligations as of March 31,2019
Cancellable operating leases commitments
OthersLease liabilities as of April 1,2019- 24 -- 25 -

6.

NEWLY ISSUED STANDARDS AND INTERPRETATIONS NOT YET ADOPTED

7.

The standards and interpretations newly issued prior to the approval date of the consolidated financial
statements do not have significant impacts on the Group’s consolidated financial statements.

(1)

OPERATING SEGMENTS
General information regarding reportable segments
The Group’s reportable segments are components of the Group for which separate financial
information is available, and which are subject to regular review by the Board of Directors for the
purpose of making decisions about the allocation of management resource and assessing the segments’performance.
The Group engages in various customer-related business activities, mainly based on market needs andtypes of customer services. Accordingly, reportable segments are classified into the following:“Payment business,” “Lease business,” “Finance business,” “Real estate-related business,” and“Entertainment business.”
The Payment business mainly consists of the credit card business, which is the Group’s major segment,
and other closely related businesses.
The Lease business is centered on the leasing of office equipment.
The Finance business consists of the credit guarantee business and finance-related business.
The Real estate-related business offers both real estate sales and rentals.
In the Entertainment business, the Group is developing an amusement business centered on the
management of amusement centers/arcades.
The Group does not allocate assets and liabilities to business segments that are used by the Board of
Directors.
Effective for the fiscal year ended March 31, 2020, the business segment “Credit Service” wasrenamed to “Payment.” The change to this reportable segment’s name does not have an effect on thesegment information.
Note that the new business segment name is used in the table below for the fiscal year ended March
31, 2019.

(2)

Measurement basis
The accounting for reportable segments is already stated in Note “3. Significant Accounting Policies.”
The profit in reportable segments represents business profit. Intersegment revenue and transfer
amounts are based on prevailing market prices.

(3)

Profit or loss by reportable segments
FY2019 (From April 1, 2019 to March 31, 2020)

Revenue
Revenue from external customers
Intersegment revenue
Total
Net revenue
Segment profit (Business profit)(Note 1)
Reconciliations
Profit before tax
Other items
Interest income(Note 3)
Interest expense
Depreciation and amortization
Share of profit of investments
accounted for using equity method- 26 -

Real estate- Entertainrelated
ment(Millions of yen)
Adjustments Consolidat(Note 2)ed

Payment

Lease

Finance¥230,928
1,512
232,441
232,441¥12,2671
12,26912,269¥43,112–
43,112
43,112¥62,309951
63,261
17,227¥48,493048,4938,822¥397,112
2,466
399,579
313,873

6,297

2,951

18,004

6,957

1,969

–
–

–
–

–
–

–
–

–
–

90,326

1,474

22,275217

4,215
22,828

1,273
364

3,386
429

885
2,243

5,356

–

140

195

750

- 27 -

Total¥–(2,466)(2,466)(2,462)¥397,112–
397,112311,410

36,1803

36,184––––(8,725)27,4580

114,295(3)

114,291

64
2,752

9,825
28,619

(1)
(3)

9,824
28,615

6,442

–

6,442

Payment
Revenue
Revenue from external customers $2,121,924
Intersegment revenue
13,894
Total
2,135,818
Net revenue
2,135,818
Segment profit (Business profit)
57,865(Note 1)
Reconciliations–
Profit before tax–
Other items
Interest income
829,981(Note 3)
Interest expense
38,737
Depreciation and amortization
209,765
Share of profit of investments
49,215accounted for using equity method

Lease

Real estate- Entertainrelated
ment

Finance

Total(Thousands of U.S. dollars)
Adjustments Consolidat(Note 2)ed$112,719
17
112,737
112,737$396,149–
396,149
396,149$572,543
8,746
581,290
158,299$445,591 $3,648,928
2
22,661
445,593 3,671,589
81,064 2,884,068$– $3,648,928(22,661)–(22,661) 3,648,928(22,630) 2,861,438

27,119165,436

63,93418,097

332,45331

332,485

–
–

–
–

–
–

–
–

–
–

–
–

(80,176)
252,308

13,552

204,6811,999

2

1,050,217

11,6993,352

31,116
3,950

8,138
20,614588
25,29090,280262,973(10)(33)

90,270262,940

–

1,294

1,793

6,891

59,195–59,195(29) 1,050,188

FY2018 (From April 1, 2018 to March 31, 2019)

Revenue
Revenue from external customers
Intersegment revenue
Total
Net revenue
Segment profit (Business profit)(Note 1)
Reconciliations
Profit before tax
Other items
Interest income(Note 3)
Interest expense
Depreciation and amortization
Share of profit of investments
accounted for using equity method

Real estate- Entertainrelated
ment(Millions of yen)
Adjustments Consolidat(Note 2)ed

Payment

Lease

Finance¥227,102
1,415
228,518
228,518¥12,580
512,586
12,586¥39,231–
39,231
39,231¥42,099943
43,043
18,113¥50,827050,827
8,761¥371,842
2,365
374,207
307,212

16,915

5,720

19,209

8,305

2,078

–
–

–
–

–
–

–
–

–
–

Total

¥–
(2,365)(2,365)(2,357)¥371,842–
371,842304,855

52,2293

52,233––––(6,469)45,76389,505

1,569

18,557190

0109,822(3)

109,818

4,530
20,344

1,302
220

2,521
147

876
1,435

16
1,513

9,247
23,662

(1)
(1)

9,245
23,660

6,056

–

165

197

936

7,355

–

7,355

(Notes)1. Business profit is determined by adding or subtracting certain reconciliation items to or from profit before tax.
Given the nature and frequency of income and expenses, reconciliations are determined based on a judgement of
whether they can help provide effective comparative information on the Group’s performance and appropriatelyreflect how the businesses are managed.
2. Adjustments represent eliminations for intersegment transactions
3. Interest income represents “Interest income” per the consolidated statement of income, adjusted by fees that arepart of adjustments for the application of the effective interest method to financial assets.
4. The amount and contents of impairment losses on non-financial assets in each reporting segment recognized in
profit or loss in the consolidated statements of income are stated in Note “16. Impairment of non-financial assets’’.

- 28 -

Reconciliation from segment profit (business profit) to profit before tax
FY2019(From April 1, 2019
to March 31, 2020)¥36,184

FY2018(From April 1, 2018
to March 31, 2019)¥52,233

Thousands of
U.S. dollars
FY2019(From April 1, 2019
to March 31, 2020)$332,485

(663)

(951)

(6,099)

917

–

8,429

743

–

6,835

82
90
(8,979)(7,176)––(5,517)
(226)

762
832
(82,506)(65,942)(627)(1,266)(5,766)–(3,299)

–

–

(506)

–

(1,175)(8,725)27,458(219)(6,469)45,763(10,798)(80,176)
252,308

Millions of yen

Segment profit (Business profit)
Adjustments for the application of the effective
interest method to financial assets
Reconciliations (Other income)Gain on sale of shares of subsidiaries andassociates
Gain on sale of businesses
Other
Reconciliations (Other expenses)
Impairment losses on non-financial assets
Loss on valuation of investment securities(e.g. stocks)
System transfer cost
Impairment losses related to investments accounted
for using equity method
Other
Reconciliations – total
Profit before tax(4)

Information related to products and services
This information is omitted because the classification of products and services is the same as that ofreportable segments.

(5)

Information related to geographical areas
Revenue by region is not presented because revenues from Japanese customers account for the
majority of revenues in the consolidated statement of income.
In addition, the disclosure of non-current assets classified by region is omitted, given that the bookvalue of non-current assets located in Japan accounts for the majority of non-current assets in the
consolidated statement of financial position.

(6) Information about major customers
Information is omitted because no external customer accounts for 10% or more of revenue in the
consolidated statement of income.

- 29 -

8.

CASH AND CASH EQUIVALENTS

11. OPERATIONAL INVESTMENT SECURITIESThe breakdown of cash and cash equivalents is as follows:
Millions of yen

Cash and deposits
Securities
Total

9.

FY2019(As of March 31,
2020)¥109,761−¥109,761

FY2018(As of March 31,
2019)¥80,9421,700¥82,642

The breakdown of operational investment securities is as follows:
Thousands of
U.S. dollars
FY2019(As of March 31,
2020)$1,008,558−$1,008,558

TRADE AND OTHER RECEIVABLES

Unlisted stocks
Funds for real estate
Funds for unlisted stocks
Other
Total

Millions of yen

FY2018(As of March 31,
2019)
¥779
35,493
2,771
928¥39,973

FY2019(As of March 31,
2020)¥2,244,568
1,348,442
65,456
830,650
18
252,704
19,837
1,319
21,842
25,135¥2,565,409

FY2018(As of March 31,
2019)¥2,104,227
1,369,457
61,821
672,925
23
237,390
17,2801,351
16,501
16,446¥2,393,197

The breakdown of investment securities is as follows:
Thousands of
U.S. dollars
FY2019(As of March 31,
2020)$20,624,539
12,390,359
601,458
7,632,553
166
2,322,011
182,283
12,124
200,705
230,964$23,572,629

10. INVENTORIESMillions of yen

Listed stocks
Unlisted stocks
Funds for unlisted stocks
Other
Total

FY2019(As of March 31,
2020)¥40,095
12,834
5,587
2,207¥60,724

FY2018(As of March 31,
2019)¥71,036
14,3794,858
1,279¥91,553

13. OTHER FINANCIAL ASSETS
The breakdown of other financial assets is as follows:

FY2018(As of March 31,
2019)¥5,763Thousands of
U.S. dollars
FY2019(As of March 31,
2020)$54,585

5,005

3,480

45,996

2,959¥13,905

2,672¥11,916

27,191$127,773

Millions of yen

Millions of yen
FY2019(As of March 31,
2020)¥135,169
211¥135,380

FY2018(As of March
31, 2019)¥151,230
154¥151,385

Thousands of
U.S. dollars
FY2019(As of March 31,
2020)$1,242,021
1,941$1,243,962

Guarantee deposits
Cash and deposits required to besegregated under regulations
Other
Total

FY2019(As of March 31,
2020)¥5,940

The amounts of inventories recognized as expenses during the current and previous fiscal years were¥79,736 million (U.S. $732,674 thousand) and ¥61,866 million, respectively.
Of the above-mentioned amounts, the amounts for write-downs and reversal of write-downs are as
follows:

Amount of write-downs
Amount of reversal of write-downs

Thousands ofMillions of yen
U.S. dollars
FY2019 (From April 1, FY2018 (From April 1, FY2019 (From April 1,
2019 to March 31,
2019 to March 31,2018 to March 31,
2020)
2020)
2019)
¥2,283¥1,564$20,986
392
200
3,608

Inventory write-downs were reversed due to an increase in market price of real estate for sale held by
the Group and a subsequent recovery in their net realizable values.

- 30 -

Thousands of
U.S. dollars
FY2019(As of March 31,
2020)$368,422
117,932
51,34020,281$557,977

Investment securities for which stock lending agreements are executed amounted to ¥1,248 million (U.S.
$11,469 thousand) and ¥3,082 million as of March 31, 2020 and 2019, respectively.

The breakdown of inventories is as follows:

Real estate for sale
Merchandise
Total

FY2019(As of March 31,
2020)¥1,43743,452
2,585
1,315¥48,789

Thousands of
U.S. dollars
FY2019(As of March 31,
2020)$13,204
399,267
23,752
12,085$448,309

12. INVESTMENT SECURITIESThe breakdown of trade and other receivables is as follows:

Accounts receivable – installment
Payment business
Lease business
Finance business
Real estate-related business
Finance lease receivables
Purchased receivables
Other trade receivables
Loans receivable
Other
Total

Millions of yen- 31 -

14. PROPERTY, PLANT AND EQUIPMENT(1)

Accumulated depreciation and accumulated impairment losses

Reconciliation
Changes in acquisition cost, accumulated depreciation and accumulated impairment losses of property,
plant and equipment, as well as the carrying amount are as follows:
Acquisition cost

FY2018 (As of April 1, 2018)
Acquisition
Acquisition due to businesscombinations
Sale or disposal
Transfer
Exchange differences ontranslation of foreign operations
FY2018 (As of March 31, 2019)
Adjustments for the application of
IFRS 16
FY2019 (As of April 1, 2019)
Acquisition
Acquisition due to businesscombinations
Sale or disposal
Transfer
Exchange differences ontranslation of foreign operations
FY2019 (As of March 31, 2020)

FY2018 (As of March 31, 2019)
Adjustments for the application of
IFRS 16
FY2019 (As of April 1, 2019)
Acquisition
Acquisition due to businesscombinations
Sale or disposal
Transfer
Exchange differences ontranslation of foreign operations
FY2019 (As of March 31, 2020)(Millions of yen)
Construction in Equipment andTotal
progressother¥54¥30,406¥68,813
26
2,564
3,284

Buildings

Land¥26,032693¥12,320
–

–

–

–

–

–

(211)
3

–
–

–
(54)

(11,382)36(11,593)
(13)

–

–

–

(0)

(0)

26,51812,32026

21,62460,490

(107)

–

–

(1,949)(2,057)

26,410852

12,320326

26
133

19,675
3,735

58,433
5,048

–

–

–

0

0

(456)
–

–
–

(10)
(119)

(3,540)80(4,006)
(38)

(0)

–

–

(0)

(1)

26,806

12,64730

19,951

59,435

Buildings

Land$243,668$113,212(Thousands of U.S. dollars)
Construction in Equipment andTotal
progressother$244$198,703$555,829

(988)

–

–

(17,914)(18,902)242,680
7,833

113,212
3,000

244
1,227

180,789
34,327536,926
46,389

–

–

–

3

3

(4,193)
–

–
–

(95)
(1,097)(32,528)740(36,818)
(356)

(1)

–

–

(8)

(10)

246,318

116,212278

183,323546,133

FY2018 (As of April 1, 2018)
Depreciation
Impairment losses
Sale or disposal
Exchange differences ontranslation of foreign operations
Other
FY2018 (As of March 31, 2019)
Adjustments for the application of
IFRS 16
FY2019 (As of April 1, 2019)
Depreciation
Impairment losses
Sale or disposal
Exchange differences ontranslation of foreign operations
Other
FY2019 (As of March 31, 2020)

FY2018 (As of March 31, 2019)
Adjustments for the application of
IFRS 16
FY2019 (As of April 1, 2019)
Depreciation
Impairment losses
Sale or disposal
Exchange differences ontranslation of foreign operations
Other
FY2019 (As of March 31, 2020)

Buildings

Land¥13,440
934
35
(193)

¥–
–
–
–

(Millions of yen)
Construction in Equipment andTotal
progressother¥–¥25,151¥38,592
–
2,665
3,600
–
11
46
–
(10,896)(11,090)

–

–

–

(0)

(0)

–
14,217–––––
16,931–
31,149

(51)

–

–

(726)

(778)

14,165
947

–
−

–
−

16,2042,000

30,370
2,948

16

−

−

14

31

(393)

−

−

(2,934)(3,327)
(0)

(0)

−

−

(0)

−

−

−

0

0

14,736−−

15,28430,021

Buildings

Land$130,640$–(Thousands of U.S. dollars)
Construction in Equipment andTotal
progressother$–$155,577$286,217

(476)

–

–

(6,678)(7,155)130,163
8,707
154(3,612)

–
–
–
–

–
–
–
–

148,898
18,381
132(26,967)

279,062
27,088286(30,579)

(1)

–

–

(2)

(4)

–
135,411

–
–

–
–

0
140,4420275,854

Carrying amount

FY2018 (As of April 1, 2018)
FY2018 (As of March 31, 2019)
FY2019 (As of March 31, 2020)

Buildings

Land¥12,591
12,30012,069¥12,320
12,32012,647(Millions of yen)
Construction in Equipment andTotal
progressother¥54¥5,254¥30,221
26
4,693
29,341
30
4,666
29,414(Thousands of U.S. dollars)
Construction in Equipment andTotal
progressother
FY2019 (As of March 31, 2020)$110,906$116,212$278$42,881$270,279(Notes) 1. Depreciation expenses for property, plant and equipment are included in “Cost of sales for the real estaterelated business,” “Cost of sales for the entertainment business,” and “Selling, general and administrative
expenses” in the consolidated statement of income. Impairment losses are included in “Selling, generaland administrative expenses” and “Other expenses” in the consolidated statement of income.
2. No items of property, plant and equipment were subject to restriction of ownership or pledged ascollateral as of March 31, 2020 and 2019.
Buildings- 32 -

Land- 33 -

(2)Leased assets
The carrying amount of leased assets held under finance leases included in property, plant andequipment as of March 31, 2019 was as follows:
Buildings
FY2018 (As of March 31, 2019)¥60(Millions of yen)Equipment and
Total
other
¥1,310¥1,37015. INTANGIBLE ASSETS(1)

Reconciliation
Changes in acquisition cost, accumulated amortization and accumulated impairment losses, as well as
the carrying amount are as follows:
Acquisition cost
(Millions of yen)
FY2018 (As of April 1, 2018)
Acquisition
Acquisition due to businesscombinations
Sale or disposal
Exchange differences ontranslation of foreign operations
Other
FY2018 (As of March 31, 2019)
Adjustments for the application of
IFRS 16
FY2019 (As of April 1, 2019)
Acquisition
Acquisition due to businesscombinations
Sale or disposal
Exchange differences ontranslation of foreign operations
Other
FY2019 (As of March 31, 2020)

Goodwill

Software¥1,085¥214,976
50,923–

Software in
progress¥34,571
19,154

Other

Total

¥6,5891,927¥257,222
72,006

–

–

–

–

–

–

(8,522)–(1,812)(10,334)

–

–

–

–

–

–
1,085

–
257,378(50,168)
3,556

–
6,704

(50,168)
268,724

–

(373)

–

–

(373)

1,085
23

257,004
8,559

3,556
7,703

6,704
5,327

268,351
21,614

–

–

1

1

2

(825)

(37,327)(4,449)(1,812)(44,414)

–

(10)

–

–

(10)

–
283

–
228,225(3,975)
2,836–
10,220(3,975)
241,567

Goodwill

Software$9,969$2,364,954(Thousands of U.S. dollars)
FY2018 (As of March 31, 2019)
Adjustments for the application of
IFRS 16
FY2019 (As of April 1, 2019)
Acquisition
Acquisition due to businesscombinations
Sale or disposal
Exchange differences ontranslation of foreign operations
Other
FY2019 (As of March 31, 2020)(Note)- 34 -

Software in
progress$32,680

Other

Total

$61,608$2,469,213–(3,428)––(3,428)9,969
216

2,361,526
78,64932,68070,78761,60848,9502,465,784
198,604

–

–

12

10

23

(7,581)(342,991)(40,882)(16,653)(408,109)

–

(97)

–

–

(97)

–
2,604

–
2,097,086(36,531)
26,066–
93,916(36,531)2,219,675

Acquisition of intangible assets includes assets transferred from software in progress.

- 35 -

Accumulated amortization and accumulated impairment losses(2)(Millions of yen)

FY2018 (As of April 1, 2018)
Amortization expense
Impairment losses
Sale or disposal
Exchange differences ontranslation of foreign operations
Other
FY2018 (As of March 31, 2019)
Adjustments for the application of
IFRS 16
FY2019 (As of April 1, 2019)
Amortization expense
Impairment losses
Sale or disposal
Exchange differences ontranslation of foreign operations
Other
FY2019 (As of March 31, 2020)

Software in
progress¥––––

Goodwill

Software¥––––¥33,425
17,60815(4,986)

–

–

–

–

–

–
–

–
46,062

–
–

–
2,689

–
48,751

(215)

–

−

(215)

–
–
825
(825)

45,84618,104
6,320(12,407)

–
–
–
–

2,689
1,724
–
(1,812)

48,536
19,8297,145(15,044)

–

(5)

–

–

(5)

–
–

48
57,907

–
–

–
2,601

48
60,508

Other

Total

¥3,187
1,314–(1,812)¥36,61218,922
15(6,799)(Thousands of U.S. dollars)
FY2018 (As of March 31, 2019)
Adjustments for the application of
IFRS 16
FY2019 (As of April 1, 2019)
Amortization expense
Impairment losses
Sale or disposal
Exchange differences ontranslation of foreign operations
Other
FY2019 (As of March 31, 2020)

Goodwill

Software$–$423,251

Software in
progress
$–

Other

Total

$24,709$447,960–(1,980)––(1,980)–421,270
166,358
58,074(114,008)––––

24,70915,847–(16,651)445,980
182,205
65,655(138,241)

–

(48)

–

–

(48)

–
–

443
532,089–––
23,905443
555,994–
7,581(7,581)

Carrying amount(Millions of yen)
FY2018 (As of April 1, 2018)
FY2018 (As of March 31, 2019)
FY2019 (As of March 31, 2020)

Goodwill

Software¥1,085
1,085
283¥181,550
211,315
170,318

Goodwill

Software$2,604$1,564,997

Software in
progress¥34,571
3,556
2,836

Other

Total

¥3,402
4,015
7,619¥220,609
219,972
181,058

Leased assets
The carrying amount of leased assets held under finance leases included in intangible assets as ofMarch 31, 2019 was as follows:

FY2018 (As of March 31, 2019)(Millions of yen)
Software¥174(3) Borrowing costs
Borrowing costs capitalized as a component of the acquisition cost of qualifying assets were ¥112
million as of March 31, 2019. Capitalization rates applied were 0.50% as of March 31, 2019.There areno significant borrowing costs included in acquisition cost as of March 31, 2020.
16. IMPAIRMENT OF NON-FINANCIAL ASSETS
FY2018 (from April 1, 2018 to March 31, 2019)
The information is omitted because it is insignificant.
FY2019 (from April 1, 2019 to March 31, 2020)
The Group recorded impairment losses on the following asset groups. Impairment losses are included
in “Other expenses” in the consolidated statement of income.
Segment
Payment
Real estate-related

Impairment loss
Thousands of U.S.
dollars¥7,152$65,72024
221

FY2019 (As of March 31, 2020)(Note)

Other

Total

$70,011$1,663,680

In addition, as a result of assessing the recoverable amount of goodwill in the payment business, animpairment loss of goodwill of ¥825 million (U.S. $7,581 thousand) is recognized since the initiallyestimated profitability is no longer expected. The receoverable amount is determined based on value in
use.
An impairment loss of ¥24 million (U.S. $221 thousand) is recorded for buildings and other assets in
the real estate business due to the closure of some stores. The receoverable amount is determined based

Amortization expenses for intangible assets are included in “Cost of sales for the real estate-related business,”“Cost of sales for the entertainment business,” and “Selling, general and administrative expenses” in the
consolidated statement of income. Impairment losses are included in “Other expenses” in the consolidated
statement of income.

The main item of intangible assets is an intercompany mainframe system with the carrying amount of¥156,362 million (U.S. $1,436,755 thousand) and ¥200,550 million as of March 31, 2020 and 2019,respectively. The remaining useful life of the intercompany mainframe system is 13 years.

- 36 -

Equipment and other, Software, Goodwill
Buildings,Equipment and other , Software

With regard to a part of software and other assets in the payments business, an impairment loss of ¥6,327
million (U.S. $58,138 thousand) is recorded. That is due to the change in the outsourcing agreement
following company split of Qubitous, and no new investment recovery method could be expected,
which made it difficult to recover the investment from future cash flows. The recoverable amount isdetermined based on value in use, and impairment loss is recorded with the value of the asset beingzero.

(Thousands of U.S. dollars)
Software in
progress$26,066

Type of assets

Millions of yen- 37 -

on value in use, and impairment loss is recorded with the value of the asset being zero.

Rent income
Direct operating expenses

17. INVESTMENT PROPERTY(1)Reconciliation
Changes in acquisition cost and accumulated depreciation and accumulated impairment losses ofinvestment properties are as follows:

March 31, 2020)¥4,644
2,692

Millions of yen

Balance at beginning of period(Before adjustments)
Adjustments for the application of IFRS 16
Balance at beginning of period(After adjustments)
Acquisition
Sale or disposal
Balance at end of period

FY2018 (FromApril 1, 2018 toMarch 31, 2019)¥60,848–
60,8488,029(13)68,863Thousands of U.S.
dollars
FY2019 (FromApril 1, 2019 toMarch 31, 2020)$632,765
37,686
670,451
30,370(10,365)
690,456

Accumulated depreciation and accumulated impairment losses
Millions of yen

Balance at beginning of period(Before adjustments)
Adjustments for the application of IFRS 16
Balance at beginning of period(After adjustments)
Depreciation
Impairment losses
Sale or disposal
Balance at end of period(Note)FY2019 (FromApril 1, 2019 toMarch 31, 2020)¥12,180–
12,1801,547–(94)
13,633

FY2018 (FromApril 1, 2018 toMarch 31, 2019)¥10,877–
10,877
1,137
165
(0)
12,180Thousands of
U.S. dollars
FY2019 (FromApril 1, 2019 toMarch 31, 2020)$111,923–
111,923
14,220–(871)
125,273

Impairment losses on investment properties are included in “Other expenses” in the consolidated statementof income.

Carrying amount and fair value of investment properties are as follows:
Thousands of
U.S. dollars

Millions of yen

Carrying amount
Fair value

FY2019(As of March 31,
2020)¥61,508
81,261FY2018(As of March 31,
2019)¥56,683
74,842FY2019(As of March 31, 2020)$565,183
746,680

Fair values at the end of the period are mainly determined by the Group, which refers to the Real
Estate Appraisal Standard (and adjusts the appraisal value using indicators as necessary). The
valuation conforms to relevant valuation standards of the country where the properties are located andis based on market evidence reflecting transaction prices for similar assets.
The fair value of investment properties is classified as Level 3 under the fair value hierarchy because
it is determined using valuation techniques that incorporate unobservable inputs.
(2)

Income and expenses arising from investment properties
Rent income and associated direct operating expenses from investment properties are as follows:
Millions of yen
FY2019 (FromApril 1, 2019 to- 38 -FY2018 (FromApril 1, 2018 toMarch 31, 2020)$42,678
24,735

Rent income is included in “Revenue from the real estate-related business” in the consolidated
statement of income. Direct operating expenses are direct expenses incurred in conjunction with rent
income and are included mainly in “Cost of sales for the real estate-related business” in the
consolidated statement of income.

Acquisition cost

FY2019 (FromApril 1, 2019 toMarch 31, 2020)¥68,863
4,101
72,965
3,305(1,128)75,142

March 31, 2019)¥4,565
2,402

Thousands of
U.S. dollars
FY2019 (FromApril 1, 2019 to- 39 -

18. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

19. STRUCTURED ENTITY(1) Investments in associates(1)

The carrying amount of investments in associates individually immaterial to the Group is as follows:

FY2019(As of March 31,
2020)

FY2018(As of March 31,
2019)

Thousands of
U.S. dollars
FY2019(As of March 31,
2020)¥56,989¥74,383$523,656

Millions of yen

Total carrying amount ofinvestments in associates

The Group has a right to direct activities of management and collection of assets held by the structured
entities. The Group also has a right to variable returns from the structured entities through holding ofsubordinated beneficiary rights backed by trust assets. Therefore, the Group has determined that it hascontrol over the structured entities.

The Group’s share of comprehensive income of associates individually immaterial to the Group is asfollows:
Millions of yen
FY2019 (FromApril 1, 2019 toMarch 31, 2020)¥4,258(779)
3,479

ProfitOther comprehensive income
Comprehensive income(2)

FY2018 (FromApril 1, 2018 toMarch 31, 2019)¥4,524347
4,872

Furthermore, the Group engages in investing activities both in Japan and abroad mainly throughinvestment partnerships and investment trusts. These investment partnerships procure funds frompartner investors and finance investees primarily in the form of capital contribution. Such investment
partnerships have been structured so that voting rights are not the dominant factor in deciding who
controls the partnership.

Thousands of
U.S. dollars
FY2019 (FromApril 1, 2019 toMarch 31, 2020)$39,129(7,158)31,971The use of assets and liabilities held by the consolidated structured entities is restricted to the purposeof structured scheme in accordance with a contract with the structured entities.
Assets and liabilities of the above-mentioned structured entities that are consolidated to the Group’s
accounts are as follows:

Investments in joint ventures
The carrying amount of investments in joint ventures individually immaterial to the Group is asfollows:

FY2019(As of March 31,
2020)

FY2018(As of March 31,
2019)

Thousands of
U.S. dollars
FY2019(As of March 31,
2020)¥20,209¥18,369$185,695

Millions of yen

Total carrying amount ofinvestments in joint ventures

Millions of yen

AssetsLiabilities

ProfitOther comprehensive income
Comprehensive income

FY2019 (FromApril 1, 2019 toMarch 31, 2020)¥2,183(9)2,174

FY2018 (FromApril 1, 2018 toMarch 31, 2019)¥2,830(19)
2,810

FY2019(As of March 31,
2020)¥35,000
35,000FY2018(As of March 31,
2019)¥41,203
20,869Thousands of
U.S. dollars
FY2019(As of March 31,
2020)$321,602
321,602

The amount of investments in structured entities over which the Group has determined it has joint
control or significant influence is as follows:

The Group’s share of total comprehensive income of joint ventures individually immaterial to theGroup is as follows:
Millions of yen

Consolidated structured entities
The Group securitizes receivables using trusts and special purpose entities, which are consolidated to
the financial statements of the Group. Trusts used for the securitization are structured entities and,
therefore, have been designed so that voting or similar rights are not the dominant factor in deciding
who controls the entity.

FY2019(As of March 31,
2020)

FY2018(As of March 31,
2019)

Thousands of
U.S. dollars
FY2019(As of March 31,
2020)¥1,030¥1,303$9,464

Millions of yen

Thousands of
U.S. dollars
FY2019 (FromApril 1, 2019 toMarch 31, 2020)$20,065(86)
19,978Investments accounted for using
equity method(2)Non-consolidated structured entities
The Group invests in investment partnerships whose operation is controlled by a third party.
The Group has made no arrangement to provide financial support to assets and liabilities held by thesestructured entities. Therefore, the Group’s maximum exposure to loss from its involvement in nonconsolidated structured entities is limited to the carrying amount of investments. See the breakdown
as follows:- 40 -- 41 -

Thousands of
U.S. dollars

Millions of yen
FY2019(As of March 31,
2020)

FY2018(As of March 31,
2019)

FY2019(As of March 31,
2020)

Operational investment securities
Investment securities¥47,352
6,794¥39,194
6,124$435,105
62,428

Total¥54,146¥45,318$497,533

20. INCOME TAXES(1)Deferred tax assets and liabilities
The breakdown of major factors giving rise to deferred tax assets and liabilities and the reconciliation
are as follows:
FY2019 (From April 1, 2019 to March 31, 2020)
Balance at
beginning of
periodMaximum exposure represents the possible amount of the maximum loss, and does not provide any
indication of the probability of occurrence.
Deferred tax assets
Allowance for doubtful
accounts
Financial guarantee
liabilities
Provision for point cardcertificates
Provision for loss oninterest repayments
Unused tax losses
Other
Total
Deferred tax liabilities
Net change in fair valueof equity instruments
Retained profits at
subsidiaries andassociates
Other
Total
Net amount- 42 -(Millions of yen)
Recognized in
Recognized inotherBalance at end
profit or loss comprehensiveof period
income¥19,117¥–¥(1,624)¥–¥17,493

2,535

–

(14)

–

2,521

17,299–481–

17,781

5,202

–

937

–

6,140

83
12,08356,321

–
–
–

2,475
1,466
3,723

–
(421)
(421)

2,558
13,12859,623(11,647)

–

3,705

4,760

(3,182)(6,719)

–

4,630

(163)

(2,252)(6,830)(25,198)¥31,123

–
–
¥–

(349)
7,986
¥11,710(1)
4,595¥4,173(7,181)(12,615)¥47,007

Balance at
beginning of
periodDeferred tax assets
Allowance for doubtful
accounts
Financial guarantee
liabilities
Provision for point cardcertificates
Provision for loss oninterest repayments
Unused tax losses
Other
Total
Deferred tax liabilities
Net change in fair valueof equity instruments
Retained profits at
subsidiaries andassociates
Other
Total
Net amount

Recognizeddirectly inequityRecognizeddirectly inequity$175,668$–(Thousands of U.S. dollars)
Recognized in
Recognized inotherBalance at end
profit or loss comprehensiveof period
income$(14,923)$–$160,745

23,294

–

(129)

–

23,164

158,957

–

4,427

–

163,385

47,805

–

8,615

–

56,420764
111,031517,521–––

22,745
13,47534,210–(3,875)(3,875)23,509120,631547,856(107,028)–

34,04743,740(29,239)(61,740)–

42,548(1,502)(20,694)(62,766)(231,535)$285,985––$–(3,207)73,388$107,599(14)
42,223$38,347(65,988)(115,922)$431,933- 43 -

FY2018 (From April 1, 2018 to March 31, 2019)liabilities is considered.
(Millions of yen)

Deferred tax assets
Allowance for doubtful
accounts
Financial guarantee
liabilities
Provision for point cardcertificates
Provision for loss oninterest repayments
Unused tax losses
Other
Total
Deferred tax liabilities
Net change in fair valueof equity instruments
Retained profits at
subsidiaries andassociates
Other
Total
Net amount

Recognized in
Recognized inotherBalance at end
profit or loss comprehensiveof period
incomeBalance at
beginning of
periodRecognizeddirectly inequity¥14,893¥3,726¥498¥–¥19,117

2,253

(107)

388

–

2,535

17,486

–

(187)

–

17,2996,719–(1,517)

–

5,202

4,674
9,511
55,539

–
2,856
6,474

(4,591)(963)(6,372)

–
679
679

83
12,08356,321(16,262)

286

106

4,222

(11,647)(3,894)–(2,824)–(6,719)(5,715)(25,873)¥29,666(1,961)(1,675)¥4,799851(1,866)¥(8,238)(5)
4,216¥4,896(6,830)(25,198)¥31,123

In principle, no deferred tax liabilities are recognized for taxable temporary differences associatedwith investments in subsidiaries as of March 31, 2020, and 2019. This is because the Company is in aposition to control the timing of the reversal of the temporary differences, and it is probable that theCompany will not reverse such differences in the foreseeable future. Taxable temporary differences
associated with investments in subsidiaries for which deferred tax liabilities have not been recognizedare ¥56,496 million (U.S. $519,127 thousand), and ¥49,547 million, respectively, as of March 31,
2020 and 2019.
(2) Income taxes
The breakdown of income taxes is as follows:

FY2019 (FromApril 1, 2019 toMarch 31, 2020)

FY2018 (FromApril 1, 2018 toMarch 31, 2019)

Thousands of
U.S. dollars
FY2019 (FromApril 1, 2019 toMarch 31, 2020)(Subtotal)¥16,523
16,523¥8,184
8,184$151,829
151,829

Deferred income taxes
Origination and reversal of temporary differences(Subtotal)
Total income taxes(11,710)(11,710)¥4,813

8,238
8,238¥16,423(107,599)(107,599)$44,230

Millions of yen

Current income taxes
Current

Reconciliation of the statutory effective tax rate to the average effective tax rate is as follows:

The breakdown of deferred tax assets and liabilities in the consolidated statement of financial positionis as follows:
Millions of yen

Deferred tax assets
Deferred tax liabilities
Net amounts

FY2019(As of March 31,
2020)¥47,910903¥47,007

FY2018(As of March 31,
2019)¥32,148
1,025¥31,123

Thousands of
U.S. dollars
FY2019(As of March 31,
2020)$440,232
8,299$431,933

Deductible temporary differences and unused tax losses for which deferred tax assets are notrecognized are as follows:
Millions of yen

Deductible temporary differences
Unused tax losses
Total

FY2019(As of March 31,
2020)¥89,185
2,252¥91,438

FY2018(As of March 31,
2019)¥85,201
5,569¥90,770

Thousands of U.S.
dollars
FY2019(As of March 31,
2020)$819,496
20,700$840,196

FY2019 (From April
1, 2019 to March 31,
2020)
Statutory effective tax rate
Income or loss on investments using equity method
Non-deductible expenses for tax purposes
Non-taxable income for tax purposes
Unrecognized deferred tax assets
Other

30.62
(3.25)
0.35(10.57)0.74(0.36)

30.62
1.49
0.19
(0.11)
2.79
0.91

Average effective tax rate

17.53

35.89

The Group is subject to corporate tax, inhabitant tax, and business tax. The Group’s statutory effective
tax rates calculated based on these taxes for FY2019 and FY2018 are both 30.62%. Overseas
subsidiaries, however, are subject to local corporate and other taxes.
21. TRADE AND OTHER PAYABLES
The breakdown of trade and other payables is as follows:
Millions of yen

Unused tax losses for which deferred tax assets are not recognized will expire as follows:
Millions of yen

Within one year
Over one year but within five years
Over five years
Total

FY2019(As of March 31,
2020)
¥112
249
1,890
¥2,252FY2018(As of March 31,
2019)
¥27
468
5,074
¥5,569Thousands of U.S.
dollars
FY2019(As of March 31,
2020)$1,0352,297
17,367$20,700

Accounts payable – trade
Accounts payable – other
Total

FY2019(As of March 31,
2020)¥223,967
6,959¥230,927

FY2018(As of March 31,
2019)¥306,314
8,415¥314,729

The Group considers the possibility that a portion or all of deductible temporary differences or unused
tax losses could be utilized against future taxable profits for the recognition of deferred tax assets.
When assessing the recoverability of deferred tax assets, the timing of the reversal of deferred tax- 44 -(Unit: %)FY2018 (From April
1, 2018 to March 31,
2019)- 45 -

Thousands of
U.S. dollars
FY2019(As of March 31,
2020)$2,057,958
63,950$2,121,908

22. BONDS AND BORROWINGS
Company
name

The breakdown of bonds and borrowings is as follows:
Millions of yen
FY2019(As of March 31,
2020)¥465,306
1,377,002
21,256550,000¥2,413,565

Bonds payable
Borrowings
Lease liabilities
Commercial papers
Total

FY2018(As of March 31,
2019)¥413,401
1,279,417–

511,000¥2,203,818

Thousands of
U.S. dollars
FY2019(As of March 31,
2020)$4,275,538
12,652,784
195,317
5,053,753$22,177,393

The details of bonds payable are as follows:
Company
name

Issue

The 44th
Credit Saison unsecured
Co., Ltd.
straight
bonds
The 46th
Credit Saison unsecured
Co., Ltd.
straight
bonds
The 47th
Credit Saison unsecured
Co., Ltd.
straight
bonds
The 48th
Credit Saison unsecured
Co., Ltd.
straight
bonds
The 49th
Credit Saison unsecured
Co., Ltd.
straight
bonds
The 50th
Credit Saison unsecured
Co., Ltd.
straight
bonds
The 51st
Credit Saison unsecured
Co., Ltd.
straight
bonds
The 52nd
Credit Saison unsecured
Co., Ltd.
straight
bonds
The 53rd
Credit Saison unsecured
Co., Ltd.
straight
bonds
The 54th
Credit Saison unsecured
Co., Ltd.
straight
bonds
The 56th
Credit Saison unsecured
Co., Ltd.
straight
bonds
The 57th
Credit Saison unsecured
Co., Ltd.
straight
bonds

Issuancedate

FY2019(As of March
31, 2020)(Millions ofyen)

FY2018(As of March
31, 2019)(Millions ofyen)August 30,
2012¥9,996¥ [9,996]¥9,985$91,850$ [91,850]

0.27636
per year(variable)

Unsecured August 28,
bonds
2020

April 25,2013

10,000[10,000]

9,992

91,889[91,889]

0.70 peryear

Unsecuredbonds

April 24,2020

June 14,
2013

9,999
[9,999]9,991

91,883[91,883]0.879
peryearUnsecuredbonds

June 12,2020

October 21,
2013

14,972

14,963

137,578

1.038 peryear

Unsecured October 20,
bonds
2023

January 31,
2014

9,973

9,966

91,6471.023 peryear

Unsecured January 31,
bonds
2024

April 24,
2014

9,976

9,970

91,6720.904 peryear

Unsecuredbonds

April 24,
2024

June 18,
2014

9,975

9,969

91,6620.884 peryear

Unsecuredbonds

June 18,
2024

July 31,2014

19,945

19,932

183,274

0.826 peryear

Unsecured
bonds

July 31,2024

October 24,
2014

14,984

14,973

137,683

0.435 peryear

Unsecured October 22,
bonds
2021

July 31,2015–

29,987[29,987]–0.256 peryear

Unsecuredbonds

September25, 2015

19,96019,943

183,4070.538 peryear

Unsecured September
bonds
22, 2022

January 29,
2016

14,985[14,985]

14,968

137,697[137,697]

0.42 peryear

Unsecured January 29,
bonds
2021

- 46 -FY2019(As of March
Coupon rate
Redemption
31, 2020)
Collateral(%)
date(Thousands of
U.S. dollars)

July 31,
2019

Issue

Issuancedate

The 58th
April 28,
Credit Saison unsecured
2016
Co., Ltd.
straight
bonds
The 59th
October 31,
Credit Saison unsecured
2016
Co., Ltd.
straight
bonds
The 60th
October 31,
Credit Saison unsecured
2016
Co., Ltd.
straight
bonds
The 61st
March 31,
Credit Saison unsecured
2017Co., Ltd.
straight
bonds
The 62nd
Credit Saison
May 31,
unsecuredCo., Ltd.
2017
straight bond
The 63rd
Credit Saison
May 31,
unsecuredCo., Ltd.
2017
straight bond
The 64th
June 15,
Credit Saison unsecured
2017Co., Ltd.
straight
bonds
The 65th
July 31,
Credit Saison unsecured
2017Co., Ltd.
straight
bonds
The 66th
DecemberCredit Saison unsecured
22, 2017
Co., Ltd.
straight
bonds
The 67th
April 27,
Credit Saison unsecured
2018Co., Ltd.
straight
bonds
The 68th
Credit Saison unsecured
April 27,
Co., Ltd.
straight
2018
bonds
The 69thJune 19,
Credit Saison unsecured
2018Co., Ltd.
straight
bonds
The 70th
July 31,
Credit Saison unsecured
2018Co., Ltd.
straight
bonds
The 71st
NovemberCredit Saison unsecured
30, 2018
Co., Ltd.
straight
bonds
The 72nd
January 31,
Credit Saison unsecured
2019Co., Ltd.
straight
bonds
The 73rd
March 15,
Credit Saison unsecured
2019Co., Ltd.
straight
bonds
The 74th
April 19,
Credit Saison unsecured
2019Co., Ltd.
straight
bonds
The 75th
July 31,
Credit Saison unsecured
2019Co., Ltd.
straight
bonds

FY2019(As of March
31, 2020)(Millions ofyen)

FY2018(As of March
31, 2019)(Millions ofyen)

19,975

19,953

183,550

0.30 peryear

Unsecured
bonds

9,948

9,944

91,4170.77 peryear

Unsecured October 31,
bonds
2031

9,984

9,974

91,7440.08 peryear

Unsecured October 29,
bonds
2021

19,516

19,477

179,332

0.24236
per year(variable)

Unsecured March 31,
bonds
2032

24,94024,912

229,165

0.16 peryear

Unsecuredbonds

May 31,
2022

9,978

9,969

91,6920.16 peryear

Unsecuredbonds

May 31,
2022

9,935

9,931

91,2921.00 peryear

Unsecuredbonds

June 15,
2037

9,957

9,951

91,4940.38 peryear

Unsecured
bonds

July 30,2027

29,970[29,970]

29,931

275,390[275,390]

0.09 peryear

Unsecured December
bonds
22, 2020

19,971

19,944

183,507

0.06 peryear

Unsecuredbonds

April 30,2021

14,906

14,901

136,973

0.99 peryear

Unsecuredbonds

April 30,
2038

9,967

9,957

91,5900.18 peryear

Unsecuredbonds

June 19,2023

19,925

19,903

183,088

0.18 peryear

Unsecured
bonds

July 31,
2023

9,958

9,951

91,5080.31 peryear

Unsecured November
bonds
28, 2025

9,938

9,931

91,3220.48 peryear

Unsecured January 31,
bonds
2029

9,937

9,931

91,3150.48 peryear

Unsecured March 15,
bonds
2029

11,917–

109,509

1.00 peryear

Unsecuredbonds

April 19,
2039

9,956

–

91,4820.20 peryear

Unsecured
bonds

July 31,2025- 47 -FY2019(As of March
Coupon rate
Redemption
31, 2020)
Collateral(%)
date(Thousands of
U.S. dollars)
April 28,2021

Company
name

Issue

The 76th
Credit Saison unsecured
Co., Ltd.
straight
bonds
The 77th
Credit Saison unsecured
Co., Ltd.
straight
bonds
The 78th
Credit Saison unsecured
Co., Ltd.
straight
bonds
The 79th
Credit Saison unsecured
Co., Ltd.
straight
bonds
The 1stOmnibusunsecured
K.K.
straight
bonds
The 2ndOmnibusunsecured
K.K.
straight
bonds
The 3rdOmnibusunsecured
K.K.
straight
bonds

FY2019(As of March
31, 2020)(Millions ofyen)

FY2018(As of March
31, 2019)(Millions ofyen)

July 31,
2019

9,946

–

91,3940.30 peryear

Unsecuredbonds

October 18,
2019

9,952

–

91,4490.23 peryear

Unsecured October 16,
bonds
2026

October 31,
2019

19,894–

182,801

0.23 peryear

Unsecured October 30,
bonds
2026

January 31,
2020

19,911–

182,961

0.22 peryear

Unsecured January 31,
bonds
2025

Issuancedate

FY2019(As of March
Coupon rate
Redemption
31, 2020)
Collateral(%)
date(Thousands of
U.S. dollars)

23. OTHER FINANCIAL LIABILITIESThe breakdown of other financial liabilities is as follows:
Millions of yen

July 31,2029

Derivative liabilities
Guarantee deposits received
Deposits received
Other
Total

FY2019(As of March 31,
2020)¥7,7204,096
12,647
2,154¥26,619

FY2018(As of March 31,
2019)¥8,934
3,814
13,5702,122¥28,441

Thousands of
U.S. dollars
FY2019(As of March 31,
2020)$70,944
37,640116,216
19,798$244,600

24. PROVISIONS(1)

Reconciliation
The breakdown of provisions and the fluctuation during the period are as follows:

January 31,
2018

48
[16]

64
[16]

441
[147]

0.12 peryear(variable)

Unsecured January 31,
bonds
2023

March 30,
2018

30
[10]

40
[10]

275
[91]

0.12 peryear(variable)

Unsecured March 31,
bonds
2023

March 29,
2019

64
[16]

80
[16]

588
[147]

0.13 peryear(variable)

Unsecured March 29,
bonds
2024

FY2019 (From April 1, 2019 to March 31, 2020)(Millions of yen)

¥465,306¥413,401$4,275,538¥ [74,994]¥ [30,029]$ [689,096](Note) Coupon rates represent the stated interest rate for the outstanding balance of bonds at the end of the reporting period.
The figures in brackets in the balance columns represent the current portion.

Balance at beginning of period
Increases
Decreases (utilized)
Decreases (other)
Balance at end of period

Provision for point
card certificates¥104,963
14,9689,992–
109,938

Provision for loss oninterest repayments¥17,762
11,1806,045–
22,897

Balance at beginning of period
Increases
Decreases (utilized)
Decreases (other)
Balance at end of period

Provision for point
card certificates$964,467
137,539
91,820–1,010,186

Provision for loss oninterest repayments$163,213
102,733
55,550–––210,396

Other provisions

Total¥1,530
64
41
–
1,554

¥124,256
26,213
16,079–134,390

Total

The details of borrowings are as follows:
Millions of yen
Classification

FY2019(As of March
31, 2020)

FY2018(As of March
31, 2019)

Thousands of
U.S. dollars
Average interest
FY2019rate (%)(As of March 31,
2020)

Repayment
periodShort-term loans¥256,504¥239,960$2,356,925
0.39–
payableLong-term loans
1,073,764
1,017,872
9,866,437
0.402020 – 2037
payableLong-term loans
payable under
46,73320,000429,4210.37
2020 – 2055
securitizedreceivables
Lease
–
1,584
–
–
–
obligations
–
–
Total
¥1,377,002¥1,279,417$12,652,784(Notes) 1. Short-term borrowings refer to loans with a contractual borrowing period of one year or less.
2. Average interest rate represents the weighted average of stated interest rates for the outstanding balance ofborrowings at the end of the reporting period.

(Thousands of U.S. dollars)(2)

Other provisions$14,065596
377–
14,284

Total$1,141,747
240,868
147,748–
1,234,867

Provision for point card certificates
The Group offers a rewards program to its card holders (members) as the major benefit of holding
the credit card. Under the program, card holders can exchange points earned based on the amount ofcredit card purchases for a variety of items. Points granted to members have no expiry date.
The Group recognizes a provision for point card certificates as a liability by estimating costs to be
incurred through the exchange of points in the future. To measure liability, the Group determines theestimated points to be exchanged in the future out of the outstanding number of points at the end of
the period, which is multiplied by a point unit value. The use of points by members involves
uncertainty.

(3)

Provision for loss on interest repayments
The Group recognizes a provision for loss on interest repayments at an amount required for future
claims by considering historical data on interest repayments. If such claims for interest repayments
unexpectedly increase or decrease due to a change in legal regulations or other reasons, the actual
amount of repayments may differ from the initial estimate, resulting in the over- or understatementof provision for loss on interest repayments.

For details on collateral, please refer to Note “37. Collateral.”(4)

Other provisions
Other provisions include asset retirement obligations, provision for loss on collecting gift tickets,and allowance for losses on warranty of defects, all of which are individually immaterial.

- 48 -- 49 -

25. EMPLOYEE BENEFITS(2)

Employees of the Group can choose either a defined contribution pension plan or a prepaid retirement
allowance plan for their retirement plan.
Amounts recognized as expenses associated with the defined contribution pension plan are as follows:
Millions of yen
FY2019 (From April 1,
2019 to March 31,
2020)

FY2018 (From April 1,2018 to March 31,
2019)

Thousands of
U.S. dollars
FY2019 (From April 1,
2019 to March 31,
2020)

Reconciliation of treasury shares during the period is as follows:

Contributions paid to the defined contribution¥1,194¥1,232$10,980
pension(Note) Contributions paid are included in “Selling, general and administrative expenses” in the consolidated statement ofincome.

26. OTHER LIABILITIESThe breakdown of other liabilities is as follows:
Millions of yen

Accrued expenses
Contract liabilities
Accrued paid absences
Provision for bonuses
Other
Total

FY2019(As of March 31,
2020)¥20,953
8,004
3,152
2,603
11,061¥45,775

FY2018(As of March 31,
2019)¥17,689
5,493
3,155
2,838
7,850
¥37,026

Thousands of
U.S. dollars
FY2019(As of March 31,
2020)$192,530
73,55428,97023,923
101,635$420,614

300,000,000

Change22,112,371
331¥52,880
0FY2018 (As of March 31, 2019)
Change22,112,702
7,100,694

52,881
10,000FY2019 (As of March 31, 2020)

29,213,396

62,881

22,112,702
7,100,694$485,905
91,891The Companies Act provides that at least half of payment or contribution for the issuance of sharesshall be credited to share capital, and the remaining amount may be credited to legal capital surplus
included in capital surplus. The Companies Act also provides that legal capital reserve may becredited to share capital pursuant to a resolution at the General Meeting of Shareholders.

Number of shares issued
185,444,772––

300,000,000

185,444,772

–

–

(4)

Retained earnings
The Companies Act provides that an amount equal to 10% of the dividends paid from surplus mustbe transferred to legal capital reserve and legal retained earnings until the aggregate amount of legal
capital reserve and legal retained earnings equals 25% of share capital. The amount accumulated inlegal retained earnings may be used to offset deficit. Further, legal retained earnings may be reversed
pursuant to a resolution at the General Meeting of Shareholders.

FY2019 (As of March 31, 2020)
300,000,000
185,444,772(Note) The shares issued by the Company are common stock with no par value that have no restrictions on any rights.
The shares issued have been fully paid up.

- 50 -

Amount(Thousands of U.S. dollars)(3) Capital surplus

Number of shares authorized

FY2018 (As of March 31, 2019)

FY2018 (As of April 1, 2018)
ChangeFY2019 (As of March 31, 2020)
29,213,396
577,797(Note) The number of the Company’s shares held by associates is 350,000 shares as of March 31, 2020 and 2019.

Reconciliation for the numbers of shares authorized and shares issued is as follows:

ChangeAmount(Millions of yen)

FY2018 (As of March 31, 2019)
ChangeNumber of shares authorized and shares issued

FY2018 (As of April 1, 2018)

Number of shares

Number of shares

27. EQUITY AND OTHER COMPONENTS OF EQUITY(1)

Treasury shares
The Companies Act of Japan (the “Companies Act”) provides that, by a resolution of the General
Meeting of Shareholders, a company may acquire treasury shares after determining the number ofshares to be acquired, the total amount of acquisition cost, and other details as long as the acquisitionis within the range of the distributable amount. Under the Companies Act, treasury shares can also be
acquired through market transactions or tender offers in accordance with the Articles ofIncorporation by resolution of the Board of Directors.

- 51 -

(5)Other components of equity

28. DIVIDENDS(Millions of yen)

EquityDebt
instruments
instruments
Exchangemeasured at fair measured at
Effective
differences onvalue throughfair value portion of cash translation ofotherthrough other flow hedges
foreigncomprehensive comprehensive
operations
incomeincomeFY2018 (As of
April 1, 2018)
Effects ofchanges inaccounting
standards
Increase(decrease)during theperiodTransfer toretainedearnings
FY2018 (As of
March 31, 2019)
Increase(decrease)during theperiodTransfer toretainedearnings
FY2019 (As of
March 31, 2020)

Other

Total

¥36,771¥–¥(458)¥(399)¥0¥35,913810

12(4,217)50–(3,343)(8,964)(7)(1,534)240

63

Resolution

Ordinary General
Meeting of
Shareholders heldon June 20, 2018
Ordinary General
Meeting of
Shareholders heldon June 20, 2019(10,203)(2)

Resource ofdividends

Commonstock

Retainedearnings¥5,719*$52,553¥35*$0.32

March 31, 2018

June 21, 2018

Commonstock

Retainedearnings

7,353*67,56845*0.41

March 31, 2019

June 21, 2019

–

–

(63)

(362)

28,318

5(6,210)(108)

022,004

Resolution

Classes ofsharesResource ofdividends(11,411)

10

962

(992)

(43)

(11,474)

Ordinary General
Meeting of
Shareholders heldon June 18, 2020

Commonstock

Retainedearnings

–

–

–

48

(8,369)8,489

15(5,248)(1,100)4

2,161

Record date

Effective date

Dividends with an effective date falling in the following fiscal year are as follows:–(8,417)

Total amount ofdividends
Dividends per(Millions ofshare (Yen)yen)*U.S. dollars*Thousands of
U.S. dollars

Classes ofshares(298)

Total amount ofdividends
Dividends per(Millions ofshare (Yen)yen)*U.S. dollars*Thousands of
U.S. dollars¥7,033*$64,632¥45*$0.41

Record date

Effective date

March 31, 2020

June 19, 2020

29. REVENUE(Thousands of U.S. dollars)
EquityDebt
instruments
instruments
Exchangemeasured at fair measured at
Effective
differences onvalue throughfair value portion of cash translation ofotherthrough other flow hedges
foreigncomprehensive comprehensive
operations
incomeincomeFY2018 (As of
March 31, 2019)
Increase(decrease)during theperiodTransfer toretainedearnings
FY2019 (As of
March 31, 2020)(1) Dividends paid

(1)

Breakdown of revenue
The breakdown of revenue recognized from contracts with customers and other sources is asfollows:
FY2019 (From April 1, 2019 to March 31, 2020)

Other

Total

$260,207$48$(57,068)$(994)$–$202,192(104,852)

93

8,845

(9,117)(403)(105,434)(Millions of yen)
Revenue recognizedfrom contracts withcustomers
Revenue from the payment business(77,345)

–

–

–

444

(76,901)

78,009141(48,222)(10,111)41

19,857- 52 -

Revenue recognizedfrom other sources

Total¥ 141,440¥ 88,720¥ 230,160

Revenue from the lease business–

12,266

12,266

Revenue from the finance business
Revenue from the real estate-related
business
Revenue from the entertainment business–

43,112

43,11256,1596,147

62,30748,493–48,493

–

771

771

¥ 246,093¥ 151,019¥ 397,112

Finance income
Total- 53 -

(Thousands of U.S. dollars)
Revenue recognizedfrom contracts withcustomers
Revenue from the payment business

Total

Total
$2,114,867–

112,713112,713–396,149

396,149

516,030

56,489572,520445,591–

445,591

–

7,086

7,086

$2,261,266$1,387,662$3,648,928

Receivables arising fromcontracts with customers
Trade and other receivables

Revenue from the finance business
Revenue from the real estate-related
business
Revenue from the entertainment business
Total

FY2019(As of March
31, 2020)¥112,457¥97,091$1,033,334$892,140

5,493

8,004

50,47473,554FY2018(As of April 1,
2018)

FY2018(As of March 31,
2019)

Receivables arising fromcontracts with customers
Trade and other receivables¥103,118¥112,457

Contract liabilities

6,090

5,493

Total

¥138,459¥87,791¥226,250–

12,57912,579–39,231

39,23136,0906,008

42,09850,827–50,827

Finance income

FY2019(As of April 1,
2019)

Millions of yen(Millions of yen)

Revenue from the lease business

FY2019(As of March 31,
2020)

FY2018 (From April 1, 2018 to March 31, 2019)

FY2018 (From April 1, 2018 to March 31, 2019)

Revenue from the payment business

FY2019(As of April 1,
2019)

Contract liabilities

Interest and dividend income is recognized as revenue in accordance with IFRS 9, and income fromthe Lease business, and also from real estate rentals in the Real estate-related business, is recognized
as revenue in accordance with IFRS 16. Revenue recognized in accordance with IFRS 9 amounted to¥135,582 million (U.S. $1,245,816 thousand) for FY2019. Revenue recognized in accordance withIFRS 16 amounted to ¥15,437 million (U.S. $141,845 thousand) for FY2019.

Revenue recognizedfrom other sources

–

854

854

¥225,376¥146,465¥371,842

Revenue recognized from other sources includes interest and dividend income based on IFRS 9 andlease income based on IAS 17.
Interest and dividend income was recognized as revenue in accordance with IFRS 9, and income
from the Lease business, and also from real estate rentals in the Real estate-related business, wasrecognized as revenue in accordance with IAS 17. Revenue recognized in accordance with IFRS 9amounted to ¥130,866 million for FY2018. Revenue recognized in accordance with IAS 17
amounted to ¥15,599 million for FY2018.

Contract liabilities mainly represent a deferred portion of annual membership fees. The amounts ofrevenue recognized in FY2019 and FY2018 that were included in the beginning balance of contract
liabilities were ¥4,413 million (U.S. $40,550 thousand) and ¥4,694 million, respectively.
None of the revenue recognized in FY2019 and FY2018 arose from performance obligations
satisfied (or partially satisfied) in previous periods.
(3)

Transaction price allocated to remaining performance obligations
The Group has adopted a practical expedient and omitted information on remaining performanceobligations, given that there were no significant transactions for which an individual estimatedcontract period exceeds one year.

30. COST OF SALES
The breakdown of cost of sales is as follows:
Millions of yen
FY2019(From April 1, 2019
to March 31, 2020)
Cost of sales for the real estate-related
business:
For real estate sales
For real estate rentals
Other
Subtotal
Cost of sales for the entertainment business
Cost of goods
Sundry expenses
Subtotal
Total- 54 -

Thousands of
U.S. dollars

Millions of yen

Revenue recognized from other sources includes interest and dividend income based on IFRS 9 andlease income based on IFRS 16.

Revenue recognizedfrom contracts withcustomers

Contract balance
FY2019 (From April 1, 2019 to March 31, 2020)$815,222

Finance income(2)

The breakdown of contract balances is as follows:$1,299,644

Revenue from the lease business
Revenue from the finance business
Revenue from the real estate-related
business
Revenue from the entertainment business

Revenue recognizedfrom other sources

FY2018(From April 1, 2018
to March 31, 2019)

Thousands of
U.S. dollars
FY2019(From April 1, 2019 toMarch 31, 2020)¥40,3542,348
3,327
46,030¥19,940
2,075
2,905
24,921$370,799
21,58330,577422,960

39,497
174
39,671¥85,70241,844221
42,066¥66,987

362,926
1,602
364,529$787,490- 55 -

31. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES(2)

The breakdown of selling, general and administrative expenses is as follows:
Millions of yen

Advertising expenses
Provision for point card certificates
Provision for loss on interest repayments
Employee benefit expenses
Commission expenses
Depreciation
Other
Total

FY2019(From April 1, 2019
to March 31, 2020)¥24,872
14,968
11,18048,58975,622
26,45535,221¥236,910

FY2018(From April 1, 2018
to March 31, 2019)¥24,320
13,033
176
50,88874,88822,47435,191¥220,974

The breakdown of other expenses is as follows:
Thousands of
U.S. dollars
FY2019(From April 1, 2019 toMarch 31, 2020)$228,545
137,539
102,733
446,472
694,870
243,090323,634$2,176,885

32. FINANCE INCOME AND FINANCE COSTS(1)Millions of yen

Total

FY2019 (From April
1, 2019 to March 31,
2020)
¥771
–
¥771

FY2018 (From April
1, 2018 to March 31,
2019)
¥703
150
¥854

Thousands of
U.S. dollars
FY2019 (From April
1, 2019 to March 31,
2020)$7,086–$7,086The breakdown of finance costs is as follows:
Millions of yen

Total

FY2019 (From April
1, 2019 to March 31,
2020)¥9,804666¥10,471

FY2018 (From April
1, 2018 to March 31,
2019)¥9,221656¥9,878

Thousands of
U.S. dollars
FY2019 (From April
1, 2019 to March 31,
2020)$90,093
6,124$96,217

33. OTHER INCOME AND OTHER EXPENSES(1) Other income
The breakdown of other income is as follows:
Millions of yen

Dividend income
Gain on bad debts recovered
Distribution income from investment
partnerships
Gain on valuation of investment securities
Gain on sale of investments in
subsidiaries and associates
Other
Total

–
1,416
¥9,220

System transfer cost
Other
Total

FY2018 (From April 1,2018 to March 31,
2019)
¥226
506

–

1,266

5,766

3,299
346
¥5,643–13,018$84,727

FY2019 (From April 1, 2019 to March 31, 2020)(Millions of yen)AmountReclassification
incurred during
adjustment
the period

FY2019 (From April
1, 2019 to March 31,
2020)¥1,4281,200

FY2018 (From April 1,2018 to March 31,
2019)¥1,474
1,151

Thousands of
U.S. dollars
FY2019 (From April
1, 2019 to March 31,
2020)$13,121
11,026

163

138

716

211

6,585

743

–

6,835

1,333
¥5,585

1,162¥4,13812,249$51,319- 56 -

Before tax
effectTax effect

After tax effectItems that will not be reclassified
subsequently to profit or loss
Net change in fair value of equity
instruments designated as measured
at fair value through othercomprehensive income

Finance costs

Interest expenses
Other

FY2019 (From April
1, 2019 to March 31,
2020)
Impairment losses on non-financial assets¥7,176
Impairment losses related to associates andjoint ventures accounted for using equity–
methodLoss on valuation of investment securities
627(e.g. stocks)

Thousands of
U.S. dollars
FY2019 (From April
1, 2019 to March 31,
2020)$65,942

Amounts incurred during the period, reclassification adjustments, and tax effects for each componentof other comprehensive income are as follows:

The breakdown of finance income is as follows:(2)

Millions of yen

34. OTHER COMPREHENSIVE INCOME

Finance income

Interest income
Other

Other expenses

Share of other comprehensive
income of investments accounted
for using equity method
Items that may be reclassified to
profit or loss
Net change in fair value of debt
instruments measured at fair value
through other comprehensive income

Effective portion of cash flow
hedgesExchange differences ontranslation of foreign operations
Share of other comprehensive
income of investments accounted
for using equity method
Total¥(15,738)¥–¥(15,738)¥4,760¥(10,978)

(312)

–

(312)

(164)

(476)

11

–

11

(1)

10

(665)

2,043

1,377

(421)

955

(687)

–

(687)

–

(687)

(317)

4

(312)

1

(311)

¥(17,709)¥2,048¥(15,661)¥4,173¥(11,487)

1,500- 57 -

(Thousands of U.S. dollars)
AmountReclassification
incurred during
adjustment
the period

Before tax
effectTax effect

After tax effect

35. EARNINGS PER SHARE(1)Basis for calculating basic earnings per share

Items that will not be reclassified to
profit or loss
Net change in fair value of equity
instruments designated as measured
at fair value through othercomprehensive income

Share of other comprehensive
income of investments accounted
for using equity method
Items that may be reclassified to
profit or loss
Net change in fair value of debt
instruments measured at fair value
through other comprehensive income$(144,614)$–(2,869)–$(144,614)(2,869)$43,740(1,512)(4,382)

107

–

107

(14)

93

18,777

12,658(3,875)

8,782–(6,312)–(6,312)45(2,872)9(2,863)$18,822$ (143,904)$38,347$ (105,556)

FY2018 (From April 1, 2018 to March 31, 2019)(Millions of yen)AmountReclassification
incurred during
adjustment
the period

Before tax
effectTax effect

After tax effectItems that will not be reclassified
subsequently to profit or loss

Share of other comprehensive
income of investments accounted
for using equity method
Items that may be reclassified to
profit or loss
Net change in fair value of debt
instruments measured at fair value
through other comprehensive income

Effective portion of cash flow
hedgesExchange differences ontranslation of foreign operations
Share of other comprehensive
income of investments accounted
for using equity method
Total

Profit not attributable to common stockholders of the parent
Profit used for calculating basic earnings
per share

Effective portion of cash flow
(6,118)hedgesExchange differences on(6,312)translation of foreign operations
Share of other comprehensive(2,918)income of investments accounted
for using equity method
Total$ (162,727)

Net change in fair value of equity
instruments designated as measured
at fair value through othercomprehensive income

Profit attributable to owners of parent$(100,873)¥(13,185)

¥–

62

–

¥(13,185)

62¥4,222–¥(8,963)

62

(2)

–

(2)

(5)

(7)

(4,246)2,025(2,220)679(1,540)

(28)

–

(28)

–

(28)

256

9

265

–

265

¥(17,144)¥2,034¥(15,109)¥4,896¥(10,213)- 58 -

Weighted-average number of common
stock
Basic earnings per share(2)

FY2019 (From April 1,
2019 to March 31, 2020)(Millions of yen)
¥22,863*Thousands of*$210,085
U.S. dollars(Millions of yen)–*Thousands of*–
U.S. dollars(Millions of yen)
22,863*Thousands of*210,085
U.S. dollars(Thousands of
159,401
shares)(Yen)
143.43*U.S. dollars*1.32

FY2018 (From April 1,2018 to March 31, 2019)¥30,517–30,517

163,332
186.84

Basis for calculating diluted earnings per share
FY2019 (From April 1,
2019 to March 31, 2020)(Millions of yen)
Profit used for calculating basic earnings
per share*Thousands of
U.S. dollars(Millions of yen)
Adjustment to profit*Thousands of
U.S. dollars(Millions of yen)
Profit used to calculate diluted earnings per*Thousands ofshare
U.S. dollars
Weighted-average number of common(Thousands ofstock
shares)(Thousands of
Increase in common stock
shares)
Weighted-average number of common(Thousands ofstock after dilution
shares)(Yen)
Diluted earnings per share*U.S. dollars
Summary of potential shares not includedin the calculation of diluted earnings per
share as they have no dilutive effect¥22,863¥30,517*$210,085(137)–*(1,263)
22,72630,517*208,822
159,401

163,332––

159,401

163,332

142.57*1.31

186.84–- 59 -FY2018 (From April 1,2018 to March 31, 2019)

Share acquisition rights
issued by a subsidiary(Qubitous Co., Ltd.
Common stock: 530
shares)36. CASH FLOW INFORMATION(1)

FY2018 (From April 1, 2018 to March 31, 2019)(Millions of yen)

Significant non-cash transactions

Non-cash changes
Changes
Adjustment due
As of April 1,
arising fromto use of the
2018
Other
cash flows effective interest
methodSignificant non-cash transactions consist of the following:
Millions of yen
FY2019 (From April
1, 2019 to March 31,
2020)¥3,369Acquisition of assets under leases(2)

FY2018 (From April 1,2018 to March 31,
2019)
¥468

Thousands of
U.S. dollars
FY2019 (From April
1, 2019 to March 31,
2020)$30,961

Changes in liabilities arising from financing activities
See the following reconciliation:
FY2019 (From April 1, 2019 to March 31, 2020)(Millions of yen)
Non-cash changes
Adjustments As of April
Changes
Adjustment due
As of April 1,
for the1, 2019
arising fromto use of the2019
application(afterOther
cash flows effective interestof IFRS 16 adjustments)
methodShort-termloans payable
Commercial
papersLong-termloans payable
Long-termloans payable
under
securitizedreceivables
Bonds payable
Lease liabilities
Total¥239,960¥–¥239,960¥16,544

As of March 31,
2020

Short-term loans
payableCommercial papers
Long-term loans
payableLong-term loans
payable under
securitizedreceivables
Bonds payable
Lease obligations
Total

As of March 31,
2019¥247,960¥(8,000)¥–¥–

389,500

121,500––¥239,960
511,000

957,558

60,535

(206)

(14)

1,017,872

20,000–––20,000338,507
1,681¥1,955,207

74,521(603)¥247,954

372
–
¥165

–
506
¥491

413,401
1,584¥2,203,818

37. COLLATERALThe breakdown of assets pledged as collateral is as follows:¥–¥–¥256,504

511,000–

511,000

39,000––550,000

1,017,872–

1,017,872

56,070(178)–

1,073,764

20,000–20,00026,733––

46,733

413,401
1,584–
20,902

413,401
22,48651,510(4,616)

394
–

–
3,386

465,306
21,256¥2,203,818¥20,902¥2,224,721¥185,242¥215¥3,386¥2,413,565

Millions of yen

Trade and other receivables
Other current financial assets

FY2019(As of March 31,
2020)¥46,733
1,511

FY2018(As of March 31,
2019)¥20,000
1,511

Thousands of
U.S. dollars
FY2019(As of March 31,
2020)$429,421
13,884

38. OFFSETTING OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES(Thousands of U.S. dollars)
Adjustments As of April 1,
Non-cash changes
for the2019(after
Changes
Adjustment due
As of April 1, application adjustments)
As of March 31,
arising fromto use of the
2019
2020
Other
of IFRS 16
cash flows effective interest
methodShort-term$2,204,906
loans payable
Commercial
4,695,396
papersLong-term
9,352,869
loans payable
Long-termloans payable
under
183,772
securitizedreceivables
Bonds
3,798,602
payableLease
14,557
liabilities
Total$20,250,105$–$2,204,906$152,018$–$–$2,356,925–

4,695,396

358,357––

5,053,753–

9,352,869

515,207△1,640–9,866,437–

183,772

245,649––

429,421–

3,798,602

473,3143,621–

4,275,538

192,065

206,622△42,421–

31,115

195,317$192,065 $20,442,170$1,702,125$1,981$31,115$22,177,393- 60 -

The following is quantitative information about the financial assets and liabilities offset in the
consolidated statement of financial position, and the financial assets and liabilities not offset but
subject to enforceable master netting agreements or similar agreements.
The right of set-off for master netting agreements arises only after the occurrence of defaults or otherprescribed circumstances that are not expected to occur in the ordinary course of business activities.
For financial instruments and collateral received, an enforceable right of set-off arises only when suchcircumstances occur. Of the financial assets held by the Group, only master netting agreements onderivatives fall into such circumstances.

Total amount ofrecognizedfinancial assets
and liabilities
Financial assets
Trade and otherreceivables
Other financial assets(derivative assets)
Financial liabilities
Trade and other payables
Other financial liabilities(derivative liabilities)(Millions of yen)
FY2019 (As of March 31, 2020)
Amount subject to enforceable
master netting agreements or
Net amountsimilar agreements not included
presented in theAmountNet
in “Amount offset” as shown inconsolidated
offsetamounts
the left column
statement of financial
position
Financial
Collateral
instruments
received¥6,405¥(6,388)

¥16

¥–

¥–

¥16

164

–

164

(164)

–

–

15,257(6,388)

8,868

–

–

8,868

4,392

–

4,392

(164)

–

4,227

- 61 -

39. FINANCIAL INSTRUMENTS(Thousands of U.S. dollars)

Total amount ofrecognizedfinancial assets
and liabilities
Financial assets
Trade and otherreceivables
Other financial assets(derivative assets)
Financial liabilities
Trade and other payables
Other financial liabilities(derivative liabilities)

FY2019 (As of March 31, 2020)
Amount subject to enforceable
master netting agreements or
Net amountsimilar agreements not included
presented in theAmountin “Amount offset” as shown inconsolidated
offsetthe left column
statement of financial
position
Financial
Collateral
instruments
received$(58,706)

$147

$–

$–

$147

1,514

–

1,514

(1,514)––140,197(58,706)

81,491––

81,49140,357–40,357(1,514)–

38,842(Millions of yen)

Total amount ofrecognizedfinancial assets
and liabilities
Financial assets
Trade and otherreceivables
Other financial assets(derivative assets)
Financial liabilities
Trade and other payables
Other financial liabilities(derivative liabilities)

Amountoffset(Millions of yen)Net
amounts$58,853

FY2018 (As of March 31, 2019)
Amount subject to enforceable
master netting agreements or
Net amountsimilar agreements not included
presented in thein “Amount offset” as shown inconsolidated
the left column
statement offinancial position
Financial
Collateral
instruments
received(1) Classification of financial instruments(a) Measurement basis for financial instruments
The measurement basis for financial assets is as follows:
FY2019 (As of March 31, 2020)
EquityDebt instruments
instruments
measured at fairmeasured at fair
Measured at fair
Measured atvalue throughvalue throughvalue throughamortized cost
other
other
profit or loss
comprehensive
comprehensive
incomeincomeAssetsCash and cash equivalents
Trade and otherreceivables
Operational investment
securities
Investment securities
Other financial assets
Total¥(10,662)

¥226

¥–

¥–

¥226

0

–

0

(0)

–

–

13,162(10,662)

2,500

–

–

2,500

1,159

–

1,159

(0)

–

1,159

¥–

¥–

¥–

¥109,761¥109,761

22,7193,071–

2,539,617

2,565,409

48,789–––48,78920,629432¥92,571––¥3,07140,095–¥40,095–
13,473¥2,662,852

60,724
13,905¥2,798,590(Thousands of U.S. dollars)
FY2019 (As of March 31, 2020)
EquityDebt instruments
instruments
measured at fairmeasured at fair
Measured at fair
Measured atvalue throughTotalvalue throughvalue throughamortized cost
other
other
profit or loss
comprehensive
comprehensive
incomeincomeNetamounts¥10,888

Total

AssetsCash and cash equivalents
Trade and otherreceivables
Operational investment
securities
Investment securities
Other financial assets
Total

$–

$–

$–

$1,008,558$1,008,558

208,764

28,226–23,335,638

23,572,629

448,309–––448,309

189,555
3,974$850,604––$28,226

368,422–$368,422–
123,799$24,467,996

557,977
127,773$25,715,249(Millions of yen)

FY2018 (As of March 31, 2019)
EquityDebt instruments
instruments
measured at fair
Measured at fairmeasured at fairvalue throughMeasured atvalue throughvalue throughotheramortized costprofit or loss
othercomprehensive
comprehensive
incomeincomeAssetsCash and cash equivalents
Trade and otherreceivables
Operational investment
securities
Investment securities
Other financial assets
Total- 62 -

Total

¥–

¥–

¥–

¥82,642¥82,642

24,6692,837–

2,365,689

2,393,197

39,973–––39,973

20,5220¥85,166––¥2,837

71,030–¥71,030–
11,915¥2,460,248

91,553
11,916¥2,619,283- 63 -

The measurement basis for financial liabilities is as follows:

Among the above, the fair value of the major issues is as follows:(Millions of yen)

FY2019 (As of March 31, 2020)
Measured at fairvalue through profit
or loss
Liabilities
Trade and other payables
Financial guarantee liabilities
Bonds and borrowings
Other financial liabilities
Total

¥–
–
–
7,720
¥7,720Measured atamortized cost¥230,927–
2,413,565
18,898¥2,663,391¥–
10,206––¥10,206

Total¥230,927
10,206
2,413,565
26,619¥2,681,319(Thousands of U.S. dollars)
FY2019 (As of March 31, 2020)
Measured at fairvalue through profit
or loss
Liabilities
Trade and other payables
Financial guarantee liabilities
Bonds and borrowings
Other financial liabilities
Total

$–
–
–
70,944$70,944

Measured atamortized cost

Financial guarantee
contract$2,121,908–
22,177,393
173,655$24,472,957$–
93,787––$93,787

Total$2,121,908
93,787
22,177,393
244,600$24,637,690

Issue
Seven & i Holdings Co., Ltd.
Ryohin Keikaku Co., Ltd.
Mitsui Fudosan Co., Ltd.
Ho Chi Minh City Development
Joint Stock Commercial Bank
Digital Garage, Inc.
SEIBU HOLDINGS Inc.
Daiwa Securities Group Inc.
Takashimaya Company, Ltd.
Idemitsu Kosan Co., Ltd.
Mizuho Leasing Company, Ltd.
Monex Group, Inc.
Kyushu Railway Company

FY2019(As of March 31, 2020)¥12,249
7,670
3,336

Liabilities
Trade and other payables
Financial guarantee liabilities
Bonds and borrowings
Other financial liabilities
Total

(b)

¥–
–
–
8,934
¥8,934

Financial guarantee
contract¥314,729–
2,203,818
19,507¥2,538,055

¥–
8,305
–
–
¥8,305

Total¥314,729
8,305
2,203,818
28,441¥2,555,295

Investments in equity instruments designated at fair value through other comprehensive income
Certain securities classified as equity instruments are designated as those measured at fair value
through other comprehensive income.

4,140

21,842

2,263
1,729
1,645
1,609
1,415
1,411
634
620

2,126
2,820
–
2,437
2,116
1,751
1,421
–

20,80015,89615,121
14,787
13,005
12,971
5,832
5,696

Millions of yen

Thousands of U.S.
dollars
FY2019 (From April FY2018 (From April FY2019 (From April 1,
1, 2019 to March 31, 1, 2018 to March 31,
2019 to March 31,
2020)
2019)
2020)

FY2018 (As of March 31, 2019)
Measured atamortized cost

2,377

As a result of reviewing business relations with its counterparties, the Group has disposed of andderecognized certain financial instruments designated as equity instruments measured at fair value
through other comprehensive income. Fair value at the time of derecognition, cumulative gains orlosses, and dividend income are as follows:(Millions of yen)
Measured at fairvalue through profit
or loss

Thousands of U.S.
dollars
FY2018FY2019(As of March 31, 2019) (As of March 31, 2020)¥14,304$112,553
17,71570,477
4,963
30,662Millions of yen

Financial guarantee
contract

Fair value at the time of derecognition
Cumulative gains (losses) on disposal¥17,924
12,621¥584
309$164,704
115,978

FY2019 (From April 1, FY2018 (From April
2019 to March 31,
1, 2018 to March 31,
2020)
2019)

Thousands of U.S.
dollars
FY2019 (From April
1, 2019 to March 31,
2020)

Millions of yen

Dividends from equity instruments
derecognized during the period
Dividends from equity instruments heldat the end of the reporting period

¥209

¥6

$1,924

1,017

1,336

9,345

¥1,226¥1,342$11,270

The Group holds those designated equity instruments in order to strengthen business relationships
with its counterparties, not to secure profit through short-term trading. Accordingly, the Group hasdetermined that unrecognized gains and losses arising from those securities are appropriate to berecognized in other comprehensive income rather than in profit or loss.

Cumulative gains and losses recognized as other components of equity are reclassified from othercomponents of equity to retained earnings upon disposal or a significant decline in fair value.

Details and fair values of securities designated as measured at fair value through othercomprehensive income are as follows:

The amount reclassified are ¥8,417 million (U.S. $77,345 thousand) and ¥202 million for FY2019
and FY2018, respectively.

Listed stocks

Millions of yen
FY2019FY2018(As of March 31, 2020)(As of March 31, 2019)¥40,095¥71,030- 64 -

Total

Thousands of U.S. dollars
FY2019(As of March 31, 2020)$368,422- 65 -

(2)Gains and losses on financial instruments

Measured at amortized cost

Analysis of gains and losses on financial instruments held by the Group is provided below.
(a)

Net gains and losses on financial instruments

Financial assets

FY2019 (From April 1, 2019 to March 31, 2020)(Millions of yen)
Measured at amortized cost
Financial assets
Revenue
Interest income calculatedusing the effective interest
methodGain (Loss) on valuationof operational investment
securities
Dividend income
Other
Total
Finance costs
Interest expenses
Other
Total
Impairment losses on
financial assets
Other income
Dividend income
Gain on bad debts
recovered
Distribution income frominvestment partnerships
Gain on sale of shares ofsubsidiaries and associates
Gain on valuation of
investment securities
Other
Total
Other expenses
Loss on valuation of
investment securities(e.g.

¥111,976

Financialliabilities

Debt instruments Equity instruments
measured at fair
designated as
Measured at fairvalue throughmeasured at fairvalue throughothervalue through otherprofit or loss
comprehensive
comprehensive
incomeincome

¥–

¥–

¥190

¥–

Total

¥112,167

–

–

86

–

–

86

–
1,706
113,683

–
–
–

2,580
–
2,667

–
–
190

–
–
–

2,580
1,706
116,541

–
–
–

9,804
666
10,471

–
–
–

–
–
–

–
–
–

9,804
666
10,471

29,315

–

–

22

–

29,338

–

–

201

–

1,226

1,428

1,200

–

–

–

–

1,200

–

–

163

–

–

163

–

–

743

–

–

743

–

–

716

–

–

716

77
1,277

0
0

–
1,825

–
–

–
1,226

77
4,329

–

–

627

–

–

627

Revenue
Interest income calculated
by using the effective
interest method
Gain (Loss) on valuationof operational investment
securities
Dividend income
Other
Total
Finance costs
Interest expenses
Other
Total
Impairment losses on
financial assets
Other income
Dividend income
Gain on bad debts
recovered
Distribution income frominvestment partnerships
Gain on sale of shares ofsubsidiaries and associates
Gain on valuation of
investment securities
Other
Total
Other expenses
Loss on valuation of
investment securities(e.g.

Financialliabilities$1,028,911$–––
15,684
1,044,596(Thousands of U.S. dollars)
Debt instruments Equity instruments
measured at fair
designated as
Measured at fairvalue throughmeasured at fairvalue through
Total
other
value through otherprofit or loss
comprehensive
comprehensive
incomeincome$1,752

$–

–

795

–

–

795

–
–
–

23,712–
24,507

–
–
1,752

–
–
–

23,712
15,684
1,070,856–––

90,093
6,124
96,217

–
–
–

–
–
–

–
–
–

90,093
6,124
96,217269,372

–

–

203

–

269,576

–

–

1,850

–

11,27013,121

11,026––––

11,026

–

–

1,500

–

–

–

6,835

Total

–

19

82

–

–

101

¥–

¥19

¥709

¥–

¥–

¥729

- 66 -

1,500
6,835

–

–

6,585

–

–

6,585

708
11,7342
2–
16,771–––
11,270711
39,780

–

–

5,766

–

–

5,766

–
$–

176
$176

757
$6,523

–
$–

–
$–

934
$6,700stocks)
Other
Total

stocks)Other$1,030,663$–- 67 -

FY2018 (From April 1, 2018 to March 31, 2019)(b)(Millions of yen)

Measured at amortized cost
Financial assets
Revenue
Interest income calculatedusing the effective interest
methodGain (Loss) on valuationof operational investment
securities
Dividend income
Other
Total
Finance costs
Interest expenses
Other
Total
Impairment losses on
financial assets
Other income
Dividend income
Gain on bad debts
recovered
Distribution income frominvestment partnerships
Gain on valuation of
investment securities
Other
Total
Other expenses
Loss on valuation of
investment securities(e.g.

Financialliabilities

Measured at fairvalue throughprofit or loss

Debt instruments Equity instruments
measured at fair
designated asvalue throughmeasured at fairothervalue through othercomprehensive
comprehensive
incomeincome

1)
Total

2)
¥–

¥–

¥175

¥–

¥107,221

–

–

(275)

–

–

(275)

–
1,810
108,856

–
–
–

2,962
14
2,701

–
19
194

–
–
–

2,962
1,844
111,752

–
–
–

9,221
472
9,693

–
184
184

–
–
–

–
–
–

9,221
656
9,878

26,272

–

–

79

–

26,352

–

–

132

–

1,342

1,474

1,151

–

–

–

–

1,151

–

–

138

–

–

138

The fair value of certain receivables without a due date but with other limitations, such as limiting
the loan amount to the value of collateralized asset, is measured at the carrying amount, assumingthat the fair value approximates the carrying amount based on expected repayment periods andinterest rate terms.

–

–

211

–

–

211

The fair value calculation does not incorporate future interest repayments.

13
1,165

–
–

–
482

–
–

–
1,342

13
2,990

–

–

1,266

–

–

1,266

Total

(i) Accounts receivable – installment
Accounts receivable – installment with variable interest rates reflects market interest rates in the
short term. Thus, accounts receivable – installment is stated at carrying amount, given that the fairvalue approximates the carrying amount, unless the credit status of debtors changes significantly inlater periods. On the other hand, the fair value is determined for accounts receivable – installment
with fixed interest rates by discounting credit risk-adjusted future cash flows from the group offinancial assets classified by the type of loans and maturity terms, using a risk-free market interest
rate. The fair value of certain delinquent receivables is measured by deducting the estimated amountof bad debts from the carrying amount of receivables at the end of the reporting period, assumingthat the calculated amount approximates the fair value.

(ii) Finance lease receivables
The fair value of finance lease receivables is determined by estimating future cash flows of theprincipal and interests arising from respective lease periods and subtracting debtor’s credit risk,
which is then discounted using a risk-free market rate.

0

24

–

–

–

24

¥0

¥24

¥1,266¥–¥–¥1,2903)

Gains and losses arising from the derecognition of financial assets measured at amortized cost

Fair value measurement of financial instruments
Fair value hierarchy
Classification based on fair value hierarchy
The Group analyses financial assets and financial liabilities measured at fair value or those whose
fair value is disclosed in the notes. The following shows the classification of fair value from Level
1 to Level 3 based on the fair value hierarchy.
The levels under the fair value hierarchy are defined as follows:
Level 1:

Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2:

Fair value, other than Level 1, that is determined by directly or indirectly using theobservable price

Level 3:

Fair value determined by using valuation techniques that incorporate unobservable
inputsOperational investment securities and investment securities
The fair value of operational investment securities and investment securities is determined asfollows: listed stocks are valued at prices on the stock exchanges; bonds are valued at prices on theexchange markets or information provided by counterpart financial institutions, or at prices that arereasonably calculated based on the value of underlying assets; and investment trusts are based on
the disclosed net asset value. The fair value of investments in limited liability investment
partnerships and similar partnerships is deemed to be the amount proportionate to the Group’s shareof equity interests, which is determined based on the fair value of assets belonging to thepartnership as long as they can be fair valued. The fair value of unlisted stocks is calculated byusing valuation techniques based on discounted cash flow, transactions and the market price ofcomparable companies. When determining the fair value of unlisted stocks, unobservable inputs,
such as weighted average cost of capital(“WACC”), price earnings ratio(“PER”) and price bookvalue ratio(“PBR”), are used.

There are no pertinent items.

(a)Trade and other receivables¥107,045

Other

(3)

Cash and cash equivalents
Cash and cash equivalents are stated at carrying amount because the fair value approximates the
carrying amount due to short maturity.

stocks)(b)

Valuation techniques and inputs used in fair value measurement
Assets4)

Other financial assets
Derivatives are classified as financial assets or liabilities measured at fair value through profit orloss and are measured at prices provided by counterpart financial institutions. Financial assets otherthan derivatives are stated at carrying amounts, which approximately represent their fair values
because of the short settlement period.
Liabilities

1)

Trade and other payables
Trade and other payables are stated at carrying amount as their fair values approximates theircarrying amount due to the short settlement period.

- 68 -- 69 -

2)

Bonds and borrowings(c)(i) Short-term loans payable
Short-term loans payable are stated at the carrying amount as their fair values approximates theircarrying amount due to the short settlement period.

Financial instruments measured at fair value and the fair value hierarchy
Financial instruments measured at fair value in the consolidated statement of financial position andthe breakdown by level of the fair value hierarchy are as follows:(Millions of yen)(ii) Commercial papers

Level 1

Commercial papers are stated at the carrying amount as their fair values approximates theircarrying amount due to the short settlement period.
(iii) Long-term loans payable
Long-term loans payable with variable interest rates only take a change in credit spread into
account as variable interest rates reflect market interest rates in a short period. The current credit
spread is determined by referring to a credit spread that would be offered by financial institutions
if the Group was to newly obtain finance with similar terms and conditions for the averageremaining maturity for the outstanding borrowings. To calculate the difference between the
carrying amount and the fair value, the Group calculates the fair value by firstcompartmentalizing the differences of interest arising from fluctuation of the credit spread bycertain period of time, and then discounting them at risk-free market interest rates corresponding
to each period of time. The fair value of long-term loans payable with fixed interest rates isdetermined by discounting the aggregate amount of principal and interest of the long-term loanscompartmentalized by certain periods of time at interest rates that would be offered for similarborrowings.
(iv) Bonds
The fair value of public offering bonds issued by the Company is measured based on the market
price, which is the Reference Statistical Prices (Yields) for Over-the-Counter(“OTC”) Bond
Transactions issued by the Japan Securities Dealers Association. As private placement bonds
issued by the Company are those subscribed privately by its main banks, the fair value iscalculated in the same way as described in “(iii) Long-term loans payable.”(v) Long-term loans payable under securitized receivables
Long-term loans payable under securitized receivables will not be affected by ups and downs in
the Company’s creditworthiness; therefore, the fair value measurement of such payables only
takes into account changes in market interest rates. The fair value of long-term loans payable
under securitized receivables is determined by discounting the aggregate amount of principal
and interests of the borrowings compartmentalized by certain periods of time at interest rates
that would be offered for similar borrowings.
3)

Other financial liabilities
Derivatives are disclosed in “Assets, 4) Other financial assets.” Other financial liabilities, except
for derivatives, are stated at the carrying amount as the fair value approximates the carrying amountbecause of the short settlement period.

4)

FY2019 (As of March 31, 2020)
Level 2
Level 3Financial guarantee liabilities
The fair value of financial guarantee liabilities is determined by discounting future cash outflows
for guarantees to be provided under financial guarantee contracts, which is adjusted by debtor’s
credit risk.

AssetsAssets measured at fair value
through profit or loss
Trade and other receivables
Operational investment securities
Investment securities
Other financial assets
Equity instruments measured at fairvalue through other comprehensive
incomeInvestment securities
Debt instruments measured at fairvalue through other comprehensive
incomeTrade and other receivables
Total
Liabilities
Measured at fair value through profit
or loss
Other financial liabilities
Total

¥–
–
–
–

¥22,719
–
1,193
432

¥–
48,78919,435–¥22,719
48,78920,629432

36,695

3,399–

40,095–36,695–27,745

3,071
71,297

3,071
135,738

–
¥–

7,720
¥7,720–¥–7,720¥7,720(Thousands of U.S. dollars)
FY2019 (As of March 31, 2020)
Level 2
Level 3
Total

Level 1
AssetsAssets measured at fair value
through profit or loss
Trade and other receivables
Operational investment securities
Investment securities
Other financial assets
Equity instruments measured at fairvalue through other comprehensive
incomeInvestment securities
Debt instruments measured at fairvalue through other comprehensive
incomeTrade and other receivables
Total
Liabilities
Measured at fair value throughprofit or loss
Other financial liabilities
Total

$–
–
–
–

$208,764–
10,9663,974$–
448,309
178,588–$208,764
448,309
189,555
3,974

337,184

31,237–368,422–
337,184–
254,943

28,226655,125

28,226
1,247,253–$–

70,944$70,944–$–

70,944$70,944

The amount of financial guarantee contracts classified as contingent liabilities is ¥399,948 million(U.S. $3,674,984 thousand). The liability amount recognized in the consolidated statement offinancial position is ¥10,206 million (U.S. $93,787 thousand) as of March 31, 2020, and the fairvalue is ¥26,163 million (U.S. $240,403 thousand) (asset).
The amount of financial guarantee contracts classified as contingent liabilities is ¥372,237 million.
The liability amount recognized in the consolidated statement of financial position is ¥8,305
million as of March 31,2019, and the fair value is ¥21,538 million (asset).

- 70 -

Total- 71 -

(Millions of yen)
FY2018 (As of March 31, 2019)
Level 2
Level 3

Level 1
AssetsAssets measured at fair value
through profit or loss
Trade and other receivables
Operational investment securities
Investment securities
Other financial assets
Equity instruments measured at fairvalue through other comprehensive
incomeInvestment securities
Debt instruments measured at fairvalue through other comprehensive
incomeTrade and other receivables
Total
Liabilities
Measured at fair value through profit
or loss
Other financial liabilities
Total

(d)

FY2018 (As of March 31, 2019)
Total

¥–
–
–
–

¥24,669
–
1,472
0

¥–
39,97319,050–¥24,669
39,973
20,522
061,237

9,793–

71,030Fair value(Millions ofyen)
Measured at fair value throughprofit or loss
Operational investment
securities

Investment securities–
61,237–35,935

2,837
61,861

2,837
159,034

–
¥–

8,934
¥8,934–¥–

8,934¥8,934¥39,973

19,050

Valuationtechniques

Capitalization
methodNet asset value
Discounted cash
flow
Market prices ofcomparable
companies
Net asset value

Trade and other receivables(Notes) 1.
2.

2,837

Discounted cashflow

Significant unobservable inputs
Significant unobservable inputs used to measure the fair value of financial instruments classified as
Level 3 in the consolidated statement of financial position are as follows:

Measured at fair value throughprofit or loss
Operational investment
securities

Investment securities

FY2019 (As of March 31, 2020)
Fair value
Valuation
Unobservable(Thousands oftechniques
inputsU.S. dollars)¥48,789$448,309

19,435

178,588

Capitalization
methodNet asset value
Discounted cash
flow
Market prices ofcomparable
companies
Net asset value

Range

Capitalization
3.4% – 6.5%
rate––
4.68% –
WACC
9.05%
PER
8.9 – 24.1
PBR

0.9 – 2.1––

Discount rate

2.97% –
18.10%

Measured at fair value throughother comprehensive income
Trade and other receivables

3,071

28,226

Total¥71,297$655,125- 72 -

Discounted cash
flow

Capitalization
3.4% – 6.6%
rate––
4.18% –
WACC
9.06%
PER
10.0 – 26.8
PBR

1.2 – 2.4––

Discount rate

2.97% –
15.31%

Total¥61,861
Operational investment securities are mainly composed of investments in funds for real estate.
Investment securities are mainly composed of unlisted stocks and investments in funds for unlisted
stocks.

Transfer between Level 1 and Level 2

Fair value(Millions of
yen)

Range

Measured at fair value throughother comprehensive income

Transfers between levels of the fair value hierarchy are recognized on the day when the event orchange in circumstances that caused the transfer occurred. The Group did not recognize any
material transfers between Level 1 and Level 2 for each fiscal year.
(e)

Unobservable
inputs- 73 -

(f)Reconciliation of financial instruments classified as Level 3
The following is the reconciliation of financial assets measured at fair value and classified as Level
3 in the consolidated statement of financial position.

Balance at beginning of period
Total gains and losses
Profit or loss (Note 1)
Other comprehensive income(Note 2)
Purchases
Sales
Other
Balance at end of period
Changes in unrealized gains orlosses recognized in profit orloss on assets held at the end of
the reporting period (Note 1)(Millions of yen)
FY2019 (From April 1, 2019 to March 31, 2020)
Financial assets measured Financial assets measured
at fair value through profit at fair value through otherTotal
or loss
comprehensive income¥59,024¥2,837¥61,861
2,528
180
2,708
2,528
168
2,696
–

11

11

22,820(16,147)–
68,225

246
(192)
–
3,071

23,067(16,340)–
71,297

209

–

209

(Thousands of U.S. dollars)
FY2019 (From April 1, 2019 to March 31, 2020)
Financial assets measured Financial assets measured
at fair value through profit at fair value through otherTotal
or loss
comprehensive income
Balance at beginning of period$542,351$26,072$568,424
Total gains and losses
23,2291,655
24,885
Profit or loss (Note 1)
23,2291,548
24,778Other comprehensive
–
107
107
income (Note 2)
Purchases
209,693
2,263
211,957
Sales(148,377)(1,765)(150,142)
Other
–
–
–
Balance at end of period
626,898
28,226655,125
Changes in unrealized gains orlosses recognized in profit or
1,921
–
1,921
loss on assets held at the end of
the reporting period (Note 1)(g)

Valuation processes used by the Group (Level 3)
Valuations and procedures to determine the fair value of financial instruments classified as Level 3
are undertaken by the Group’s independent administrative division, which is responsible forchecking on a regular basis the details of investees’ businesses, the availability of their businessplans, and comparable listed companies to determine whether or not fair value measurements,
including valuation models, are appropriate.

(h)Sensitivity analysis of fair value measurement classified as Level 3

Fair value measurements classified as Level 3 are conducted using valuation techniques based on
inputs, such as prices and rates, whose fair values are not observable in the market. The following
sensitivity analysis shows the effect on profit or loss and other comprehensive income for changes
in unobservable inputs within a reasonably possible range which are used to measure the fair valueof financial assets classified as Level 3 in the consolidated statement of financial position.
Sensitivity analysis is conducted by taking account of the type of financial instruments and market
conditions at the time of analysis. Changes in significant assumptions for each valuation technique
are set as follows:
・ Capitalization method: Capitalization rate changes within the range of plus/minus 0.5%
・ Discounted cash flow method: WACC changes within the range of plus/minus 1%
・ Market multiple method: PBR and PER change within the range of plus/minus 0.1 and plus/minus
1.0, respectively
When fair values of operational investment securities, investment securities, and trade and otherreceivables classified as Level 3 are measured through a valuation technique other than the above
using reasonably possible alternative assumptions for unobservable inputs, such fair values would
not be included in the table below if the change in fair value is not material.

(Millions of yen)
FY2018 (From April 1, 2018 to March 31, 2019)
Financial assets measured Financial assets measured
at fair value through profit at fair value through otherTotal
or loss
comprehensive income¥55,068¥2,007¥57,075
1,277
90
1,367
1,277
88
1,366

Balance at beginning of period
Total gains and losses
Profit or loss (Note 1)
Other comprehensive income–
11(Note 2)
Purchases
16,7201,358
18,078
Sales(14,041)(618)(14,660)
Other
–
–
–
Balance at end of period
59,024
2,837
61,861
Changes in unrealized gains orlosses recognized in profit or
(807)
(80)
(887)
loss on assets held at the end of
the reporting period (Note 1)(Notes) 1. Amount is included in “Revenue from the payment business,” “Revenue from the finance business,”“Revenue from the real estate-related business,” “Other income,” as well as “Impairment losses on
financial assets” and “Other expenses” per the consolidated statement of income.
2. Amount is included in “Net change in fair value of debt instruments measured at fair value through othercomprehensive income” per the consolidated statement of comprehensive income.

- 74 -- 75 -

Total fair value
Measured at fair value
through profit or loss
Operational investment
securities
Investment securities
Measured at fair value
through othercomprehensive income
Trade and otherreceivables¥9,099¥2,833¥(2,271)

¥–

¥–

7,127

1,263

(917)

–

–

(Millions of yen)

Level 1–

Trade and otherreceivables¥–¥1,515,560¥1,106,877¥2,622,437¥2,539,617

Total

–

1,515,560

1,106,877

2,622,437

2,539,617

–

–

–

–

–

(26,163)(26,163)

10,206

Financial guarantee
liabilities (assets)
Bonds and borrowings(assets)–

Total (assets)(Thousands of U.S. dollars)
FY2019 (As of March 31, 2020)
Impact on other comprehensive
Impact on profit or loss
incomeFavorable
Unfavorable
Favorable
Unfavorable
changeschangeschangeschanges–

2,415,980–

2,415,980

2,413,565¥–¥2,415,980¥(26,163)¥2,389,817¥2,423,772(Thousands of U.S. dollars)
FY2019 (As of March 31, 2020)
Fair value
Total carrying
amountLevel 2
Level 3
Total

Level 1
Assets$83,613$26,039$(20,870)$–$–

65,49011,606(8,434)––

Trade and other receivables$–$13,925,942$10,170,698$24,096,640$23,335,638

Total

–

13,925,942

10,170,698

24,096,640

23,335,638––(240,403)(240,403)

93,787

Liabilities–

Total fair value(i)

Total carrying
amountAssets–––Financial guarantee
liabilities (assets)
Bonds and borrowings(assets)–

Total (assets)

Measured at fair value
through profit or loss
Operational investment
securities
Investment securities
Measured at fair value
through othercomprehensive income
Trade and otherreceivables

FY2019 (As of March 31, 2020)
Fair value
Level 2
Level 3
Total

Liabilities

Total fair value
Measured at fair value
through profit or loss
Operational investment
securities
Investment securities
Measured at fair value
through othercomprehensive income
Trade and otherreceivables(Millions of yen)
FY2019 (As of March 31, 2020)
Impact on other comprehensive
Impact on profit or loss
incomeFavorable
Unfavorable
Favorable
Unfavorable
changeschangeschangeschanges(Millions of yen)
FY2018 (As of March 31, 2019)
Impact on other comprehensive
Impact on profit or loss
incomeFavorable
Unfavorable
Favorable
Unfavorable
changeschangeschangeschanges¥10,156¥2,806¥(2,278)

¥–

¥–

6,141

1,022

(748)

–

–

–

–

–

–

22,199,582–

22,199,582

22,177,393$22,199,582$(240,403)$21,959,178$22,271,181(Millions of yen)

FY2018 (As of March 31, 2019)
Fair value
Level 2
Level 3
Total

Level 1

Total carrying
amountAssetsTrade and other receivables¥–¥1,376,128¥1,075,178¥2,451,306¥2,365,689

Total

–

1,376,128

1,075,178

2,451,306

2,365,689––(21,538)(21,538)8,305–

2,218,438–

2,218,438

2,203,818¥–¥2,218,438¥(21,538)¥2,196,900¥2,212,124

Liabilities
Financial guarantee
liabilities(assets)
Bonds andborrowings(assets)–

Total(assets)

Financial instruments that are not measured at fair value and the fair value hierarchy
Fair value of financial instruments that are not measured at fair value and the fair value hierarchy bylevel is as follows. Financial instruments whose fair values approximate carrying amount are notdisclosed.

–
$–

(4)

Financial risk management
The Group is engaged in the Payment business, Lease business, Finance business, Real estaterelated business, and Entertainment business. In conducting these businesses, the Group is exposed
to financial risks, including credit risk, liquidity risk, and market risk. The Group conducts risk
management to reduce such financial risks.
Additionally, the Group uses derivatives to hedge interest rate fluctuation risks and other risks. It is
the Group’s policy not to enter into any derivative transactions for speculative purposes. The Group
enters into and manages derivative transactions only after obtaining management approval in- 76 -- 77 -

accordance with internal regulations, which also specify the authority for transactions, trading limit
and others.
1)

Credit risk management (and impairment loss on financial assets)(a)Overview of credit risks
Financial assets of the Group are mainly composed of accounts receivable – installment from its
card members. The Group is exposed to credit risks mainly when the repayment ability of credit
card members deteriorates. The majority of accounts receivable – installment as of March 31, 2020,
resulted from the Payment business. Changes in economic environment surrounding the business,such as labor conditions, household disposable income, and consumer spending due to recession,
may hinder card members in fulfilling their obligations in accordance with contract terms andconditions.
The Group’s (operational) investment securities mainly consist of stocks, investment trusts, andinvestments in partnerships, which are held for the purpose of pure investment and businesspromotion. They are exposed to respective issuers’ credit risks.

(b) Credit risk management
The Group strives for continuous improvement in the quality of receivables, and develops andoperates a system related to credit control, such as credit limits, credit information control, andinternal ratings in accordance with the Company’s internal rules for credit risk management. The
Group periodically holds Board of Directors and other relevant meetings to discuss and report thestatus of credit controls. The Asset-Liability Management (ALM) Committee is responsible for the
management of (operational) investment securities by regularly obtaining credit and fair value
information. Long-term loans receivable are regularly monitored at the level of each department forborrowers’ credit risk and other risks. In dealing with counterparty risk in derivative transactions, inorder to avoid credit risk that arises from default, the Group contracts with domestic and foreignbanks and securities companies with high creditworthiness.

(c)

Changes in allowance for doubtful accounts
Details of allowance for doubtful accounts for FY2019 are as follows:(Millions of yen)
FY2019 (From April 1, 2019 to March 31, 2020)
Beginning of the year
End of the year
Financial instruments measured
at amortized cost
Trade and other receivables
Other current financial assets
Financial instruments measured
at fair value through othercomprehensive income
Trade and other receivables
Total¥49,035132

229¥47,600

244¥49,412(Thousands of U.S. dollars)
FY2019 (From April 1, 2019 to March 31, 2020)
Beginning of the year
End of the year
Financial instruments measured
at amortized cost
Trade and other receivables
Other current financial assets
Financial instruments measured
at fair value through othercomprehensive income
Trade and other receivables
Total$435,169
104$450,569
1,213

2,106
$437,381

2,249$454,032

Details of allowance for doubtful accounts for FY2018 are as follows:(Millions of yen)
FY2018 (From April 1, 2018 to March 31, 2019)
Beginning of the year
End of the year
Financial instruments measured
at amortized cost
Trade and other receivables
Other current financial assets
Financial instruments measured
at fair value through othercomprehensive income
Trade and other receivables
Total- 78 -¥47,359
11- 79 -¥48,5658¥47,359
11

149¥48,724229¥47,600(Thousands of U.S. dollars)
FY2019 (From April 1, 2019 to March 31, 2020)
Lifetime expected credit losses
Financial assets for which credit
Financial assets
risk has increased significantly
for which
Purchased orsince initial recognition but thatallowance for
12-month
are not credit-impaired financial Credit-impaired doubtful accounts originatedexpected credit
Total
credit-impaired
assetsfinancial assets at
is always
lossesthe reporting date measured at an financial assets
Assessment on Assessment onamount equal toa collective
an individual
lifetime expected
basis
basis
credit losses

Trade and other receivables (financial instruments measured at amortized cost)(Millions of yen)
FY2019 (From April 1, 2019 to March 31, 2020)
Lifetime expected credit losses
Financial assets for which credit
Financial assets
risk has increased significantly
for which
Purchased orsince initial recognition but thatallowance for
12-month
are not credit-impaired financial Credit-impaired doubtful accounts originatedexpected credit
credit-impaired
assetsfinancial assets at
is always
lossesthe reporting date measured at an financial assets
Assessment on Assessment onamount equal toa collective
an individual
lifetime expected
basis
basis
credit losses
Allowance for
doubtful accounts at
beginning of period
Changes in allowancefor doubtful accounts
resulting fromaddition or collection
Changes due tochange in stages:
Transfer to lifetime
expected credit
lossesTransfer to creditimpaired financial
instruments
Transfer to 12month expectedcredit losses
Changes in risk
variables
Write-offAllowance for
doubtful accounts at
end of period

Total¥6,752¥2,081¥–¥35,849¥402¥2,274¥47,359

304

(97)

–

(13,886)

1,030

8,945

(3,702)

(62)

1,569

–

(167)

–

–

1,339

(110)

(775)

–

19,110––18,224

26

(583)

–

–

–

–

(557)

2,168

653

–

1,836

(47)

(1,308)

3,303

(45)

–

–

(9,449)–(7,436)(16,931)

9,032

2,847

–

33,293

1,386

2,475

49,035

Allowance for
doubtful accounts at
beginning of period
Changes in allowancefor doubtful accounts
resulting fromaddition or collection
Changes due tochange in stages:
Transfer to lifetime
expected credit
lossesTransfer to creditimpaired financial
instruments
Transfer to 12month expectedcredit losses
Changes in risk
variables
Write-offAllowance for
doubtful accounts at
end of period$62,042$19,122$–$329,409$3,696$20,898$435,169

2,796

(896)

–

(127,597)

9,472

82,201(34,023)(576)

14,421–(1,535)––12,309(1,011)(7,125)–

175,598––

167,461

241(5,363)

–

–

–

–

(5,122)

19,923

6,008–

16,875(432)(12,021)30,353

(418)

–

–

(86,830)–(68,329)(155,579)

82,997

26,167–305,919

12,73522,749450,569(Millions of yen)
FY2018 (From April 1, 2018 to March 31, 2019)
Lifetime expected credit losses
Financial assets for which credit
Financial assets
risk has increased significantly
for which
Purchased orsince initial recognition but thatallowance for
12-month
are not credit-impaired financial Credit-impaired doubtful accounts originatedexpected credit
Total
credit-impaired
assetsfinancial assets at
is always
lossesthe reporting date measured at an financial assets
Assessment on Assessment onamount equal toa collective
an individual
lifetime expected
basis
basis
credit losses
Allowance for
doubtful accounts at
beginning of period
Changes in allowancefor doubtful accounts
resulting fromaddition or collection
Changes due tochange in stages:
Transfer to lifetime
expected credit
lossesTransfer to creditimpaired financial
instruments
Transfer to 12month expectedcredit losses
Changes in risk
variables
Write-offAllowance for
doubtful accounts at
end of period¥6,797¥2,218¥–¥36,009¥406¥3,134¥48,565

305

(151)

–

(13,103)

(2)

6,945

(6,005)

(61)

1,619

–

(236)

–

–

1,321

(146)

(810)

–

19,546––

18,589

34

(772)

–

–

–

–

(737)

(113)

(23)

–

2,418

–

(1,729)

551

(62)

–

–

(8,784)(1)(6,075)(14,924)

6,752

2,081

–

35,849402

2,274

47,359For the fiscal year ended March 31, 2020 and 2019, undiscounted expected credit losses related topurchased or originated credit-impaired financial assets upon initial recognition amounted to- 80 -- 81 -

(Thousands of U.S. dollars)
FY2019 (From April 1, 2019 to March 31, 2020)
Lifetime expected credit losses
Financial instruments for which
Financialcredit risk has increased
instruments for
Financialsignificantly since initialwhich financial
12-month
instruments
Credit-impaired
recognition but that are notguarantee
expected credit credit-impaired financial assets
purchased or
Total
financialliabilities are
lossesoriginatedinstruments at the always measured
credit-impaired
at an amount
Assessment on Assessment on reporting dateequal to thea collective
an individual
lifetime expected
basis
basis
credit losses¥13,385 million(U.S. $122,992 thousand) and ¥12,582 million.
Financial guarantee liabilities(Millions of yen)
FY2019 (From April 1, 2019 to March 31, 2020)
Lifetime expected credit losses
Financial instruments for which
Financialcredit risk has increased
instruments for
Financialsignificantly since initialwhich financial
12-month
instruments
Credit-impaired
recognition but that are notguarantee
expected credit credit-impaired financial assets
purchasedor
Total
financialliabilities are
lossesoriginatedinstruments at the always measured
at an amount credit-impaired
Assessment on Assessment on reporting dateequal to thea collective
an individual
lifetime expected
basis
basis
credit losses
Financial guarantee
liabilities at beginningof period
Changes in financial
guarantee liabilities
resulting fromaddition or collection
Changes due tochange in stages:
Transfer to lifetime
expected credit
lossesTransfer to creditimpaired financial
instruments
Transfer to 12month expectedcredit losses
Changes in risk
variables
Write-off
Financial guarantee
liabilities at end of
period¥5,389¥2,624

¥–

¥291

¥–

¥–

¥8,305

35

(607)

–

(17)

–

–

(589)

(136)

1,934

–

(10)

–

–

1,787

(137)

(848)

–

6,176

–

–

5,189

36

(468)

–

–

–

–

(431)

1,309

789

–

1,612

–

–

3,710

(0)

–

–

(7,763)––(7,764)

6,495

3,423

–

287

–

–

10,206- 82 -

Financial guarantee
liabilities at beginningof period
Changes in financial
guarantee liabilities
resulting fromaddition or collection
Changes due tochange in stages:
Transfer to lifetime
expected credit
lossesTransfer to creditimpaired financial
instruments
Transfer to 12month expectedcredit losses
Changes in risk
variables
Write-off
Financial guarantee
liabilities at end of
period$49,525$24,112$–$2,681$–$–$76,319323△5,579

–

(164)

–

–

(5,420)(1,257)

17,775

–

(97)

–

–

16,420(1,267)△7,800–56,751––47,682333△4,301––––(3,967)

12,0297,251–

14,812––

34,094(0)––(71,340)––(71,341)

59,686

31,458

–

2,643

–

–

93,787- 83 -

(Millions of yen)
FY2018 (From April 1, 2018 to March 31, 2019)
Lifetime expected credit losses
Financial instruments for which
Financialcredit risk has increased
instruments for
Financialsignificantly since initialwhich financial
12-month
instruments
Credit-impaired
recognition but that are notguarantee
expected credit credit-impaired financial assets
purchased or
Total
financialliabilities are
lossesoriginatedinstruments at the always measured
credit-impaired
at an amount
Assessment on Assessment on reporting dateequal to thea collective
an individual
lifetime expected
basis
basis
credit losses
Financial guarantee
liabilities at beginningof period
Changes in financial
guarantee liabilities
resulting fromaddition or collection
Changes due tochange in stages:
Transfer to lifetime
expected credit
lossesTransfer to creditimpaired financial
instruments
Transfer to 12month expectedcredit losses
Changes in risk
variables
Write-off
Financial guarantee
liabilities at end of
period¥4,632¥2,081

¥–

¥331

¥–

¥–

¥7,045

63

(495)

–

(18)

–

–

(450)

(116)

1,704

–

(13)

–

–

1,575

(112)

(730)

–

6,279

–

–

5,436

25

(340)

–

–

–

–

(315)

897

404

–

1,079

–

–

2,382

(0)

–

–

(7,367)––(7,367)

5,389

2,624

–

291

–

–

8,305

There is no significant change in the gross carrying amount of trade and other receivables (i.e.,
financial instruments measured at amortized cost) that could affect the change in allowance for
doubtful accounts for the fiscal year ended March 31, 2020 and March 31, 2019.
(d) Modified financial instruments
Contractual cash flows have been modified for certain financial instruments whose estimated credit
losses were originally measured at an amount equal to lifetime expected credit losses. The following
are amortized costs before modification and modification gain or loss recognized for the financial
instruments. There are no financial instruments that have been modified since initial recognition at atime when they were measured at lifetime expected credit losses and for which financial guarantee
liabilities were changed to an amount equal to 12-month expected credit losses for the fiscal year
ended March 31, 2020.
Millions of yen
FY2019 (As of MarchFY2018 (As of31, 2020)
March 31, 2019)
Amortized cost before modification
Modification gain (loss)(e)¥22,762(2,848)(f)

Maximum exposure to credit risk before considering collateral and other credit enhancements(Millions of yen)
FY2019 (As of March 31, 2020)
Financial instruments to which
Financial instruments to which
impairment requirements of
impairment requirements of
IFRS 9 are applied
IFRS 9 are not applied
Credit risk related to assets in the
consolidated statement of financial position:
Trade and other receivables
Measured at amortized cost
Measured at fair value through profit
or loss
Debt instruments measured at fairvalue through other comprehensive
incomeOther financial assets
Credit risk related to items other than assets
in the consolidated statement of financial
position:
Loan commitments
Financial guarantee contracts
Total

Credit risk related to assets in the
consolidated statement of financial position:
Trade and other receivables
Measured at amortized cost
Measured at fair value through profit
or loss
Debt instruments measured at fairvalue through other comprehensive
incomeOther financial assets
Credit risk related to items other than assets
in the consolidated statement of financial
position:
Loan commitments
Financial guarantee contracts
Total$209,154(26,176)

Write-off
The following is the amount of financial assets directly written off for which the Group continues its
collecting activities:
Millions of yen

Uncollectible balance

Thousands of U.S. dollars

FY2019 (As of
FY2018 (As of March FY2019 (As of March 31,
March 31, 2020)
31, 2019)
2020)¥1,260¥1,168$11,581- 84 -¥––

22,7193,071–

13,473432

3,918,464
389,741¥6,864,368––¥23,152(Thousands of U.S. dollars)
FY2019 (As of March 31, 2020)
Financial instruments to which
Financial instruments to which
impairment requirements of
impairment requirements of
IFRS 9 are applied
IFRS 9 are not appliedThousands of U.S. dollars
FY2019 (As of March 31,
2020)¥19,282(2,267)¥2,539,617- 85 -$23,335,638$––

208,764

28,226–

123,799

3,974

36,005,372
3,581,196$63,074,232––$212,739

(Millions of yen)
FY2018 (As of March 31, 2019)
Financial instruments to which
Financial instruments to which
impairment requirements of
impairment requirements of
IFRS 9 are applied
IFRS 9 are not applied
Credit risk related to assets in the
consolidated statement of financial position:
Trade and other receivables
Measured at amortized cost
Measured at fair value through profit
or loss
Debt instruments measured at fairvalue through other comprehensive
incomeOther financial assets
Credit risk related to items other than assets
in the consolidated statement of financial
position:
Loan commitments
Financial guarantee contracts
Total¥2,365,689¥––

24,6692,837–

11,91503,930,239
363,931¥6,674,614––¥24,670(g)

Quantitative information about credit-impaired financial instruments as of March 31, 2020 as wellas the amount of associated collateral and other credit enhancements held for security purposes(Millions of yen)
FY2019 (As of March 31, 2020)
Net of collateral andMaximum exposure to
Collateral and other
other credit
credit risk
credit enhancements
enhancements
Trade and other receivables
Measured at amortized cost
Debt instruments measured at fairvalue through other comprehensive
incomeOther financial assets
Financial guarantee contracts
Total¥69,560¥19,165¥50,395

3,071

3,013

58

–
690
¥73,323–482¥22,661–207¥50,662(Thousands of U.S. dollars)
FY2019 (As of March 31, 2020)
Net of collateral andMaximum exposure to
Collateral and other
other credit
credit risk
credit enhancements
enhancements
Trade and other receivables
Measured at amortized cost
Debt instruments measured at fairvalue through other comprehensive
incomeOther financial assets
Financial guarantee contracts
Total$639,169$176,100$463,069

28,226

27,689

537

–
6,348
$673,745–
4,437$208,227–
1,911$465,517(Millions of yen)
FY2018 (As of March 31, 2019)
Net of collateral andMaximum exposure to
Collateral and other
other credit
credit risk
credit enhancements
enhancements
Trade and other receivables
Measured at amortized cost
Debt instruments measured at fairvalue through other comprehensive
incomeOther financial assets
Financial guarantee contracts
Total¥61,772¥16,286¥45,486

2,837

2,771

66

–
651
¥65,261–429¥19,486–
222¥45,774

The amount of collateral and other credit enhancements represents fair value of collateralized realestate for purchased receivables.

- 86 -- 87 -

(h)Quantitative information about maximum exposure to credit risk, collateral held, and other credit
enhancements for financial assets to which impairment requirements of IFRS 9 are not applied.

i)

The Group’s credit risk exposure related to trade and other receivables, other financial assets, andloan commitments is as follows:(Millions of yen)
FY2019 (As of March 31, 2020)
Net of collateral andMaximum exposure to Collateral and other
other credit
credit risk
credit enhancements
enhancements
Trade and other receivables
Measured at fair value through profit orloss
Operational investment
securities/investment securities
Measured at fair value through profit orloss
Equity instruments measured at fairvalue through other comprehensive
incomeOther financial assets
Total¥22,719¥2,906¥19,81269,418–69,41840,095–40,095432¥132,666–¥2,906432¥129,759(Thousands of U.S. dollars)
FY2019 (As of March 31, 2020)
Net of collateral andMaximum exposure to Collateral and other
other credit
credit risk
credit enhancements
enhancements
Trade and other receivables
Measured at fair value through profit orloss
Operational investment
securities/investment securities
Measured at fair value through profit orloss
Equity instruments measured at fairvalue through other comprehensive
incomeOther financial assets
Total$208,764$26,710

637,865–$182,054

637,865

368,422–368,422

3,974$1,219,026–$26,710

3,974$1,192,316(Millions of yen)
FY2018 (As of March 31, 2019)
Net of collateral andMaximum exposure to Collateral and other
other credit
credit risk
credit enhancements
enhancements
Trade and other receivables
Measured at fair value through profit orloss
Operational investment
securities/investment securities
Measured at fair value through profit orloss
Equity instruments measured at fairvalue through other comprehensive
incomeOther financial assets
Total¥24,669¥1,307¥23,362

60,496–60,496

71,030–71,0300¥156,197–¥1,307

0¥154,889(Millions of yen)
FY2019 (As of March 31, 2020)
Financial instruments to which impairment requirements of IFRS 9 are applied
Financial instruments for which allowance for
doubtful accounts is measured at an amountequal to lifetime expected credit losses
Financial
instruments for
Financial
Financial
Financial
which
instruments for
instruments to
Creditinstruments forallowance for
which
which
impairedwhich credit
doubtfulCreditallowance for
impairment
Total
financialrisk hasaccounts is
impaired
doubtful
instruments requirements ofincreasedmeasured at an
financialaccounts ispurchased or IFRS 9 are notsignificantly
amount equal
instruments atalwaysappliedoriginatedsince initial
to 12-month
the reporting measured at anrecognition but
expected credit
dateamount equalthat are notlossesto lifetime
credit-impaired
expected credit
financial assets
lossesCredit risk related to assets
in the consolidated

statement of financial
position:
Trade and other receivables
Payment business
Normal receivables
Delinquent receivables(short- to medium-term)
Delinquent receivables(long-term)
Subtotal
Lease business
Normal receivables
Delinquent receivables(short- to medium-term)
Delinquent receivables(long-term)
Subtotal
Finance business
Normal receivables
Delinquent receivables(short- to medium-term)
Delinquent receivables(long-term)
Subtotal
Real estate-related business
Other
Total
Other financial assets
Credit risk related to items
other than assets in the
consolidated statement offinancial position:
Loan commitments
Payment business
Other loan commitments¥1,206,826¥–¥–¥101,722

¥–

¥–

–

8,630

–

–

–

–

8,630

–

–

47,643

1,137

19,904–

68,684

1,206,826

8,630

47,643102,859

19,904–

1,385,864

311,908

–

–

357

–

–

312,265

–

5,666

–

–

–

–

5,666

–

–

7,929

155

–

–

8,085

311,908

5,666

7,929

512

–

–

326,016

796,980

–

–

–

–

22,719819,700

–

2,562

–

–

–

–

2,562

–

–

5,813

8

4,477

–

10,300796,980047,022
2,362,737
13,6052,562––
16,859
–

5,813
34
1,809
63,230–8344
0103,725–

4,477
20,789–45,171–

22,719––22,719432

832,563
21,16848,8312,614,444
14,037

3,905,981
12,483

–
–

–
–

–
–

–
–

–
–

3,905,981
12,483

The amount of collateral and other credit enhancements represents fair value of collateralized realestate for non-recourse loans.
(i)Analysis of concentration of credit risk
An analysis of concentration of credit risk for each year is as follows.

- 88 -¥1,308,548- 89 -

(Thousands of U.S. dollars)
FY2019 (As of March 31, 2020)
Financial instruments to which impairment requirements of IFRS 9 are applied
Financial instruments for which allowance for
doubtful accounts is measured at an amountequal to lifetime expected credit losses
Financial
instruments for
Financial
Financial
Financial
which
instruments for
instruments to
Creditinstruments forallowance for
which
which
impairedwhich credit
doubtfulCreditallowance for
impairment
Total
financialrisk hasaccounts is
impaired
doubtful
instruments requirements ofincreasedmeasured at an
financialaccounts ispurchased or IFRS 9 are notsignificantly
amount equal
instruments atalwaysappliedoriginatedsince initial
to 12-month
the reporting measured at anrecognition but
expected credit
dateamount equalthat are notlossesto lifetime
credit-impaired
expected credit
financial assets
losses(Millions of yen)
FY2018 (As of March 31, 2019)
Financial instruments to which impairment requirements of IFRS 9 are applied
Financial instruments for which allowance for
doubtful accounts is measured at an amountequal to lifetime expected credit losses
Financial
instruments for
Financial
Financial
Financial
which
instruments for
instruments to
Creditinstruments forallowance for
which
which
impairedwhich credit
doubtfulCreditallowance for
impairment
Total
financialrisk hasaccounts is
impaired
doubtful
instruments requirements ofincreasedmeasured at an
financialaccounts ispurchased or IFRS 9 are notsignificantly
amount equal
instruments atalwaysappliedoriginatedsince initial
to 12-month
the reporting measured at anrecognition but
expected credit
dateamount equalthat are notlossesto lifetime
credit-impaired
expected credit
financial assets
lossesCredit risk related to assets
in the consolidated

Credit risk related to assets
in the consolidated

statement of financial
position:statement of financial
position:

Trade and other receivables
Payment business
Normal receivables$11,089,094
Delinquent receivables–(short- to medium-term)
Delinquent receivables–(long-term)
Subtotal
11,089,094
Lease business
Normal receivables
2,866,013
Delinquent receivables–(short- to medium-term)
Delinquent receivables–(long-term)
Subtotal
2,866,013
Finance business
Normal receivables
7,323,173
Delinquent receivables–(short- to medium-term)
Delinquent receivables–(long-term)
Subtotal
7,323,173
Real estate-related business3
Other432,070
Total
21,710,355
Other financial assets
125,013Credit risk related to items
other than assets in the
consolidated statement offinancial position:
Loan commitments
Payment business
35,890,670
Other loan commitments
114,701$–$–$934,693$–$–$12,023,788

79,301––––79,301–

437,777

10,447

182,895–

631,120

79,301

437,777

945,141

182,895–

12,734,211

–

–

3,282

–

–

2,869,296

52,064––––52,064–

72,863

1,428

–

–

74,29152,064

72,863

4,710

–

–

2,995,651

–

–

–

–

208,764

7,531,937

23,547––––23,547–53,42081

41,144–

94,64623,547––
154,914–53,420313
16,628581,003
–

81
3,165
0
953,098–

41,144
191,022–415,062–

208,764––
208,764
3,974

7,650,132
194,505
448,698
24,023,199
128,987

–
–

–
–

–
–

–
–

–
–

35,890,670
114,701

Trade and other receivables
Payment business
Normal receivables
Delinquent receivables(short- to medium-term)
Delinquent receivables(long-term)
Subtotal
Lease business
Normal receivables
Delinquent receivables(short- to medium-term)
Delinquent receivables(long-term)
Subtotal
Finance business
Normal receivables
Delinquent receivables(short- to medium-term)
Delinquent receivables(long-term)
Subtotal
Real estate-related business
Other
Total
Other financial assets
Credit risk related to items
other than assets in the
consolidated statement offinancial position:
Loan commitments
Payment business
Other loan commitments(Note)- 90 -¥1,220,932¥–¥–¥111,657

¥–

¥–

–

8,117

–

–

–

–

¥1,332,590
8,117

–

–

46,694

1,042

17,235–64,972

1,220,932

8,117

46,694112,699

17,235–

1,405,680

291,668

–

–

31

–

–

291,700

–

5,628

–

–

–

–

5,628

–

–

8,321

178

–

–

8,500

291,668

5,628

8,321

210

–

–

305,829638,266

–

–

–

–

24,669662,936

–

2,115

–

–

–

–

2,115

–

–

6,115

8

4,269

–

10,394

638,266
3
33,0892,183,961
11,927

2,115––
15,861
–

6,115
34
1,819
62,985–8410
0113,330–

4,269
18,243–39,749–24,669––24,6690675,446
18,691
34,9092,440,556
11,927

3,914,114
16,125

–
–

–
–

–
–

–
–

–
–

3,914,114
16,125

Definitions of terms in the table are as follows:
Normal receivables: Non-delinquent receivables
Delinquent receivables (short- to medium-term) : Receivables for which contractual payments are past due morethan 30 days but not more than 90 days
Delinquent receivables (long-term): Receivables for which contractual payments are past due morethan 90 days, restructured loans, or other receivables- 91 -

ii)

The Group’s credit risk exposure related to financial guarantee contracts is as follows:
Financial
instruments forwhich financial
guarantee
liabilities aremeasured at an
amount equal to
12-month
expected credit
losses(Millions of yen)

Financial
instruments forwhich financial
guarantee
liabilities aremeasured at an
amount equal to
12-month
expected credit
lossesCustomers related to retailloans provided by partner
financial institutions
Customers related to loans
with pictures pledged ascollateral provided bypartner financial
institutions
Customers related to rent
guarantee businessBorrowings entered into by
GFINSERVICES (S) PTE.
LTD.
Customers related to
mortgage loans provided bypartner financial
institutions
Customers related tohousing loans provided bypartner financial
institutions
Total

FY2019 (As of March 31, 2020)
Financial instruments for which financial
guarantee liabilities are measured at an
amount equal to lifetime expected credit
lossesCredit-impaired
Financial instruments
financial instruments
for which credit risk
purchased or
has increased
Credit-impaired
originatedsignificantly since
financial instruments
initial recognition but
at the reporting datethat are not creditimpaired financial
assetsTotal¥250,735¥9,263¥425¥–¥260,424

47

–

–

–

47

47,922–––47,922

992

–

–

–

992

84,716

3,166

553

–

88,436

2,125

–

–

–

2,125

¥386,539¥12,430¥978¥–¥399,948

Customers related to retailloans provided by partner
financial institutions
Customers related to loans
with pictures pledged ascollateral provided bypartner financial
institutions
Customers related to rent
guarantee businessBorrowings entered into by
GFINSERVICES (S) PTE.
LTD.
Customers related to
mortgage loans provided bypartner financial
institutions
Customers related tohousing loans provided bypartner financial
institutions
Total(Thousands of U.S. dollars)
FY2019 (As of March 31, 2020)
Financial instruments for which financial
guarantee liabilities are measured at an
amount equal to lifetime expected credit
lossesCredit-impaired
Financial instruments
financial instruments
for which credit risk
Totalpurchased or
has increased
Credit-impaired
originatedsignificantly since
financial instruments
initial recognition but
at the reporting datethat are not creditimpaired financial
assets$2,303,914$85,121$3,909$–$2,392,945

433

–

–

–

433

440,342–––440,342

9,115

–

–

–

9,115

778,433

29,096

5,082–

812,612

19,533–––

19,533$3,551,773$114,218$8,991$–$3,674,984(Millions of yen)

Financial
instruments forwhich financial
guarantee
liabilities aremeasured at an
amount equal to
12-month
expected credit
lossesCustomers related to retailloans provided by partner
financial institutions
Customers related to loans
with pictures pledged ascollateral provided bypartner financial
institutions
Customers related to rent
guarantee businessBorrowings entered into by
GFINSERVICES (S) PTE.
LTD.
Customers related to
mortgage loans provided bypartner financial
institutions
Customers related tohousing loans provided bypartner financial
institutions
Total- 92 -FY2018 (As of March 31, 2019)
Financial instruments for which financial
guarantee liabilities are measured at an
amount equal to lifetime expected credit
lossesCredit-impaired
Financial instruments
financial instruments
for which credit risk
purchased or
has increased
Credit-impaired
originatedsignificantly since
financial instruments
initial recognition but
at the reporting datethat are not creditimpaired financial
assetsTotal¥263,748¥9,059¥450¥–¥273,258

54

–

–

–

54

21,566–––

21,566

1,064

–

–

–

1,064

70,313

2,578

492

–

73,384

2,908

–

–

–

2,908

¥359,655¥11,637¥943¥–¥372,237- 93 -

(j)Carrying amount of non-financial assets obtained by the Group through exercising its right tocollateral or other credit enhancements in FY2018
Millions of yen
FY2019FY2018(As of March 31, 2020) (As of March 31, 2019)Non-financial assets
Real estate for sales
Total

¥726
¥726

¥5,313¥5,313Thousands of U.S. dollars
FY2019(As of March 31, 2020)$6,673$6,6732) Liquidity risk(a)Overview of liquidity risk

The Group is exposed to liquidity risk, which represents the risk that it cannot fulfil the repayment
obligation when due for interest-bearing debts, such as borrowings, bonds and commercial papers,
under certain circumstances. For example, a greater-than-expected change might be seen infinancial markets or the Group might not be able to participate in markets due to a downgrade of theGroup’s credit rating.
(b) Liquidity risk management
The Group manages liquidity risks through ALM to implement timely cash management, diversify
financing methods, obtain commitment lines from multiple financial institutions, and balance shortterm and long-term borrowings in consideration of market forces.
(c)

Maturity analysis for financial liabilities
Operating lease obligations are stated in Note “42. Leases.”
The Group could be required to provide guarantees or execute commitments for the maximum
exposure amount within one year under financial guarantee contracts and loan commitments. The
details of maximum exposure are stated in Note “1) Credit risk management (and impairment loss
on financial assets).”
Derivatives are stated in the net amount of assets and liabilities.

Carrying
amountNon-derivative liabilities
Trade and other¥230,927
payablesBonds and borrowings
Bonds payable
465,306
Borrowings
1,377,002
Commercial papers
550,000
Lease liabilities
21,256
Other financial
18,898liabilities
Derivatives
Cash flow hedges
7,556
Total
¥2,670,948

Carrying
amount

Total(Millions of yen)
FY2019 (As of March 31, 2020)
Due after
Due after
Due after
Due after
Due within
one year
two years
three years
four years
Due after
one yearthrough two through three through four through five five years
years
years
years
years

¥230,927¥230,927

¥–

¥–

¥–

¥–

¥–

479,155
1,397,128
550,010
21,33275,147402,012550,010
4,374

66,730118,218–
3,522

56,581
131,035–
2,600

56,373
111,496–
2,315

60,895
148,719–
1,995

163,427
485,645–6,524

18,89818,230

16

72

253

–

324

8,231
¥2,705,683

1,814¥1,282,517

1,569¥190,058

1,398¥191,687

1,109¥171,548

812¥212,422

1,526¥657,448

Total(Thousands of U.S. dollars)
FY2019 (As of March 31, 2020)
Due after
Due after
Due after
Due after
Due within
one year
two years
three years
four years
Due after
one yearthrough two through three through four through five five years
years
years
years
years

Non-derivative
liabilities
Trade and other$2,121,908 $2,121,908 $2,121,908
payablesBonds and borrowings
Bonds payable
4,275,538
4,402,789
690,507
Borrowings
12,652,784 12,837,713
3,693,947
Commercial papers
5,053,753
5,053,847
5,053,847
Lease liabilities
195,317
196,013
40,194
Other financial
173,655
173,655
167,517
liabilities
Derivatives
Cash flow hedges
69,43075,633
16,668
Total$24,542,387 $24,861,561 $11,784,593

Carrying
amountNon-derivative
liabilities
Trade and other¥314,729
payablesBonds and borrowings
Bonds payable
413,401
Borrowings
1,279,417
Commercial papers
511,000
Other financial
19,507
liabilities
Derivatives
Cash flow hedges
8,933
Total
¥2,546,989

(d)

Total

$–

$–

$–

$–

$–

613,163
1,086,271–
32,366

519,902
1,204,037–
23,891

517,996
1,024,500–
21,279559,543
1,366,530–
18,334

1,501,674
4,462,424–
59,946

155

669

2,326

–

2,985

14,425$1,746,383

12,847$1,761,349

10,198$1,576,301

7,467$1,951,876

14,024$6,041,057(Millions of yen)
FY2018 (As of March 31, 2019)
Due after
Due after
Due after
Due after
Due within
one year
two years
three years
four years
Due after
one yearthrough two through three through four through five five years
years
years
years
years

¥314,729¥314,729

¥–

¥–

¥–

¥–

¥–

425,669
1,297,352
511,008

30,067
333,593511,008

76,651
125,626–

66,447
100,584–

56,297130,262–

56,089110,519–

140,114496,766–

19,507

19,193

74

6

45

–

186

10,150¥2,578,417

2,050¥1,210,641

1,797¥204,150

1,559¥168,598

1,388¥187,994

1,099¥167,708

2,255¥639,322

Loan commitment (as a lessee)
The Group enters into loan commitment contracts with five banks to finance working capitalefficiently.
The unused portion of the loan commitment under these contracts is as follows:- 94 -- 95 -

Millions of yen
FY2019FY2018(As of March 31, 2020) (As of March 31, 2019)
Total amount ofcommitments
Borrowings madeunder the commitment
Net amount¥225,000

and liabilities are conducted by reasonably estimating changes in interest rates over the next year
or so after the end of the reporting period and the effect on profit or loss for the year due to thechange. To determine the effect on profit or loss, the Group classifies financial assets and liabilities
into those with fixed interest rates and those with floating interest rates, and takes the difference
between floating rate assets and floating rate liabilities to calculate an interest rate gap.

Thousands of U.S. dollars
FY2019(As of March 31, 2020)¥225,000$2,067,444

–

–

–

¥225,000¥225,000$2,067,444

Assuming that all risk variables other than interest rates remain constant, when the benchmark
interest rate as of March 31, 2020, rises by one basis point (0.01%), profit before tax for the fiscal
year ended March 31, 2020, will decrease by ¥17 million (U.S. $158 thousand) (¥23 million for the
fiscal year ended March 31, 2019), and conversely, when the benchmark interest rate falls by one
basis point (0.01%), profit before tax for the fiscal year ended March 31, 2020, will increase by ¥17
million (U.S. $158 thousand) (¥ 23 million for the fiscal year ended March 31, 2019). The effectassumes that risk variables other than interest rates remain constant and that there are no correlations
between interest rates and other risk variables. When actual interest rates go beyond the reasonably
estimated range, it could have a greater impact on profit or loss compared to the estimated amount.

3) Market risks(a)Overview of market risks(i)Interest rate risk
While considering market forces and the balance of short-term and long-term borrowings, theGroup utilizes both indirect financing through bank borrowings and direct financing through theissuance of bonds and commercial papers as well as securitization of receivables to operatebusinesses in each segment. The Group also has financial assets that accrue interest income,including revolving payment receivables, receivables from credit card cash advance, and financerelated receivables.

(ii) Price fluctuation risksMarketable equity instruments held by the Group are exposed to price (stock price) fluctuation risk.
When stock prices of marketable equity instruments as of March 31, 2020, rise by 1%, accumulated
other comprehensive income (net of tax) increases by ¥406 million (U.S. $3,733 thousand) for the
fiscal year ended March 31, 2020 (¥698 million for the fiscal year ended March 31, 2019).
Conversely, when stock prices of marketable equity instruments fall by 1%, accumulated othercomprehensive income (net of tax) decreases by ¥406 million (U.S. $3,733 thousand) for the
fiscal year ended March 31, 2020 (¥698 million for the fiscal year ended March 31, 2019). The
effect assumes that risk variables other than stock prices remain constant and that there are nocorrelations between stock prices and other risk variables. When actual stock prices go beyond thereasonably estimated range, it could have a greater impact on profit or loss compared to theestimated amount.

As the Group is significantly affected by interest rate fluctuations, the Group mitigates interest raterisks by promoting the use of ALM, which is the practice of managing assets and liabilities in acomprehensive manner. For the same purpose, the Group also enters into derivative transactions,such as interest rate swaps.
(ii) Price fluctuation risks
The Group’s (operational) investment securities mainly consist of stocks, investment trusts, andinvestments in partnerships, which are held for the purpose of pure investment and businesspromotion. The investments are exposed to fluctuation risks in stock prices and issuers’
creditworthiness.
(b) Market risk management(5)

Derivatives and hedge accounting

(i)

1)

Risk management policies

Interest rate risks
The Group manages interest rate fluctuation risks through ALM. Methods and procedures for risk
management are stated under internal rules for ALM. Based on the policy determined by the ALM
Committee, the Board of Directors understands the implementation status and discusses matters tobe addressed. The relevant departments regularly review the overall status of interest rates and termsof financial assets and liabilities, and monitors them through sensitivity (gap) analysis and othermeasures. Through ALM, the Group also enters into derivative transactions for interest rate swaps
to hedge interest rate fluctuation risks.

(ii) Price fluctuation risks
Based on the ALM policy, the Group mitigates price fluctuation risks of investment products
including investment (operational) securities by implementing preliminary investigations, setting acap on investment amounts, and also implementing ongoing monitoring for potential investments.
Additionally, stocks held for the purpose of promoting business through business or capital alliances
are monitored by relevant departments of the Group for issuers’ market environments, financial
conditions, and other risk factors.
Relevant departments are responsible for regularly reporting to the ALM Committee and othermanagement.
(c)(i)

Status of market risks
Interest rate risk
Financial instruments affected by interest rate risks, the main risk variable of the Group, mainly
consist of trade and other receivables, bonds and borrowings, and interest rate swap transactions.

The Group uses derivatives to hedge interest rate risks and other risks. Derivative transactions
entered into by the Group are limited to those backed by actual demand, and no derivativetransactions are entered into for speculative purposes. When a natural hedge is unavailable against
market risks, the Group designates derivative transactions as hedges based on risk management
policies and applies hedge accounting.
Relevant departments are responsible for executing derivative transactions in accordance withprocedures specified in internal control regulations stipulated by the Board of Directors, and the totaltransaction limit and the range of the hedge ratios are authorized by the Board of Directors inadvance. The status of major derivative transactions is reported to the Board of Directors on aquarterly basis.
Consolidated subsidiaries enter into derivative transactions in accordance with control regulations
stipulated by each subsidiary. Subsidiaries are required to report to the Company on a quarterly basis
regarding the hedging relationships between derivatives and corresponding receivables/payables,
counterparties, transaction amounts, remaining periods, and the fair values of transactions.
The Group only applies cash flow hedges for hedge accounting.
Cash flow hedges
The Group applies cash flow hedges by entering into interest rate swap contracts with floating-ratereceipt/fixed-rate payment to avoid risks arising from changes in future cash flows of bonds andborrowings with floating rates.
The hedge ratio is 1:1 since the Group uses the interest rate swap as a hedging instrument in a cash
flow hedge to hedge borrowings (hedged item) by the same amount.

Quantitative analysis for the management of interest rate fluctuation risks for such financial assets- 96 -- 97 -

2)

Nominal amount of major derivative contracts subject to hedge designation(Millions of yen)

(Millions of yen)
FY2019 (As of March 31, 2020)
Due after one Due after two Due after three Due after four
Due after fiveDue within one
year through years through years through years through
years
year
three years
four years
five years
two years
Interest rate swaps
Nominal amount of hedging
instrument
Average rate

¥53,500¥33,600¥54,070¥51,000¥72,950¥210,570

Cash flow hedges
Interest rate fluctuation
risk

0.73%

0.44%

0.40%

0.48%

0.51%

0.34%

Interest rate swaps(Thousands of U.S. dollars)
FY2019 (As of March 31, 2020)
Due after one Due after two Due after three Due after four
Due within one
Due after five
year through years through years through years through
year
years
two years
three years
four years
five years
Interest rate swaps
Nominal amount of hedging
instrument
Average rate$491,592$308,738$496,829$468,620$670,311$1,934,852

0.73%

0.44%

0.40%

0.48%

0.51%

0.34%

(Millions of yen)
FY2018 (As of March 31, 2019)
Due after one Due after two Due after three Due after four
Due within one
Due after five
year through years through years through years through
year
years
two years
three years
four years
five years
Interest rate swaps
Nominal amount of hedging
instrument
Average rate

¥25,800¥53,800¥33,900¥54,370¥51,300¥240,920

0.64%

0.73%

0.44%

0.40%

0.48%

0.43%

Hedge ineffectiveness arises since terms of the hedged items and hedging instruments do not always match
perfectly (e.g., difference in interest payment dates).
3)

Notional
amount ofhedging
instruments

4)¥460,090

Changes in fair value of hedging
instruments used to calculate theineffective portion of hedge
AssetsLiabilities

Cash flow hedges
Interest rate fluctuation
riskInterest rate swaps¥475,690¥164

Other financial assets or¥7,720 other financial liabilities¥164

Other financial assets or¥8,934 other financial liabilities

Cash flow hedges
Interest rate fluctuation risk
Bonds and borrowings¥7,684FY2019 (As of March 31, 2020)
Line item including hedging
Carrying amount of hedging
instruments on the
instruments
consolidated statement of
AssetsLiabilities
financial position

Cash flow hedges
Interest rate fluctuation risk
Bonds and borrowings$70,612$4,370,945$1,514$70,945- 98 -

Other financial assets orother financial liabilities

Cash flow hedges
Interest rate fluctuation risk
Bonds and borrowings¥9,028¥7,720Changes in fair value of hedging
instruments used to calculate theineffective portion of hedge
AssetsLiabilities$1,514¥7,556¥–$69,430$–(Millions of yen)
FY2018 (As of March 31, 2019)
Balance of the effective portion
Balances remaining in the
Changes in fair value ofof cash flow hedges (foreffective portion of the cash flow
hedged items used to calculatecontinuing hedge that ishedge arising from any hedging
the ineffective portion of hedge accounted for in accordance with relationships for which the hedge
IFRS 9 (2014).6.5.11)
accounting is no longer applied

Cash flow hedges
Interest rate fluctuation
riskInterest rate swaps¥8,934(Thousands of U.S. dollars)
FY2019 (As of March 31, 2020)
Balance of the effective portion
Balances remaining in the
Changes in fair value ofof cash flow hedges (foreffective portion of the cash flow
hedged items used to calculatecontinuing hedge that ishedge arising from any hedging
the ineffective portion of hedge accounted for in accordance with relationships for which the hedge
IFRS 9 (2014).6.5.11)
accounting is no longer applied(Thousands of U.S. dollars)
Notional
amount ofhedging
instruments¥0(Millions of yen)
FY2019 (As of March 31, 2020)
Balance of the effective portion
Balances remaining in the
Changes in fair value ofof cash flow hedges (foreffective portion of the cash flow
hedged items used to calculatecontinuing hedge that ishedge arising from any hedging
the ineffective portion of hedge accounted for in accordance with relationships for which the hedge
IFRS 9 (2014).6.5.11)
accounting is no longer applied(Millions of yen)
FY2019 (As of March 31, 2020)
Line item including hedging
Carrying amount of hedging
instruments on the
instruments
consolidated statement of
AssetsLiabilities
financial position¥0

Changes in fair value of hedging
instruments used to calculate theineffective portion of hedge
AssetsLiabilities

Hedged items

Hedging instruments

Notional
amount ofhedging
instruments

FY2018 (As of March 31, 2019)Line item including hedging
Carrying amount of hedging
instruments on the
instruments
consolidated statement of
AssetsLiabilities
financial position$70,944- 99 -¥8,933¥–5)Effect on the consolidated statement of income and the consolidated statement of comprehensive
income as a result of applying hedge accounting

Changes in valueof hedging
instruments
recognized inothercomprehensive
incomeCash flow hedges
Interest rate fluctuation
risk
Bonds and borrowings(Millions of yen)
FY2019 (As of March 31, 2020)
Amount reclassified from net change
in fair value of cash flow hedges toprofit or loss
Line item in
Ineffective
Amounts for which Amounts that Line item for which
profit or loss
portionprofit or loss washedge accounting had
have been(including
recognized inaffected uponpreviously been used, reclassified
ineffective
profit or loss
reclassification
but the hedged future because theportion of hedge)
cash flows are no hedged item has
longer expected to affected profit
occur
or loss¥(665)$(6,118)

Changes in valueof hedging
instruments
recognized inothercomprehensive
income6)

41. CURRENT AND NON-CURRENT CLASSIFICATIONS
The classification of current and non-current assets and liabilities to be collected or settled is asfollows:(Millions of yen)

Changes in valueof hedging
instruments
recognized inothercomprehensive
incomeCash flow hedges
Interest rate fluctuation
risk
Bonds and borrowings

The basic policy for capital management of the Group is to ensure financial soundness by maintaining
an appropriate equity level and a debt/equity structure that is commensurate with operating risks.
The Group monitors the ratio of equity attributable to owners of parent to total assets as a key metricfor capital management purposes. The ratios of equity attributable to owners of parent to total assets
as of March 31, 2020 and 2019 are 14.44%, and 15.28%, respectively.
The Group is not subject to any significant capital restrictions.

FY2019 (As of March 31, 2020)
¥–

¥–

¥–

¥2,043Finance costs(Thousands of U.S. dollars)

Cash flow hedges
Interest rate fluctuation
risk
Bonds and borrowings

40. CAPITAL MANAGEMENT¥(4,246)

FY2019 (As of March 31, 2020)
Amount reclassified from net change
in fair value of cash flow hedges toprofit or loss
Line item in
Ineffective
Amounts for which Amounts that Line item for which
profit or loss
portionprofit or loss washedge accounting had
have been(including
recognized inaffected uponpreviously been used, reclassified
ineffective
profit or loss
reclassification
but the hedged future because theportion of hedge)
cash flows are no hedged item has
longer expected to affected profit
occur
or loss

$–

$–

$–

$18,777

Finance costs(Millions of yen)
FY2018 (As of March 31, 2019)
Amount reclassified from net change
in fair value of cash flow hedges toprofit or loss
Line item in
Ineffective
Amounts for which Amounts that Line item for which
profit or loss
portionprofit or loss washedge accounting had
have been(including
recognized inaffected uponpreviously been used, reclassified
ineffective
profit or loss
reclassification
but the hedged future because theportion of hedge)
cash flows are no hedged item has
longer expected to affected profit
occur
or loss

¥–

¥–

¥–

¥2,025

Within one year
AssetsCash and cash equivalents
Trade and other receivables
Inventories
Operational investment securities
Investment securities
Other financial assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Investment property
Investments accounted for using
equity method
Deferred tax assets
Other assets
Total assets
Liabilities
Trade and other payables
Financial guarantee liabilities
Bonds and borrowings
Other financial liabilities
Income taxes payable
Provision for point card certificates
Provision for loss on interest
repayments
Other provisions
Deferred tax liabilities
Other liabilities
Total liabilities

Over one year

¥109,761
1,256,631
31,409
–
–
7,732
–
–
–
–

(4,246)

77,19877,19847,9102,257
1,945,350

47,9108,601
3,357,229

230,927
10,206
1,030,917
16,852
9,364
12,050––1,382,648
9,767–
97,888230,927
10,206
2,413,565
26,6199,364
109,938

6,818

16,07922,897567–
43,129¥1,360,834

986
903
2,645
¥1,510,919

1,554
903
45,775¥2,871,753

Finance costs(6,118)

2,043

2,025

18,777(7,556)(8,933)(69,430)- 100 -

¥109,761
2,565,409
135,380
48,78960,724
13,90529,414
17,565
181,058
61,508–Millions of yen
Thousands of U.S. dollars
FY2019 (From April 1, 2019 FY2018 (From April 1, 2018 FY2019 (From April 1, 2019
to March 31, 2020)
to March 31, 2019)
to March 31, 2020
Interest rate fluctuation risk¥(8,933)¥(6,713)$(82,088)(665)¥–
1,308,777
103,971
48,78960,724
6,173
29,414
17,565
181,058
61,508–6,344
1,411,879

Changes in amounts recognized in other comprehensive income

Beginning of the year
Amount occurring during theperiodAmount reclassified to profit orloss
End of the year

Total

- 101 -

(Thousands of U.S. dollars)
FY2019 (As of March 31, 2020)
Within one year
AssetsCash and cash equivalents
Trade and other receivables
Inventories
Operational investment
securities
Investment securities
Other financial assets
Property, plant and equipment
Intangible assets
Right-of-use assets
Investment property
Investments accounted for using
equity method
Deferred tax assets
Other assets
Total assets
Liabilities
Trade and other payables
Financial guarantee liabilities
Bonds and borrowings
Other financial liabilities
Income taxes payable
Provision for point cardcertificates
Provision for loss on interest
repayments
Other provisions
Deferred tax liabilities
Other liabilities
Total liabilities

Over one year

$1,008,558
11,546,742
288,608

Total$–
12,025,887
955,354$1,008,558
23,572,629
1,243,962–

448,309448,309–
71,048––––557,977
56,725
270,279
161,403
1,663,680
565,183

557,977
127,773
270,279
161,403
1,663,680
565,183–

709,351

709,351–
58,298
12,973,255

440,232
20,741
17,875,127

440,232
79,03930,848,383

2,121,908
93,787
9,472,729
154,848
86,044––
12,704,663
89,751–2,121,908
93,787
22,177,393
244,600
86,044

110,728

899,457

1,010,186

62,649147,747

210,396

5,218–
396,303$12,504,220

9,065
8,299
24,310$13,883,295

14,284
8,299
420,614$26,387,515- 102 -

(Millions of yen)
FY2018 (As of March 31, 2019)
Within one year
AssetsCash and cash equivalents
Trade and other receivables
Inventories
Operational investment securities
Investment securities
Other financial assets
Property, plant and equipment
Intangible assets
Investment property
Investments accounted for using
equity method
Deferred tax assets
Other assets
Total assets
Liabilities
Trade and other payables
Financial guarantee liabilities
Bonds and borrowings
Other financial liabilities
Income taxes payable
Provision for point card certificates
Provision for loss on interest
repayments
Other provisions
Deferred tax liabilities
Other liabilities
Total liabilities

Over one year

¥82,6421,251,738
2,628
–
–
5,568
–
–
–

Total

¥–
1,141,458
148,757
39,97391,553
6,347
29,341
219,972
56,683¥82,6422,393,197
151,385
39,97391,553
11,91629,341
219,972
56,683–92,752

92,752–
9,781
1,352,360

32,1481,116
1,860,105

32,148
10,897
3,212,465

314,729
8,305
873,170
17,737
3,120
11,697––1,330,648
10,703–
93,266

314,7298,305
2,203,818
28,441
3,120
104,963

5,937

11,824

17,762541–
35,866¥1,271,106

988
1,025
1,159
¥1,449,617

1,530
1,025
37,026¥2,720,724- 103 -

42. LEASES

2)(1) Lessee

Operating lease
The Group leases real estate as well as equipment and others under operating leases.
The following is the breakdown of the future minimum lease payments by year of payment under
non-cancellable operating leases.

1) Finance lease
The Group mainly leases buildings, land and other real estate. The real estate is mainly used as storesand offices, and the contract terms range from 1 year (buildings) to 60 years (land).
The comparative information for the year ended March 31, 2019 is disclosed in accordance with IAS
17 “Leases”.

(Millions of yen)
Future minimum lease payments
FY2018(As of March 31, 2019)
Due within one year
Due after one year
through five years
Due after five years
Total

FY2019 (As of March 31, 2020)
The following is the breakdown of profit and loss related to leases.
Millions of yen
Thousands of U.S. dollars
FY2019 (From April 1, 2019 FY2019 (From April 1, 2019
to March 31, 2020)
to March 31, 2020
Depreciation charge for right-ofuse assets
Buildings
Other
Total
Interest expense on leaseliabilities
Total cash outflow for leases(2) Lessor¥ 3,638652
4,290

The Group rents office automation (OA) equipment, cooking equipment, air-conditioning equipment,
and others.
The comparative information for the year ended March 31, 2019 is in accordance with IAS 17“Leases”$33,432
5,992
39,424137

1,261¥4,901$45,041

FY2019 (As of March 31, 2020)
1)

Millions of yen
Thousands of U.S. dollars
FY2019 (As of MarchFY2019 (As of March
As of April 1, 201931, 2020)
31, 2020)¥13,970
4,508¥18,478¥13,494
4,071¥17,565$128,366
41,426$169,792

The maturity analysis of the lease payments receivable (undiscounted) under finance leases is asfollows.

$123,991
37,411$161,403

The amount of increase in right-of-use assets is ¥3,388 million (U.S. $31,132 thousand) for FY2019.
For a maturity analysis of lease liabilities, please refer to Note “39. Financial Instruments, (4)Financial risk management, 1) Liquidity risk.”
FY2018 (As of March 31, 2019)
1) Finance lease
The following is the breakdown of the future minimum lease payments by year under finance leases
and components of present value.
(Millions of yen)
FY2018(As of March 31, 2019)
Future minimum lease
Present value
payments
¥486
¥457
1,175
1,111
16
15
1,679
1,584
(94)
1,584

- 104 -

Finance lease
Finance income on the net investment in the lease for FY2019 was ¥10,792 million (U.S. $99,166
thousand).

As of April 1, 2019

Due within one year
Due after one year through five years
Due after five years
Total
Less: Amount equivalent to interest
Finance lease obligations (present valueof future minimum lease payments)

707
1,586
¥2,526

Lease payments under operating leases for FY2018 were ¥189 million.

The following is the breakdown of carrying amount of right-of-use assets.

Right-of-use assets
Buildings
Other
Total

¥233

Due within one year
Due after one year through twoyears
Due after two year through threeyears
Due after three year through fouryears
Due after four year through fiveyears
Due after five years
Total
Interest expense on leaseliabilities
Total cash outflow for leases

2)

Millions of yen
Thousands of U.S. dollars
FY2019 (As of to March 31, FY2019 (As of March 31,
2020)
2020
¥75,418$692,995
66,967615,337

56,059515,10742,265388,362

26,296

241,633

14,822281,830

136,200
2,589,636

23,788

218,584

258,041

2,371,051

Operating lease
Revenue from the real estate-related business for FY2019 was ¥4,644 million (U.S. $42,678
thousand).
The maturity analysis of the lease payments receivable (undiscounted) under operating lease is asfollows.

- 105 -

Due within one year
Due after one year through twoyears
Due after two year through threeyears
Due after three year through fouryears
Due after four year through fiveyears
Due after five years
Total

Millions of yen
Thousands of U.S. dollars
FY2019 (As of March 31, FY2019 (As of March 31,
2020)
2020
¥1,440$13,235
1,365

12,551

1,126

10,349

891

8,193

179

1,649

2,223
7,227

20,434
66,413

FY2018 (As of March 31, 2019)1)

43. RELATED PARTIES(1)

Related party transactions
Related party transactions are as follows:
FY2019 (From April 1, 2019 to March 31, 2020)

Type ofrelated party

Name

Transaction

Transactio
Account namen amount
Trade and
¥720,706 otherreceivables

Associate

Seven CS Card
Service Co., Ltd.

Settlement with affiliatedstores and collection of
accounts receivable –installment (Note1)

Associate

UC Card Co., Ltd.

Proceeds from sale ofshares of subsidiaries andassociates (Note2)

Finance lease

20,370–The following is the breakdown of the future minimum lease payments by year of payment underfinance leases and components of present value.
(Millions of yen)

Due within one year
Due after one year throughfive years
Due after five years
Total
Less: Unearned financeincomePresent value of total future
minimum lease payments tobe received

FY2018(As of March 31, 2019)
Future minimum lease payments
Present value
to be received¥70,653¥61,615
179,784

165,866

13,971
264,40913,609241,091(Millions of yen)
Future minimum lease payments tobe received
FY2018(As of March 31, 2019)¥1,821
2,183
2,416¥6,422

Settlement with affiliatedTrade andstores and collection of$ 6,622,312 otheraccounts receivable –receivables
installment (Note1)

Associate

UC Card Co., Ltd.

Proceeds from sale ofshares of subsidiaries andassociates (Note2)

187,176 –¥36,330¥0––(Thousands of U.S. dollars)
Allowance for
Outstanding doubtful accounts
balanceon the outstandingbalance$333,830

$3

–

–

1.

Fees for settlement with affiliated stores and collection of accounts receivable - installment are determined basedon quoted market prices and other factors.
2. The sale price of the shares was determined by taking into account the net assets of UC Card Co., Ltd.

FY2018 (From April 1, 2018 to March 31, 2019)

Name

Transaction

Transaction
amountAccount nameOutstandingbalance(Millions of yen)
Allowance for
doubtful accounts
on the outstandingbalance

Settlement withaffiliated stores andTrade and othercollection of¥726,690¥43,186¥0
receivables
accounts receivable– installment (Note)
Settlement with
Trade and other
72,253–affiliated stores andpayablesAssociate
UC Card Co., Ltd. collection of
1,203,390
accounts receivable
Other assets
6,444
0– installment (Note)(Note) Fees for settlement with affiliated stores and collection of accounts receivable - installment are determined based onquoted market prices and other factors.
Associate

Seven CS Card
Service Co., Ltd.

(2) Compensation for management personnel
The remuneration for key management personnel is as follows:- 106 -

Account
nameSeven CS Card
Service Co., Ltd.

Type ofrelated party

The following is the breakdown of the future minimum lease to be received by year of payment under
non-cancellable operating leases.

Transaction
amountTransaction

Associate(Note)
241,091

Operating lease

Due within one year
Due after one year throughfive years
Due after five years
Total

Name

(23,318)

Allowance for doubtful accounts on the uncollectible amount of total minimum lease payments to bereceived as of March 31, 2019, was ¥5,492 million.
2)

Type ofrelated party

Outstandingbalance(Millions of yen)
Allowance for
doubtful accounts
on the outstandingbalance- 107 -

Millions of yen
FY2019(From April 1, 2019
to March 31, 2020)
Remuneration for key management
personnel

FY2018(From April 1, 2018
to March 31, 2019)¥492

Thousands of
U.S. dollars
FY2019(From April 1, 2019
to March 31, 2020)¥521$4,527

46. INVOLVEMENT WITH SUBSIDIARIES(1)

Composition of the Group
Name

Address

Capital stock(Millions ofyen)

Relationship with the Company¥4,500

Payment businessand financebusiness

The Company provides credit card
settlement agency services and lending
services through the Company’s
100.0 automated teller machines (ATM) on(–) behalf of this subsidiary. It also has
extended loans to this subsidiary.
Concurrent positions/offices held bydirectors: Yes

2,216

Real estate-related
business andentertainment
business

The Company leases office equipment tothis subsidiary and rents office buildings
from this subsidiary. The Company also
100.0 makes advance payments for this(–) subsidiary based on the card
membership agreement.
Concurrent positions/offices held bydirectors: Yes

The commitments of expenditure after the reporting date are as follows:
Millions of yen
FY2019FY2018(As of March 31, (As of March 31,
2020)
2019)
¥2,330¥–Thousands of
U.S. dollars
FY2019(As of March 31,
2020)

Millions of yen
FY2019(As of March 31,
2020)¥4,146,531
228,066
3,918,464

FY2018(As of March 31,
2019)¥4,153,470
223,230
3,930,239

Saison Fundex Corporation

Toshima-ku,
Tokyo$ 21,415

The Company and some of its consolidated subsidiaries provide cash advance and card loan services
that accompany their credit card operations in the Payment business. The amount of undrawn loans
equivalent to loan commitments in the line of credit facility for the operations as well as for
subsidiaries and associates is as follows:

Total loan commitments
Balance of loans taken out
Net loan commitments

Percentage ofvoting rights
held by theCompany (%)(Consolidated subsidiaries)

44. COMMITMENTS

Contractual commitments foracquisition of intangible assets

Description ofmajor businesses

Thousands of
U.S. dollars
FY2019(As of March 31,
2020)$38,100,995
2,095,623
36,005,372

Regarding the contracts equivalent to loan commitments above, the majority are for cash advance
services that accompany credit card services furnished to the Company’s cardholders, and thus, not all
the loan commitments will be taken out.

Concerto Inc.

Toshima-ku,
Tokyo

JPN COLLECTIONSERVICE CO., LTD.

Asaka-shi,
Saitama

1,053

Payment business

Atrium Servicing Co., Ltd.

Chiyoda-ku,
Tokyo

500

Real estate-related
business

Qubitous Co., Ltd. (Note 5)

Toshima-ku,
Tokyo

100

Payment business

The Company outsources card service
100.0 operations to this subsidiary.
(–) Concurrent positions/offices held bydirectors: Yes

Worknet Co., Ltd.

Toshima-ku,
Tokyo

100

Payment business

100.0–(100.0)

Saison Personalplus Co., Ltd.

Toshima-ku,
Tokyo

82

Payment business

The Company receives personnel
100.0 placement services from this subsidiary.
(–) Concurrent positions/offices held bydirectors: Yes

50

Real estate-related
business

This subsidiary provides guarantee for
the Company’s real estate mortgage loancustomers. The Company also rents
100.0
office equipment and has extended loans(–)
to this subsidiary.
Concurrent positions/offices held bydirectors: Yes

10

Payment business

45. CONTINGENCIES
Debt guarantee
For debt guarantee, please refer to Note “39. Financial Instruments, (4) Financial risk management, 1)
Credit risk management (and impairment loss on financial assets), (i) Analysis of concentration of
credit risk.”Atrium Co., Ltd.

JBM Consultant Co., Ltd.
Hayabusa Trust Co., Ltd.
Phoenix One Co., Ltd.

Chiyoda-ku,
Tokyo

Kita-ku,Osakashi, Osaka
Chiyoda-ku,
Tokyo
Chiyoda-ku,
Tokyo

Ell Blue LLC

Chiyoda-ku,
Tokyo

PT. Saison Modern FinanceJakarta,Indonesia

1010Real estate-related
business
Real estate-related
business

100.0–(100.0)100.0–(100.0)100.0–(100.0)Real estate-related
business––(100.0)

IDR 166.6
Payment businessbillion22 other consolidated
subsidiaries- 108 -The Company outsources part of its debt
collection activities to this subsidiary.
100.0 The Company also rents office(100.0) equipment to this subsidiary.
Concurrent positions/offices held bydirectors: Yes
100.0–(100.0)- 109 -

82.0 The Company has extended loans to this(–) subsidiary.

NameAddress

Capital stock(Millions ofyen)

Description ofmajor businesses

Percentage ofvoting rights
held by theCompany (%)(2)
Relationship with the Company(Companies accounted forusing equity method)

Idemitsu Credit Co., Ltd.

Sumida-ku,
Tokyo

1,950

Payment businessThis company outsources card services
50.0 to the Company.
(–) Concurrent positions/offices held bydirectors: Yes

Saison Information Systems, Minato-ku,
Co., Ltd. (Note 3)
Tokyo

1,367

Payment business

The Company outsources its system
46.8
development and information processing(–)
to this company.

Resona Card Co., Ltd.

Koto-ku, Tokyo

1,000

Payment business22.4 This company outsources card services(–) to the Company.

Eplus Inc.

Shibuya-ku,
TokyoEntertainment
business

The Company makes advance payments
for this company based on the card
50.0
membership agreement.
(–)
Concurrent positions/offices held bydirectors: Yes

Payment businessThis company outsources card services
49.0 to the Company.
(–) Concurrent positions/offices held bydirectors: Yes

Seven CS Card Service Co.,Ltd.

Chiyoda-ku,
Tokyo

972

100

Takashimaya Financial
Partners co.,Ltd. (Note 6)

Chuo-ku, Tokyo

100

Daiwa House Financial Co.,Ltd.

Chuo-ku,
Osaka-shi,
Osaka

100

Shizugin Saison Card Co.,
Ltd.

Suruga-ku,
Shizuoka-shi,
Shizuoka

HD SAISON Finance
Company Limited

Ho Chi Minh
City, Vietnam

50

Termination of the comprehensive business alliance with Mizuho Bank
The comprehensive business alliance agreement implemented under the Basic Agreement for
Comprehensive Business Alliance executed by and among Mizuho Bank, Ltd. (“Mizuho Bank”), UC
CARD Co., Ltd. (“UC CARD”), Qubitous Co., Ltd. (“Qubitous”), and the Company on December 24,
2004 (as amended) was terminated on October 1,2019, and the following accounting treatments were
performed.

(a)
1)

2.
3.
4.
5.
6.
7.

Overview of transactions
Qubitous, the joint processing company for the Company and Mizuho Bank, transferred its
outsourced processing services from UC CARD to UC CARD and carried out a company split.

2)

Overview of company split(i)

Description of businesses subject to the company split

Outsourced processing services from UC CARD(ii) Assets and liabilities succeeded upon the company split as of September 30,2019(Millions of yen)
Assets
Items

AmountItems¥124 Trade and other payables

Payment businessThis company outsources card services
30.5
to the Company.
(–)

Property, plant and equipment

This company outsources card services
30.0 to the Company.
(–) Concurrent positions/offices held bydirectors: Yes

Other assets

Payment business

Payment businessThis company outsources card services
50.0 to the Company.
(–) Concurrent positions/offices held bydirectors: Yes

VND 2,000.0
Payment businessbillionLiabilities

Other financial assets

59 Other liabilities

Intangible assets

Items$ 1,140 Trade and other payables
544 Other liabilities

Intangible assets

5,693

3,079
$ 243,939

Total

Effective date of the company split
October 1, 20194)

$ 6,427

239,175（Note）There were no cash and cash equivalents.
3)¥1,319(Thousands of U.S. dollars)
Liabilities
Items
AmountProperty, plant and equipment

Total- 110 -

619

Total

AmountOther financial assets

Other assets

The names of the businesses in the “Description of major businesses” column represents the names of thereportable segments described in Note “7. Operating Segments.”
Figures in brackets in the “Percentage of voting rights owned by the Company” column represent the percentage
of voting rights indirectly held by the Company.
This company files a Securities Report.
This company transferred its UC CARD stock to UC CARD. As a result, UC CARD ceased to be a company
accounted for using equity method of the Company from the third quarter of the fiscal year ended March 31,
2020.
At the meeting of the Board of Directors held on February 26, 2020, a resolution was passed for the absorptiontype merger of Qubitous Co., Ltd., a consolidated subsidiary of the Company. The effective date of merger was
April 1, 2020.
Takashimaya Credit Co., Ltd. merged with Takashimaya Insurance Co., Ltd. on March 1 2020. The company
name has been changed to Takashimaya Financial Partners co., Ltd.
There is no company that falls under a specified subsidiary.

¥699

335
¥26,547

Assets49.0 Concurrent positions/offices held by(–) directors: Yes

Amount26,029Total

22 other companies accounted
for using equity method(Notes) 1.

Company split of Qubitous

Overview of the successor company（as of March 31,2019）
Trade name

UC CARD Co., Ltd.

Location of head office

1-1-5,Uchisaiwai-cho,Chiyoda-ku,Tokyo

Title and name of Representative

Nobuaki Kitajima, President and CEO

Business content

Credit card business

Capital¥500 million

Date of incorporation

October 1,2005

Fiscal year-end
Major shareholders and shareholding
ratiosMarch
Mizuho Bank, Ltd.: 51% CREDIT SAISON CO.,LTD.:
31% NTT DOCOMO,INC.: 18%- 111 -

$ 12,120

5)

6)

Method of the company split(a)Overview of transactions

An absorption-type split under which Qubitous was the split company and UC CARD was the
succeeding company

1)

Summary of the merged company and its business
Name of the merged company： Qubitous Co., Ltd.

Overview of accounting treatments

For the fiscal year ended March 31, 2020, the gain or loss on transfer, which was the difference
between the consideration for the company split and the net assets based on the book value of theassets and liabilities related to the succeeded business immediately prior to the succession, wasrecognized as a gain on sale of businesses of ¥82 million(U.S. $762 thousand) in “other income” in the
consolidated statement of income. The consideration for the company split received from UC CARD
was ¥25,311 million (U.S. $232,581 thousand). All consideration transferred had been settled in cash.

Business content： Outsourced credit card processing services
2)

April 1, 2020（*）Since this merger was a simplified merger for the Company pursuants to Article 796(2) of
the Companies Act and a short form merger for Qubitous Co., Ltd. pursuants to Article 784(1) of
the same act, it was executed without acquiring approval for the merger contract at the general
meeting of shareholders of the Company and Qubitous Co., Ltd.

(b) Cancellation of investment in Qubitous by Mizuho Bank
1)

3)

Overview of transactions
The Company acquired all Qubitous stock held by Mizuho Bank. Mizuho Bank transferred all of
its Qubitous stock acquisition rights to Qubitous. As a result, Oubitous became a 100% subsidiaryof the Company.

(c)
1)

4)

Overview of transactions

For the fiscal year ended March 31, 2020, a gain on sale of investments in subsidiaries andassociates of ¥545 million (U.S. $5,013 thousand) was recognized in “other income” due to thetransfer of UC CARD stock.
(3) Merger with Qubitous, a consolidated subsidiary of the Company
At the meeting of the Board of Directors held on February 26, 2020, a resolution was passed for theabsorption-type merger of Qubitous Co., Ltd. (“the absorption merger”), a consolidated subsidiaryof the Company.

- 112 -

Other matters regarding the overview of transactions
On October 1, 2019, the Company completed the acquisition of Qubitous Co., Ltd. as a whollyowned subsidiary, which the Company previously managed as a consolidated subsidiary engaged inoutsourced processing services of the Company’s credit card transactions. Following theacquisition, the Company decided the merger with Qubitous Co., Ltd. to carry out business
management as a single entity, which was considered as the best practice for the effective use ofGroup management resources and the achievement of management efficiency.

Cancellation of investment in UC CARD by the Company

Overview of accounting treatments

Merger method
The method of the merger is an absorption-type merger with the Company as the surviving
company and Qubitous Co., Ltd. as the dissolved company.

The company transferred its UC CARD stock to UC CARD. As a result, UC CARD ceased to be acompany accounted for using equity method of the Company from the third quarter of the fiscal
year ended March 31, 2020.
2)

Effective date of merger(b)Overview of accounting treatments
Due to the deferred tax asset recognised from the absorption merger, deferred tax asset increased by¥4,624 million (U.S. $42,494 thousand) for the fiscal year ended March 31, 2020. Income tax
expense decreased by the same amount and profit increased by the same amount.

47. SUBSEQUENT EVENT
There are no relevant items except for the items described in the Note “46. Involvement withsubsidiaries, (3) Merger with Qubitous, a consolidated subsidiary of the Company”.

- 113 -

(2) OTHERS
Quarterly information for FY2019(Cumulative period)
Net revenue (Millions of yen)
Profit before tax (Millions ofyen)Profit attributable to owners ofparent (Millions of yen)
Basic earnings per share (Yen)(Accounting period)
Basic earnings(losses) per share(Yen)(Cumulative period)
Net revenue (Thousands of U.S.
dollars)
Profit before tax (Thousands of
U.S. dollars)Profit attributable to owners ofparent (Thousands of U.S.
dollars)
Basic earnings per share (U.S.
dollars)(Accounting period)
Basic earnings(losses) per share(U.S. dollars)

Three months ended
June 30, 2019
¥77,488

Six months ended
September 30, 2019
¥159,285

Nine months ended
December 31, 2019
¥237,755

Fiscal year ended
March 31, 2020
¥311,410

14,28025,15940,66527,458

9,901

18,63734,07622,86360.71

115.33212.54

143.43Three months ended
June 30, 2019

Six months ended
September 30, 2019¥60.71Three months ended
June 30, 2019¥54.50Six months ended
September 30, 2019

Nine months ended
December 31, 2019¥97.91
Nine months ended
December 31, 2019

Fiscal year ended
March 31, 2020
¥ (71.67)
Fiscal year ended
March 31, 2020

$712,010$1,463,615$2,184,650$2,861,438

131,221

231,183

373,658

252,308

90,983

171,251

313,116

210,085

0.56

1.06

1.95

1.32

Three months ended
June 30, 2019

Six months ended
September 30, 2019

$0.56

$0.50

- 114 -

Nine months ended
December 31, 2019
$0.90

Fiscal year ended
March 31, 2020$(0.66)