INTEGRATED REPORT 2018

Business of the IBJ Leasing GroupThe IBJ Leasing Group aims to make a further
leap forward by taking on challenges for enhancing
corporate value and achieving value creation forstakeholders.
Corporate Philosophy

We aim to be a Group which contributes tosociety by offering valued financial services
which lead to future prosperity.
How the Group should be and stakeholders
the Group should consider
Mindset of each employee

Clients

Shareholders

Employees

SocietyDesiredFuture Imageof the IBJ
Leasing GroupThe Three CsManagement Policy
to customers’ needs and provide precise
1. Respondand prompt services by combining the Group’s total
strength.

2.

Non-financial Assets for Supporting Growth

Endeavor to further enhance the Group’s reputationand credibility among shareholders and in themarket.

to create a dynamic corporate culture full of
3. Strive
energy and vitality in which proactive, ambitious
human resources are fostered and promoted.

with the law and its spirit, and aim to
4. Comply
be a Group which always recognizes its social

responsibility and secures understanding andsympathy from society.

Business of the IBJ Leasing Group(As of March 31, 2018)

Stock Information

Trajectory of the IBJ Leasing Group ................................................................... 03
Business of the IBJ Leasing Group .................................................................... 05
Financial and Non-financial Highlights ............................................................07/08
Stock Information
Consolidated
Financial Data over the Past 11 Years .......................................... 09
Number of
Shares Authorized
GrowthStrategy

140,000,000

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

VisionValue-creating company tackling challenges together with clients

13 President’s Commitment

Mizuho Bank, Ltd.
CSR of the IBJ Leasing Group ........................................................................... 31
UNIZO Holdings Company, Limited.
List of Directors, Auditors and Executive Officers ............................................... 33
Japan Trustee Services Bank, Ltd. (Trust Account)
Message from Outside Director ......................................................................... 34
Meiji Yasuda Life Insurance Company
Corporate Governance and Internal Control....................................................... 35
DOWA HOLDINGS
CO., LTD. ................................................................... 37
Complianceand Risk Management
NIPPON STEEL
REALCO., LTD.
...................................................................
Commitmentby the KOWA
Personnel
UnitESTATE
39
The Kyoritsu
Ltd.
Recruitment
and Co.,Developmentof Human Resources ......................................... 40...................................................
Promotionof Work-Life
Balance43
Japan Trustee
Services
Bank,andLtd.Diversity(TOSHIBACORPORATION Retirement Benefit
Trust....................................................................
Account
re-entrusted
bytheMitsui
Sumitomo
Trust&
Banking
Co.,
Ltd.)
Environmental and Social Activities
44
Dialoguewith Shareholders
Investors
45
The Master
Trust Bank ofandJapan,
Ltd. ..........................................................
(Trust Account)
SUBARU CORPORATION

Consolidated Financial Data and Corporate Information

Japan Trustee Services Bank, Ltd. (Trust Account 5)
Analyses
Business
Conditions
and Resultsof Operations ............................. 47
STATEonSTREETBANKAND TRUSTCOMPANY........................................................................
Business Risks and Other Risks
49
Tosoh Corporation
Consolidated Financial Statements .................................................................... 50
RBC ISB S/A DUB NON RESIDENT/TREATY RATE UCITS-CLIENTS ACCOUNT
Corporate Information........................................................................................ 82
Credit Saison Co., Ltd.
Stock Information .............................................................................................. 84
THE SHIGA BANK, LTD.
IINO KAIUN KAISHA, LTD.

Promote business together
with clients as their partner

Tackle new businessdomains transcending theframework of financing

2,500

IBJ Leasing Company, Limited

14.3%

Website: www.ibjl.co.jp

2,000

Overview

3.81
3.62

President and
CEO
1,393

3.26

1,251

2.93

1,120

2.62

975

2.28

949

2.22

900

2.11

895

2.09

720

1.68

708

1.66

692

1.62

of the IBJ Leasing
31 CSRGroup
Shin Kuranaka
684
Senior Managing
Director
675
Chief CSR Officer

1.60
1.58

670

1.57

670

1.57

666

1.56

540

1.26

Report for Shareholders(Japanese and English)

0

Details

Report4Q
1QSecurities
2Q
3Q
FY2015

Financial Results

1Q
2Q and3Q English)
4Q
1Q(Japanese
FY2016

Report on Corporate
Governance
CSR 3Q
Activities
2Q
4Q (Website)
FY2017

Entities Covered
This report covers the entire IBJ Leasing Group.
Notes concerning Future Forecast

Integrated Report (Japanese and English)

Financial information
01

ForeignInvestors

3,000

Composition of communication tools

500

Fulfill corporate social
responsibility

1,626

Hiroshi Motoyama
1,546*Shareholding ratio is calculated by deducting treasury stock.
This
report contains the IBJ Leasing Group’s financial information as well as non-financial
information including management strategies, environment, social and corporate goverStock
Performance
nance
(ESG)
to help stakeholders have a better understanding of the Group’s businessDistribution of Shareholders
activities. When we edited this Report, we referred to certain guidelines including “InterIndividuals
Financial
Reporting Period
Stock<IR>
price Framework” issued by the International Integrated Reporting Council (IIRC),
national
and Others
Institutions
(yen)
From
April
2017
to
March
2018
(including
someactivand explained the Group’s value-creating activities over the medium to long-term in an
3,500
13.1%
41.1%
ities that occurred outside this period)easy-to-understand and simple manner.

1,000

Thorough client-oriented
approach

8425

Number of Shares Issued
42,649,000
Shareholder Registry
Mizuho Trust & Banking Co., Ltd.
Value Creation Process of the IBJ Leasing Group ..............................................
11
Administrator
Number of Shareholders
41,614President’s Commitment ................................................................................... 13(Office Location)
Stock Transfer Agency Department,
Stock Exchange Listing
Tokyo Stock Exchange, 1st section
Fifth Mid-term Management Plan (FY2017 – FY2019) ........................................ 17
Mizuho Trust & Banking Co., Ltd.
2–1, Yaesu 1-chome, Chuo–ku, Tokyo
Funding Policies ................................................................................................ 24
Commitment by the Operating Unit ................................................................... 25
Major
Shareholders(TopClients20) [Medical and Healthcare] ...................... 26
Value
Creation
Together with
Value
Creation Together with Clients [Environment and Energy] .................... 27
Number of Shares Held
Shareholding Ratio*
Shareholders(1,000 shares)(%)
Value Creation Together with Clients [Real Estate] ......................................... 28
The Dai-ichi Life Insurance Company, Limited
2,930
6.87
Value Creation Together with Clients [Global/Overseas Subsidiaries] ............. 29
NISSAN MOTOR CO., LTD. Retirement Benefit Trust Account,
Value Creation Together with Clients [Global/Aircraft] .................................... 30with the trustee being Mizuho Trust & Banking Co., Ltd., and
1,750
4.10
re-trustee Trust & Custody Services Bank, Ltd.

1,500

Flow for realization of the vision

Creation Process
11 Valueof the IBJ Leasing Group

Securities CodeSompo Japan Nipponkoa Insurance Inc.
Editorial Policy

Fifth Mid-term Management Plan

Consolidated Financial Data and Corporate Information

CONTENTS

Non-financial Assets for Supporting Growth

Action Guidelines

Challenge
ChangeCreateGrowth Strategy

Domestic
Corporations

Non-financial information29.6%

This report contains management policies and futurebusiness performance based on the information on
hand at the time of the preparation of this report.
These statements may contain certain risks and unFinancial
certainties, and as such do not guarantee Instrumentsthat suchpolicies and performance will be achieved. Business
Pleasebe advised that any predictions for the future
madeOperators
in this report may differ significantly from the actual
1.9%
results due to various factors.
IBJ IBJ
Leasing
LeasingCompany,
Company,
LimitedLimited02 84

Business of the IBJ Leasing Group

Business of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

Trajectory of the IBJ Leasing Group
IBJ Leasing Co., Ltd. was established in 1969 as a general leasing company under an initiative by The Industrial Bankof Japan, Ltd. (now Mizuho Bank, Ltd.), with the participation of major companies representing Japanese industries. The IBJ Leasing Group, which has proactively developed its operations in leasing and installment sales—thefinancing of physical items—in Japan and overseas. In addition to financing related to capital expenditure, including
industrial and factory equipment, information and communication equipment and medical equipment, we are expanding the scope of our business activities through initiatives in businesses involving in commercial distributions
and a broad range of financial sectors and through M&A activities.

The IBJ Leasing Group will continue to strive for the realization of asustainable society and enhancement of corporate value by responding to the needs of clients that are becoming more and more diversified
and complex over time, drawing on its strengths acquired through its
business.

Strengths of the
IBJ Leasing GroupHigh expertiseand extensive

Historyof Our Business1969 IBJ Leasing Company is established under the initiative of
The Industrial Bank of Japan, Ltd. as a pioneer of vessel
financing1972 Begins vendor leases of construction equipment as apioneer in that field
1982 Begins full-scale information equipment sales business1985 Undertakes Japan’s first rolling stock leasing
1992 Krung Thai IBJ Leasing Co., Ltd., an overseas subsidiary,is established in Thailand (now an equity method affiliate)1998 PNB-IBJL Leasing and Finance Corporation, an overseas
subsidiary, is established in the Philippines (now an equity
method affiliate)1998 Begins full-scale business in structured finance1999 Acquires shares of Nissan Leasing Co., Ltd. (subsequently
merged into IBJ Leasing in 2015)

know-how to solve
clients’ issues(1969~2018)2000 Business department specializing in medical and welfare
services is established.

2010 PT. IBJ VERENA FINANCE, an overseas subsidiary, is established in Indonesia(now a consolidated subsidiary).

2000 Acquires shares of Saison Auto Lease Systems Co., Ltd.
(now IBJ Auto Lease Company, Limited, a consolidated
subsidiary).

2011 Acquires shares of Siemens Financial Services K.K. (its business absorbed into
IBJ Leasing and then dissolved in 2013).
2012 Acquires shares of Toshiba Group’s financial services company for corporations (now IBJL-TOSHIBA Leasing Company, Limited, a consolidated subsidiary).

2001 Acquires shares of Universal Leasing Co., Ltd. (now aconsolidated subsidiary).

2012 Environmental Business Promotion Division is established.

2004 Shares listed on the Second Section of the Tokyo Stock
Exchange.
2005 Designated an issue on the First Section of the Tokyo Stock
Exchange.

2016 IBJ Air Leasing Limited (now a consolidated subsidiary) is established for the
IBJ Leasing Group to enter the aircraft operating lease business.

Strong relationshipwith large
and mid-sizedcorporate clients

2006 Acquires shares of Dai-ichi Leasing Co., Ltd. (now a consolidated subsidiary).
2008 IBJ Leasing (China) Ltd., an overseas subsidiary, is established in China (now a consolidated subsidiary).

13,643Well-balanced

12,414Net Income Attributable to Owners of the Parent (Millions of yen)

11,144

Operating Assets (Billions of yen)

11,609portfolio

10,531*The graph shows results from FY2004 onwards after the Company’s listing.

9,025

8,984
7,981

953.7

1,031.2

1,092.2

1,581.0

1,608.7

1,683.0

1,432.3

7,799
7,019

5,591

8,920

985.0

935.2

1,211.3

1,263.1

1,343.0

928.6

813.5

4,296

Strong fundraising

3,348

base

2004
03

IBJ Leasing Company, Limited

2010

2015

2017
IBJ Leasing Company, Limited04

Business of the IBJ Leasing Group

Business of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing GroupThe IBJ Leasing Group comprises IBJ Leasing, 26 consolidated subsidiaries and three equity-method affiliates (asof March 31, 2018). Centered on this structure, we provide wide-ranging financial services, including leasing, installment sales and loans in Japan and overseas by utilizing our understanding of equipment and extensive financial
expertise.

Each IBJ Leasing Group company aims to achieve “the expansion of cooperation with partner corporations,” “thepursuit of expertise” and “the expansion of global business” and collaborate with each other, with IBJ Leasing at thecore and displaying their respective characteristics, to provide solutions that best suit the diverse needs of clients in
not only Japan, but also countries in Asia and around the world.

Major Group Companies
Leasing and Installment Sales

Financing and Other

Consulting service for controlling optimal BS/PL control

Specialized financing to deliver cash flow through realin addition to fundraising at the time of introducing

estate, aircraft, vessels and other items

equipment

Cooperation with partner
corporations

Pursuit of expertiseGroup companies/partner corporations

Group companies/business description

IBJL-TOSHIBA Leasing Company, Limited/Toshiba GroupIBJ Auto Lease Company, Limited/auto leasing

Commercial distribution finance/business financeLeases in the subscription or value-added service models
Support for clients’ product sales and service provision

Used equipment sales, photovoltaic power sales
operations, etc.

Dai-ichi Leasing Co., Ltd./The Dai-ichi Life Group

Leverage our extensive know-how of equipment and highly sophisticated financial
solutions to solve clients’ accounting, financial and business issues

Universal Leasing Co., Ltd./Sankyu GroupKL Lease & Estate Co., Ltd./building leasing
KL & Co., Ltd./used equipment sales
KL Office Service Company, Limited/officeservices

Client base centered on large and mid-sized corporations

Industrial and factoryequipment

Transportationequipment

Construction
equipment

Information andcommunication equipment

Medicalequipment

Leasing and Installment Sales

71%

Real estate

Environment-related
equipment

Financing

FY2017Gross profit

27%

Expansion of global businessGroup companies/locations
IBJ Leasing (China) Ltd./China¥38.2 Billion

PT. IBJ VERENA FINANCE/Indonesia
IBJ Leasing (UK) Limited/the U.K.
Krung Thai IBJ Leasing Co., Ltd.*/Thailand
Other

2%

PNB-IBJL Leasing and Finance Corporation*/the Philippines
IBJ Air Leasing Limited/the U.S. and Bermuda*An equity-method affiliate

05

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited

06

Business of the IBJ Leasing Group

Business of the IBJ Leasing Group

Financial Highlights¥13,643

Annual Dividend (Yen)/Dividend Payout Ratio (%)¥70

Dividend

millionAnnual Dividend

Achieved the fifth consecutive year ofrecord-breaking profit

80

13,64313,00010,531

11,00011,144

11,609Dividend payout ratio

20.4%
7,000

40

0

0

2016

2017

Contract Execution Volume (Millions of yen)

2013

million1,500,000

21.4%

2014

22.0%

2015

22.0%

21.9%

2016

900,000

environment.

arise from an aging population with a low birthrate.

Reuse rate* (FY2017)

Composition of the Board of Directors (as of June 30, 2018)

69%

1,683,005
1,581,025

1,608,718

1,432,299

1,092,027

1,400,000

We are contributing to the formation of a recyclingoriented society by practicing the 3Rs (Reduce, Reuse
and Recycle) through re-leasing and disposing ofequipment for which the lease term has expired.

1,343,046

1,200,000

837,669700,000

1,000,000

0

2013

2014

2015

2016

2017

Equity (Millions of yen) / Equity Ratio (%)¥148,951

Equity

0

2013

2014

2015

2016

2017

ROE (%)

Equitymillion ratio

Equity

9.6

%

621

%

Equity ratio

Male
12.0

11.4

148,951
127,033

7.6%

9.4

9.6

400

7.4%

7.8%

8.2%

6.0

IBJ Leasing Company, Limited

2015

2016

2017

594
201

389

393

404

2015

2016

2017

200

2.0
2014

573
184

300
4.0

80,000

2013

600
500

8.0

117,890
104,841
7.2%

9.5

621
217

0

100
2013

2014

2015

2016

2017

0

Nine directors, including threeoutside directors
Ratio of
Outside Directors

33%

We appoint three independent outside directors with
abundant experience and broad insight in corporate
management, specialized fields, etc., and receive
accurate advice on overall business management froman objective perspective.
*Attendance rate of outside directors at the Board of Directors meetings(FY2017): 100%

Female employment rate (non-consolidated basis)(New graduates hired in FY2017)

Number of
employees

Female

700

10.0

10.0

136,571

140,000
120,000*Reuse rate = Number of equipment sold ÷ Number of equipment for
which the lease term or re-lease term has expired

Number of employees (non-consolidated basis) (Number of persons)8.2

160,000

07

area, we strive to contribute to the needs of society that2017

943,134

0

focus area, we strive to contribute to a healthy global

million1,600,000

1,065,352

billionPositioning the medical and healthcare field as a focus

1,800,000

1,300,000¥34.9

Positioning the environment and energy field as a

¥1,683,005

1,335,909

100,000

billionContract Execution
Volume56

Operating Assets (Millions of yen)

¥1,335,909

¥83.3

64

60

50

1,100,000

Consolidated Financial Data and Corporate Information

Results in the Medical and Healthcare Area (FY2017)

Contract Execution
Volume

%

70

60

2015

21.9

70

12,414

9,000

2014

Dividend
payout ratio

Results in the Environment and Energy Area (FY2017)

The 16th consecutive year of
dividend increases

54

2013

Non-financial Assets for Supporting GrowthNon-financial Highlights

Net Income Attributable to Owners of the Parent (Millions of yen)

15,000Growth Strategy

621

Male 404
Female 217

48%

We have achieved the target rate of female employees tobe hired set at 40% in the “General Business Owner Action
Plans under the Act of Promotion of Women’s Participation
and Advancement in the Workplace” and focus our efforts
on developing an environment where female employees
can participate more actively in the workplace, as well as
on proactively hiring female employees.
IBJ Leasing Company, Limited

08

Business of the IBJ Leasing Group

Business of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

Consolidated Financial Data over the Past 11 Years
Consolidated Financial Results
FY2007

FY2008FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017

Revenues

341,320

298,707

263,598

256,059

270,066

352,492

354,779

353,733

364,174

429,405

399,738

Gross profit before funding costs

36,351

38,18136,72036,54936,57944,27043,00541,60944,80344,90445,157

Funding costs

9,849

10,105

7,213

5,459

5,286

6,596

6,426

6,338

6,361

5,697

6,959

Gross profit

26,501

28,076

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

38,441

39,20638,197

Selling, general and administrative expenses

14,956

21,32018,24815,646

20,601

23,007

19,877

17,325

20,86821,244

19,034

Operating income

11,544

6,755

11,257

15,444

10,691

14,665

16,701

17,946

17,573

17,962

19,162

Net income attributable to owners of the parent

7,799

3,348

7,019

9,025

4,296

8,920

10,531

11,144

11,60912,414

13,643

Total assets

1,195,336

1,076,150

1,017,099

1,028,020

1,332,963

1,372,246

1,462,183

1,551,704

1,718,720

1,752,284

1,821,501

Operating assets

1,092,247

984,981935,223

928,633

1,211,268

1,263,116

1,343,046

1,432,299

1,581,025

1,608,718

1,683,005

Lease

698,861596,869

553,541

546,185

755,139780,234

809,499878,693

958,353

950,318

983,590

Installment sales receivable*

121,989

120,373

107,487

94,514112,243

113,939

133,267

153,910

147,455

137,820

138,592

Loans

243,304

233,687

237,414

241,925

295,008

320,143

359,530

361,067

377,933

348,085

360,073

Operational investment securities

28,091

34,05036,77946,00848,876

48,79840,74938,627

97,283

172,493

196,860

Long-term receivables

2,920

9,470

14,082

10,397

19,15318,502

11,404

8,947

10,393

3,331

2,440

Interest-bearing debt

1,057,295

927,454868,631877,629

1,133,481

1,176,464

1,226,274

1,309,951

1,465,584

1,492,438

1,536,240

57,42855,994

63,342

69,392

74,71784,905

109,840

123,297

132,786

141,755

154,632

212.2391.90

193.91

249.33118.71

246.43264.75261.32272.20291.08319.91

1,534.45

1,509.00

1,709.86

1,889.18

1,954.63

2,218.77

2,458.28

2,764.23

2,978.61

3,202.27

3,492.55

38.00

40.00

44.00

46.00

48.00

50.00

54.00

56.00

60.00

64.00

70.00

Return on equity (ROE)

14.2

6.0

12.0

13.9

6.2

11.8

11.4

10.0

9.5

9.4

9.6

Return on assets (ROA)

1.0

0.6

1.2

1.6

0.9

1.1

1.2

1.3

1.1

1.1

1.1

Equity ratio

4.7

5.1

6.1

6.7

5.3

5.9

7.2

7.6

7.4

7.8

8.2

723

743

766

765

1,073

1,050

1,036

1,050

1,072

1,053

1,081

For the year: (Millions of yen)

At year-end: (Millions of yen)

EquityPer share data: (Yen)
Net income
EquityDividends (non-consolidated basis)

Key indicators: (%)

Other (Number of persons)
Number of employees*After subtraction of deferred profit on installment sales

09

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited

10Growth Strategy

Business of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

Value Creation Process of the IBJ Leasing GroupHigh expertise andextensiveknow-how to solve
clients’ issues

Strong relationshipwith large andmid-sized corporateclients

Initiatives for Business Strategies and Focus Areas
Fifth Mid-term Management Plan

Stakeholders

p17

Responding to the diverse needs of clients through our new
business strategies

New business strategies

Support clients’commercial distribution

Jointly promote service
business with clients

Promote JVs withclients

Expand the business in fields that respondto social issues

Focus areas

Well-balanced
portfolio

Medical and Healthcare
Case Study

Strong fundraisingbase

Global/Overseas
Subsidiaries
Case Study

p26

Environment and Energy
Case Study

p27

p29

Real Estate
Case Study

p28

Technology

Global/Aircraft
Case Study

Providing flexible and awide variety of services tomeet clients’ needs

Shareholders

Sustainable increases ofcorporate value andshareholder returns

Social issues

11

IBJ Leasing Company, Limited

Global warming

Creation of productive and high-quality
employment opportunities

Society
Solving social issues andpracticing corporatesocial responsibility
through our businesses

Prosperous living

Employees
Creation of environmentand systems where all
employees are provided
with a meaningful andengaging workplaceneeds as the starting point

Respond tosocial issues

Resource and energy
shortageContribution to industrial and technologicaladvancement

Maintenance of a healthy global environment

p30

Accelerate initiatives cutting across focus areas with client

Aging population withlow birthrate

Sustainable economic development

Clients

Value Creation for Stakeholders

Strengths of the IBJ
Leasing Group

Realization of a Sustainable
Society

Contribution tosolving issues

Maturity of domestic
marketAdvancement of
globalization

Labor shortage due todecreasing labor force

Transformation ofbusiness models driven
by Industry 4.0

IBJ Leasing Company, Limited

12

Growth Strategy

Business of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

President’s Commitment

As a business partner of choicefor our clients, we contribute to
the resolution of social issues
together with our clients and aim
to enhance corporate value.
President and CEO

Fifth Mid-termManagement Plan
P17 - 23

Overview and Outlook of the Fifth Mid-termManagement Plan
In May 2017, the IBJ Leasing Group announced the Fifth Mid-term Management Plancovering a three-year period from fiscal 2017 to fiscal 2019. With the vision of a “value-creating company tackling challenges together with clients” and a basic policy of
promoting more profitable businesses by making use of our accumulated businessknow-how and financial strengths upheld in this Plan, we are focusing our efforts on thefields that have good potential for growth in line with structural changes in society andindustries and reinforcement the management base that supports our businesses. As
such, we are aiming to achieve the targets of “¥15.0 billion in net income attributableto owners of the parent,” “10% ROE” and “maintaining 20% or more dividend payout
ratio” by the final fiscal year of the Plan.
Japan is facing significant structural changes in society and industries on the backof a rapidly declining birthrate and aging population, changes in the business modelsof corporations driven by Industry 4.0, further acceleration of globalization, measurestaken against global warming and energy resource shortages, etc. The IBJ Leasing
Group is committed to enhancing corporate value by proactively responding to theneeds arising out of such changes.
I believe that, in order for the IBJ Leasing Group to achieve sustainable growth, it
is indispensable to provide higher value-added services and promote more profitablebusinesses. The IBJ Leasing Group has strengths in providing solutions for clients’ accounting, financial and business issues by utilizing our broad knowledge of equipment,
deep understanding of commercial distribution and advanced financial expertise. We
can support clients from not only the liabilities side, but also assets side on the balance
sheet through the ownership of equipment. This means that we are able to provide
a wide variety of services including holding assets on behalf of our clients and selling
products and services jointly with our clients, not to mention providing means of pro-13

IBJ Leasing Company, Limited

curing funds. I believe that the source of added value is not the provision of uniform
products and services, but to base our efforts on the needs of our clients as the starting
point and make the maximum use of the strengths of the IBJ Leasing Group to satisfy
such needs. We hope to become a business partner of choice for our clients throughsuch efforts and grow together with them.

Achievements in Fiscal 2017
In fiscal 2017, the first fiscal year of the Fifth Mid-term Management Plan, we promoted
various initiatives with these policies, and have been steadily accumulating achievements. I feel that the initiatives are bearing fruit. In the business of involving in commercial distributions, a new business strategy that focuses on the flows of purchaseand product sales at clients, we succeeded in concluding contracts for large projects.
With regard to the individual focus areas, in the real estate area, we recorded the firstsales in real-estate leasing which covers childcare facilities and hotels with rising social
needs and started initiatives targeting manufacturing factories and overseas real estate in collaboration with leading business operators. In the environment and energy
area, we worked to reduce environmental load by enhancing the advisory function forclients including the provision of support for subsidy applications and the promotion of
investment in energy saving, while we also expanded initiatives for the energy businesssuch as the leasing of large-scale wind power-generation facilities. In the medical andhealthcare area, in addition to financing for medical equipment, we are expanding thebusiness in response to the growth of businesses undertaken by medical institutions
such as the leasing of vehicles for nursing care. In the global area, we are strengthening
the initiatives targeted at non-Japanese companies including increases in transactions
with local conglomerates in Thailand and Indonesia and the growing number of leases
for medical institutions in China. We have also steadily increased operating assets bymaking full use of our accumulated know-how in initiatives for aircraft-backed collateralized loans in the aircraft business.
As a result of these efforts, net income attributable to owners of the parent for fiscal
2017 amounted to ¥13.6 billion, achieving record-breaking profit for five consecutive
years.
I consider fiscal 2018 to be an important year, at the halfway point for the IBJ Leasing Group to make a further leap forward toward achieving the targets with an eye on
the final fiscal year of the Plan and beyond. We are committed to achieving the ¥14.5
billion target for net income attributable to owners of the parent by continuing to promote the strategies set forth in the Mid-term Management Plan, accurately responding
to the needs of our clients and taking on the challenges of entering into new businessdomains, in addition to our specialty of financial solutions, transcending the frameworkof financing.

Net Income Attributable to
Owners of the Parent (Billions of yen)
14

13.6

13

12.4
12

11.6

11

10

0

2015

2016

2017

Value Creation Together
with Clients
P26 - 30

Results in Fiscal 2017
Net Income Attributable to
Owners of the Parent¥13.6

BillionROE

Dividend Payout Ratio

9.6

%

21.9

%

IBJ Leasing Company, Limited

14

Growth Strategy

Business of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

President’s Commitment

Reinforcement of the Management Base for
Sustainable Growth
CSR of the IBJ Leasing GroupP31 - 32

In order for the IBJ Leasing Group to achieve sustainable growth, it is necessary to not
only promote the business strategies, but also reinforce its management base in ways
such as further enhancing its corporate governance system, advancing its risk-return
management through the integrated operation of the business portfolio and the financial ALM (asset liability management) and building an environment where employees
can demonstrate their capabilities at their full potential.
With the aim of solidifying the foundation for sustainable growth, we reexamined thegovernance system in fiscal 2017 to further invigorate strategic discussions for growthat the Board of Directors meetings, and at the same time, reorganized the executive
organization to create a system that is capable of speedier decision-making to allow fortaking on challenges for new business models and handling diversified risks. We havealso established a system to enhance our portfolio management, identify types of risks
and the total risk exposure and take appropriate risks in order to promote challenges
for entering into new businesses. To achieve sustainable corporate growth, we promote
diversity to retain personnel with a diverse array of perspectives and values based on avariety of experiences and skills. At the same time, under the recognition that it is criticalto provide all employees with a meaningful and engaging workplace, we are working to
improve operational productivity through IT system investments and reforms in operational processes and to also enhance the work-life balance.

Shareholder Returns
Policy on Shareholder Returns

Annual Dividend per Share
80

70
60

60

64

40

20

0

15

2015

2016

IBJ Leasing Company, Limited

2017

(yen)

The Company’s basic policy on shareholder returns is to pay dividends in accordancewith business performance in an attempt to improve profitability. At the same time, asa financial services business operator, the amount of shareholders’ equity is one of theimportant factors to increasing corporate value. Therefore, we intend to pay dividends
while maintaining a balance between shareholder returns and shareholders’ equity. We
plan to continue paying steady dividends. Retained earnings are effectively utilized as
funds for future growth in an attempt to further expand our business base and increase
ROE over the medium to long term.
In line with this policy, in fiscal 2017 we continued to increase shareholder returns
by raising the annual dividend ¥6 to ¥70 per share, with the dividend payout ratio of
21.9%. ROE also increased by 0.2 points from the end of the previous fiscal year, to
9.6%.
We expect to raise the annual dividend per share an additional ¥4 in fiscal 2018, to¥74 per share, amounting to the 17th consecutive year of dividend increases.

We will bring about sustainable growthby way of value co-creation withstakeholders, changing ourselves intune with the changes of the times.

Desired Future Image of the IBJ Leasing GroupIn order to continue to be a company needed by society, it is indispensable to create
value shared with stakeholders such as “clients,” “shareholders,” “society” and “employees” who are engaged with that company. We are committed to improving thecorporate value of the IBJ Leasing Group by creating values of “providing flexible and awide variety of services to meet the needs” for clients, incorporating their perspectives,and at the same time, creating the value of “sustainable increases of corporate value
and shareholder returns” for our shareholders, “solving social issues and practicing
corporate social responsibility through our businesses” for society and “the creationof environment and systems where all employees are provided with a meaningful
and engaging workplace” for employees. In order to achieve further growth and social
contribution, it is important for us to create a prosperous future, as well as solve social
issues and bring about sustainable growth by way of value co-creation with clients,changing ourselves in tune with the changes of the times. The IBJ Leasing Group willcontinue to strive for the realization of a sustainable society and enhancement of corporate value by offering services with clients as the starting point.

Value Creation Process of
the IBJ Leasing GroupP11 - 12

IBJ Leasing Company, Limited

16

Growth Strategy

Business of the IBJ Leasing Group

Fifth Mid-term Management Plan (FY2017 – FY2019)
From fiscal 2017, the IBJ Leasing Group has started to implement the Fifth Mid-term Management Plan covering

Growth Strategy

Leap

Non-financial Assets for Supporting Growth

Furthera three-year period.
Under this plan, the Group not only focuses on fields with promising prospects for growth on the back ofConsolidated Financial Data and Corporate Information

structural changes in society and industries, but also utilizes its accumulated business know-how and financial
strengths to actively promote businesses with higher profitability in addition to existing business lines.
The IBJ Leasing Group strives to make a further leap forward and achieve further value creation for stakeholders
by implementing the measures stipulated in the Fifth Mid-term Management Plan.

2019

Overview of the Fifth Mid-term Management Plan (FY2017 – FY2019)
VisionValue-creating company tackling challenges together with clientsBusiness Strategies and Reinforcement of Management Base

Basic Policy

Vigorously promote more profitable businesses leveraging expertise and financial
strengths gained

Focus Areas

New Business Strategies (Expanding existing client base)
Medical and healthcare
Environment and energy
Real estate
Global (Overseas subsidiaries/Aircraft)
Technology

Reinforcement ofManagement BaseStrengthening risk-return management: integrated operation of the business portfolio
and the financial ALM
Resource strategy: promotion of diversity / improvement of operational productivity

2018

Targets for the Final Fiscal YearNet Income Attributable to Owners of the Parent

15.0

¥

billionROE

Results in FY2017
Dividend Payout Ratio

10%

Maintaining

20% or More2017

Net Income Attributable to Owners of the Parent

¥

13.6

ROE

Dividend Payout Ratio

9.6

billion

21.9

%

%

Net Income Attributable to Owners of the Parent

ROE(Billions of yen)(%)

TargetTarget

10

15.0
+10%

9.6

13.6
9.4

12.4

2016
FY2016

17

IBJ Leasing Company, Limited

FY2017FY2019FY2016FY2017FY2019

IBJ Leasing Company, Limited

18

Growth Strategy

Business of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information“Fifth Mid-term Management Plan”

Approach in Initiatives for Business Strategies and Focus Areas

Overview of new business strategies

We will respond to the diverse needs of clients through our new business strategies to expand our businesses in fields that havegood potential for high growth on the back of structural changes in society and industries. In addition, we strive for increases incorporate value by accelerating initiatives across the focus areas positioning client needs as the starting point.

Promote business together
with clients

Further reinforce initiatives
in focus areas

Responding to the diverse needs

Expanding businesses in fields thatof clients through our new businesshave good potential for high growthstrategies

in the future

New businessstrategies
Current basic
approach

Support clients’commercial
distribution

Gain revenue such as fee income through involvement in the commercial
distribution of clients across the entire business process, from upstream todownstream, in addition to capital investment

Jointly promote
service businesswith clientsEnter into joint service contracts with clients and receive payment for services
by helping them change their business model (from selling products to selling
subscriptions or value-added services)

Promote JVs
with clients

Create investment opportunities by sharing risks with clients as a business
partner

Medical and healthcare

Support clients’commercial distribution

Environment and energy

Initiatives across focus areas (conceptual diagram)

Real estate
Jointly promote service
business with clients

GlobalPromote JVs with clients

Provide solutions to meet a wide range of needsfrom client perspective

Overseassubsidiaries
Aircraft

Comprehensive package
solutions across focus areas

Focus areas

Medical andhealthcare

Technology

Medical equipment
leasing (CT, MRI, etc.)

Medical andhealthcare

Real estateTechnology

Provide one-stop solutions that include
everything from the provision of assets

Needs for using high-cost medical
equipment with optimized cash flow

to the streamlining of business, such

Hospital

as leasing medical equipment andNeeds tostreamline
business

Initiatives across focus areas
Offer higher value-added services by providing comprehensive package solutions thatcut across focus areas starting with client needs

19

IBJ Leasing Company, Limited

efficiency by utilizing IoT data

HospitalTechnology

Futureapproachbuildings and optimizing business

Needs to reduce
cost burden of
acquiring buildings

Gather operating dataof medical equipment;deliver business
improvement proposals

Needs to reduce costs bysaving energy

Real estate

Focus areas

Leasing of
hospital buildings
Environment
and energy

Medical andhealthcare

Real estate

Environment andenergyProposals to run hospitals at low cost

Energy-saving, low-cost
hospital design proposals

equipment and buildings

by leasing energy-saving medical

IBJ Leasing Company, Limited

20

Growth Strategy

Business of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information“Fifth Mid-term Management Plan”

Market Outlook and Strategies by Focus Area
Changes in the external
environment

Focus area

StrategyMarket outlook

Targets for the final fiscal year (FY2019)

Aging population withlow birthrate
Medical and healthcare

Global warming

Rising needs to improve the efficiency of hospital management, treatment,

Expand equipment leasing opportunities in treatment/diagnosis and convalescence/nursing careand the use of related assets due to pressure to curb medical expenses.

Expand real estate leasing in response to needs for the construction and reconstruction of facilities

Rising needs for service providers in the areas of convalescence andoperated

nursing care due to the acceleration of aging.

Collaborate with new partners and expand the joint promotion of service business with clients

Rising needs for generation, storage and saving of energy, as will those

Seize environment- and energy saving-related capital investment projects
Boost sales activities targeting local governments
Promote involvement in the commercial distribution of environmental and energy business
operators as a business partner
Enter renewable energy businessfor related capital investment, amid CO2 reduction and other measures tocurb global warming.

Environment and energy

Resource andenergy shortage

Rising needs to level out costs and cash flow corresponding to the impactof saved energy.

Rising needs for real estate for childcare and nursing care, areas growing

Reinforce real estate leasing in areas with high societal needs

due to the rise in dual income families and the aged population, as well as

Strengthen bridge function for domestic REIT

for hotels due to the increase in inbound tourism.

Real estate
Maturity ofdomestic market

GlobalAdvancement of
globalization

Overseas subsidiaries

Rising needs for real estate in major overseas markets.

Transformation ofbusiness models driven
by Industry 4.0

Capture the needs of Japanese companies to make capital investment and business expansion

due to urbanization, industrialization, etc. in the Asian market, our focus

overseasarea.

Increase transactions with non-Japanese companies

In addition to the countries where IBJL already operates (China, Indonesia,

Inorganic growth through M&As and the asset purchases

21

IBJ Leasing Company, Limited¥55

billionContract execution volume¥50

billionOperating assets¥350

billionOperating assets¥120billionThailand, and the Philippines), large potential also in other Asian countries.

Rising needs to acquire aircraft and for related services such as repair andPromote the aircraft operating lease businessmaintenance are expected to continue over the mid- to long-term driven

Promote initiatives for aircraft-backed collateralized loans

AircraftEnter business related to engines, parts, and other aircraft peripherals
Set up and expand sales of JOLCO

Rapidly expanding needs across industries let alone corporations for:

Provide consulting on improving the operational efficiency of companies using data

sophisticated management of equipment, enhancing the value of services

Provide data platform service across industries and the value chain

by utilizing data, and developing strong infrastructure to accumulate andTechnology

Seize opportunities to invest in overseas real estate funds

Continued growth of the financial market and changes in social structureby the expanding mobility trend and the rise of LCCs worldwide.

Labor shortage due to thedecreasing labor force

Invest jointly leveraging knowledge and relationships with clientsContract execution volume

analyze vast amounts of data.

Operating assets¥110billion—
IBJ Leasing Company, Limited

22

Growth Strategy

Business of the IBJ Leasing Group

Growth Strategy

Consolidated Financial Data and Corporate Information“Fifth Mid-term Management Plan”

Funding Policies

Reinforcement of Management BaseThe IBJ Leasing Group offers wide-ranging financial services¥928.1 billion with 63 financial institutions as of the end of

to meet clients’ needs through funding that ensures stability

FY2017 with the aim of securing the liquidity of working

and curtails costs. The Group also raises funds based on its

capital and efficient fundraising. The unused balance underannual cash plans and in a flexible manner that responds

these agreements is ¥676.6 billion, which ensures sufficient

to fluctuations in the financial environment based on its

liquidity.

Funding Policies

Under the plan, we will aim to make a further leap toward the future by ramping up efforts to promote new businesses in addition
to existing ones. To this end, we will properly manage risk-taking and returns, while at the same time further reinforcing themanagement base by focusing on realizing a more flexible and robust organization capable of taking on new challenges andtransformation.

Strengthening of Risk-Return Management
We will promote a more sophisticated portfolio management which enables proper risk-taking and reinforce a structure for appropriate
risk-return management through the integrated operation of “risk management,” “portfolio management” and “financial ALM.”

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

comprehensive asset liability management (ALM) policies.
When procuring funds, we use a combination of borrowings

Committee consisting of members who are officers in charge

from financial institutions and raising funds in the market,of relevant departments holds monthly meetings to analyze,

thereby achieving a balance between short- and long-termamong other things, financing means that are most suitable

funding. We borrow funds from more than 100 financial

for the portfolio composition, current interest rate trends andinstitutions, including city banks and regional banks, as welltheir future outlook. We also perform detailed analyses ofas insurance companies, and we maintain stable transactions

the impact of interest rate volatilities on the present value ofwith these institutions.

assets and liabilities, using indicators such as delta1 and value
at risk (VaR)2. We have formulated ALM policies based on

Risk management

through the issuance of commercial paper and corporate

these analyses, and work to ensure smooth funding and cost

Risk-return analysis of individual businesses and assets

bonds and the securitization of lease receivables. In addition

control by flexibly implementing these policies in day-to-day

Verification of effective capital allocation

to ourselves, IBJL-TOSHIBA Leasing also issues commercial

operations.

Verification of the financial position suitable for the risk characteristics of each portfolio

paper. IBJ Leasing has an issue limit of ¥550.0 billion, and
IBJL-TOSHIBA Leasing of ¥150.0 billion.
In addition, the Group has concluded overdraft agreements

Clarification of types and the total amount of risks to
be taken
Strengthen risk-return management of each portfolio.
Pursue the optimum allocation of businesses andassets to enhance the quality of overall assets

Financial ALM

Optimum financing and ALM operation attuned tothe portfolio structure

and commitment line agreements in the total amount ofInterest-bearing Debt

(Billions of yen)

1,465.6
456.3

Resource Strategy
Recognizing that the advancement of even more diverse human resources in the workplace is essential for the IBJ Leasing
Group to grow, we position the promotion of diversity as a key management strategy. We also optimize administrative processes
and IT systems throughout the Group to improve operational productivity.

Improvement of operational productivity

Advancement of diverse human resources in workplaces

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

Expansion of education and training systems

 ophisticated management data analysis enviS
ronment

Realize a more flexible and robust organization capable of tackling new challenges and transformation

1,492.4
433.8

1,536.2
453.8

Direct funding
40%

Indirect funding
60%

Commercial
paper, corporate
bonds, etc.

1,200

114.9
800

Promotion of diversity

Terms
1 Delta: An indicator to show how much the present value of assets andliabilities changes in the case of increases in interest rate
2 Value at risk (VaR): A method under which calculations are made,based on past statistics, to quantify how much loss in the position of
the portfolio held would be incurred during a certain period of time withcertain probabilities in the case of unfavorable market situations andascertain the maximum amount of potential loss as risk exposure.

Long-term borrowings Short-term debt
Securitized bonds and receivables Commercial paper

1,600

IBJ Leasing Company, Limited

With regard to ALM operations, the Company’s PM/ALM

The Company obtains funding from financial markets

Portfolio management23

Non-financial Assets for Supporting Growth

364.4

135.1

162.8

312.7

270.7

Mizuho Group
12%Interest-bearing debt asof the end of FY2017
610.8

Regionalbanks
26%¥1,536.2 billion

648.9

530.0
400

0

Life insurancecompanies, etc.
14%
2015

2016

City banks
8%

2017

Credit Rating

Rating and Investment
Information, Inc. (R&I)

Japan Credit Rating
Agency, Ltd. (JCR)

IBJ Leasing has obtained credit ratings from Rating andLong-term rating

Short-term rating

Long-term rating

Investment Information, Inc. (R&I) and Japan Credit Rating

A−

a−1

A−

Agency, Ltd. (JCR) to evaluate its creditworthiness.

IBJ Leasing Company, Limited

24

Growth Strategy

Business of the IBJ Leasing Group

Commitment by the Operating Unit

We will take on challenges for further growth byoffering comprehensive package solutions
that meet a wide range of client needs.
The business environment surrounding companies is drastically changing. On the back of such circumstances are thestructural changes in society and industries in Japan, including the decreasing labor force and the advancement oftechnologies and globalization. Companies are required toascertain these various changes and build business models
that best suit themselves on a daily basis. Under such a business environment, clients are facing more issues than ever,and their needs change with each passing day.
As we aim to become a business partner of choice for clients, we need to promote business positioning client needs
as the starting point instead of providing uniform products andservices. At IBJ Leasing, each operating unit has formulatedcomprehensive strategies under which clients’ management
issues and their solutions are planned and systematically implemented. In case of issues that are beyond the capacities ofan operating unit, a system is put in place to work on a client’s
issue for resolution through concerted efforts of not only specialized departments with a high level of expertise such as theReal Estate Business Department, the Environmental Energy
Business Promotion Department and the Medical & Healthcare Department, but also middle and back offices.
In fiscal 2017, we have promoted the business strategies
set forth in the Fifth Mid-term Management Plan based onsuch approaches and systems, and as a result, we succeeded in achieving some progress in the business of involving incommercial distribution, a new business strategy that focuseson the flows of purchase and product sales at clients, and ineach of the focus areas, namely, “medical and healthcare,”“environment and energy,” “real estate” and “global” fields.
More specifically, in the business of involving in commercial
distribution, we have been making bulk purchases on behalfof clients, successfully providing value including “cost reduction,” “prevention of loss of sales opportunities” and “support
for suppliers.” In addition, we assist clients’ business not only
by providing support for product sales through proactive engagement in the sales of their products and services, but also
comprehensive solutions for which we receive fees based ona contract for a subscription or value-added service that utilizes a pay-per-use scheme or provides additional maintenanceservices. In addition to the steady achievements we havemade in each of the focus areas, in the medical and healthcare field for example, we have started initiatives to cut acrossfocus areas for medical institutions based on client needs,
whereby we provide not only leasing of medical equipment to25

IBJ Leasing Company, Limited

be used in hospitals, but also comprehensive environmentand energy-related proposals that enable energy saving andcost reduction as well as “real estate” leasing of nursing carefacilities.
Fiscal 2018 is a year in which we are to further promotethese initiatives. We believe that promoting the comprehensive package solutions based on various client needs by cutting across focus areas is the way sales promotion shall be
carried out under this Mid-term Management Plan. We arecommitted to be involved in the entire business of clients in
depth and support the resolution of management issues. In
so doing, what matters most is how accurately we grasp client needs, and we need to further strengthen relationships
with clients in three dimensions: namely, vertical orientation(in multiple layers ranging from staff in charge to top management), horizontal orientation (not only for a single department,
but cutting across multiple departments) and depth (intimacy
with each layer or department). By strengthening relationships
in three dimensions, we will accurately identify client needs
and achieve the resolution of issues by being deeply involvedin the entire business.
The IBJ Leasing Group will continue with the effort to become a business partner ofchoice for clients and take onchallenges for further growth.

Hidehiko Kamata
Managing Executive Officer

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

Value Creation Together with Clients“Medical and Healthcare”
With the advancement of the aging society, the role of the medical andhealthcare field in society is becoming increasingly important. Under
such circumstances, the IBJ Leasing Group is promoting real estatebusiness activities in cooperation with real estate developers and theprovision of service businesses in partnership with medical equipment
manufacturers, etc., as well as financing services for equipment so as tomeet a wide variety of client needs in the medical and healthcare field.

Contract Execution
Volume in FY2017¥34.9

billion

Sales Strategies
Expand facility equipment leasing in theconvalescence/nursing care fields in addition to
medical equipment leasing in Japan and overseas

In addition to initiatives for advanced medical equipment inJapan and financing for medical equipment including leases
for local medical institutions in China, we will capture capital
investment needs in the convalescence/nursing care fields.

Expand real estate leasing in response toneeds for the construction and reconstructionof facilities operated by clients

We will promote the provision of real estate leasing in responseto the needs of nursing care providers for the construction of
new facilities and the reconstruction of aged hospital facilities.

Jointly promote service business with clients
through collaboration with medical, nursing
care and healthcare equipment manufacturers

We aim to cooperate with medical, nursing care and healthcare
equipment manufacturers to boost the service business andfacility equipment sales.

Case Study

Maintenance Lease of World’s First Four-Way Hybrid Operating RoomWith a total of 450 beds, SAITAMA SEKISHINKAI Hospital operated by the Social medical corporation SEKISHINKAI supports regional healthcare as the core hospital in the western Saitama medical service area.
When SAITAMA SEKISHINKAI Hospital was considering the introduction of the world’s first* four-way hybrid operating
room at the Minimally Invasive Cranial Nerve Center, IBJ Leasing proposed maintenance lease jointly with Siemens Healthcare K.K. As a result, SAITAMA SEKISHINKAI Hospital selected equipment for angiography, computed tomography (CT) andmagnetic resonance imaging (MRI) proposed by us for use in the operating room. The IBJ Leasing Group is committed to contributing to the advancement of regional healthcare through initiatives aimed at advanced medical equipment such as these.
*According to market research by Siemens Healthcare

Client’s

Feedback

SAITAMA SEKISHINKAI Hospital,
Social medical corporation SEKISHINKAI

In addition to traditional surgical equipment, equipment
for angiography, CT and MRI has also been installedin the four-way hybrid operating room, allowing highlysophisticated and minimally invasive procedures to be
conducted swiftly. Because equipment was introduced ona maintenance lease basis, it was easier for us to grasp
the balance of payments for the capital investment by
including the maintenance costs in the monthly lease fees,
which at the same time enabled stable cash flow.
We appreciate all the proposals that have been madeby IBJ Leasing related to medical equipment to date.

Mr. Kazuo Mochida
General Manager

IBJ Leasing Company, Limited

26

Growth Strategy

Business of the IBJ Leasing Group

Value Creation Together with Clients

Growth Strategy

Consolidated Financial Data and Corporate Information

Value Creation Together with Clients“Environment and Energy”
Amid the growing importance of environmental activities on a global
scale, the IBJ Leasing Group is committed to helping promote social
efforts in conserving the environment and energy. To this end, in
addition to financing services including leasing, we will support clientsin their installation of environment- and energy-related equipment andcontribute to the widespread use of renewable energy through allianceswith manufactures, engineering companies, operating companies, etc.

Contract Execution Volume in
FY2017¥83.3

billionOperating Assets in
FY2017“Real Estate”
In an increasingly aging society with a low birthrate, the real estatebusiness is facing increasingly diversified needs such as the promotionof the medical and healthcare field and increased hotel construction
on the back of demand from inbound tourism. The IBJ Leasing Groupwill respond to diversified client needs for property such as commercial
facilities and logistics facilities by taking advantage of its initiatives infields with growing social needs and accumulated know-how.

Sales Strategies¥245.7billion

Sales Strategies

Capture the needs of both providers and users ofenvironment- and energy-related facilities and expand
the number of projects for facility leases, etc.

We will provide high value-added products and services
through application agency for various subsidies andcollaboration with manufacturers and engineering companies.

Reinforce real estate leasing in areas with highsocietal needs

We will reinforce our initiatives in fields with growing social
needs such as hotels, healthcare, and childcare.

Boost sales activities targeting local governments

We will expand initiatives for the facility renewal projects, etc.,
of local governments.

Enhance bridge functions for REITs in Japan

We will increase opportunities to provide bridge functions inline with increasing matching needs to close gaps between
the timing for acquisition and the timing for selling associatedwith the diversification of property held under REITs.

Be involved in commercial distribution andcapture the diverse needs of manufacturers andengineering companies as their business partner

We will seize new business opportunities by getting involved incommercial distribution upon obtaining a deep understanding.

Increase superior joint investment projects withclients leveraging accumulated know-how

We will make joint investments in response to the investment
needs of clients by assessing projects taking advantage of ouraccumulated know-how and thereby earn investment returns.

Participate in projects by utilizing a networkwith companies operating the renewable energy
business, such as manufacturers, electricity andgas companies, etc.

We will pursue initiatives taking up a business risk-taking
model.

Seize opportunities to invest in overseas realestate funds

We will work to diversify opportunities for revenue by making
joint investments in overseas real estate funds operated byleading Japanese developers.

Case Study

Leasing of Large-Scale Wind Farm Facility

Case Study

The introduction of renewable energy has various goals including driving countermeasures against global warming throughthe diversification of energy sources and the realization of a low-carbon society, and its uptake is being encouraged.
As a pioneer that established the industry as the first company in Japan to specialize in wind power generation, Eco
Power Co., Ltd., a group company of Cosmo Energy Holdings Co., Ltd., is engaged in the wind power generation businessacross Japan. IBJ Leasing proposed a scheme that utilizes a lease service for introducing wind power generators andleased 19 wind power generators (generation capacity of 43,600 kW) to Eco Power in fiscal 2017.

Client’s

Feedback Eco Power Co., Ltd.

Eco Power is working to realize a sustainable,
recycling-oriented society by contributing to thepromotion and widespread use of renewableenergy as a specialist in the wind power generation
business. The proposal made by IBJ Leasing wasa valuable scheme for Eco Power, based on their
deep understanding of the wind power generation
business and abundant financial know-how, andthis lead to our adoption of that proposal.

27

Non-financial Assets for Supporting Growth

IBJ Leasing Company, Limited

Mr. Kazuyuki Yukawa
Director

IBJ Leasing’s Initiatives for its First Off-Balance Sheet Development
Project of a Manufacturing Plant

ICHIKOH INDUSTRIES, LTD., a major manufacturer of automotive parts that boasts 114 years of history since its foundation, is forging ahead with extending and renovating its footprints in Japan and overseas, and the establishment of adomestic manufacturing plant for headlights, its mainstay, is part of these measures. ICHIKOH INDUSTRIES adopted the
IBJ Leasing Group’s proposal for an off-balance sheet development project, a scheme for the resolution of issues on balance sheets and business strategies, for the new plant in collaboration with the Industrial & Infrastructure Fund Investment
Corporation (IIF), the only REIT specializing in industrial and infrastructure properties in Japan.

Client’s

Feedback ICHIKOH INDUSTRIES, LTD.

We received this proposal from IBJ Leasing and
IIF for our construction of the new plant that wasessential for the “growth of head lamp businesses”
we set out in our mid-term plan.
While we anticipated a high level of ongoing
capital investments, the plan enabled the levelingof funding and cost burdens as well as an offbalance sheet development scheme. This is why
we chose this proposal as the best solution for
promoting our management strategy, and weappreciate the ingenuity of the proposal.

Mr. Hideki Shirato
Director and Senior Managing
Executive Officer

IBJ Leasing Company, Limited

28

Growth Strategy

Business of the IBJ Leasing Group

Value Creation Together with Clients“Global/Overseas Subsidiaries”
Amid globalization and the growing number of Japanese companies
entering overseas markets, the Asian region has become increasingly
important not only as a production base, but also as a consuming region,and the economy in the region is continuing to grow. The IBJ Leasing
Group has four local sales subsidiaries in the Asian region to respondto client needs related to overseas business and financing throughtransactions among overseas subsidiaries, cross-border transactions, etc.

Growth Strategy

Consolidated Financial Data and Corporate Information

Value Creation Together with Clients
Operating Assets in
FY2017¥70.9

billionOperating Assets in
FY2017“Global/Aircraft”
The expansion of mobility worldwide and the market entry of LCCs
due to the liberalization of the airline industry are fueling the global
increase in travelers, leading to a growing demand for air travel. The IBJ
Leasing Group is helping to address the growing demand for aircraft byproviding airline companies around the world with services including
aircraft leasing and aircraft-backed loans or loans secured by engines.

Sales Strategies¥76.2

billion

Sales Strategies

Capture the needs of Japanese companies
to make capital investment and businessexpansion overseas

We aim to win capital investment projects in line with thefurther business expansion of clients and become a strategic
partner for their overseas business.

Drive forward aircraft operating lease businessWe will increase the establishment of aircraft operating leases
centering on general-purpose narrow-body aircraft after
appropriately identifying risk and return.

Increase transactions with non-Japanesecompanies

We aim to increase transactions with local companies includedin the commercial distribution of Japanese companies
and expand the client base through collaboration with IBJ
Leasing’s overseas investees.

Promote initiatives for aircraft-backed
collateralized loans

We will expand our initiatives by further strengthening
the capability to establish aircraft-backed loans based on
accumulated know-how.

Inorganic growth through M&As and asset
purchases

We always give consideration to our growth potential throughM&As or asset purchases of local companies.

Enter business related to engines, parts, andother aircraft peripherals

We will consider participating in business related to engines,
parts, and other aircraft peripherals as part of new businessdevelopment.

[Fee Business] Set up and expand sales of
JOLCO

We aim to increase fee income by diversifying the conditions
for setting up JOLCO.

Case Study

Indonesia : Support for PT United Tractors Which is Taking Part
in a National Infrastructure Development Project

The Republic of Indonesia, which is establishing an increasingly prominent position as a country that drives the ASEAN
economy, is now in the process of implementing a transport infrastructure development project as part of its National Medium-Term Development Plan (2015–2019) for connecting the vast country. The PT United Tractors Group is participatingin the project as a private firm, and has the largest private construction company in the country and engages in important
projects related to the development of the transportation network including an elevated road construction project to connect Jakarta, the capital, and other regions in the country.
PT. IBJ VERENA FINANCE, an overseas subsidiary of IBJ Leasing in Indonesia, facilitates the introduction of construction
machinery through leasing to PT United Tractors, and these transactions contribute to infrastructure development in the
country from a financial aspect.

Client’s

Feedback PT United Tractors Tbk

Mr. Iwan Hadiantoro
Finance Director

29

Non-financial Assets for Supporting Growth

IBJ Leasing Company, Limited

PT United Tractors Tbk. is the sole distributor of construction
machinery manufacturers in Japan such as Komatsu andTadano and has established good relationship with Japanesecompanies.
Currently, the Group is involved in the development oftransport and road networks related to National Infrastructuredevelopment project.
The growth of Indonesian economy has triggered theincreasing demand for the capital investment of construction
machinery. We and our customers need financing solutions forthe procurement of construction machinery products. Throughthe financing support provided by PT. IBJ VERENA FINANCE,
we and our customers can enjoy the benefit which help them toprocure the machineries to support their business operations.

Initiatives at IBJ Leasing
For the promotion of the aircraft-related business, specialized and extensive
knowledge of the laws, taxes and accounting systems of each country is indispensable, not to mention knowledge of finance and equipment such as aircraft.
In addition, most of our transactions are carried out with overseas clients, requiring communication capabilities including language skills.
IBJ Leasing has accumulated a variety of insight and know-how through its
experience in the aircraft business for more than 30 years. We provide financing services securedby aircraft or engines mainly for leading overseas airline clients. In recent years, we have establisheda subsidiary (IBJ Air Leasing) jointly with Aircastle Limited, a leading aircraft leasing company in the
U.S., to also work on the aircraft operating leasebusiness. Furthermore, we are expanding thebusiness domain for aircraft operating leases by,for example, commencing in-house operation of
aircraft for the first time utilizing know-how accumulated at the subsidiary.
We will continue our efforts to meet thegrowing demand for aircraft through the promotion of the business strategies set out in the
A Board of Directors meeting of IBJ Air Leasing
Mid-term Management Plan.

Yoshiyasu Mizutomi
Executive Officer, General Manager
of Aviation Business Department

IBJ Leasing Company, Limited30

Non-financial Assets for Supporting GrowthBusiness of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

CSR of the IBJ Leasing GroupWe will achieve sustainable growth together with society
by fulfilling our responsibility for stakeholders andcreating value that can be shared.
The IBJ Leasing Group sets the slogan “We aim to be aGroup which contributes to society by offering valued financial services which lead to future prosperity” as its Corporate
Philosophy, and corporate social responsibility (CSR) is thebasis of our business activities.
Looking at the surrounding business environment, the
IBJ Leasing Group sees so many issues that need to be addressed, such as global environmental issues and structuralchanges in Japanese society, and the solutions to such issues always need to adapt to changes in society. In recent
years, ESG investments are expanding, which mean investments focused not only on financial information, but also on
corporate initiatives toward the environment, society andgovernance (ESG) and non-financial information accumulated
through such initiatives. The IBJ Leasing Group deems thissituation as that corporations are being tested for their capabilities to respond to such changes and solve issues.
The IBJ Leasing Group will achieve sustainable growth byfulfilling the responsibilities expected of us as a member of society and proactively exerting influence on society. In addition
to fulfilling economic responsibilities such as the pursuit of appropriate profit and securing employment, we are committed
to fulfilling our legal responsibilities to comply with laws, regulations and various rules and ethical responsibilities to display behavior wherein human rights are respected and social
norms are not violated. Furthermore, in addition to fulfillmentof these social responsibilities, we believe that the sustainable
development of the IBJ Leasing Group will be achieved by
our initiatives toward the resolution of social issues and ourcontribution to the creation of a sustainable society throughour business activities.
The IBJ Leasing Group sets value creation for “clients,”“shareholders,” “society” and “employees,” the key stakeholders, as its commitment and considers that the resolution of social issues is our opportunity to grow, as set forthin the Fifth Mid-term Management Plan currently underway.
We support the investments of clients in renewable energy
facilities and environmentally-friendly equipment to achieve
the reduction of environmental load on a global scale, one of
the material issues, with our solutions. In addition, amid theadvent of the super-aging society, the IBJ Leasing Group ispushing forward with initiatives that combine the solution ofsocial issues with its business, such as making contributions
to longer healthy life expectancies through support for customers’ introduction of medical and healthcare equipment, as

well as the resolution of the issue of long waiting lists for nursery schools through real estate lease for childcare facilities.
Furthermore, in order for the IBJ Leasing Group to achievesustainable growth, it needs not only to keep its business inconstant motion, but also to strive to reinforce its corporate
governance and enhance its human resources and non-financial assets so as to be capable of responding to any changes.
The IBJ Leasing Group sees human resources as precious
management assets in particular. In order to create an environment where all employees can demonstrate their capabilities
at their full potential, we are working to improve operational
productivity through IT system investments and reforms inoperational processes, and at the same time, to enhance thework-life balance through the promotion of diversity. This is because we believe that the creation of a working environment
where diverse employees can demonstrate creativity is thesource for the capability to respond to changes. It is also necessary to have corporate governance that functions effectively
and good management transparency to carry out appropriate
and prompt decision-making. In this context, the IBJ Leasing
Group is working to reinforce the internal control system inways such as the effective operation of the Board of Directors, thorough implementation of compliance within Japan andoverseas and the establishment of a risk management system.
The IBJ Leasing Group will continue working toward the realization of a sustainable society and the enhancement of corporate value through the creation of value that can be sharedwith stakeholders. I hopefor your continued support and patronage into
the future.

Shin Kuranaka
Senior Managing Director,
Chief CSR Officer

CSR Activities
The businesses of the IBJ Leasing Group, including financing, the management of equipment, insurance, and overseas businesses, are closely connected with the economy, society and the environment in various aspects. The IBJ Leasing Group aims to realize
a sustainable society, increase corporate value and achieve growth by fulfilling social responsibilities through its business activities
and by gaining trust from various stakeholders including “clients,” “shareholders,” “society” and “employees.”

Value Creation Process of the IBJ Leasing GroupP11 - 12

Clients

IBJ Leasing Company, Limited

Contribution toindustrial andtechnologicaladvancement

Shareholders

Creation of
productive andhigh-quality
employment
opportunities

Society

Prosperous living

Employees

Maintenance ofa healthy global
environment

Fulfill social responsibility
Creation of shared value
through the businessRealization of asustainable society
Stakeholders

Responsibilities to be fulfilled by the Group

Clients

Contribute to the development of clients’ businessactivities by providing optimal solutions tailored tochanges in the times and environment.

Reference pages

E

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

Society

Promote social contribution activities and environmental
initiatives based on ISO14001 in an organizational andcontinuous manner and contribute to the realization ofa sustainable society through business.

Employees

Respect the human rights of each employee, secure andcultivate human resources with diverse perspectives
and values and conduct organizational management tocreate a vibrant environment in which employees feelsatisfied with their jobs.

E Environment
31

Sustainable economic
development

S Society

S

G

E

S

S

Value creation together with clients

P26-30

Corporate governanceP35-36

Compliance

P37

Dialogue with shareholders and investors

P45

Initiatives for reducing environmental load

P44

Social contribution activities

P44

Recruitment and development of humanresources

P40-42Work-life balance

P43

Promotion of diversity

P43

G Governance
IBJ Leasing Company, Limited

32

Non-financial Assets for Supporting GrowthBusiness of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

List of Directors, Auditors and Executive Officers
Board of Directors

President and CEO

Deputy President

Senior Managing Director

Hiroshi Motoyama

Katsuji Nagatsu

Shin Kuranaka

April 2004

April 2002

June 2007
April 2009
June 2011
June 201633

Corporate Auditors

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

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

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

March 2006 General Manager, Career Development Division of Mizuho
Corporate Bank, Ltd.
General Manager, Human Resources Department of Mizuho
Financial Group, Inc.
April 2009 Executive Officer, General Manager, Human Resources
Department of Mizuho Financial Group, Inc.
April 2010 Executive Managing Director of Mizuho Bank, Ltd.
April 2013 Senior Managing Executive Officer, CCO, CIO, Chief CSR Officerof the Company
June 2013 Senior Managing Director, Senior Managing Executive Officer,
CCO, CIO, Chief CSR Officer of the Company
April 2017 Senior Managing Director, Senior Managing Executive Officer, CCO,
CIO, CRO, Chief CSR Officer of the Company (present position)

Managing Director

Managing Director

Shinichiro Maruyama

Masaya Hamamoto

Akira Ueda

April 2010

General Manager, Corporate Banking Division No. 14 of Mizuho
Corporate Bank, Ltd.
Executive Officer, General Manager of the Corporate Business
Unit (Large Corporations)
June 2012 Executive Officer, General Manager of Planning Department of the Company
June 2013 Director, Executive Officer, General Manager of Planning
Department of the Company
April 2015 Managing Director, Managing Executive Officer, General
Manager of Corporate Planning Department of the Company
June 2015 Managing Director, Managing Executive Officer, General
Manager of Business Co-ordination Department of the Company
April 2017 Managing Director, Managing Executive Officer of the Company
February 2018 Managing Director, Managing Executive Officer, CFO of theCompany (present position)

April 2011

May 2001

April 2012

July 2013

Outside Director

Outside Director

Outside Director

Takao Komine

Masatoshi Kiriyama

Yasuyuki Sugiura

July 1969 Joined the Economic Planning Agency
June 1998 Director General, Prices Bureau of Economic Planning Agency
July 1999 Director General, Research Bureau of Economic Planning Agency
January 2001 Director General, National and Regional Planning Bureau of
Ministry of Land, Infrastructure and Transport
April 2003 Professor, Graduate School of Social Science, Hosei University
June 2009 Outside Director (part-time) of the Company (present position)
April 2010 Senior Research Fellow, Japan Center for Economic Research
May 2012 Trustee, Senior Research Fellow, Japan Center for Economic
Research (present position)
April 2017 Professor, Department of Regional Development, Taisho
University (present position)

April 1972
June 1989

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

IBJ Leasing Company, Limited

April 2014
April 2015
June 2015
April 2016
April 2017

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

Outside Audit & Supervisory Board Member

Outside Auditor

Outside Auditor

Shigeaki Katayama

Takehito Miyaguchi

Shinichi Takahashi

Akira Noguchi

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

April 2005

April 1984

Joined The Dai-ichi Mutual Life Insurance
Company
April 2006 Executive Vice President of DLIBJ AssetManagement Co., Ltd.
April 2011 Senior Executive Vice President of DIAM
Co., Ltd.
October 2016 Director, Managing Executive Officer,
Head of Institutional Marketing Division ofAsset Management One Co., Ltd.
April 2018 Director of Trust & Custody Services Bank,
Ltd.
June 2018 Deputy President of Trust & Custody
Services Bank, Ltd. (present position)
Auditor of the Company (present position)

General Manager, Beijing Branch ofMizuho Corporate Bank, Ltd.
June 2007 Executive Officer of Mizuho Corporate
Bank, Ltd.
Deputy Chairman & President of Mizuho
Corporate Bank (China), Ltd.
June 2012 Senior General Manager of Mizuho
Corporate Bank, Ltd.
Chairman of Mizuho Corporate Bank
(China), Ltd.
October 2015 Adviser of Mizuho Research Institute Ltd.
Adviser of Mizuho Bank (China), Ltd.
June 2017 Audit & Supervisory Board Member of theCompany (present position)

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

April 1979

May 2007Managing Director

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

Outside Audit & Supervisory Board Member

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

Corporate Executive Officers
Managing
Executive
Officers

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

Executive
Officers

Toshiyuki Kamimura
Kozo Shino
Yoshiyasu Mizutomi
Katsuzumi Orihashi
Chihiro Tokiyasu
Yutaka Sasaki
Toshikazu Ishizaka

Message from Outside Director

Hiromichi Koyata
Noboru Otaka
Asao Tsumuji
Yasushi Hara
Kunihiro Mio
Mitsuyuki Kimura

Message

After years of work as a government official (at the Economic Planning Agency, the current
Cabinet Office), I started my career teaching at a university. Over the course of my career as
an economist spanning about half a century, I have always observed the Japanese economy
and discussed economic policy issues. Based on such experience, I believe that I can make acontribution as an outside director in the following two ways.
First, to check the Company’s management with an outside set of eyes, so to speak, andpoint out any issues that may be difficult to notice from inside the company. I have neverworked in the private sector, nor am I an expert on financial issues. So, I intend to point out
things that I can see precisely because of being a person who has not been engaged in any
business operations, rather than to discuss and provide advice on specific details of the leasebusiness.
Second, to convey economic and social movements from a broad perspective. Observing
the Japanese economy, I can tell that there are megatrends such as globalization, genderequality and demographic changes that no one can avoid. In view of the fact that there aresuch megatrends, corporate management should know about them, adapt as swiftly as possible, and if at all possible, proactively navigate such issues.
I hope that I can help IBJ Leasing on these fronts to achieve further development with theknowledge and experience I’ve accumulated.

Takao Komine

Professor, Department of Regional Development, Taisho University

IBJ Leasing Company, Limited

34

Non-financial Assets for Supporting GrowthBusiness of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

Corporate Governance and Internal Control
Internal Audit Department

Corporate Governance
Basic Approach
To enhance corporate value consistently over the long term, the
IBJ Leasing Group recognizes that it is essential to ensure effective
corporate governance, meaning a framework governing businessactivities centered on a closely regulated relationship between
shareholders and management, and that the basic objective forcorporate governance is to put in place an environment to ensure
this.
Outline of Corporate Governance Structure (As of June 26, 2018)
Form of organization

Company with auditors

Number of directors

9, of whom 3 are outside directors

Number of auditors

4, all of whom are outside auditors

Term of office of directors

2 years

Executive officer system

AdoptedBoard of Directors
meetings in FY2017

Audit Committee
meetings in FY2017

100%

Attendance rate ofcorporate auditors

100%

Auditors and Audit Committee

Number of meetings 15 times
held
Attendance rate ofcorporate auditors

Structure of compensation for directors

Independent auditor

Total amount of compensation, etc. for directors and corporate auditors in FY2017

Compensation for Directors

Number of meetings 18 times
held
Attendance rate of
directors

decision making by the board.
The Company has adopted an executive officer system toensure the rapid and efficient execution of business in accordancewith the decisions of the Board of Directors, and delegates authority
for business execution to the president and executive officers.
In fiscal 2017, the Company established the Executive
Management Committee as the highest decision-making bodyfor executives to reinforce the operation of meeting bodies,
Policy Planning Committees & Council for each function under
the Executive Management Committee, with the objective of
enabling prompt and appropriate decision-making in addition to
taking on challenges for new business models and responding toincreasingly diversified risks.

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

monthly corresponding to their responsibilities. The amount ofcompensation for each director is determined by the method
adopted by the resolution of the Board of Directors.
In addition, IBJ Leasing has introduced the performancelinked, share-based remuneration system by the resolution of theOrdinary General Meeting of Shareholders held on June 26, 2018.
The system aims to contribute to the improvement of businessperformance in the medium- to long-term and increasing corporate
value, and ultimately sharing awareness of raising our stock value
with our shareholders by further clarifying the linkage of the
remuneration for directors (excluding the chairman of the Board of
Directors and outside directors) and executive officers who do notconcurrently serve as directors with the business performance andstock value of IBJ Leasing.

100%
With regard to the compensation for directors
excluding outside directors, it is performancebased corresponding to their positions andresponsibilities, with a performance-linked,
share-based remuneration system introduced
from 2018. As for the compensation for outside
directors, it is fixed monthly corresponding totheir responsibilities.
Deloitte Touche Tohmatsu LLC

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

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

The maximum total amount of compensation to be paid to all
directors has been set based on the resolution of the General
Meeting of Shareholders. With regard to the compensation for
directors excluding outside directors, it is performance-based
corresponding to their positions and responsibilities.
As for the compensation for outside directors, it is fixedDirectors excluding outside directors

Title

Outsidedirector

1¥ 5 million

Outside officers2

9¥ 82 million

1 This includes one corporate auditor who resigned on or prior to March 31, 2018.
2 This includes two outside officers who resigned on or prior to March 31, 2018.

Significant concurrent positions outside
the Company (As of June 26, 2018)

Reasons for appointment

Attendance at meetingsof Board of Directors /Audit Committee

Takao
KomineTrustee, Senior Research Fellow, Japan Center for
Economic Research
Professor, Department of Regional Development,
Taisho University

We expect that he would make use of his abundant experienceand broad insight in financial policy and specialized academic
fields.

Board of Directors meetings:
18 out of 18 meetings

Masatoshi
Kiriyama—

We expect that his abundant experience and broad insight inBoard of Directors meetings:
economic, industrial and commercial policy would be reflected in
14 out of 14 meetings
the management of the Company.
(since assuming office in June 2017)

YasuyukiSugiuraAdvisor, Mitsubishi Corporation
Managing Director, Toyo Bunko
Outside Director, SENKO Group Holdings Co., Ltd.

We expect that his abundant experience and broad insightacquired through executing business operations at a general
Board of Directors meetings:
trading enterprise, including corporate administration, overseas
14 out of 14 meetingsbusinesses and public relations would be reflected in the (since assuming office in June 2017)
management of the Company.

Shigeaki
Katayama—

We expect that he would make use of his abundant experienceand broad insight in corporate management in carrying out theCompany’s audit operations.

—

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

Audit

Supervision
Executive officer system

Audit

Chief Executive Officer (President)

CRO: Chief Risk Management Officer
CFO: Chief Financial Officer
CCO: Chief Compliance Officer
CIO: Chief Information Officer

Executive Management Committee(CEO, CRO, CFO, CCO, CIO, etc.)(Full-time)

Independent Auditor(Audit Firm)

Cooperation

Audit Department

Control

Legal Division

Legal Advisors
Cooperation

Policy Planning Committees & Council
PM/ALM Committee

Risk Management Committee

Operating Units

35

IBJ Leasing Company, Limited

Credit Committee

Business Council

Administrative UnitsGroup companies

OutsideauditorShinichiTakahashi

Akira Noguchi

Compliance Division(under direct control of CCO)IT System/Investment Committee¥260 million

Name

Takehito
Miyaguchi

General Meeting of Shareholders (Shareholders)

Audit Committee(Outside Auditors (all))

6

Concurrent Positions Outside the Company, Reasons for Appointment and Other Relevant Matters Concerning Outside
Directors and Outside Auditors(Full-time)

Board of Directors(Directors/Outside
Directors)

Total amount ofcompensation, etc.

Corporate auditors excluding outside auditors

1

Corporate Governance Structure (Revised in fiscal 2017)

Accounting
Audit

Number ofrecipients

Attorney, Nishimura & Asahi

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

We expect that he would make use of his abundant experience andbroad insight in financial institutions in carrying out the Company’s
Deputy President, Trust & Custody Services Bank, Ltd.
audit operations, and also that he would contribute to maintaining
and raising the level of corporate governance of the Company.

Board of Directors meetings:
18 out of 18 meetings
Audit Committee meetings:
15 out 15 meetings
Board of Directors meetings:
14 out of 14 meetings
Audit Committee meetings:
10 out 10 meetings(since assuming office in June 2017)

Board of Directors meetings:
14 out of 14 meetings
Audit Committee meetings:
10 out 10 meetings(since assuming office in June 2017)—(Assumed office in June 2018)

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

IBJ Leasing Company, Limited

36

Non-financial Assets for Supporting GrowthBusiness of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

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

lines via attorneys to enable all of its employees to report potential
violations directly to the Compliance Division and/or the corporate
auditors. The Company has also formulated Rules on the Protectionof Whistleblowers to protect reporters.

Compliance Awareness Activities
Compliance Structure
The Company has formulated Compliance Regulations toensure compliance, appointed a chief compliance officer (CCO),
and established the Compliance Division. Furthermore, eachdepartment general manager functions as the department-level
head of compliance, and is tasked with supervising and enforcing
its practice. In addition, the Audit Department examines andassesses the current state of compliance in each department. The
Company has created a system in which necessary measures aretaken based on reports from the Audit Department. As internalreporting systems, the Company has established a compliancehotline structure and maintains internal and external reporting

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

Risk Management
Comprehensive Risk Management Activities
As financial services become more diversified and sophisticated,the various risks that arise from business operations growincreasingly complex. In this environment, the IBJ Leasing Group
recognizes that precise monitoring and analysis, as well as theproper control and management of these risks is exceedingly
important for maintaining or increasing the soundness ofbusiness operations, and is strengthening and streamlining its risk
management system accordingly.
The IBJ Leasing Group has categorized risks that arise inassociation with the operating activities into financial risk to be
managed quantitatively and operational risk to be managed
qualitatively, and risk management systems are established foreach risk. Moreover, the new Risk Management Committee wasinstituted in fiscal 2018 to centrally manage operational risk andestablish a comprehensive risk management system that also
encompasses the management of financial risk.
As for financial risk, meaning credit risk1, market risk2 andprice fluctuation risk3, the locations and the magnitude of risk are

Keywords Explained
1 Credit risk is the risk of loss associated with the inability to collect lease
payments, installment payments, or loan principal and interest as contracted, due to factors such as bankruptcy or deterioration of financial
position of the debtor.
2 Market risk is the risk of incurring loss as a result of a decline or disappearance in, or total loss of, the value of the Company’s financial assets
and liabilities attendant on market price fluctuations (interest rates, stock
prices, foreign exchange rates, etc.).
3 Price fluctuation risk is the risk of fluctuations in the value of items otherthan marketable products, for example, the risk of fluctuations in theestimated residual value in operating leases and risk inherent in real estate-related financing (risk of fluctuations in the real estate value at the
expiry of a contract).

37

IBJ Leasing Company, Limited

monitored based on the management framework centered on the
allocation of risk capital. Operational risk such as administrativerisk, system risk, legal risk, etc., is monitored for the statusof occurrence of risk events, countermeasures, preventive
measures, etc.
In addition, to realize the goal of becoming a multiple financial
services company and expand our specialized financing services,
we are aware that further enhancement of our risk management
system, for example, monitoring and handling the various risks
inherent in transactions, etc., will be more important than ever.
Thus we are strengthening our risk management. For example,
when we start handling new products and developing new
businesses, we thoroughly review the identification and evaluationof inherent risks through the Risk Management Committee, whose
members include executives in charge of the administrative units.

capital to each financial risk, we control losses incurred from any
unforeseen situation within manageable limits, thereby maintaining
our financial stability.
Key aspects, such as the amount of risk capital to beallocated for each risk, are determined as a part of the fiscal
year’s management plan at the Board of Directors meetings, andspecific operating policies are determined through resolutions
by the Executive Management Committee and Policy Planning
Committees (such as the PM/ALM Committee), and reflectedin business operations. Within such a framework, the Risk
Management Department, which is independent from thebusiness and treasury departments, monitors operations
periodically to measure risks. The results of this monitoring arereported to the Board of Directors on a monthly basis.

Credit Risk Management Structure
The IBJ Leasing Group aims to minimize credit costs by optimizing
its credit management structure at all stages of each transaction,from entrance to exit, regarding credit risk of our clients.
Firstly, at the initial stage of deal execution under our “client
credit rating system,” we grant a credit rating for each debtor,
conduct a strict credit screening for each debtor when reviewing
a deal, and, to avoid excessive concentrations of credit, manage
credit limit by using our “credit monitoring systems by ratings.”
Next, during the contract period, we apply asset selfassessment rules, which are as stringent as those employed bymegabanks, in accordance with the Financial Services Agency’s“Financial Inspection Manual,” and also implement write-offs andprovide reserves based on the assessment results. Also, we
periodically follow up on non-performing assets and make debt
collection of assets for which we have already provided reserves tofacilitate final disposal of nonperforming assets.
Meanwhile, our approach to credit portfolio management isbased on the use of statistical methods to calculate the potential
for losses related to credit risk. To that end, each month wecalculate the expected loss (EL, i.e., credit cost), which is theaverage loss anticipated over the next year, and the unexpected
losses (UL, i.e., credit risk amount), which is the maximum amountof any additional loss in excess of the EL.
As for expected losses, our stance is to cover an expected loss
from income gained through credit transactions, and we use thisamount as a reference value when estimating the cost of credit
for our income plan as well as when arranging deals. Concerning
unexpected losses, if an unexpected loss is incurred, our stance is
to cover it from our equity capital, which we monitor in relation to
the pre-allocated risk capital, and report to the Board of Directors
on a monthly basis. In addition, we are focusing on initiatives toimprove our asset quality by controlling the risks inherent in thebusiness and assets through portfolio management.

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

Operational Risk Management Structure
The Operational Risk Management Division of the Risk
Management Department centrally collects and manages
operational risk events resulting from inadequacies, administrative
errors, compliance issues, inappropriate business operations,system failures and any other external factors and takes
appropriate actions according to the relevant risk categories suchas the formulation of countermeasures and measures to prevent
recurrence. Furthermore, risk-related analyses are reported
quarterly at meetings of the Risk Management Committee, as wellas those of the Board of Directors, together with financial risk.

Risk Management Framework Centered on Allocation of Risk Capital

Risk Capital Allocation
An extremely high priority is placed on the integrated monitoring
and control of total financial risk. Thus we incorporate an
integrated risk management structure in accordance with that of
the mega-banks into our management policies in order to improve
the soundness and stability of our business. Specifically, wequantify various risk factors and employ integrated and centralized
control systems to ensure that our total risk exposure remains
below the required percentage of our shareholders’ equity (i.e.,
our financial strength).
In other words, we define our risk tolerance as the amountof risk capital, calculated by subtracting equity capital and partof retained income as reserves reported for the maintenance of
the Company from shareholders’ equity. By allocating this risk

Directors/Outside Directors

Allocation of risk capital

Decides on important matters
Proposal ofcountermeasures

Capitalsurplus

PM/ALM Committee
Operation and execution to meet the basic policies
Reporting, proposal ofcountermeasures

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

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

Reserve for new
business activities

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

Retainedearnings

Market risk

Provisionallyallocated
capitalCredit risk
Price fluctuation risk

Note: The colored box on the right side of the chart above is not intended to denote the relative size of risk allocated to each risk category.
IBJ Leasing Company, Limited

38

Non-financial Assets for Supporting GrowthBusiness of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

Commitment by the Personnel Unit

39

IBJ Leasing Company, Limited

Strategic personnel allocation

Human resource portfolio
Personnel allocation

Human resource portfolio

Implementation of measures topromote diversity
Implementation of measures related towork style reform
Implementation of measures toinvigorate communication

Promotion of diversity
Work style reform

An organization capableof contributing to thedevelopment of local
industries not only in Japan,
but also in overseas countries

Diversity
An organization capable ofallowing diverse human resources
to demonstrate their abilities
and skills and increasing value
provided to society

Recruitment and Development of Human Resources
Human Resources Development Programs
The IBJ Leasing Group has established detailed training programs such as operational skill training programs including stratified
training based on each employee’s development level and optional training and correspondence courses to support employees toimprove themselves and to encourage them to acquire qualifications.
In addition, the IBJ Leasing Group strives to develop human resources by setting up career plans for each employee as a guidefor employees to understand the knowledge, skills, etc., they should acquire in each of the steps in their career, devote themselvesto their duties and self-improvement by setting their own goals and undergo necessary training in a systematic manner.
Training Program Diagram
Stratified training
Career-track positions

General positions

Correspondence
courses

Operational skill training

Other

Manager training
Human assessment training

Management training

Evaluator training

Administrative job training

Mid-level manager training

Secondment

Administrative training
Follow-up training

Follow-up training

New employee training (Introduction, OJT, operational)

New employee training (Introduction, OJT, operational)

Compulsory
courseCareer design
training

Language training

Selective management training

e-Learning

Management training

Course for self-development

External management seminar

Optional training

lar, among the “Three Cs” in the Action Guidelines of IBJ Leasing, namely “Challenge”, “Change” and “Create”.
Next, we develop human resources who can play an activerole on the global scene. The development of human resources who work overseas is carried out centered on three pillarsof the education and training of existing employees, the hiringof students who desire to work overseas and the mid-career
recruitment of employees with overseas experience. As for thedevelopment of existing employees, we make open calls for
employees who desire to work overseas, have the applicantsundergo language training and then dispatch them to overseas
subsidiaries. In new college graduate recruiting, we focus on
the hiring of students studying abroad and those who desire
to work overseas. At the same time, we proactively recruit
mid-career employees who have overseas experience as those
who can make immediate contributions to the Group.
Lastly, diversity. The IBJ Leasing Group is promoting diversity including work style reform with the aim of establishing anenvironment where all employees can demonstrate their capabilities at their full potential. In an aim to provide employees avariety of ways to work with more flexibility, we have establishedan environment with systems enabling career conversions for
employees: from general positions or area-limited career-track
positions to unlimited career-track positions; or conversions tolifework positions in which those who are temporarily unable toperform their duties due to reasons such as childcare, nursing
care, etc. may convert from career-track positions to area-limited career-track positions or general positions. In addition, weestablished an organizational setup where experienced employees can teach their accumulated insight and know-how
to less experienced colleagues and share intellectual property,
and at the same time, are pushing forward with the creation ofa working environment that has a sense of unity beyond theboundaries between departments.
The IBJ Leasing Group sees employees as invaluable assets and continues with its efforts to create an organization
where each employee can demonstrate their creativity and play
an active role.

GlobalHuman resource
development

External lecture to acquire specialized knowledge

The IBJ Leasing Group provides services that contribute to financial solutions using equipment and the acceleration of ourclients’ business. More specifically, our services start with oursales representatives identifying client needs. They discuss
the matter with departments in charge of that field, and create
solutions based on such needs. After that, specialists in tax
affairs, accounting and legal affairs validate the solutions fromthe perspectives of their fields of expertise. Then, the sales representatives propose the solutions to clients. This is a cycle
carried out on a daily basis. It is our business to accurately
grasp diverse client needs and respond to them by utilizing ourcollective wisdom, and each and every one of the employees
conducts the business and supports the growth of IBJ Leasing.
Amid the fast-paced structural changes in society and industries, the flexibility to keenly respond to changes and diversity that can accommodate global developments has become
increasingly important, not to mention knowledge of and expertise in finance, tax affairs, accounting, related legal affairs
and equipment. With the aim of “developing human resources
and creating a corporate culture willing to take on challenges
and promoting work style reform,” the IBJ Leasing Group is
working to create systems and a working environment whereorganizations can perform at their full potential in the belief that
it is important for us to ensure the diversity of employees andcreate and maintain a meaningful and engaging workplace foreach of them.
To be specific, we are carrying out concrete measures toward the above objectives by dividing them into four major
categories: “evaluation and remuneration systems,” “humanresource development,” “human resource portfolio and strategic personnel allocation” and “the promotion of diversity andwork style reform.” In so doing, we place particular focus on thefollowing three points.
Firstly, we are pushing forward with measures to take on
further “Challenges” with the aim of responding to structuralchanges in society and industries and creating new value. Inline with this, we have introduced evaluation and remuneration
systems that place strong emphasis on “Challenge” in particu-

Creation of career plans
Strengthening of human resources
working overseas
Utilization of external educational
institutions

A highly-flexible organization
capable of adapting itself
to changes in the social
environment and taking onchallenges

Evaluation andremuneration systems

Sales skill improvement training

Chihiro Tokiyasu

Challenge

Evaluation and remuneration systems
to promote Challenges
Setting up of appropriate evaluation
processes and remuneration systems

Instructor training

Executive Officer, General Manager of
Personnel Department

Desired Future Image of
the Organization

Concrete measures

Mentor training

The IBJ Leasing Group encourages
diverse human resources to takeon challenges and aims to achieve
growth on a global scale.

Overview of the Personnel Strategies

Life planningtraining

Financial analysis lecture
IBJ Leasing Company, Limited40

Non-financial Assets for Supporting GrowthBusiness of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

Recruitment and Development of Human Resources
Hiring New Graduates, Mid-career Workers and Persons with Disabilities
Based on its policy to conduct fair and impartial pre-employment
screening, the IBJ Leasing Group promotes recruitment of diverse
talent including new graduates, as well as mid-career workers withvarious backgrounds and persons with disabilities.

Development of Global Human Resources

We believe that the future of the IBJ Leasing Group depends
on people with different personalities who perform at their fullpotential, think together, act together and develop together.
IBJ Leasing’s Past record(Persons)
30

20

New graduates employed

Employment rate of persons with disabilities

27

2.07%

22

20

2.03%

2.20%
2.0

17

Employee Feedback

10

0

(%)
3.0

1.0

2015

2016

2017

The IBJ Leasing Group has set the Global field as part of the
focus areas in the Fifth Mid-term Management Plan currently
underway and is strategically implementing the development andstrengthening of human resources who can play an active rolein overseas countries based on the three pillars for achieving thePlan, namely education and training of existing employees, thehiring of students who desire to work overseas and the mid-career
recruitment of employees with overseas experience.
Following the open call for overseas-oriented employees made

2018

0.0

within the Company in September 2017, four trainees including
three who applied have been dispatched to overseas subsidiaries
in April 2018 after undergoing language training.
In addition, we focus on the hiring of students studying abroad
and those who desire to work overseas, while also proactively
undertaking the mid-career recruitment of employees who
have overseas experience as those who can make immediate
contributions to the Group.

Trainee at Philippines Subsidiary PNB-IBJL Leasing and Finance Corporation 

Koki Kimijima

I joined the Company in 2015 and have served as an account representative for small and medium enterprises in Tokyo forthree years. I participated in the open call for overseas-oriented employees in the hope of achieving growth in a challenging
environment where I can work with people and in communities with more diverse cultural backgrounds and values. After
undergoing language training, I started working at an overseas subsidiary in the Philippines in April 2018 and have been engaged in sales activities for Japanese clients while studying sales practices, the tax system, accounting, etc., of the country.
Here, communication is based mostly on English, so I am striving to improve my language skills as well. I hope to be
assigned overseas in the future drawing on the knowledge, abilities and language skills I acquired during this period as a
trainee.

Internship Program
An Internship Program is provided for students so that they
can have a better understanding of the leasing industry and ourbusiness operations.
The program is provided in a systematic manner under whichinterns receive basic knowledge of the leasing business and getan organizational overview, learn analytical methods to understandcorporate business models and engage in sales role-plays, on
top of on-site visits to clients’ locations together with IBJ Leasing
employees. The program has received favorable responses fromparticipating students with comments such as “because of thecontent-rich program, I was able to understand the challenge andexcitement of the work” through learning of the operations fromvarious angles.

System for Career Conversions

On-the-Job Training (OJT) and Mentor Systems
The OJT and mentor systems have been instituted to support new
employees from both operational and mental aspects so that they
can learn the operations and grow effectively.
The OJT system is designed to allow trainees to deepen theirunderstanding of their jobs and master the operations by working onpractical operations together with their instructors. The mentor systemallows employees who have just started their careers to designatesenior employees close to their own career stage as mentors andprovides an environment where they can ask for various consultations
on not only questions and concerns over work, but also private
matters, so that they can mitigate their anxiety.

41

IBJ Leasing Company, Limited

We have been promoting the establishment of systems that allow
for flexible work styles according to the life cycle of employees
in order to create a meaningful and engaging corporate culture,
and an easier-to-work environment has been establishedwhere systems are introduced to enable (i) career enhancement
conversions (career conversions from general positions to careertrack positions); (ii) career conversions from area-limited careertrack positions to unlimited career-track positions; and (iii) careerconversions to lifework positions (those who are temporarily unable
to perform their duties due to reasons such as childcare, nursing
care, etc. may convert from career-track positions to area-limited
career-track positions or general positions).
In fiscal 2017, eight employees in general positions haveundergone trials for taking career-track positions, and four
employees have converted their employment types from arealimited career-track positions to unlimited career-track positions.
Employee Feedback

Employees who become mentors are required to undergo mentor training beforehand.

Career enhancement
conversions

GeneralpositionsArea-limited careertrack positions

Career-track
positions

Career conversions tolifework positions

Trainee at Thailand Subsidiary Krung Thai IBJ Leasing Co., Ltd. 

Kaoru Enda

I converted my employment type from the area-limited career-track position to the unlimited career-track position in October
2017, because I wanted to accumulate operational experience and broaden my knowledge by working in various areas without being limited to the Tokyo metropolitan area. I have been assigned to a Thailand subsidiary since April 2018 using theoverseas trainee program. Working currently as a member of the sales team responsible for the central area of Thailand, I am
engaged in the cultivation of Japanese companies operating in the country and provide support for other team members. I
sometimes get to accompany locally-hired staff in their sales activities and gain many opportunities to learn about the uniqueculture and management strategies of local companies, which provides me with valuable experiences every day.
I am committed to mounting an effort to proactively absorb new findings so that I will be able to make attractive proposals
on overseas business to clients.

IBJ Leasing Company, Limited

42

Non-financial Assets for Supporting GrowthBusiness of the IBJ Leasing Group

Promotion of Work-Life Balance and Diversity

Growth Strategy

Initiatives for a Recycling-Oriented Society

Expanding Promotion of the Advancement of Women to Work Style Reform

P hasePhase

employees. In Phase 4 implemented in fiscal 2017, we appointed
employees in management positions in each department and officeas leaders of work style reform, SAKURA People, and worked topromote organizational reform in working styles so as to expand
the work style reform movement on a company-wide basis.

Phase

P h a seFrom October 2014 to May 2015

From June 2015 to December 2015

From October 2016 to February 2017

From October 2017 to March 2018

Work style reform for female employees

Career support for women in
career-track positions

Initiatives for work style reformfrom management’s perspective

Launch of SAKURA People·Establishment of program to support
career design·Invigoration of job rotation·Promotion of streamlined operations
and career formation·Expansion of work domains for female
members of the general staff·Establishment of a system for careerconversions·Appointment of employees inmanagement positions in eachdepartment and office as leaders ofwork style reform

From April 2018: Development into Initiatives as Company-Wide Work Style Reform
The Diversity Promotion Division works to implement initiatives topromote work style reform and create various types of plans for
personnel system reform, etc. In fiscal 2017, the Division promotedchanges to various personnel systems, while at the same time
established a mechanism under which excellent case examples
gained through the activities undertaken by SAKURA People asmentioned above are shared on a group-wide basis. In fiscal 2018,the Division is accelerating its initiatives toward the improvementof company-wide operational productivity by further advancing theactivities of SAKURA People and adding work style reform to thepersonnel evaluation items for employees.

Torakoyaemployees beyond generations. At Torakoya, interactive sessions
are provided by seasoned employees with abundant experience aslecturers instead of classroom lectures, enabling communicationthat goes beyond workplaces, employment types and ages.

*“Torakoya” was named by a vote of employees, which is a combination of the Head Office address, Toranomon, and Terakoya, Japanese private educational
institutions during the Edo period.
Case Study

Lecturer: IBJ Auto Lease Company, Limited

Details of the Lecture
Ms. Nonogaki joined the Company as a general staff. After serving as a staff member in the operating unit and the planning andadministrative unit, she converted her employment type to thecareer-track position. She is currently seconded to the group company IBJ Auto Lease Company, Limited, playing an active role in a
managerial position.
As a role model of women’s advancement in the workplacein the IBJ Leasing Group, Ms. Nonogaki gave a lecture centeredaround her knowledge and findings accumulated during thecourse of her career and her thoughts on the job, company andcolleagues, which garnered quite a high level of satisfaction among
participants.

Holding of an In-House Lobby Concert
An in-house concert was held as a venue for a gathering of the
IBJ Leasing Group members. A concert hall-like atmosphere wascreated with illumination and flower stands, and many employees
enjoyed the music of the string quartet. The event received manyfavorable responses from the participants.
43

IBJ Leasing Company, Limited

In lease transactions, equipment “owned” by leasing companies
is “used” by clients; therefore, after the lease term expires,the equipment will be returned to the leasing companies for
destruction, sale, disposal, etc. The IBJ Leasing Group screens
expired equipment that can be reused or that can be used as

Setsuko Nonogaki
Lecturer’s VoiceMy experience as a lecturer at Torakoya was a very good
opportunity for me, allowing me to reconfirm what I placed
the highest emphasis on, what I had thought during mycareer, and ultimately, my whole career at the Company. I realized that, after giving the lecture, there were many people
with worries and concerns precisely because they are faithfully engaged with the Company. I received feedback andcomments from the participants saying, for example, “Thislecture gave me an opportunity to learn about various informative topics to use as a model in considering my own career,” and I am pleased to know that my hopes and thoughts
were passed along to my less-experienced colleagues.

materials, implements 3Rs (Reduce, Reuse and Recycle) by taking
appropriate disposal measures such as selling to used-item dealers
and consigning to recycling companies, and thereby contributes tothe creation of a recycling-oriented society.

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

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

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

Main Environmental Purposes and Targets
Environmental target -Annual target -Environmental Purposes - Medium-term target -Initiatives to Invigorate Communication

The IBJ Leasing Group set up Torakoya* as an in-house
educational institution in October 2017 with the purpose oftransferring knowledge and know-how accumulated by the Groupin its history and providing a venue for communication among

Consolidated Financial Data and Corporate Information

Environmental and Social Activities

Work Style Reform

In October 2014, we established a cross-departmental team, the
SAKURA project team, to promote the advancement of women.
This team conducts activities at each phase under a different theme,
and in recent years, has presented proposals to management as
to the measures to be taken, not only to promote the advancementof women, but also to realize diversified ways of working by all

Non-financial Assets for Supporting Growth

FY2017 target

Results

Reduce the amount of paper used

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

11% reduction from target

Reduce consumption of electric power

Maintain average monthly level of FY2013-FY2015

11% reduction from target

Sustainable contribution to building a recycling-oriented society

Achieve reuse rate* of 67% or more

Reuse rate 69% achieved

Promote 3R by purchasing used equipment

10% increase from FY2016 results

85% achieved

Ensure disposal in compliance with laws and regulations andselect law-abiding recycling business operators

Regularly investigate industrial waste disposal business
operators used group-wide

Implemented group-wide*Reuse rate means the rate calculated by: Number of equipment sold ÷ Number of equipment for which the lease term or re-lease term has expired

Social Contribution Activities
Support for Areas Affected by the Heavy Rain Event of July 2018
We extend our deepest condolences to those who were affectedby the Heavy Rain Event of July 2018.
The IBJ Leasing Group donated ¥10 million through The
Japanese Red Cross Society as our contribution to support thevictims and to restore the affected areas. In addition, we sent relief
supplies such as drinking water and sandbags to the affected area.

Support for Gold Ribbon Campaign
The Gold Ribbon Campaign is organized and promoted by anaccredited NPO, Gold Ribbon Network, to support children withcancer. The IBJ Leasing Group has installed vending machines
in its Head Office, by which a portion of sales proceeds will be
donated to support the Gold Ribbon campaign.

Participation in Eco Cap Campaign
The Eco Cap Campaign is a movement to deliver vaccines forcommunicable diseases to children in developing countries, using
proceeds from sales of PET bottle caps. Those caps are separated
and collected for recycling, and sold to recycling business
operators.
Since October 2010, the IBJ Leasing Group has put collection
boxes at various locations in the Head Office building and eachbranch and has been actively promoting collection of Eco Caps.
FY (accumulated) Number of caps collected (estimate) Converted to number of vaccines Converted to CO2
Vaccines for approximately 2,794.31kg
2010-2017
366,980 caps
443.05 children
IBJ Leasing Company, Limited

44

Non-financial Assets for Supporting GrowthBusiness of the IBJ Leasing Group

Consolidated Financial Data and Corporate Information

Analyses on Business Conditions and Results of Operations 47

Disclosure Policy

Flow of company information

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

Dialogue with Shareholders and Investors

The Company discloses information to the public on aconsolidated basis of the IBJ Leasing Group to protect rights andinterests of shareholders and other stakeholders. Timely, properand fare disclosure of information will ensure transparency of the

Growth Strategy

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

Business Risks and Other Risks 49
Consolidated Financial Statements 50
Corporate Information 82

Legal department

Stock Information 84

Verification

Board of Directors and otherdecision-making bodies

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

Decisions madeFinancial results

Each department

Company information of
the IBJ Leasing Group

Subsidiaries

Information
disclosure

Securities
exchange, etc.

Reporting to the Board of Directors

IR Activities
The basic stance of the Company regarding IR activities is tocontinuously disclose information in a fair, timely and appropriatemanner and to enhance communication with shareholders andinvestors, to enable their further understanding about the IBJ
Leasing Group and fair evaluation of its corporate value. The IBJ
Leasing Group holds briefing sessions to explain financial results
to institutional investors and analysts and individual meetings withdomestic and overseas investors on a regular basis, as well as
annual company information sessions, questionnaire surveys, etc.
for individual investors. Through such means, we engage in active
dialogue with shareholders and investors.

The IBJ Leasing Group aims to achieve sustainable increases
in corporate value by appropriately incorporating opinions andfeedback obtained through dialogue into management.
Record of IR Activity in FY2017
Financial results briefing session

Twice

Briefing session for individual investors

Once

Individual meeting with institutional investors, etc.

52 times

Shareholder Returns
Dividend Policy

Shareholders Benefit Plan

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

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

(yen)Company design
pre-paid book card

80

70
60

54

56

60

64

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

40

20

0

45

Shareholders Special Benefit Plan

2013

IBJ Leasing Company, Limited

2014

2015

2016

2017

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

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

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

Analyses on Business Conditions and Results of Operations
1. Financial Results and Business Performance Overview

The global economic environment in fiscal 2017 has been on amoderate expansion track partly due to steady growth of the U.S.
and European economies and solid performance in the Asian
economy.
The Japanese economy has been on a moderate recovery
trend partly due to the effect of the global economy, and capital
investment has remained steady against the backdrop of improvement in corporate earnings and other factors.
In the leasing industry, leasing transaction volumes remained
almost at the same level as the previous fiscal year.
In the financial market, amid the continued monetary easing
policy, both long-term interest rates and short-term interest rates
remained low.
Amid such a business environment, the IBJ Leasing Group has
started to implement the Fifth Mid-term Management Plan covering the three-year period from April 2017 to fiscal 2019. Under
this plan, the Group sets the vision of a “value-creating company
tackling challenges together with clients” and utilizes its accumulated business know-how and financial strengths to actively
promote businesses with higher profitability in addition to existing
business lines.
In fiscal 2017, the first year of the plan, the Group steadily implemented strategies aimed at further growth such as taking on thechallenge of entering into new domains and promoting initiatives
focused on profitability. As a result of these efforts, net income
attributable to owners of the parent amounted to ¥13,643 million,
achieving record-breaking profit for five consecutive years.
As for the business condition in fiscal 2017, the Group pushedforward with initiatives for business strategies and the focus areas
set out in the Fifth Mid-term Management Plan and carried out
high value-added proposal-based sales activities that cover thewhole business activities of clients, leading to the expansion of
the Groups’ initiatives that contribute to the acceleration of capital
investment and business activities of large- and mid-sized corporate clients.
Serving the manufacturing industry and the internal demand-oriented industry is the Group’s forte and is established as
its core business. While succeeding in concluding contracts forlarge projects through the commercial distribution business that
focuses on the flows of purchase and product sales at clients, inthe real estate field, the Group recorded the first sales in real-estate leasing which covers childcare facilities and hotels with risingsocial needs. Furthermore, in addition to logistics and commercial
facilities that it had traditionally covered in this field, the Groupstarted initiatives targeting manufacturing factories and overseas
real estate (in the U.S. and Europe) in collaboration with leadingbusiness operators.
At the same time, the Group also places its focus on thefields where business expansion can be expected in association

with the structural changes in society and industries in Japan.
In the environment and energy field, the transaction volumes
have significantly increased as the Group worked to attract
corporate investment in energy saving through the promotion ofbusinesses that utilize subsidies, while also expanded initiatives
for the energy business such as the leasing of large-scale wind
power-generation facilities. In the medical and healthcare field,
in addition to financing for medical equipment, the Group is
expanding the business in response to the growth of businessundertaken by medical institutions such as the leasing of vehicles for nursing care. In the global field, the Group is strengthening initiatives targeted at non-Japanese companies including
increases in transactions with local conglomerates in Thailand
and Indonesia and the growing number of leases for medical
institutions in China. The Group has also steadily increased its
operating assets by making full use of accumulated know-how
in initiatives for aircraft-backed collateralized loans in the aircraftbusiness.
As a result of these developments, the contract execution
volume increased 22.3% year on year to ¥1,335,909 million, while
operating assets increased 4.6% compared with the previous yearto ¥1,683,005 million.
The financial results for each segment are as follows.
(Revenues indicate revenues to external customers.)[Leasing and Installment Sales]
Revenues in leasing and installment sales decreased 7.3% year
on year to ¥386,007 million partly due to the recording in theprevious fiscal year of a series of sales of real estate for which thelease term had expired, and operating income decreased 1.6%
year on year to ¥15,524 million.
Operating assets at the end of fiscal 2017 increased ¥34,043
million compared with the previous year to ¥1,122,183 million.
[Financing]
Revenues in financing increased 9.4% year on year to ¥12,510 million while operating income increased 29.7% year on year to ¥7,963
million as the Group responded to diverse client needs.
Operating assets at the end of fiscal 2017 increased ¥36,354
million compared with the previous year to ¥556,933 million.
[Other]In the other segment, revenues decreased 11.1% year on year to¥1,220 million, while operating income decreased 15.9% year on
year to ¥393 million.
Operating assets at the end of fiscal 2017 increased ¥3,888
million compared with the previous year to ¥3,888 million as theGroup worked on bridge projects in the photovoltaic power generation business.

Contract Execution Volume(Millions of yen)
2013

2014

2015

2016

2017

Leasing and installment sales

384,855

456,381465,505

475,661

430,482

Financing

452,814486,752

599,847

616,366

901,485

Other

—

—

—

—

3,941

Total

837,669

943,134

1,065,352

1,092,027

1,335,909

Operating Assets

47(Millions of yen)
2013

2014

2015

2016

2017

Leasing and installment sales

942,767

1,032,603

1,105,808

1,088,139

1,122,183

Financing400,279

399,695

475,216

520,579

556,933

Other

—

—

—

—

3,888

Total

1,343,046

1,432,299

1,581,025

1,608,718

1,683,005

IBJ Leasing Company, Limited

2. Results of Operations and Financial Position
Revenues
Revenues decreased ¥29,667 million year on year to ¥399,738
million, partly due to the recording in the previous fiscal yearof a series of sales of real estate for which the lease term had
expired.
Gross profit and operating income
Cost of revenues decreased ¥28,657 million year on year to¥361,541 million following a decrease in revenues. Of this amount,funding costs increased ¥1,262 million year on year to ¥6,959
million due to reasons such as an increase in foreign currency borrowing following the expansion of initiatives in the global field.
Selling, general and administrative expenses decreased¥2,210 million year on year to ¥19,034 million. Of this amount,personnel and facilities costs increased ¥147 million year on yearto ¥19,782 million. In addition, as for credit costs, the provisionof the allowance for doubtful accounts, etc., decreased ¥2,357
million year on year, amounting to ¥(782) million, due in part to
the reversal of a portion of the large provision of allowance for
doubtful receivables incurred in the previous fiscal year.
As a result of the above, operating income increased ¥1,200
million year on year to ¥19,162 million.
Net income attributable to owners of the parent
As for extraordinary income and loss, extraordinary income was¥586 million and extraordinary loss was ¥16 million, recording a
net extraordinary income of ¥570 million.
The extraordinary income was due to the recording of a gainon sales of shares held as Strategic shareholdings and the extraordinary loss was due to the recording of a loss on devaluation of investment securities.
Income before income taxes increased ¥1,680 million year on
year to ¥20,535 million.
Corporate taxes, current income taxes and deferred income
taxes amounted to ¥6,365 million, while net income attributable
to non-controlling interests was ¥526 million.
As a result of the above, net income attributable to ownersof the parent increased ¥1,229 million year on year to ¥13,643
million.
Operating assets
The Group pushed forward with initiatives for business strategies
and the focus areas set out in the Fifth Mid-term Management
Plan and carried out high value-added proposal-based sales
activities that cover the whole business activities of clients,
leading to the expansion of the Groups’ initiatives that contributeto the acceleration of capital investment and business activitiesof large- and mid-sized corporate clients. As a result, operating
assets at the end of fiscal 2017 increased ¥74,287 million compared with the previous year to ¥1,683,005 million.

Interest-bearing debt
Interest-bearing debt at the end of fiscal 2017 increased ¥43,801
million compared with the previous year to ¥1,536,240 million following an increase in operating assets.
EquityTotal equity at the end of fiscal 2017 increased ¥12,877 million
compared with the previous year to ¥154,632 million, as a resultof income during the year.
Source of capital and liquidity of funds
In order to offer wide-ranging financial services to meet customer needs, the Group strives for funding that ensures stability andcurtails costs. The Group also raises funds flexibly based on its
annual cash plans and comprehensive asset liability management (ALM) policies that respond to fluctuations in the financial
environment.
The Group’s funds comprise long-term and short-term procurements using a combination of indirect funding via borrowing
from financial institutions and direct funding from the market. At
the end of the fiscal 2017, indirect funding decreased ¥3,916 million compared with the previous year to ¥919,621 million. Direct
funding increased ¥47,718 million compared with the previous yearto ¥616,618 million, partly due to the issuance of commercial paper
and the securitization of lease receivables.
In addition, the Group has concluded overdraft agreements
and commitment line agreements in the total amount of ¥928,137
million with 63 financial institutions as of the end of fiscal 2017with the aim of securing the liquidity of working capital and efficient fundraising. The unused balance under these agreements is¥676,567 million, which ensures sufficient liquidity.
Status of cash flows
Net cash used in operating activities was ¥54,196 million partly
due to an increase in operating assets.
Net cash used in investing activities was ¥2,096 million partly
due to ongoing system investments.
Net cash provided by financing activities as a whole was¥44,317 million, with ¥439 million of cash outflow from indirect
funding and ¥47,718 million of cash inflow from direct funding
through commercial paper and the securitization of receivables.
As a result of the above activities, the balance of cash andcash equivalents as of the end of fiscal 2017 decreased ¥11,955
million compared with the previous year to ¥29,607 million.

Total assets
Total assets at the end of fiscal 2017 also increased ¥69,217
million compared with the previous year to ¥1,821,501 million.

IBJ Leasing Company, Limited48Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting GrowthBusiness Risks and Other Risks

Consolidated Financial Statements

The following factors constitute the principal business risks that have the potential to affect the business results,
stock price and financial position of the IBJ Leasing Group. Forward-looking statements contained herein represent
the judgment of the IBJ Leasing Group as of June 26, 2018

Consolidated Balance Sheet

Consolidated Financial Data and Corporate Information

IBJ Leasing Company, Limited and Consolidated Subsidiaries
As of March 31, 2018
Thousands of
U.S. dollars (Note 1)

Millions of yen

1. Trends in Corporate Capital Investment and Investments
in Leased Plant and Equipment
In Japan, lease transactions are widely used as a fund procurement technique when companies undertake capital investments.
Trends in the amount of corporate capital investment and in
the amount of investment in leased plant and equipment tend tofollow the same underlying pattern, and the amount of investment in leased plant and equipment may be affected by trends
in corporate capital investment.
Trends in the amount of contracts executed by the IBJ Leasing Group, the amount of corporate capital investment and theamount of investment in leased plant and equipment do not always coincide. However, any significant decrease in the amountof corporate capital investment and the amount of investment
in leased plant and equipment may affect the future businessperformance of the IBJ Leasing Group.

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

3. Credit Risk
Lease transactions involve the provision of credit to customers
in the form of leases over relatively long terms (averaging five
49

IBJ Leasing Company, Limited

years). The initial expected profit is secured by collecting the fullamount of leasing fees from the customer. Therefore, the IBJ
Leasing Group assesses the appropriateness of entering into
contracts by conducting strict credit checks of each customer,and by assessing the future second-hand value of leased
equipment. We also strive to control and minimize credit risk
within the operating assets portfolio through quantitative monitoring of credit risks. Moreover, in instances when a customer’s
credit status has deteriorated and non-payment of leasing fees,
etc., occurs, we work to recover as much as possible of theoutstanding amount through the sale or transfer of leased equipment to other customers.
Furthermore, from the perspective of credit risk management,
we conduct self-assessments of assets in compliance with the
Financial Inspection Manual of the Financial Services Agency,
which is recommended by “Temporary treatment of accounting
and auditing on the application of accounting standard forfinancial instruments in the leasing industry.” (Report No. 1 9 of
the Industry Auditing Committee of the Japanese Institute ofCertified Public Accountants).
As a result, the portion of credit in “doubtful operating receivables and receivables, etc., equivalent to the foregoing” in fiscal
2017 was ¥8,400 million. The Group provides allowance against
100% of this amount and directly reduces the entire amount as
the amount deemed uncollectible.
Nonetheless, depending upon future economic trends, newbad debts caused by the deterioration of the credit status ofcompanies may affect the business performance of the IBJ
Leasing Group.

2018

2017

2018

ASSETS
Current Assets:
Cash and Cash Equivalents (Note 15)
Marketable Securities (Notes 3 and 15)
Lease Receivables and Investments in Lease (Notes 4, 6, 14 and 15)¥

29,607¥

41,563$

278,606

520

44

4,893

823,384

809,304

7,748,039

Receivables (Notes 4, 6 and 15):
Notes and Accounts

363

486

3,423

4,289

4,028

40,360Installment Sales

138,851

138,089

1,306,588

Loans

230,405

205,206

2,168,113

Factoring

125,538

139,749

1,181,313

4,130

3,130

38,863

503,577

490,690

4,738,660

196,860

172,493

1,852,456

Deferred Tax Assets (Note 9)

1,595

1,874

15,010Prepaid Expenses and Other

50,76053,763477,659

Allowance for Doubtful Receivables(2,265)(3,130)(21,321)1,604,039

1,566,603

15,094,002

251,467

236,482

2,366,309

Lease

Other
Total Receivables
Operational Investment Securities (Notes 3, 4, 6 and 15)

Total Current Assets
Property and Equipment:
Leased Assets (Notes 4, 5 and 6)
Accumulated Depreciation(91,366)(95,568)(859,762)

Net Leased Assets

160,100

140,913

1,506,547

Advances for Purchases of Leased Assets

5,858

311

55,131Other Operating Assets (Note 4)

3,941

—

37,086

(52)

—

(492)

Accumulated Depreciation

3,888

—

36,594

4. Risk of Changes to Regulatory Systems

Advances for Purchases of Other Operating Assets

1,873

—

17,630The IBJ Leasing Group provides comprehensive financial
services, mainly leases, rentals, installment sales and loans, inaccordance with current laws and regulations, tax systems andaccounting standards. Significant changes to such regulatory
systems and standards may affect the business performance of
the IBJ Leasing Group.

Own-used Assets

6,315

6,187

59,425

Accumulated Depreciation(3,322)(3,200)(31,265)

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

Net Other Operating Assets

Net Own-used Assets

2,992

2,986

28,160Total Property and Equipment

174,714144,211

1,644,062

Investment Securities (Notes 3, 6 and 15)

21,68020,340204,010Investments in Unconsolidated Subsidiaries
and Associated Companies

8,359

7,907

78,662Long-term Receivables (Note 15)

2,440

3,331

22,968Goodwill

133

168

1,259

Intangible Leased Assets (Note 4)

105

101

993

Deferred Tax Assets (Note 9)

631

975

5,941

Other

9,567

8,987

90,035

Allowance for Doubtful Receivables

(171)

(343)

(1,610)Investments and Other Assets:

Total Investments and Other Assets
Total Assets

42,747

41,469402,258¥ 1,821,501¥ 1,752,284$ 17,140,322

See accompanying Notes to Consolidated Financial Statements.

IBJ Leasing Company, Limited

50

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

Consolidated Statement of Income
IBJ Leasing Company, Limited and Consolidated Subsidiaries
For the year ended March 31, 2018
Thousands of
U.S. dollars (Note 1)

Millions of yen

2018

2017

2018

Current Liabilities:
Short-term Borrowings (Notes 6, 7 and 15)

2018

2017

2018

¥ 399,738¥ 429,405$ 3,761,535

Cost and Expenses

361,541

390,198

3,402,099

Gross Profit

38,197

39,206359,436

Revenues

LIABILITIES and EQUITY¥

805,696$ 7,416,630

202,054

155,509

1,901,328

Lease Payable (Notes 14 and 15)

7,251

7,329

68,234

Selling, General and Administrative Expenses (Note 12)

19,034

21,244

179,117

Accounts Payable - trade (Notes 15 and 20)

54,38353,400511,750

Operating Income

19,162

17,962

180,319

Accrued Expenses

2,669

2,619

25,124

Income Taxes Payable

2,015

1,200

18,965

Deferred Profit on Installment Sales (Note 4)

258

268

2,431

Accruals for Debt Guarantees

27

68

256

25,31819,671

238,246

1,082,143

1,045,764

10,182,964

Long-term Debt (Notes 6, 7 and 15)

546,020531,232

5,138,053

Deposits Received

29,12625,623274,083

2
516
124
445
(308)
(3)
—
586
(16)
—
25

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

26
4,861
1,169
4,190
(2,907)
(28)
—
5,522
(156)
—
239

Income before Income Taxes

20,53518,854

193,235

Income Taxes: (Note 9)
Current
Deferred

5,380
984

5,864
374

50,634
9,263

6,365

6,239

59,897

14,169526¥ 13,643

12,615201¥ 12,414

133,338
4,952
128,386

Current Portion of Long-term Debt (Notes 6, 7 and 15)

Other
Total Current Liabilities

788,165¥

Thousands of
U.S. dollars (Note 1)

Millions of yen

Long-term Liabilities:

Liability for Employees’ Retirement Benefits (Note 8)

2,410

2,533

22,686

Other

7,167

5,375

67,443584,725564,764

5,502,265

Total Long-term Liabilities
Commitments and Contingent Liabilities (Note 10)

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

Total
Equity: (Notes 11 and 19)
Common Stock
Authorized, 140,000,000 Shares;
Issued, 42,649,000 Shares as of March 31, 2018 and 201717,874

Capital Surplus

16,07016,086151,221

Retained Earnings

105,148

94,319989,447

Treasury Stock - at cost
583 shares as of March 31, 2018 and 201717,874

168,196

(1)

(1)

(9)

9,047

8,036

85,138Deferred Gain on Derivatives under Hedge Accounting

141

24

1,335

Foreign Currency Translation Adjustments

621

348

5,852

Defined Retirement Benefit Plans

48

(116)

454

148,951

136,571

1,401,634

5,681

5,183

53,459154,632

141,755

1,455,093¥ 1,821,501¥ 1,752,284$ 17,140,322

Accumulated Other Comprehensive Income:Unrealized Gain on Available-for-sale Securities

Total
Non-controlling Interests
Total Equity
Total Liabilities and Equity

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

Yen

Amounts per Share of Common Stock (Notes 2(w) and 19)
Net Income attributable to Owners of the Parent per Share
Cash Dividends applicable to the fiscal year$

U.S. dollars (Note 1)

2018

2017

2018

¥319.91¥70.00¥291.08¥64.00$3.01$0.66

See accompanying Notes to Consolidated Financial Statements.

See accompanying Notes to Consolidated Financial Statements.

51

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited

52

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Statement of Comprehensive Income

Consolidated Statement of Changes in Equity

IBJ Leasing Company, Limited and Consolidated Subsidiaries
For the year ended March 31, 2018

IBJ Leasing Company, Limited and Consolidated Subsidiaries
For the year ended March 31, 2018
Thousands

Thousands of
U.S. dollars (Note 1)

Millions of yen

2018

Net Income

2017¥ 14,1692018¥ 12,615$ 133,338

Other Comprehensive Income (Loss): (Note 17)

Balance as of April 1, 2016

Unrealized Gain on Available-for-sale Securities

Net Income attributable to
Owners of the Parent

1,020

80

9,600

Deferred Gain on Derivatives under Hedge Accounting

112

171

1,060

Cash Dividends Paid

Foreign Currency Translation Adjustments

126

(526)

1,188

Purchase of Treasury StockDefined Retirement Benefit Plans

169

132

1,591

Share of Other Comprehensive Income (Loss) in Associated Companies

97

(100)

920

Changes in Scope ofConsolidation

1,525

(243)

14,359¥ 15,695¥ 12,372$ 147,697

Total Other Comprehensive Income (Loss)
Comprehensive Income

Owners of the Parent
Non-controlling Interests
See accompanying Notes to Consolidated Financial Statements.

¥ 15,210¥ 12,147$ 143,131

485

224

4,566

Millions of yen
Accumulated Other Comprehensive Income

Number ofshares ofCommonStock
Outstanding

CommonStockCapitalSurplusRetained
Earnings

TreasuryStock42,648¥ 17,874¥ 16,086 ¥ 84,514¥ (0)Unrealized
Deferred Gain Foreign
DefinedGain onon Derivatives Currency Retirement
Availableunder Hedge Translation
Benefitfor-sale
Accounting Adjustments
Plans
Securities¥ 7,956¥ (174)¥ 1,026¥ (249) ¥ 127,033¥ 5,753 ¥ 132,786

12,414

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

(0)

(0)

(50)

(50)

12,414(2,558)(0)(0)

Noncontrolling Total Equity
Interests

Total

(50)

Changes in an Interest in
Subsidiary
Net change during year
Balance as of March 31, 2017

Total Comprehensive Income attributable to:Consolidated Financial Data and Corporate Information

42,648¥ 17,874¥ 16,086 ¥ 94,319

¥ (1)

79

198

(677)

¥ 8,036

¥ 24

¥ 348

132

(266)

(570)

(836)

¥ (116) ¥ 136,571¥ 5,183 ¥ 141,755

Net Income attributable to
Owners of the Parent

13,643

13,643

13,643

Cash Dividends Paid

(2,814)(2,814)(2,814)

(15)

(15)

Purchase of Treasury Stock
Changes in Scope ofConsolidation
Changes in an Interest in
Subsidiary(15)

Net change during year
Balance as of March 31, 2018

42,648¥ 17,874¥ 16,070 ¥ 105,148

¥ (1)

1,011

117

273

¥ 9,047

¥ 141

¥ 621

164

1,566

¥ 48 ¥ 148,951

497

2,064

¥ 5,681 ¥ 154,632

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

Balance as of March 31, 2017
Net Income attributable to
Owners of the Parent
Cash Dividends Paid

CommonStockCapitalSurplusRetained
Earnings

TreasuryStock$ 168,196$ 151,371$ 887,548$ (9)Unrealized
Deferred Gain Foreign
DefinedGain onon Derivatives Currency Retirement
Availableunder Hedge Translation
Benefitfor-sale
Accounting Adjustments
Plans
Securities$ 75,620$  228$ 3,281

Noncontrolling Total Equity
Interests

Total$ (1,095) $ 1,285,140$ 48,774 $ 1,333,914

128,386

128,386

128,386(26,487)(26,487)(26,487)

(150)

(150)

Purchase of Treasury Stock
Changes in Scope ofConsolidation
Changes in an Interest in
Subsidiary(150)

Net change during year
Balance as of March 31, 2018

$ 168,196$ 151,221$ 989,447

$ (9)

9,518

1,107

2,571

$ 85,138$ 1,335$ 5,852

1,549$

14,745454 $ 1,401,634

4,685

19,430$ 53,459 $ 1,455,093

See accompanying Notes to Consolidated Financial Statements.

53

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited

54

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group

Consolidated Statement of Cash Flows
Thousands of
U.S. dollars (Note 1)

Millions of yen

2018

¥

Cash Flows from Investing Activities:
Purchases of Own-used Assets
Proceeds from Sales of Fixed Assets
Purchases of Marketable and Investment Securities
Proceeds from Sales and Redemption of Marketable
and Investment Securities
Proceeds from Sales of Subsidiaries causing Changes
in Scope of Consolidation (Note 18)
Other — net
Net Cash Used in Investing Activities
Cash Flows from Financing Activities:
Net Increase (Decrease) in Short-term Borrowings
Proceeds from Long-term Debt
Repayments of Long-term Debt
Cash Dividends Paid
Other — net
Net Cash Provided by Financing Activities
Foreign Currency Translation Adjustments on Cash andCash Equivalents
Net Decrease in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Decrease in Cash and Cash Equivalents resulting
from Exclusion from Scope of Consolidation
Cash and Cash Equivalents at End of Year

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presenting Consolidated Financial Statements

IBJ Leasing Company, Limited and Consolidated Subsidiaries
For the year ended March 31, 2018

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

Growth Strategy

¥

2017

20,535¥2018

18,854$

193,235(4,565)
11,679
(124)
(445)
—
(1,037)
(40)
(586)
16
—

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

(42,964)
109,904(1,169)(4,190)—(9,759)(385)(5,522)
156—(14,175)(14,931)(24,366)
955(92,767)
57,83450
7,773(74,731)(54,196)(8,855)31,863(75,383)
2,177(138,384)
104,750
21(8,870)(91,954)(73,100)(133,395)(140,504)(229,293)
8,992(872,940)
544,220478
73,147(703,224)(509,989)(1,637)—(825)(1,333)15(1,603)(15,404)—(7,768)

650

61

6,118

—

2,546

—

(284)
(2,096)

(172)
(487)

(2,678)(19,732)

5,643
210,921(169,286)(2,814)(146)
44,317(57,411)295,430(168,793)(2,558)546
67,213

53,106
1,984,770(1,592,981)(26,487)(1,377)417,031

19

(342)

187

(11,955)
41,563(6,716)48,332(112,503)
391,109

—

(52)

—

29,607¥

41,563$

The accompanying consolidated financial statements of IBJ Leasing Company, Limited (“IBJL”) and its consolidated subsidiaries(together with IBJL, “IBJL Group”) have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments
and Exchange Act and its related accounting regulations and in accordance with accounting principles generally accepted in Japan,
which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to thecompany’s financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan.
In addition, certain reclassifications have been made in the 2017 consolidated financial statements to conform to the classifications
used in 2018.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which IBJL is incorporated andoperates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside
Japan and have been made at the rate of ¥106.27 to US$1.00, the approximate rate of exchange at March 31, 2018. The translations
should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any otherrate. The amounts indicated in millions of yen are rounded down by truncating the figures below one million. As a result, totals may not
add up exactly.

2. Summary of Significant Accounting Policies(a) Consolidation
The consolidated financial statements include the accounts of IBJL Group, which include IBJL-TOSHIBA Leasing Company, Limited,
Dai-ichi Leasing Co., Ltd., IBJ Auto Lease Company, Limited, IBJ Leasing (China) Ltd. and PT.IBJ Verena Finance.
The number of consolidated subsidiaries as of March 31, 2018 and 2017 was 26. The number of associated companies accounted
for under the equity method as of March 31, 2018 and 2017 was 3. Investments in associated companies consist of Krung Thai IBJ
Leasing Co., Ltd., Juhachi Sogo Lease Co., Ltd. and PNB-IBJL Leasing and Finance Corporation.
Astro Leasing International Co., Ltd. and 102 other subsidiaries are neither consolidated nor accounted for under the equity
method, as they are acting as operators under Tokumei Kumiai agreements and the leased assets and liabilities do not substantiallybelong to the subsidiaries. Aries Line Shipping S.A. and 26 other subsidiaries are also not consolidated or accounted for under theequity method, as they are immaterial. I-N Information Systems, Ltd. and 2 other associated companies are not accounted for underthe equity method, as they are immaterial.
Upon consolidation, significant intercompany accounts and transactions have been eliminated. In addition, all significant unrealized
profit included in assets resulting from transactions within IBJL Group has also been eliminated.
The accounting standard for consolidated financial statements requires a company to consolidate all subsidiaries where thecompany controls the operations, irrespective of whether or not the company owns a majority of their shares. Control is considered toexist where the company has (a) the power to appoint or remove the majority of the Board of Directors or an equivalent governing body,and/or (b) the power to cast the majority of the votes at a meeting of the Board of Directors or an equivalent governing body.
The excess of the cost of an acquisition over the fair value of the net assets of the acquired subsidiary at the date of acquisition isrecorded as Goodwill and is amortized on a straight-line basis over the estimated benefit period.
Implementation Guidance No. 15, “Implementation Guidance on Disclosures about Certain Special Purpose Entities,” issued by the
Accounting Standards Board of Japan (“ASBJ”) permits companies to avoid consolidation of certain Special Purpose Entities (“SPEs”)
that were established and are being operated for the purpose of securitization of receivables.
IBJL securitizes its lease receivables to diversify its funding sources and ensure stable funding. In the securitization structures, IBJL
uses SPEs that include Tokurei Yugen Kaisha and Kabushiki Kaisha. IBJL transfers the lease receivables to the SPEs in the securitization
structures. The SPEs procure funds, such as borrowings, backed by the transferred assets and these funds flow back to IBJL as sales
proceeds of the transferred assets. IBJL also provides collection services to the SPEs. A portion of the receivables is not transferredand is held by IBJL. These receivables held by IBJL are properly evaluated at the end of the fiscal year, and these are appropriatelyreflected in the consolidated financial statements.
As a result of securitizations, IBJL had 20 SPEs that were not consolidated under Guidance No. 15 as of March 31, 2018 and 2017.
Total assets (simply compiled amount) of such SPEs as of March 31, 2018 and 2017 were ¥120,601 million ($1,134,862 thousand) and¥160,191 million, respectively. Total liabilities (simply compiled amount) of such SPEs as of March 31, 2018 and 2017 were ¥121,161
million ($1,140,129 thousand) and ¥160,806 million, respectively. IBJL owns no voting rights in most of the SPEs while some employeesof IBJL serve as directors.

278,606

See accompanying Notes to Consolidated Financial Statements.

55

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited

56

Consolidated Financial Data and Corporate Information

The total amount of Lease Receivables and Investments in Lease transferred from IBJL to such SPEs in 2018 and 2017 was¥2,109 million ($19,848 thousand) and ¥18,257 million, respectively, with no gain/loss on the transfer of such receivables. IBJL holds
subordinated interests of such transferred receivables of ¥81 million ($765 thousand) and ¥4,615 million in 2018 and 2017, respectively.
IBJL recognized profit dividends of ¥153 million ($1,444 thousand) and ¥46 million, respectively, for the years ended March 31, 2018and 2017, and servicing fees received of ¥1 million ($15 thousand) with respect to the transactions with such SPEs for both of the years
ended March 31, 2018 and 2017. These amounts do not include transactions with SPEs that do not meet the criteria for off-balancesheet transactions, because IBJL treats these asset transfer transactions to the SPEs as financial transactions.

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

Business of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information(h) Property and Equipment
1. Leased Assets
	Leased Property and Equipment are stated at cost and depreciated over the lease term by the straight-line method to the residual
value, which is an amount to be realized at the time when the lease contract is terminated.
2. Other Operating Assets
	Other Operating Assets are stated at cost and depreciated over the estimated useful lives by the straight-line method.
3. Own-used Assets	Own-used Assets of IBJL and its domestic consolidated subsidiaries are stated at cost and depreciated over the following
estimated useful lives mainly by the declining-balance method:
		Buildings
3-65 years
		 Fixtures and furniture
2-20 years(i) Long-lived Assets
IBJL Group reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying amount ofan asset or asset group may not be recoverable. An impairment loss is recognized if the carrying amount of an asset or asset groupexceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual disposition of theasset or asset group. The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its
recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or
the net selling price at disposition.

(j) Intangible Assets

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

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

(d) Lease Accounting(k) Bond Issue Costs

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

Costs for bond issuance are expensed upon payment.

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

(l) Allowance for Doubtful Receivables
Allowance for Doubtful Receivables is provided based on the estimated historical default rate for general trade receivables, and is basedon individual reviews for receivables from doubtful and legally bankrupt creditors.
The amounts of Long-term Receivables considered uncollectible, which include receivables from legally bankrupt creditors, weredirectly written-off. The amounts directly written-off were ¥8,400 million ($79,045 thousand) and ¥8,501 million at March 31, 2018 and2017, respectively.

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

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

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

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

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

57

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited

58

Consolidated Financial Data and Corporate Information

IBJL and certain consolidated subsidiaries account for the liability for retirement benefits based on the projected benefit obligations
and plan assets at the balance sheet date. The projected benefit obligations are attributed to periods on a benefit formula basis.
Actuarial gains and losses that are yet to be recognized in profit or loss are recognized within equity (accumulated other comprehensive
income), after adjusting for tax effects and are recognized in profit or loss over 10 to 15 years no longer than the expected averageremaining service period of the employees. The discount rate is determined using a single weighted-average discount rate reflecting theestimated timing and amount of benefit payment.

Business of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

Derivative financial instruments and foreign currency transactions are classified and accounted for as follows: a) all derivatives arerecognized as either assets or liabilities and measured at fair value, and gains or losses on derivative transactions are recognized in theConsolidated Statement of Income and b) for derivatives used for hedging purposes, if such derivatives qualify for hedge accounting
because of high correlation and effectiveness between the hedging instruments and the hedged items, gains or losses on derivatives
are deferred until maturity of the hedged transactions.
Interest rate swaps that qualify for hedge accounting and meet specific matching criteria are not remeasured at market value, but
the differential paid or received under the swap agreements is recognized and included in interest expense.

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

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

(r) Income Taxes
IBJL and its domestic consolidated subsidiaries are subject to corporate tax, inhabitants’ taxes and enterprise taxes. Deferred income
taxes are recorded by the asset and liability method based on the differences between the tax bases of assets and liabilities and those
as reported in the consolidated financial statements, using enacted tax rates that will be in effect when the differences are expected toreverse.

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

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

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

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

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

(u) Derivatives and Hedging Activities
IBJL Group uses derivative financial instruments to manage its exposures to fluctuations in foreign currency exchange and interest rates.
Interest rate swaps are utilized to manage interest rate risks associated with certain assets and liabilities, including Loans Receivables
and Long-term Debt. Short-term Borrowings is utilized to reduce risks from fluctuations of foreign currency exchange rates associatedwith certain assets including Operational Marketable Securities. Interest rate and currency swaps are utilized to manage interest raterisks as well as foreign currency risks. IBJL Group does not enter into derivatives for trading or speculative purposes.

59

IBJ Leasing Company, Limited

Tax Effect Accounting—On February 16, 2018, the ASBJ issued ASBJ Statement No. 28 “Partial Amendments to AccountingStandard for Tax Effect Accounting”, and ASBJ Guidance No. 26 (revised 2018) Implementation Guidance on Recoverability of Deferred
Tax Assets, which included certain revisions of the previous accounting and auditing guidance issued by the Japanese Institute ofCertified Public Accountants (“JICPA”), when it is relegated from ASBJ to JICPA.
The amended accounting standard and revised guidance change the accounting treatment of timing difference on the investment in
subsidiary. The recoverability judgmental instruction for the first classification category, i.e., the healthiest companies, is also changed.
IBJL Group expects to apply the amended accounting standard and revised guidance effective for the beginning of the fiscal year
ending March 31, 2019, and is in the process of measuring the effects of applying those in future applicable periods.
Revenue Recognition—On March 30, 2018, the ASBJ issued ASBJ Statement No. 29, “Accounting Standard for Revenue
Recognition,” and ASBJ Guidance No. 30, “Implementation Guidance on Accounting Standard for Revenue Recognition.
In May 2014, the International Accounting Standard Board (“IASB”) and the Financial Accounting Standards Board (“FASB”) issued“Revenue from Contracts with Customers”, i.e., IFRS 15 from IASB and Topic 606 from FASB. They are comprehensive accounting
standards for revenue recognition as a consequence of the cooperative development project by the two boards.
ASBJ developed a comprehensive accounting standard for revenue recognition and published it in conjunction with the
Implementation Guidance in the light of the circumstances where IFRS 15 will be applied from the fiscal year starting on and afterJanuary 1, 2018, and Topic 606 will be applied from the fiscal year starting on or after December 15, 2017.
The basic policy of the ASBJ in developing the accounting standard for revenue recognition is, first, to take in the basic principles
of IFRS 15 to be consistent with it and keep comparability. If there are practices that are prevailing in Japan and need to be treateddifferently, then, the ASBJ develops an alternative accounting treatment to the extent it does not harm the comparability of the otheraccounting standard.
IBJL Group expects to apply the accounting standard and guidance for the fiscal year beginning on or after April 1, 2021, and is in
the process of measuring the effects of applying the accounting standard and guidance in future applicable periods.

IBJ Leasing Company, Limited

60

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group3. Marketable Securities, Operational Investment Securities and Investment Securities(2) The total amounts of new contracts for the years ended March 31, 2018 and 2017 were as follows:

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

Millions of yen(1) Available-for-sale Securities whose fair values are readily determinable as of March 31, 2018 and 2017 were as follows:
2018

Available-for-sale Securities
Securities with carrying amounts exceeding acquisition costs
Millions of yen

Thousands of U.S. dollars

2018
Carrying
amountEquity Securities
Bonds
National and Local
Government Bonds
Corporate Bonds
Other
Total

2017

2018

Acquisition
cost

Unrealized
gain

Carrying
amountAcquisition
cost

Unrealized
gain

Acquisition
cost

Unrealized
gain¥ 20,612 ¥ 11,812¥ 8,800¥ 18,701¥ 11,460¥ 7,241 $  193,966 $  111,156$ 82,810

4,000

24

4,049

4,000

104,485 100,061
5,754
5,590
¥ 134,877 ¥ 121,464

4,424
163
¥ 13,412

61,371
5,433¥ 89,555

57,061
5,194¥ 77,715

4,024

Carrying
amount49

37,87237,640232

4,310
983,208
941,576
238
54,14652,604¥ 11,839 $ 1,269,192 $ 1,142,976

41,632
1,542$ 126,216

Securities with carrying amounts not exceeding acquisition costs
Millions of yen

Thousands of U.S. dollars

2018

Equity Securities
Bonds
Corporate Bonds
Other
Total

2017

Carrying
amountAcquisition
cost

Unrealized
loss

Carrying
amountAcquisitioncost¥  752¥  857¥ (105) ¥   356¥   396

1,494
6,129
¥ 8,376

1,500
6,393
¥ 8,751(5)
24,788(263)
1,965¥ (375) ¥ 27,111

24,9002,087¥ 27,383

2018
Unrealized
loss

Carrying
amountAcquisition
cost

Unrealizedloss¥ (39) $ 7,079$ 8,072$  (993)(111)
14,059(121)
57,682¥ (272) $ 78,820

14,11560,163$ 82,350(56)(2,481)$ (3,530)(2)	Proceeds from sales of Available-for-sale Securities for the years ended March 31, 2018 and 2017 were ¥1,165 million ($10,963
thousand) and ¥28 million, respectively. Gross realized gains on these sales were ¥600 million ($5,654 thousand) and ¥21 million forthe years ended March 31, 2018 and 2017, respectively.
(3)	IBJL Group recorded impairment losses on investment securities of ¥16 million ($156 thousand) and ¥162 million for the years
ended March 31, 2018 and 2017, respectively.

4. Operating Assets
As described in Note 13, the classification of reportable segments was changed from this fiscal year. The following information as ofMarch 31, 2017 or for the year ended March 31, 2017 is presented under the new reportable segment.

¥

283,525
87,28559,671
430,482
901,485
3,941¥ 1,335,909

2018

283,415
137,977
54,267475,661
616,366—¥ 1,092,027$ 2,667,971
821,355
561,508
4,050,834
8,482,977
37,086$12,570,897¥(*1)	The amount of Installment Sales represents “Installment Sales Receivables” less “Deferred Profit on Installment Sales”.

5. Investment Property
IBJL and certain domestic consolidated subsidiaries own certain rental properties such as commercial facilities with land in Tokyo andother areas. Net rental income for these rental properties for the years ended March 31, 2018 and 2017 was ¥2,755 million ($25,930
thousand) and ¥2,993 million, respectively. Rental income and operating expenses are mainly recognized as “Revenues” and “Cost andExpenses”, respectively.
Gain on sales of rental properties for the years ended March 31, 2018 and 2017 was ¥564 million ($5,308 thousand) and ¥1,018
million, respectively. Proceeds from sales of rental properties and costs are recognized as “Revenues” and “Cost and Expenses”,
respectively, otherwise net gain on sales is recognized as “Other Income (Expense)”.
The carrying amounts, changes in such balances and market prices of such properties are as follows:
Millions of yen
Carrying Amount

Fair Value

April 1, 2017

Increase

March 31, 2018

March 31, 2018

¥ 95,653¥ 16,779¥ 112,432¥ 118,507

Millions of yen
Carrying Amount

Fair Value

April 1, 2016

Increase

March 31, 2017

March 31, 2017

¥ 87,208¥ 8,445¥ 95,653¥ 99,310

March 31, 2018

March 31, 2018

$ 1,057,988$ 1,115,151

Thousands of U.S. dollars
Carrying Amount

April 1, 2017

Increase$ 900,096$ 157,892

Fair Value(*1) Carrying amount recognized in the Consolidated Balance Sheets is net of accumulated depreciation.
(*2)	“Increase” for the years ended March 31, 2018 and 2017 primarily represents the acquisition of certain properties for ¥74,667 million ($702,624 thousand) and ¥105,012
million, respectively.
(*3) Fair values of properties are mainly determined by appraisal reports issued by real estate appraisers.

6. Pledged Assets(1) Operating Assets as of March 31, 2018 and 2017 consisted of the following:
Millions of yen

2018

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

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

Thousands of U.S. dollars

2017

Thousands of U.S. dollars

2017

Assets pledged as collateral as of March 31, 2018 were as follows:

2018

Millions of yen

2018

¥

823,384
160,206
138,592
1,122,183
556,933
3,888¥ 1,683,005(*1)	The amount of Installment Sales represents “Installment Sales Receivables” less “Deferred Profit on Installment Sales”.

¥

809,304
141,014
137,820
1,088,139
520,579—¥ 1,608,718$ 7,748,039
1,507,540
1,304,157
10,559,736
5,240,745
36,594$ 15,837,075

Lease Receivables and Investments in Lease
Loans Receivables
Operational Investment Securities
Leased Assets
Investment Securities
Total¥ 14,307
4,053
1,217
12,5671¥ 32,147

2018

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

IBJ Leasing Company, Limited

2018$ 134,629
38,144
11,459118,25916$ 302,507

Liabilities secured by the above assets as of March 31, 2018 were as follows:
Millions of yen

61

Thousands of U.S. dollars¥ 1,000
2,060
24,190¥ 27,250

Thousands of U.S. dollars

2018$   9,410
19,388
227,632$ 256,430

IBJ Leasing Company, Limited

62

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group

7. Short-term Borrowings and Long-term Debt

(2) The changes in plan assets for the years ended March 31, 2018 and 2017, were as follows:

Growth Strategy

Non-financial Assets for Supporting GrowthMillions of yen(1) “Short-term Borrowings” as of March 31, 2018 and 2017 was as follows:
Millions of yen

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

Thousands of U.S. dollars

Weighted averageinterest rate

2018

2018

2017

2018

¥ 270,743¥ 312,715$ 2,547,696

0.66%

453,800
63,621¥ 788,165

433,800
59,180¥ 805,696

4,270,255
598,679$ 7,416,630

0.05%
0.16%

¥ 20,000¥$

182,054¥ 202,054—
155,509¥ 155,509

188,200

0.151~0.175%

1,713,128

0.57%$ 1,901,328(2) “Long-term Debt” as of March 31, 2018 and 2017 was as follows:
Millions of yen

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

2018

2017

¥ 38,000¥ 58,000

466,824
41,196¥ 546,020

Thousands of U.S. dollars

Weighted averageinterest rate

2018

2018

$

357,5800.21~0.38%

455,3124,392,812

0.72%

17,919¥ 531,232

387,661$ 5,138,053

0.30%(*1)	IBJL Group has entered into overdraft contracts with 63 and 65 financial institutions that provide IBJL Group with credit facilities amounting to ¥928,137 million ($8,733,763
thousand) and ¥901,516 million as of March 31, 2018 and 2017, respectively. The unused facilities maintained by IBJL Group as of March 31, 2018 and 2017 amounted to¥676,567 million ($6,366,495 thousand) and ¥602,724 million, respectively.
(*2)	“Payables under securitized lease receivables” is a type of financing based on the law for the regulation of specific claims. The lease receivables sold under this law as ofMarch 31, 2018 and 2017 were ¥126,554 million ($1,190,879 thousand) and ¥86,359 million, respectively.
(*3) The aggregate annual maturities of “Long-term Debt” as of March 31, 2018 were as follows:
Millions of yen

Thousands of U.S. dollars

Years Ending March 31

2018

2018

2020
2021
2022
2023
2024 and thereafter
Total¥ 189,264
129,210
77,49965,427
84,618¥ 546,020$ 1,780,978
1,215,869
729,271615,671796,264$ 5,138,053

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

Thousands of U.S. dollars

2018

2017

2018

¥ 3,831
34
201
177
(148)
—
¥ 4,095¥ 3,726
54
133
219
(217)
(85)
¥ 3,831$ 36,051
321
1,895
1,668
(1,401)—$ 38,534(3)	Reconciliation between the liability recorded in the Consolidated Balance Sheet and the balances of defined benefit obligation andplan assets as of March 31, 2018 and 2017:
Millions of yen

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

Thousands of U.S. dollars

2018

2017

2018

¥ 4,113(4,095)18
2,392¥ 2,410¥ 4,014(3,831)183
2,349¥ 2,533$ 38,708(38,534)
174
22,512$ 22,686

Millions of yen

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

Thousands of U.S. dollars

2018

2017

2018

¥

¥

$

—
2,410
¥ 2,410—2,533¥ 2,533

Millions of yen

2018

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

Thousands of U.S. dollars

2017

¥ 362
25
(34)
9
¥ 362

¥ 369
25
(54)
39
¥ 379

Actuarial gains
Total

Thousands of U.S. dollars

2017

¥ 243
¥ 243

¥ 191
¥ 191

Millions of yen(1) The changes in defined benefit obligation for the years ended March 31, 2018 and 2017, were as follows:

2018
Thousands of U.S. dollars

2018

2017

2018

¥ 6,364
362
25
(33)
(212)
—
¥ 6,505¥ 6,550
369
25
(36)
(422)
(121)
¥ 6,364$ 59,891
3,408
237
(313)
(2,003)—$ 61,2202018$ 2,295$ 2,295(6)	Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect of defined retirement benefit
plans as of March 31, 2018 and 2017, were as follows:

Defined benefit plan
Millions of yen$ 3,408
238
(321)
88
$ 3,413(5)	Amounts recognized in other comprehensive income (before income tax effect) in respect of defined retirement benefit plans for theyears ended March 31, 2018 and 2017, were as follows:
Millions of yen

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

2018(*1) Service cost includes retirement benefits expenses of certain consolidated subsidiaries that use the simplified method.

2018

Outline of plans—
22,686$ 22,686(4) The components of net periodic benefit costs for the years ended March 31, 2018 and 2017, were as follows:

8. Retirement and Pension Plans

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

Consolidated Financial Data and Corporate Information

Unrecognized actuarial gains (losses)
Total

¥ 49
¥ 49

Thousands of U.S. dollars

2017¥ (194)¥ (194)

2018

$ 462
$ 462

(*1)	Certain consolidated subsidiaries that have lump-sum severance payment plans use the simplified method in determining the projected benefit obligations.

63

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited

64

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing GroupNon-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

Balance reported on the Consolidated Balance Sheets:(7) Plan assets as of March 31, 2018 and 2017:a. Components of plan assets
		 Plan assets consisted of the following:

Millions of yen

Domestic debt investments
Domestic equity investments
Foreign debt investments
Foreign equity investments
Insurance assets (general account)
Others
Total

2018

2017

18.4%
23.7
7.6
19.4
28.1
2.8
100.0%

17.1%
24.7
6.2
19.7
29.4
2.9
100.0%

b. Method of determining the expected rate of return on plan assets		The expected rate of return on plan assets is determined considering the long-term rates of return that are expected currently
and in the future from the various components of the plan assets.
(8) Assumptions used for the years ended March 31, 2018 and 2017, are set forth as follows:
Discount rate
Expected rate of return on plan assets
Expected rate of future salary increases

2018

2017

0.30 - 0.47%
0.89%
4.01 - 9.27%

0.30 - 0.47%
1.50%
4.01 - 9.27%

Defined contribution plan
IBJL Group’s contributions to the defined contribution retirement plan for the years ended March 31, 2018 and 2017, were ¥59 million($555 thousand) and ¥58 million, respectively.

9. Income Taxes
IBJL and certain consolidated subsidiaries are subject to a number of taxes based on income, which, in the aggregate, resulted in anormal effective statutory tax rate in Japan of approximately 30.9% for the years ended March 31, 2018 and 2017.
Deferred Tax Assets and Liabilities consisted of the following:

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

Thousands of U.S. dollars

2018

2017

2018

¥ 1,595
631¥ 1,874975$ 15,010
5,941

(980)
¥ 1,245(11)¥ 2,839(9,228)$ 11,723

A reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying
consolidated statement of income for the year ended March 31, 2017, was as follows:
2017

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

30.9%
0.2
0.5
0.1
0.2
1.2
33.1%

	Such information for the year ended March 31, 2018 is not presented as the difference is less than 5% of the effective statutory
tax rate.

10. Commitments and Contingent Liabilities(1) Commitments
	IBJL had loan commitment agreements as of March 31, 2018 and 2017 of ¥6,063 million ($57,058 thousand) and ¥4,562 million,
respectively. The loans provided under these credit facilities as of March 31, 2018 and 2017 amounted to ¥4,947 million ($46,552
thousand) and ¥2,606 million, respectively. Many of these facilities expire without being utilized and the related borrowings are
subject to periodic reviews of the borrowers’ credibility. Any unused amount will not necessarily be utilized in full.
(2) Contingent Liabilities
Contingent Liabilities as of March 31, 2018 were as follows:

Thousands of U.S. dollars

Millions of yen

2018

2017

2018

2018

Deferred Tax Assets:
Allowance for Doubtful Receivables
Depreciation
Liability for Employees’ Retirement Benefits
Write-off of Securities
Accrued Enterprise Tax
OtherDeferred Tax Assets Subtotal
Valuation Allowance
Total Deferred Tax Assets¥ 1,194
550
435
213
169
3,568
6,131
(332)
5,799

¥ 2,447
592
397
222
98
3,383
7,142
(350)
6,791

$ 11,237
5,179
4,094
2,011
1,595
33,58357,699(3,128)54,571

Deferred Tax Liabilities:
Net unrealized gain on Available-for-sale Securities
Investments in Lease
Other
Total Deferred Tax Liabilities(3,938)(192)(422)(4,553)(3,488)(223)(240)(3,952)(37,065)(1,809)(3,974)(42,848)¥ 1,245¥ 2,839$ 11,723

Millions of yen

Net Deferred Tax Assets

65

Growth Strategy

IBJ Leasing Company, Limited

Guarantee Obligations with respect to operating activities (*1)
Other Guarantee Obligations
Total¥ 11,282
11,431¥ 22,713

Thousands of U.S. dollars

2018$ 106,169
107,566$ 213,735(*1) The amount includes bank loans and trade receivables provided by Mizuho Bank, Ltd. and others, which are guaranteed by IBJL.

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

IBJ Leasing Company, Limited66

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group(b) Increases / decreases and transfer of common stock, reserve and surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component ofretained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon
the payment of such dividends until the total of the aggregate amount of legal reserves and additional paid-in capital equals 25% ofcommon stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserves may be reversed without
limitation. The Companies Act also provides that common stock, legal reserves, additional paid-in capital, other capital surplus andretained earnings can be transferred among the accounts within equity under certain conditions upon resolution of the shareholders.
(c) Treasury stock and treasury stock acquisition rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of theBoard of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders
which is determined by a specific formula.

12. Selling, General and Administrative Expenses
Major components of Selling, General and Administrative Expenses were as follows:
Millions of yen(Reversal)/provision for Doubtful Receivables(Reversal)/accruals for Debt Guarantees
Salaries and Wages
Provision for Bonus Payments
Provision for Bonus Payments to Directors
Retirement Benefits Costs for Employees

Thousands of U.S. dollars

2018

2017

2018

¥ (746)
(40)
7,203
784
67
421

¥ 1,529
37
7,501
572
62
438

$ (7,021)(385)
67,787
7,384
635
3,968

13. Segment Information
Under ASBJ Statement No. 17, “Accounting Standard for Segment Information Disclosures,” and ASBJ Guidance No. 20, “Guidanceon Accounting Standard for Segment Information Disclosures,” an entity is required to report financial and descriptive information about
its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specified
criteria. Operating segments are components of an entity whose separate financial information is available and such information
is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.
Generally, segment information is required to be reported on the same basis as is used internally for evaluating operating segment
performance and deciding how to allocate resources to operating segments.
(1) Description and revision of reportable segments
	The reportable segments of IBJL Group are those for which separate financial information is available and regular evaluation by IBJL
management is being performed in order to decide periodically how resources are allocated among the IBJL Group.
		 IBJL Group provides total financial services such as leasing business, installment sales and loan business to a wide range ofcustomers from large companies to small and medium-sized companies. IBJL Group has three business segments based on its
services: “Leasing and Installment Sales”, “Finance” and “Other”.
		 “Leasing and Installment Sales” segment represents leasing business for industrial machinery, transportation equipment andinformation-related equipment (including sales of subject properties upon expiration or cancellation of lease agreements) andinstallment sales business. “Finance” segment represents loan business, factoring business and securities business which invests insecurities that are held for the purpose of generating operational revenues. “Other” segment represents buying and selling of usedproperties business and sales of solar power business etc.
		 From this fiscal year, “Leasing” segment and “Installment Sales” segment, which had been presented separately, are integrated
and converted into “Leasing and Installment Sales” segment. Also, a management business of Operational Security, which had
been included in “Other” segment, is separated from “Other” segment, and integrated to “Loans” segment which had been reported
separately and converted into “Finance” segment. The segment information for the year ended March 31, 2017 was reclassified andpresented under the new reportable segment.

Growth Strategy

Non-financial Assets for Supporting Growth(3)	The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “Summary of Significant
Accounting Policies”.
		 Information about sales, profit, assets, liabilities and other items for the years ended March 31, 2018 and 2017 was as follows:
Millions of yen

2018
Reportable segment
Leasing andInstallment Sales

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

Finance

386,007372
386,379
370,855
15,524¥ 12,510
337
12,8484,884¥ 7,963¥ 1,220
107
1,327
934
¥ 393

¥

¥ 1,199,470¥ 609,459¥ 8,692

10,11992,767

—
—

—
—

¥

Reconciliations (*1) (*2) (*3)

—
(817)
(817)
3,901
¥ (4,718)¥¥ 1,817,622¥ 3,879¥ 1,821,501

10,11992,767

1,544
1,637

11,664
94,404¥

399,738817
400,555
376,674
23,881¥

Consolidated (*4)¥

399,738—
399,738
380,575
19,162Millions of yen

2017
Reportable segment
Leasing andInstallment Sales

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

Finance

Total

Other

416,594411
417,005
401,235
15,770¥ 11,438
269
11,708
5,567¥ 6,140¥ 1,372
95
1,468
1,000
¥ 467

¥

¥ 1,167,914¥ 559,170¥ 4,063

9,105
138,384

—
—

—
—

¥

Reconciliations (*1) (*2) (*3)

—
(777)
(777)
3,639
¥ (4,416)¥¥ 1,731,148¥ 21,136¥ 1,752,284

9,105
138,384

1,785
1,333

10,891
139,717¥429,405
777
430,182
407,803
22,378¥

Consolidated (*4)¥

429,405—
429,405
411,443
17,962Thousands of U.S. dollars

2018
Reportable segment
Leasing andInstallment Sales

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

Finance

Other

Total

Reconciliations (*1) (*2) (*3)

Consolidated (*4)

$ 3,632,326
3,504
3,635,830
3,489,748$
146,082$ 11,489
1,008
12,497
8,795$ 3,702$ 3,761,535
7,692
3,769,227
3,544,505$
224,722$$

117,720
3,180
120,900
45,96274,938—(7,692)(7,692)
36,711$ (44,403)$ 3,761,535—
3,761,535
3,581,216$
180,319$ 11,287,011$ 5,735,012$ 81,795$ 17,103,818$ 36,504$ 17,140,322

95,227872,940————

95,227872,940

14,537
15,404

109,764
888,344(*1) The details of Reconciliations to Segment Profit for the years ended March 31, 2018 and 2017 were as follows:
Millions of yen

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

IBJ Leasing Company, Limited

Total

Other

(2) Methods of measurement for the amounts of sales, profit, assets, liabilities and other items for each reportable segment

67

Consolidated Financial Data and Corporate Information

Thousands of U.S. dollars

2018

2017

2018

¥

¥

$ (2,412)(41,991)$ (44,403)(256)(4,462)¥ (4,718)(287)(4,129)¥ (4,416)

IBJ Leasing Company, Limited

68Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group(*2) The details of Reconciliations to Segment Assets as of March 31, 2018 and 2017 were as follows:
Millions of yen

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

Thousands of U.S. dollars

2018

2017

¥ (29,865)
33,744¥ 3,879¥ (11,786)
32,922¥ 21,136

Growth Strategy

Non-financial Assets for Supporting Growth(2)	Maturities of Lease Receivables for finance leases that were deemed to transfer ownership of the leased property to the lessee wereas follows:

2018

Millions of yen$ (281,034)
317,538$ 36,504

2018(*3) ‌Reconciliations of “Depreciation and Amortization” and “Capital Expenditure” are related to corporate assets not allocated to thereportable segments.
(*4) Segment Profits are reconciled to Operating Income in the Consolidated Statement of Income.
(4) Information about Geographical Areas
Property and Equipment

2019
2020
2021
2022
2023
2024 and thereafter
Total

Millions of yen

North America / Latin America

Asia

Total

¥ 126,555¥ 17,392¥ 263¥ 144,211(*1) Assets are classified by country or region based on the location of IBJL and consolidated subsidiaries.
(*2) Information by geographic segment of Property and Equipment for the year ended March 31, 2018 is not presented as domestic assets exceeded 90% of all segments.
(*3) Information by geographic segment of Sales for the years ended March 31, 2018 and 2017 is not presented as domestic sales exceeded 90% of all segments.

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

2017
Reportable segment

Impairment loss

¥ 39

¥—

Total

Other

¥—

Reconciliations

Consolidated

¥—

¥39

¥ 39

Not applicable for the year ended March 31, 2018

2019
2020
2021
2022
2023
2024 and thereafter
Total$ 204,789
151,524
118,913
90,29349,152
99,096$ 713,767

Thousands of U.S. dollars

2018

2018

¥ 233,575
175,171
130,838
85,58646,022
106,552¥ 777,746$ 2,197,945
1,648,365
1,231,188805,365
433,074
1,002,654$ 7,318,591

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

Due within one year
Due after one year
Total(6) Goodwill per reportable segment:
Not applicableThousands of U.S. dollars

2018

2017

¥ 48,099
96,358¥ 144,458¥ 41,609
84,463¥ 126,073

2018$452,618
906,733$ 1,359,351

Sub-lease transactions

14. Lease Transactions

Among the receivables and obligations relating to the sub-lease transactions, the amounts before deducting interest equivalents andincluded in the Consolidated Balance Sheet as of March 31, 2018 and 2017 were summarized as follows:

Operating Leases as lessee
The minimum rental commitments under non-cancellable operating leases at March 31, 2018 and 2017 were as follows:
Millions of yen

2018

Due within one year
Due after one year
Total

2018

¥ 21,762
16,102
12,636
9,595
5,223
10,530¥ 75,852

2017
Japan

FinanceThousands of U.S. dollars(3)	Maturities of Investments in Lease for finance leases that were deemed not to transfer ownership of the leased property to thelessee were as follows:

Millions of yen

Leasing andInstallment Sales

Consolidated Financial Data and Corporate Information

2017

¥ 6
8
¥ 15

Millions of yen

Thousands of U.S. dollars

¥ 8
11
¥ 20

2018

$ 63
80
$ 143

Lease Receivable
Investments in Lease
Lease Payable

Thousands of U.S. dollars

2018

2017

2018

¥ 1,082
5,933
7,223

¥ 1,650
5,483
7,187

$ 10,182
55,832
67,97015. Financial Instruments and Related Disclosures
Finance Leases as lessor(1) The net investments in lease were summarized as follows:
Millions of yen

Lease contract receivables
Estimated residual value
Interest income equivalents
Total

69

IBJ Leasing Company, Limited

Thousands of U.S. dollars

2018

2017

2018

¥ 777,746
1,468(28,707)¥ 750,508¥ 769,756
1,744(28,207)¥ 743,293$ 7,318,591
13,822(270,137)$ 7,062,276(1) Policy for financial instruments
	IBJL Group provides comprehensive financial services, including leasing, installment sales and loans. From the perspective offinancial stability, IBJL Group diversifies its funding sources. In addition to the indirect funding from financial institutions, IBJL Grouputilizes direct funding such as issuing bonds, commercial paper and securitization of lease receivables. Further, IBJL Group has anintegrated Asset-Liability Management (ALM) program. Derivatives are used to avoid fluctuation risks such as interest rates and tosecure stable profits.
(2) Nature and extent of risks arising from financial instruments
	Financial assets held by IBJL Group mainly consist of lease receivables and investments in lease, installment sales receivables,
loans receivables, and factoring receivables mainly due from domestic business companies. These assets are exposed to the credit
risks triggered by a contractual default of a counterparty to the transactions. In the case of deterioration in the credit conditionsof counterparties caused by a change in economic conditions or the environment, it is possible that the repayment of obligations
under the contract may not be performed. Marketable securities and investment securities, which are mainly comprised of stocks,
bonds, preferred equities and investments in partnerships, are exposed to market price fluctuation risks if they are exchange-traded

IBJ Leasing Company, Limited70

Consolidated Financial Data and Corporate Informationin addition to the credit risk of issuers. Transactions related to real estate finance are exposed to the risk of price fluctuations in thetargeted real estate.
		 Borrowings, bonds and commercial paper are exposed to the interest rate fluctuation risk for floating interest rate funding, andthe liquidity risk that ready access to funds may not be available due to a change in the financial market environment. An ALM
analysis is employed in order to make stable profit as well as to manage these funding risks.
		 Derivative transactions are mainly composed of interest rate swaps arranged as a part of ALM. IBJL Group enters into interest
rate swap transactions as a hedging instrument and applies hedge accounting to the interest rate fluctuation risk associated withinterest bearing debt such as bank loans. It is IBJL Group’s policy to utilize hedge transactions within the limit of the debt amount to
reduce interest rate risks and to improve cash flow from financial activities. The effectiveness of the hedge transactions are assessedby comparing the changes in the market price and cumulative cash flows between the hedging instrument and the hedged itemfrom the beginning of the hedge to the time of assessment.
		 IBJL Group also utilizes derivative transactions such as foreign currency forward contracts and interest and currency swaps etc.
to control the level of the risk associated with the assets and liabilities denominated in foreign currencies.
(3) Risk management for financial instruments(a) Integrated risk management
	IBJL Group places an extremely high priority on integrated monitoring and control of total financial risks, including credit risks andmarket risks which consist of interest rate risk and share price fluctuation risk. Thus, IBJL Group incorporates an integrated risk
management system into its management policy in order to improve the stability of the business. Specifically, IBJL Group manages
various quantified risks in an integrated fashion to control the total risk under a certain level of net equity (business capacity) of thecompany. In addition, a risk analysis is performed monthly, the results of which are reported to the Board of Directors.
(b) Credit risk management
	IBJL Group aims to minimize credit costs by optimizing its credit management structure at all stages of each transaction, fromentrance to exit to manage the credit risks of business partners.
		 Firstly, at the initial stage of deal execution, IBJL Group assigns a credit rating to each debtor under its client credit rating
system and conducts a strict credit screening, makes judgments on contract arrangements based on the prospects of future valueof leasing assets and, from the perspective of the avoidance of excessive concentrations of credit, IBJL Group monitors its credit
administration ceiling by using its credit rating monitoring systems. Any large contract or matter requiring complex risk judgment
requires the deliberation and the decision by the Credit Committee which enhances the risk control process. When offering newservices or new products, IBJL Group thoroughly reviews the identification and evaluation of inherent risks through the Risk Control
Committee.
		 And next, as an ongoing management measure IBJL Group provides necessary write-offs or allowances in accordance withthe self-assessment rules for assets conforming to the financial inspection manual published by the Financial Services Agency,
as recommended by “Temporary treatment of accounting and auditing on the application of accounting standard for financial
instruments in the leasing industry”. Furthermore, regarding credit risk management for the portfolio as a whole, through thequantification of the volume of the risk based on the credit rating of business customers, IBJL Group endeavors to minimize credit
costs. Also, IBJL Group periodically follows up on non-performing assets and performs debt collection of assets for which IBJL
Group has already provided reserves to facilitate final disposal of non-performing assets.
(c) Market risk management
	IBJL Group establishes basic policies (e.g., funding policy, setting commercial paper program, hedging policy, securities trading
policy) at the Board of Directors that are designed based on market environments and financial strength meeting to control risks
in line with financial operations. In addition, monthly ALM operating policies based on these basic policies, position limits, and loss
limits, etc., are determined on a monthly basis at the PM · ALM Committee, and IBJL Group strives to maintain stable earnings bycontrolling risk factors. Also, with regard to market transactions, in order to maintain a mutual check system, IBJL Group separately
established the risk control department that is independent from departments that are responsible for executions or for approval ofdelivery settlement.
		 (i) Interest rate risk management
		In order to manage interest rate risk, IBJL Group monitors the matching ratio (i.e., proportion of assets that is not exposed tointerest rate risk without allocation of the matching fixed/floating interest bearing debt to entire assets) under ALM. Also, IBJL
Group quantifies the interest rate and maturity of financial assets and liabilities based on *BPV (Basis Point Value). IBJL Groupanalyzes and monitors them using statistical techniques such as *VaR (Value at Risk).
			 In addition, compliance with the internal rules etc. is managed by the risk control department.

71

IBJ Leasing Company, Limited

Business of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information			 Sensitivity to interest rate (10BPV) interest rate risk volume (VaR) figures in IBJL Group as of March 31, 2018 and 2017, are
as shown below. The Internal Models Approach applied to measure VaR is based on the assumption that past price fluctuations
follow a normal distribution and the model calculates variance and covariance, based on which IBJL Group estimates maximum
losses statistically (variance/covariance method).
Millions of yen

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

Thousands of U.S. dollars

2018

2017

2018

¥ (2,550)¥ 1,350¥ (2,480)¥ 3,030$ (23,995)$ 12,703

			 The VaR measurement method is as follows:				Variance-covariance model for linear risk
Quantitative criteria:				(1) Confidence interval: 99%;				 (2) Holding period of 1 month; and				 (3) Historical observation period of one year
		 (ii) Price fluctuation risk management of securities such as stock		Relating to the price fluctuation risk of securities, the risk control department captures the volume of the risk using the VaR. In
addition, it monitors the status of compliance with our internal rules.
			 The VaR measurements in IBJL Group as of March 31, 2018 and 2017, are shown below. To measure the VaR, IBJL Group
created a model that shows the price fluctuation of each stock based on the stock price index fluctuation. IBJL Group adopted
the stock price fluctuation model that sets the stock price index fluctuation ratio represented by the risk factor of general market
risk. Also, the inherent fluctuation portion of each stock that is unable to be shown by the stock price index is set as a risk factor
of individual risk in our model.
Millions of yen

2018

Price variation risk of stock (VaR)

Thousands of U.S. dollars

2017

¥0

2018

¥0

$0

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

			 The VaR measurement method is as follows:				Quantitative criteria:				(1) Confidence interval: 99%;				 (2) Holding period of 1 month; and				 (3) Historical observation period of one year.
		The market price at the measurement date is employed for marketable securities. The moving-average acquisition costs or theamortized costs are used for other securities. General market risk (risk of suffering losses due to stock market movement) andindividual risk (price variance risk due to factors associated with the issuer of stock) are calculated and combined. Individual risk
for non-marketable securities is calculated assuming a fluctuation ratio of 8%.
		 (iii) Derivative transactions
		The derivative transactions carried out by IBJL Group mainly consist of interest rate swaps, entered as a part of ALM, tohedge the interest rate risks. The operating policy of hedging is determined at the monthly PM · ALM Committee to control
the interest rate risk. Also, from an operational control perspective, in order to ensure a proper review function, IBJL Group
has an organizational structure whereby the transaction execution department is clearly separated from the market risk control
department, which is responsible for evaluation of the effectiveness of hedging transactions, and the operations department,
which is responsible for delivery settlement. For the use of derivative transactions, IBJL Group enters into such transactions onlywith major financial institutions in order to mitigate counterparty risk.
(d) Other price fluctuation risk management
	The risk mainly consists of real estate price fluctuation risks for specified bonds, preferred shares, investments in partnerships andnon-recourse loans relating to a real estate finance vehicle. The risk is managed by estimating the fair value of real estate at exit andmonitoring the quantified risk for loss of principal.
(e) Liquidity risk management
	IBJL Group manages liquidity risk by diversifying the method of funding and balancing its long-term and short-term funding needs,
depending upon the market environment.
IBJ Leasing Company, Limited

72

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group(4) Supplemental explanation for quantitative information concerning market risk
	Because quantitative information concerning market risk is based on statistical assumptions, the quantitative information may differ
depending upon the quantitative basis and measurement method assumed. Also, the quantitative information is a statistical result
based on certain assumptions. It is not intended to show the expected maximum losses. Because future market conditions may
differ considerably from past conditions, there are many limitations on the quantitative data that is estimated using observation
values of past data.
(Glossary)*BPV:	BPV is one of the interest rate risk indices indicating the change in present value of subject assets or liabilities given a basis
point (0.01%) change in interest rates. IBJL Group adopts 10 basis points (0.1%) as the basis for change of value.
*VaR:	VaR is a technique for estimating the probable maximum portfolio losses as a volume of risk when the market is affected
adversely based on the statistical analysis of historical data under a given time and probability (99% one-sided confidence
interval).
(5) Supplemental explanation for fair values of financial instruments
	Fair values of financial instruments are based on the quoted prices in active markets. If a quoted price is not available, anotherrational valuation technique is used instead. Such prices have been calculated using certain assumptions, and may differ if
calculated based on different assumptions.
(a) Fair values of financial instruments
Millions of yen

2018

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

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

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

29,607

Fair value¥

29,6072017
Unrealized
gain (loss)¥—

Carrying
amount¥41,563

Fair value¥

41,563

Unrealized
gain (loss)¥—

143,253

143,253—

116,666

116,666—

808,601

831,478

22,877

797,650

816,496

18,846

138,472
229,707
125,118
2,281¥ 1,477,042

141,124
241,234
126,266
2,281¥ 1,515,246

2,652
11,527
1,148—¥ 38,204

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

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

2,795
10,9001,644—¥ 34,187

788,1657,251
54,383748,074¥ 1,597,875¥

788,166
7,240
54,321
748,665¥ 1,598,393

¥

0
(10)
(62)
590
518

¥

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

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

¥

¥

¥

¥

—
—
—

¥

¥

¥

¥

316
(8)
308

¥

316
(8)
308

¥

¥

¥

136
(5)
131

¥

136
(5)
131

¥

¥

(26)
52
(90)
382
318
—
—
—

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

Thousands of U.S. dollars

2018

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

278,606

Fair value$

278,606

Unrealized
gain (loss)$—

1,348,012

1,348,012—

7,608,934

7,824,207

215,273

1,303,021
2,161,546
1,177,366
21,471$ 13,898,956

1,327,980
2,270,016
1,188,171
21,471$ 14,258,463

24,959108,470
10,805—$ 359,507

Short-term Borrowings
Lease Payable
Accounts Payable — tradeLong-term Debt (*7) (*8)
Liabilities total$ 7,416,630
68,234
511,750
7,039,381$ 15,035,995$ 7,416,637
68,132
511,1627,044,940$ 15,040,871$$

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

$

$

$

$

2,982
(77)
2,905

$

2,982
(77)
2,905

$

7
(102)
(588)
5,559
4,876
—
—
—

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

	Methods for determining the fair values of financial instruments are as follows:				(a) Cash and Cash Equivalents
The carrying values of bank deposits approximate fair values because of their short maturities.

		 (b) Marketable Securities, Operational Investment Securities and Investment Securities		The fair values of securities are measured at the quoted market price of the stock exchange for the equity instruments. The
fair values of bonds are measured at the quoted price obtained from the financial institution for the debt instruments, or are
determined by discounting the future cash flows, by credit risk categories for risk management, at an appropriate benchmark
rate such as an interbank market rate plus a credit spread. Fair value information for securities by classifications is included in
Note 3. Marketable Securities, Operational Investment Securities and Investment Securities.
		 (c) Lease Receivables and Investments in Lease		The fair values of Lease Receivables and Investments in Lease are principally determined by discounting the future cash flows(lease payments received less maintenance fees), by credit risk categories for risk management, at an appropriate benchmark
rate such as an interbank market rate plus a credit spread.
		 (d) Installment Sales Receivables		The fair values of Installment Sales Receivables are determined by discounting the future cash flows, by credit risk categories forrisk management, at an appropriate benchmark rate such as an interbank market rate plus a credit spread.
		 (e) Loans Receivables and Factoring Receivables		The fair values of Loans Receivables and Factoring Receivables are determined by discounting the future cash flows, by credit
risk categories for risk management, at an appropriate benchmark rate such as an interbank market rate plus a credit spread.

73

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited

74

Consolidated Financial Data and Corporate Information

		 (f) Long-term Receivables		The carrying values of Long-term Receivables at the balance sheet date (net of Allowance for Doubtful Receivables)
approximate fair values, because the Allowance for Doubtful Receivables is determined based on the amount that is expected
to be recovered from collateral and guarantees.
		 (g) Short-term Borrowings
		 Short-term Borrowings from banks and other financial institutions
		The fair values of Short-term Borrowings from banks and other financial institutions are measured at the amount of principal
plus interest to be paid at maturity discounted at an appropriate benchmark rate such as an interbank market rate plus a credit
spread.
		Commercial Paper
		The fair values of Commercial Paper are measured at the amount of principal plus interest to be paid at maturity discounted at
an appropriate benchmark rate such as an interbank market rate plus a credit spread.
		 Payables under Securitized Lease Receivables		The fair values of Payables under Securitized Lease Receivables are determined by discounting the future cash flows at an
appropriate benchmark rate such as an interbank market rate plus spread for securitization.
		 (h) Lease Payable		The fair values of Lease Payable are principally determined by discounting the future cash flows at an appropriate benchmark
rate such as an interbank market rate plus a credit spread.
		 (i) Accounts Payable — trade		The carrying values of Accounts Payable - trade approximate fair value because they are settled within a short period. The fairvalues of long-term Accounts Payable are determined by discounting the future cash flows at an appropriate benchmark rate
such as an interbank market rate plus a credit spread.
		 (j) Long-term Debt
		Bonds Payable		The fair values of Bonds Payable are measured at the amount of interest and principal to be paid at maturity discounted at an
appropriate benchmark rate such as an interbank market rate plus a credit spread.
		 Long-term Debt from banks and other financial institutions
		The fair values of Long-term Debt from banks and other financial institutions are measured at the amount of interest andprincipal to be paid at maturity discounted at an appropriate benchmark rate such as an interbank market rate plus a credit
spread.
		 Payables under Securitized Lease Receivables		The fair values of Payables under Securitized Lease Receivables are determined by discounting the future cash flows at an
appropriate benchmark rate such as an interbank market rate plus spread for securitization.
		(k) Derivatives
		 Fair value information for derivatives is included in Note 16.

75

IBJ Leasing Company, Limited

Business of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information(b) Carrying amount of financial instruments whose fair values cannot be readily determined
Millions of yen

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

Thousands of U.S. dollars

2018

2017

¥ 10,950
39,502
1,233
32,480¥ 84,166¥ 10,428
45,6971,233
26,759¥ 84,1192018$ 103,045
371,716
11,611
305,637$ 792,009(*1)	As unlisted stocks do not have quoted market prices in an active market and their fair values cannot be readily determined, they are excluded from the disclosure of market
value information.
(*2)	The impairment loss on certain unlisted stocks for the year ended March 31, 2018 and 2017 was ¥16 million ($156 thousand) and ¥162 million, respectively.
(*3)	Investments in funds and partnerships are excluded from the disclosure of market value information, as they are composed of financial instruments whose fair values
cannot be readily determined, such as unlisted stocks.
(*4)	These financial instruments are excluded from the disclosure of market value information, as they do not have quoted market prices in an active market and fair values
cannot be readily determined.

(6) Maturity analysis for financial assets and securities with contractual maturities
Millions of yen

March 31, 2018

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

Due in one
year or less

¥ 29,607

Due after
one yearthrough
two years¥—

Due after
two years
throughthree years

Due after
three years
throughfour years

Due after
four years
throughfive years

¥

¥

¥

—

—

Due after
five years

—

¥

—

2,000

2,000

—

—

—

—

—
6,338

5,500
23,28525,3004,831

22,0004,915

28,1605,120

20,6009,490

248,361

185,200

138,861

91,49849,104

110,357

52,28542,656
101,916¥ 483,166

36,511
44,5237,144¥ 304,166

23,69454,293
5,992¥ 252,973

14,27028,2884,134¥ 165,106

7,336
21,774
1,594¥ 113,090

4,752
38,8684,754¥ 188,824

Due in one
year or lessDue after
one yearthrough
two years

Due after
two years
throughthree years

Due after
three years
throughfour years

Due after
four years
throughfive years

Due after
five years

¥

¥

¥

Millions of yen

March 31, 2017

Cash and Cash Equivalents
Securities
Available-for-sale Securities Bonds
National and Local
government Bonds
Corporate Bonds
Other
Lease Receivables andInvestments in Lease
Installment Sales Receivables
Loans Receivables
Factoring Receivables
Total¥ 41,563

¥

—

—

—

—

¥

—

—

2,000

2,000

—

—

—

1,200
21,917

—
9,646

5,500
8,599

25,300
3,005

22,0003,959

27,9607,616

245,321

182,817

145,626

98,64957,64579,24351,14032,522
119,691¥ 513,357

36,53438,427
5,694¥ 275,119

25,16530,7533,995¥ 221,640

14,10543,832
3,482¥ 188,376

6,473
17,4492,751¥ 110,279

4,669
42,2204,133¥ 165,844

IBJ Leasing Company, Limited76

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing GroupDue in one
year or lessMarch 31, 2018

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

$

278,606$

Due after
two years
throughthree years—$

Due after
three years
throughfour years

—

$

—

Due after
four years
throughfive years$—

Due after
five years$—

18,82018,820

—

—

—

—

—
59,64951,755219,118

238,073
45,464207,020
46,252

264,985
48,186

193,846
89,302

2,337,083

1,742,737

1,306,681

860,999

462,075

1,038,464

492,009401,396
959,034$ 4,546,597

343,571418,970
67,234$ 2,862,205

222,966
510,90256,391$ 2,380,477

134,284
266,194
38,905$ 1,553,654

69,034
204,894
15,008$ 1,064,182

44,724
365,757
44,741$ 1,776,834(*1) Please see Note 7 for annual maturities of Long-term Debt.

16. Derivatives
Fair values of derivative transactions were as follows. The fair value is measured at quoted prices obtained from the financial institutions.
The contract amounts shown in the tables are the notional amounts of derivatives and do not indicate IBJL’s exposure to credit ormarket risks:

Derivative transactions to which hedge accounting is not applied:(1) Foreign currency forward contracts
Millions of yen

2018

Selling U.S.$
Buying U.S.$

Contract
AmountContract
Amount due
after One Year¥ 2,317
—
¥

¥—
¥—

2017
Fair Value

Unrealized
Gain (Loss)

Contract
AmountContract
Amount due
after One Year

Fair Value

Unrealized
Gain (Loss)

¥ 207
¥ —

¥ 207
¥ —

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

Millions of yen

2018

At March 31,

Payment - fixed rate,receipt - floating rate

Selling U.S.$
Buying U.S.$

Hedged item

Short-term
Borrowings,
Long-term
Debt¥ 122,378

Contract
AmountContract
Amount due
after One Year

Fair Value

Unrealized
Gain (Loss)$ 21,805
—
$

$—
$—

$ 1,950$—$ 1,950$—(2) Interest rate and currency swaps
Millions of yen

Payment - floating ratein Japanese Yen,
receipt - floating rate in
U.S. dollars¥ 93,750

Fair
Value

¥ (85)

Contract
Amount due
after One Year

Hedged item

Contract
AmountLong-term
Debt¥ 104,991¥ 81,039

Fair
Value

¥ (94)

Thousands of U.S. dollars

2018

At March 31,
Hedged item

Payment - fixed rate,receipt - floating rate

Contract
Amount due
after One Year

Contract
AmountShort-term
Borrowings,$ 1,151,583
Long-term
Debt$ 882,193

Fair
Value

$ (806)(2) Interest rate and currency swaps
Millions of yen

2018

At March 31,

Payment - fixed ratein Japanese Yen,
receipt - fixed rate in
U.S. dollars
Payment - fixed rate
in Indonesian Rupiah,
receipt - floating rate in
U.S. dollars

2017

Contract
Amount due
after One Year

Contract
AmountOperational
Investment
Securities¥ 2,457

Long-term
Debt

¥

130

Fair
Value

Hedged item

Contract
AmountContract
Amount due
after One Year

Fair
Value

¥ 2,457

¥ 71

—

¥ —

¥ —

¥ —

¥

¥ 5

Long-term
Debt

¥ 824

¥ 136

¥ 89

14

2018

At March 31,

2018

2018

At March 31,

2017

Contract
Amount due
after One Year

Contract
AmountThousands of U.S. dollars

Thousands of U.S. dollars

At March 31,

Consolidated Financial Data and Corporate Information(1) Interest rate swaps

Hedged item

At March 31,

Non-financial Assets for Supporting Growth

Derivative transactions to which hedge accounting is applied:Thousands of U.S. dollars
Due after
one yearthrough
two years

Growth Strategy

Contract
AmountContract
Amount due
after One Year

Fair Value

Unrealized
Gain (Loss)¥ 3,333¥ 3,333

¥ 109

¥ 109

Payment - fixed ratein Japanese Yen,
receipt – fixed rate in
U.S. dollars
Payment - fixed rate
in Indonesian Rupiah,
receipt - floating rate in
U.S. dollars

Contract
Amount due
after One Year

Hedged item

Contract
AmountOperational
Investment
Securities$ 23,126$ 23,126$ 673

Long-term
Debt$ 1,232

$

$ 56

140

Fair
Value

Thousands of U.S. dollars

2018

At March 31,

Payment - floating ratein Japanese Yen,
receipt - floating rate in
U.S. dollars

Contract
AmountContract
Amount due
after One Year

Fair Value

Unrealized
Gain (Loss)$ 31,366$ 31,366$ 1,033$ 1,033

Not applicable at March 31, 201777

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited78

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing GroupThe following interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not re-measured at market
value, however, the differential paid or received under the swap agreements is recognized and included in interest expense or income.
In addition, the fair value of such interest rate swaps in Note 15 is included in that of the hedged items (i.e., Loans Receivables andLong-term Debt).
Millions of yen

2018
Hedged item

Payment - fixed rate, receipt - floating rate

Loans
Receivables
Long-term
Debt

2017

Contract
AmountContract
Amount due
after One Year

Hedged item

¥ 4,041¥ 4,041—¥ 63,583¥ 47,030

Long-term
Debt

Contract
Amount¥Contract
Amount due
after One Year—¥

¥ 67,428—¥ 52,623

Thousands of U.S. dollars

2018

At March 31,
Hedged item

Payment - fixed rate, receipt - floating rate

Loans
Receivables
Long-term
Debt

Contract
AmountContract
Amount due
after One Year$ 38,027$ 38,027$ 598,319$ 442,552

The assets and liabilities of Toshiba Medical Finance Co., Ltd (“TMF”) as of March 31, 2016 were as follows. TMF was excluded fromthe consolidated financial statements for the year ended March 31, 2017, as IBJL sold all of its shares of TMF:
Millions of yen

2017

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

Details of basic net income attributable to owners of the parent per share (“EPS”) for the years ended March 31, 2018 and 2017 wereas follows:
Millions of yen

Millions of yen

79

IBJ Leasing Company, Limited

Thousands ofsharesThousands of U.S. dollars

2018

2017

2018

¥ 2,659(1,189)1,470
450¥ 1,020¥ 1,235(1,119)
115
34
¥
80

$ 25,029(11,192)
13,837
4,237$ 9,600

¥

(10)
175
165
52
112

¥

(12)
276
264
93
171

$

126
—
126
—
126

¥

(526)
—
(526)
—
(526)

$

234
9
243
74
169

¥

151
39
191
58
132

$

97
—
97

¥

$

¥

(100)
—
(100)

¥ 1,525¥(243)$ 14,359

¥

¥
¥

¥
¥
¥

¥

¥

¥

$

$

$

$

(98)
1,652
1,554
494
1,060
1,188
—
1,188
—
1,188
2,205
89
2,294
703
1,591

Basic EPS
Net income available tocommon shareholders

Yen

U.S. dollars

Millions of yen

Thousands ofshares2018

For the year ended March 31,¥¥ 47,890
801(32,987)(10,490)(1,825)244
3,634(1,088)¥ 2,546

19. Per Share Information

The components of other comprehensive income (loss) for the years ended March 31, 2018 and 2017 were as follows:

Total Other Comprehensive Income (Loss)

Consolidated Financial Data and Corporate Information

Not applicable at March 31, 2018

17. Other Comprehensive Income (Loss)

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

Non-financial Assets for Supporting Growth

18. Supplemental information of Cash Flows

Interest rate swaps to which specific accounting is applied:

At March 31,

Growth Strategy

Net income
attributable toowners of theparentWeightedaverage shares¥ 13,643

42,648EPS¥ 319.91

Yen

U.S. dollars

2017$ 3.01

Net income
attributable toowners of theparentWeightedaverage shares¥ 12,414

42,648EPS¥ 291.08$ 2.74

20. Effect of Bank Holiday
As financial institutions in Japan were closed on March 31, 2018, amounts that would normally have been settled on that day werecollected or paid on the following business day, April 2, 2018. The effects of the settlements on April 2 instead of March 31 include thefollowings:

Payables :Accounts Payable - trade
Other:
Notes Deposit for Installment Sales Receivables
Notes Deposit for Investments in Lease
Notes Deposit for other

Millions of yen

Thousands of U.S. dollars

2018

2018

¥ 2,279$ 21,446¥$ 2,592
142
38

275
15
4

21. Subsequent Events
Appropriation of Retained Earnings
The following appropriation of Retained Earning at March 31, 2018, was approved at IBJL’s shareholders’ meeting on June 26, 2018:
Millions of yen

Year-end cash dividends, ¥38.00 ($0.36) per share¥ 1,620

Thousands of U.S. dollars$ 15,250

920
—
920

IBJ Leasing Company, Limited

80

Consolidated Financial Data and Corporate Information

Independent Auditor’s Report

Business of the IBJ Leasing Group

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

Corporate Information
Corporate Profile (As of March 31, 2018)
CompanyName

IBJ Leasing Company, Limited

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

Number ofConsolidated: 1,081; Non-consolidated: 621
Employees

Date ofDecember 1, 1969
Establishment¥17,874 million

Business
Integrated financial services
Description

Business Sites (As of August 31, 2018)
Head Office

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

Sapporo Branch

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

Sendai Branch

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

Corporate Business Dept. (Metropolitan Area No. 2)

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

Niigata Branch

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

Toyama Branch

5-13, Sakurabashi-dori, Toyama, Toyama 930-0004

Shizuoka Branch

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

Nagoya Branch

Osaka Business Dept.

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

Kobe Branch

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

Hiroshima Branch

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

Takamatsu Branch

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

Fukuoka Branch

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

Kyoto Branch

Sapporo Branch

Niigata Branch
Kyoto Branch
Kobe Branch

Toyama Branch

Sendai Branch

Corporate Business Dept.
(Metropolitan Area No. 2)

Takamatsu Branch
Hiroshima Branch

Head Office

Fukuoka Branch
Shizuoka Branch
Nagoya Branch
Osaka Business Dept.

81

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited82

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing GroupThe IBJ Leasing Group aims to make a further
Major Group Companies
leap
forward by taking on challenges for enhancing
corporate value and achieving value creation forstakeholders.
(As of August 31, 2018)

Company Name

Paid-in Capital or Investment Business Activity

IBJL-TOSHIBA Leasing Company, Limited¥1,520 million

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

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

WeIBJaim
be Company,a GroupLimited
which contributes toAutotoLease¥386 million

2-6, Toranomon 1-chome, Minato-ku, Tokyo 105-0001
societyby offering valued financial services
Universal Leasing Co., Ltd.
which lead to future prosperity.

Ownership

General leasing

90%

General leasing

90%

Auto leasing
Desired100%

Future Imageof the IBJ 90%¥50 million General leasing
Leasing GroupHow the Group should be and stakeholders¥10 million Building leasing100%
the Group should consider

Growth Strategy

Non-financial Assets for Supporting Growth

Consolidated Financial Data and Corporate Information

Stock Information (As of March 31, 2018)
Stock Information
Number of Shares Authorized

140,000,000

Securities Code

8425

Number of Shares Issued

42,649,000
41,614

Shareholder Registry
Administrator

Mizuho Trust & Banking Co., Ltd.

Number of Shareholders
Stock Exchange Listing

Tokyo Stock Exchange, 1st section(Office Location)

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

Major Shareholders (Top 20)
Number of Shares Held
(1,000 shares)

Shareholding Ratio*(%)

The Dai-ichi Life Insurance Company, Limited

2,930

6.87

NISSAN MOTOR CO., LTD. Retirement Benefit Trust Account,with the trustee being Mizuho Trust & Banking Co., Ltd., andre-trustee Trust & Custody Services Bank, Ltd.

1,750

4.10

Mizuho Bank, Ltd.

1,626

3.81

UNIZO Holdings Company, Limited.

1,546

3.62

Japan Trustee Services Bank, Ltd. (Trust Account)

1,393

3.26

IBJ Leasing (China) Ltd.

Meiji Yasuda Life Insurance Company

1,251

2.93

(Shanghai Head Office)

DOWA HOLDINGS CO., LTD.

1,120

2.62

NIPPON STEEL KOWA REAL ESTATE CO., LTD.

975

2.28

The Kyoritsu Co., Ltd.

949

2.22

Japan Trustee Services Bank, Ltd. (TOSHIBA CORPORATION Retirement Benefit Trust
Account re-entrusted by the Mitsui Sumitomo Trust & Banking Co., Ltd.)

900

2.11

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

895

2.09

SUBARU CORPORATION

720

1.68

Japan Trustee Services Bank, Ltd. (Trust Account 5)

708

1.66

STATE STREET BANK AND TRUST COMPANY

692

1.62

Tosoh Corporation

684

1.60

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

675

1.58

Credit Saison Co., Ltd.

670

1.57

THE SHIGA BANK, LTD.

670

1.57

IINO KAIUN KAISHA, LTD.

666

1.56

Sompo Japan Nipponkoa Insurance Inc.

540

1.26

5-3, Kachidoki 6-chome, Chuo-ku, Tokyo 104-0054
KL Lease & Estate Co., Ltd.

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

Clients

KL & Co., Ltd.

Mindset of each employee

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

Shareholders

Employees

KL Office Service Company, Limited¥10 million
Society¥10 million

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

Used equipment
sales
Office services

100%
100%

The Three Cs

Room 08-10, 20F, Metro Plaza, No. 555, Loushanguan Road,
Changning District, Shanghai, PRC (200051)

Challenge(Guangzhou Branch)
Room 1336, 13F Teem Tower,
Tianhe Road,
C208hange
Tianhe District, Guangzho, PRC (510620)
PT. IBJ VERENA FINANCE Create

1.
2.

Sentral Senayan III, 13th Floor., Jl. Asia Afrika No.8, Gelora Bung Karno,
Senayan, Jakarta Pusat 10270, Indonesia

US$30,000
Management
GeneralPolicy
leasing
100%
thousandRespond to customers’ needs and provide precise
and prompt services by combining the Group’s total
strength.
Endeavor to further enhance the Group’s reputation
andIDR176,250,000
credibility among shareholders and in the80%
market. thousand General leasing

to create a dynamic corporate culture full of
3. Strive
energy and vitality in which proactive, ambitious

IBJ Air Leasing Limited

US$1 Aircraft leasing
75%
human resources are fostered and promoted.

Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda
IBJ Air Leasing (US) Corp.
160 Greentree Drive, suite 101 Street, in the City of Dover Country of Kent,
DE 19904, USAwith the law and its spirit, and aim to
4. Comply
be a Group
which always
recognizes its 75%
social
US$100Aircraft leasing

responsibility and secures understanding andsympathy from society.

IBJ Leasing (UK) Limited

GBP6,000thousand

General leasing

100%

Krung Thai IBJ Leasing Co., Ltd.*THB100,000
General leasing
18th Floor, Nantawan Bldg., 161 Rajdamri Road, Lumpini, Pathumwan,
thousand
Bangkok 10330, Thailand
From April 2017, the IBJ Leasing Group has started to implement the Fifth

49%

Management Plan covering a three-year period.
PNB-IBJL Leasing and Finance Mid-term
Corporation*
PHP1,000,000
Under this plan, the Group will utilize its accumulated businessknow-howand leasing
GeneralPNB Makati Center 5th Floor, 6754 Ayala Ave. corner Legaspi Street,thousandfinancialstrengths
toactively
promotebusinesses
withhigher
profitability.
Makati City, Metro Manila, Philippines 1226

25%

Mizuho House 30 Old Bailey London EC4M 7AU, U.K.

Fifth Mid-term Management Plan

*An equity-method affiliate

VisionValue-creating company tackling challenges together with clients

Shareholders*Shareholding ratio is calculated by deducting treasury stock.

Stock Performance

Distribution of Shareholders

Stock price(yen)

Individuals
and Others

Financial
Institutions

3,500

13.1%

41.1%

3,000

ForeignInvestors

2,500

14.3%

2,000
1,500

Flow for realization of the vision

1,000

Thorough client-oriented
approachPromote business together
with clients as their partner

Tackle new businessdomains transcending theframework of financing

500

Fulfill corporate social
responsibility

0

1Q

2Q

3Q

FY2015

4Q

1Q

2Q

3Q

FY2016

4Q

1Q

2Q

3Q

FY2017

4Q

Domestic
Corporations

29.6%
Leasing
LeasingCompany,
Company,
LimitedLimited01 83IBJ IBJ

Financial
Instruments
Business
Operators

1.9%
IBJ Leasing Company, Limited

84

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

This report is printed on paper certified by the Forest
Stewardship CouncilTM (FSC) as being made fromsustainably managed forests, as well as vegetableoil ink in consideration of the environment.