Independent Auditor’s Report

The Board of Directors
Fuyo General Lease Co., Ltd.

OpinionWe have audited the accompanying consolidated financial statements of Fuyo General Lease
Co., Ltd. and its consolidated subsidiaries (the Group), which comprise the consolidated balance
sheet as at March 31, 2020, and the consolidated statements of income, comprehensive
income, changes in net assets, and cash flows for the year then ended, and notes to the consolidated
financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2020, and its
consolidated financial performance and its consolidated cash flows for the year then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our audit of theconsolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management, the Corporate Auditor and the Board of Corporate
Auditors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with accounting principles generally accepted in Japan, and forsuch internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern and disclosing, as required by accounting principles
generally accepted in Japan, matters related to going concern.
The Corporate Auditor and the Board of Corporate Auditors are responsible for overseeing theGroup’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and toissue an auditor’s report that includes our opinion. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these consolidated financial
statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:・ Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive tothose risks, and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances for our risk assessments, while the purpose of the audit of
the consolidated financial statements is not expressing an opinion on the effectiveness of theGroup’s internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
・ Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentation inaccordance with accounting principles generally accepted in Japan.
・ Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the groupaudit. We remain solely responsible for our audit opinion.
We communicate with the Corporate Auditor and the Board of Corporate Auditors
regarding, among other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Corporate Auditor and the Board of Corporate Auditors with a statement that
we have complied with the ethical requirements regarding independence that are relevant to our
audit of the financial statements in Japan, and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence, and whereapplicable, related safeguards.

Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is
required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect tothe year ended March 31, 2020 are presented solely for convenience. Our audit also included thetranslation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation
has been made on the basis described in Note 1 to the consolidated financial statements.

Ernst & Young ShinNihon LLC
Tokyo, Japan
June 24, 2020/s/ Hirokazu Tanaka
Designated Engagement Partner
Certified Public Accountant/s/ Nobuko Kubo
Designated Engagement Partner
Certified Public Accountant

Consolidated financial statements
Consolidated balance sheets
Millions of yen
As of March 31,
2020

Notes
AssetsCurrent assets
Cash and deposits
Installment receivables
Lease receivables and investments in leases
Operating loans
Accounts receivable - other loans tocustomers
Operational investment securities
Other operating assets
Accounts receivable - lease
Other
Allowance for doubtful accounts

3
3, 9
3, 9

¥

3, 7

9
3

Total current assets
Non-current assets
Property, plant and equipment
Assets for lease
Assets for lease
Advances for purchase of assets forlease

1, 3, 7

Total assets for lease
Other operating assets
Own-used assets

1, 3
1, 3

Total property, plant and equipment
Intangible assets
Assets for lease
Other intangible assets
Goodwill
Other
Total other intangible assets
Total intangible assets
Investments and other assets
Investment securities
Distressed receivables
Deferred tax assets
Other
Allowance for doubtful accounts

2, 3

Total investments and other assets
Total non-current assets
Deferred assets
Organization expenses
Business commencement expenses
Total deferred assets
Total assets¥

77,43679,753
1,106,840
307,124
109,652¥

71,17397,452
1,083,530
298,432$

711,534
732,825
10,170,360
2,822,061

87,5191,007,554

234,837
15,70624,86274,359(3,085)

179,529
10,83019,656
52,779(2,725)

2,157,834
144,320
228,454683,263(28,350)

2,027,487

1,898,179

18,629,855

506,498

480,930

4,654,033

6,911

15,07363,505

513,409496,003

4,717,538

26,383
13,31928,265
1,790

242,427
122,384

553,111526,059

5,082,349

266

330

2,452

21,7497,644

15,935
6,591

199,845
70,24629,394

22,526

270,091

29,66022,856

272,543

91,984602
2,762
46,079(363)

92,821571
4,155
47,541(375)

845,213
5,533
25,387423,404(3,340)141,065

144,713

1,296,197

723,837

693,630

6,651,088

1
1,271

0
1,171

14
11,685

1,273

1,172

11,6992,752,598

The accompanying notes are an integral part of these statements.

- 1 -As of March 31,
2019

Thousands of U.S.
dollars (Note 1)
As of March 31,
2020¥

2,592,981$

25,292,642

Millions of yen
As of March 31,
2020

Notes
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term borrowings
Current portion of bonds payable
Current portion of long-term borrowings
Commercial papers
Payables under securitization of leasereceivables
Current portion of long-term payables under
securitization of lease receivables
Lease obligations
Income taxes payable
Deferred profit on installment sales
Provision for bonuses
Provision for bonuses for directors (andother officers)
Provision for share awards for directors (andother officers)
Provision for future lease payments
Provision for loss on guarantees
Asset retirement obligations
Other

9

¥

3, 7

¥

44,531
491,659
20,000244,023
500,700$

417,086
4,872,898
183,773
2,525,226
4,141,321

8

28,90022,900265,552

3, 8

41,39627,802

380,375

20,302
4,215
1,307
2,219

25,103
5,555
1,421
2,015

186,555
38,73312,015
20,391

184

191

1,696

57

–

524

3
50
453
45,2542
66–
33,857

29
464
4,163
415,827

1,465,573

1,419,831

13,466,629

3, 7

150,000
680,017

105,000
646,370

1,378,296
6,248,439

3, 8

54,86938,502504,174417
15,706
2,177

593
15,606
1,869

3,835
144,319
20,011

132

126

1,214

255

137

2,351

577
730
2,311
68,009

524
907
1,770
66,702

5,307
6,715
21,237
624,918

3

Total current liabilities
Non-current liabilities
Bonds payable
Long-term borrowings
Long-term payables under securitization oflease receivables
Lease obligations
Deferred tax liabilities
Retirement benefit liability
Provision for retirement benefits for
directors (and other officers)
Provision for share awards for directors (andother officers)
Provision for maintenance costs
Provision for loss on guarantees
Asset retirement obligations
Other

45,391
530,317
20,000274,820
450,700

As of March 31,
2019

Thousands of U.S.
dollars (Note 1)
As of March 31,
2020

Total non-current liabilities
Total liabilities- 2 -975,205

878,1108,960,816

2,440,778

2,297,941

22,427,445

Millions of yen
Notes

As of March 31,
2020

As of March 31,
201910,532
8,873
228,285(2,075)

10,532
8,873
208,454(826)

96,776
81,5372,097,630(19,071)245,615

227,034

2,256,872

31,65034,713

290,826

(798)
(435)
(163)

(577)
496
3

(7,334)(3,998)(1,504)30,253

34,636277,990764
35,186842
32,525

7,022
323,313

Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeShare acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

Thousands of U.S.
dollars (Note 1)
As of March 31,
2020

311,819¥2,752,598

The accompanying notes are an integral part of these statements.

- 3 -295,039¥2,592,981

2,865,197$

25,292,642

Consolidated statements of income and statements of comprehensive income
Consolidated statements of income
Thousands of
U.S. dollars(Note 1)FY2019(April 1, 2019 March 31, 2020)

Millions of yen
FY2019(April 1, 2019 March 31, 2020)

Notes
Net sales
Cost of sales¥

Gross profit
Selling, general and administrative expenses

1

Operating profit
Non-operating income
Interest income
Dividend income
Gain on investments in investment partnerships
Gain on investments in silent partnerships
Share of profit of entities accounted for using
equity method
Recoveries of written off receivables
Reversal of allowance for doubtful accounts
Reversal of provision for loss on guarantees
Other
Total non-operating income
Non-operating expenses
Interest expenses
Bond issuance costs
Foreign exchange losses
Loss on investments in investment partnerships
Loss on investments in silent partnerships
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of investment securities
Subsidy income
Gain on reversal of share acquisition rights
Other
Total extraordinary income
Extraordinary losses
Loss on valuation of investment securities
Loss on redemption of investment securities
Impairment losses
Loss on disposal of non-current assets
Loss on liquidation of subsidiaries andassociates
Loss on tax purpose reduction entry of noncurrent assets
Other

2
3

712,330
635,982

FY2018(April 1, 2018 March 31, 2019)¥

618,119
551,433$

6,545,349
5,843,815

76,347

66,686

701,534

34,92431,006

320,906

41,42335,680380,628

71
1,772
48
–

101
1,690
378
336

1,322

1,259

660
16,291
448–
12,153

97
–
192
243

86
95
91
252

893
–
1,772
2,242

3,750

4,293

34,460

627
31
142
58
0
266

530
16
33
24
4
264

5,766
289
1,313
542
8
2,448

1,128

873

10,36644,045

39,100404,722

395
592
–
0

941
2,684
8
2

3,635
5,444
–
8

989

3,637

9,088

545
513
1,283
14

–
–
22
10

5,012
4,720
11,792
129

–

0

–

592

2,684

5,444

5

–

49

2,954

2,717

27,147

Profit before income taxes

42,08040,019386,663

Income taxes - current

10,68011,182

98,136

Total extraordinary losses- 4 -Thousands of
U.S. dollars(Note 1)FY2019(April 1, 2019 March 31, 2020)
16,054

Millions of yen
FY2019(April 1, 2019 March 31, 2020)
1,747

Notes
Income taxes - deferred

FY2018(April 1, 2018 March 31, 2019)787

Total income taxes

12,427

11,969114,190

Profit29,65328,049272,473

Profit attributable to non-controlling interests
Profit attributable to owners of parent

3,466
¥

26,187

The accompanying notes are an integral part of these statements.

- 5 -

2,534
¥

25,51531,849$240,625

Consolidated statements of comprehensive income
Thousands of
U.S. dollars(Note 1)FY2019(April 1, 2019 March 31, 2020)

Millions of yen
FY2019(April 1, 2019 March 31, 2020)

Notes
ProfitOther comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, netof taxShare of other comprehensive income ofentities accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to ownersof parent
Comprehensive income attributable to noncontrolling interests¥

1

29,653

FY2018(April 1, 2018 March 31, 2019)¥

28,049$272,473(2,380)(4,553)(21,875)

(128)
(686)

(478)
(1,066)(1,181)(6,311)

(54)

(10)

(503)

(1,157)24(10,635)(4,408)(6,084)(40,505)¥

25,245¥21,965$

231,968¥

21,804¥

19,437$200,350

3,440

The accompanying notes are an integral part of these statements.

- 6 -

2,527

31,618

Consolidated statements of changes in equity
FY2019 (From April 1, 2019 to March 31, 2020)(Millions of yen)
Shareholders’ equity
Share capital
Balance at beginning of
period¥Capital surplus

10,532¥Retained earnings

8,873

¥

208,454

Total shareholders’equityTreasury shares
¥

(826)

¥

227,034

Changes during period
Dividends of surplus(6,333)(6,333)

Profit attributable toowners of parent

26,187

26,187Purchase of treasury
shares
Disposal of treasury
shares(22)

Change in scope of
consolidation(0)(1,364)(1,364)

115

92
(0)

Change in ownershipinterest of parent due totransactions with noncontrolling interests–

Net changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of period–¥

10,532–¥

19,8308,873¥

228,285(1,249)¥(2,075)

18,580¥245,615(Millions of yen)

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at beginning of
period¥34,713

Deferred
gains orlosses onhedges¥Foreigncurrencytranslation
adjustment(577) ¥

496

Total
Remeasureaccumulated
ments ofother
definedcomprehenbenefit plans
sive income

Shareacquisitionrights

Noncontrollinginterests

Total net
assets¥¥¥¥ 295,039

3¥

34,636842

32,525

Changes during period
Dividends of surplus(6,333)

Profit attributable toowners of parent

26,187Purchase of treasury
shares(1,364)

Disposal of treasury
shares92

Change in scope of
consolidation(0)

Change in ownershipinterest of parent due totransactions with noncontrolling interests–

Net changes in items
other thanshareholders’ equity(3,062)

(221)

(931)

(167)

(4,383)

(78)

2,660

(1,801)

Total changes during
period(3,062)

(221)

(931)

(167)

(4,383)

(78)

2,660

16,779Balance at end of period ¥31,650(798) ¥

(435) ¥

(163) ¥

30,25335,186¥ 311,819

¥

- 7 -

¥

764

¥

FY2018 (From April 1, 2018 to March 31, 2019)(Millions of yen)
Shareholders’ equity
Share capital
Balance at beginning of
period¥Capital surplus

10,532¥Retained earnings

10,416¥

187,673

Total shareholders’equityTreasury shares
¥

(224)

¥

208,397

Changes during period
Dividends of surplus(4,716)(4,716)

Profit attributable toowners of parent

25,51525,515Purchase of treasury
shares
Disposal of treasury
shares

(695)

(695)

94

76

(17)

Change in scope of
consolidation–

Change in ownershipinterest of parent due totransactions with noncontrolling interests(1,542)(1,542)

Net changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of period–¥

10,532(1,542)¥

20,781

8,873¥

208,454

(601)
¥

(826)

18,637¥227,034(Millions of yen)

Accumulated other comprehensive income
Valuationdifference on
available-forsale
securities
Balance at beginning of
period¥39,265

Deferred
gains orlosses onhedges¥Foreigncurrencytranslation
adjustment(92) ¥

1,551

Total
Remeasureaccumulated
ments ofother
definedcomprehenbenefit plans
sive income

Shareacquisitionrights

Noncontrollinginterests

Total net
assets¥¥¥¥ 282,574(10) ¥

40,714924

32,537

Changes during period
Dividends of surplus(4,716)

Profit attributable toowners of parent

25,515Purchase of treasury
shares(695)

Disposal of treasury
shares76

Change in scope of
consolidation–

Change in ownershipinterest of parent due
to transactions with
non-controllinginterests(1,542)

Net changes in items
other thanshareholders’ equity(4,552)(484)(1,055)14(6,078)

(81)

(12)

(6,171)

Total changes during
period(4,552)(484)(1,055)14(6,078)

(81)

(12)

12,46532,525¥ 295,039

Balance at end of period¥

34,713¥(577) ¥

496

¥

- 8 -

3

¥

34,636¥842¥

FY2019 (From April 1, 2019 to March 31, 2020)(Thousands of U.S. dollars) (Note 1)
Shareholders’ equity
Share capital
Balance at beginning of
period$Capital surplus

96,776$

Retained earnings

81,537$

1,915,417

Total shareholders’equityTreasury shares$(7,592)$

2,086,139

Changes during period
Dividends of surplus(58,200)(58,200)

Profit attributable toowners of parent

240,625

240,625

Purchase of treasury
shares
Disposal of treasury
shares(209)

Change in scope of
consolidation(3)(12,539)(12,539)

1,060

851
(3)

Change in ownershipinterest of parent due totransactions with noncontrolling interests–

Net changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of period–$

96,776–$

182,213

81,537$2,097,630(11,479)$(19,071)

170,733$

2,256,872(Thousands of U.S. dollars) (Note 1)
Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at beginning of
period$318,967

Deferred
gains orlosses onhedges$Foreigncurrencytranslation
adjustment(5,302) $

4,563

Total
Remeasureaccumulated
ments ofother
definedcomprehenbenefit plans
sive income

Shareacquisitionrights

Noncontrollinginterests

Total net
assets$$$ 298,867$2,711,014

36$

318,264

7,744

Changes during period
Dividends of surplus(58,200)

Profit attributable toowners of parent

240,625

Purchase of treasury
shares(12,539)

Disposal of treasury
shares851

Change in scope of
consolidation(3)

Change in ownershipinterest of parent due totransactions with noncontrolling interests–

Net changes in items
other thanshareholders’ equity(28,141)(2,032)(8,561)(1,540)(40,274)(723)

24,446(16,551)

Total changes during
period(28,141)(2,032)(8,561)(1,540)(40,274)(723)

24,446

154,183(7,334) $(3,998) $(1,504) $277,990

7,022$ 323,313$ 2,865,197

Balance at end of period$

290,826$

The accompanying notes are an integral part of these statements.

- 9 -

$

Consolidated statements of cash flows
Thousands of
U.S. dollars(Note 1)FY2019(April 1, 2019 March 31, 2020)

Millions of yen
FY2019(April 1, 2019 March 31, 2020)

Notes
Cash flows from operating activities
Profit before income taxes
Depreciation of assets for lease
Loss on retirement of assets for lease and costof property for lease sales
Depreciation of other operating assets
Depreciation
Amortization of goodwill
Impairment losses
Increase (decrease) in allowance for doubtful
accounts
Increase (decrease) in provision for bonuses
and bonuses for directors (and other officers)
Increase (decrease) in provision for future lease
payments
Increase (decrease) in provision for retirement
benefits for directors (and other officers)
Increase (decrease) in provision for shareawards for directors (and other officers)
Increase (decrease) in provision formaintenance costs
Increase (decrease) in provision for loss on
guarantees
Increase (decrease) in retirement benefit
liability
Loss (gain) on valuation of short-term andlong-term investment securities
Interest and dividend income
Capital costs and interest expenses
Loss (gain) on investments in investment
partnerships and silent partnerships
Share of loss (profit) of entities accounted forusing equity method
Loss (gain) on sale of short-term and long-term
investment securities
Loss (gain) on redemption of investment
securities
Loss (gain) on disposal of non-current assets
Subsidy income
Loss on tax purpose reduction entry of noncurrent assets
Gain on reversal of share acquisition rights
Decrease (increase) in installment receivables
Net decrease (increase) in lease receivables andinvestments in leases
Decrease (increase) in accounts receivable lease
Decrease (increase) in operating loans
Decrease (increase) in accounts receivable other loans to customers¥- 10 -

42,08033,694FY2018(April 1, 2018 March 31, 2019)¥

40,01930,066$386,663309,603

118,027

19,8981,084,512

2,040
2,124
1,132
1,283

1,666
1,680
768
–

18,754
19,523
10,404
11,792

347

(164)

3,192

30

165

279

0

0

2

5

(42)

53

175

137

1,615

52

143

487

(192)

(91)

(1,772)

253

118

2,328

545

–

5,012

(1,844)
10,075(1,792)
9,179(16,951)
92,583

11

(686)

102

(1,322)(1,259)(12,153)

(395)

(941)

(3,635)

513

–

4,720

13
(592)

10
(2,684)120(5,444)

592

2,684

5,444

–
17,581(8)
19,028–
161,551(32,851)

18,628(301,861)(4,076)(3,467)(37,460)(11,528)(2,974)(105,929)(22,143)(3,369)(203,467)

FY2019(April 1, 2019 March 31, 2020)

FY2018(April 1, 2018 March 31, 2019)

Thousands of
U.S. dollars(Note 1)FY2019(April 1, 2019 March 31, 2020)(55,307)(1,648)(508,197)(170,362)(12,424)
–
(30)
1,411
551
(4,629)(168,509)(12,488)
53
451
(870)
(258)
(9,802)(1,565,402)(114,160)–(279)
12,967
5,071(42,542)

1,239

2,880

11,385(6,505)(577)(59,776)

Subtotal(90,423)(64,055)(830,868)Interest and dividends received
Interest paid
Income taxes refund (paid)
Subsidies received

3,158(10,606)(11,526)592

1,722(8,913)(11,414)2,684

29,025(97,460)(105,912)
5,444

Net cash provided by (used in) operating
activities(108,804)(79,975)(999,770)

Millions of yen

Notes
Decrease (increase) in investment securities for
sale
Purchase of assets for lease
Purchase of other operating assets
Decrease (increase) in retirement benefit asset
Decrease (increase) in distressed receivables
Decrease (increase) in guarantee deposits
Increase (decrease) in trade payables
Increase (decrease) in lease obligations
Increase (decrease) in guarantee deposits
received
Other, net- 11 -

FY2019(April 1, 2019 March 31, 2020)

FY2018(April 1, 2018 March 31, 2019)

Thousands of
U.S. dollars(Note 1)FY2019(April 1, 2019 March 31, 2020)(1,690)11–(5,489)(1,275)–15(9,297)(15,529)110–(50,439)

917

4,233

8,432

(6,393)(2,352)(58,751)

1,400

(716)

12,872(11,242)(9,393)(103,305)

39,10924,813359,367(50,000)
336,231(269,934)

27,000303,495(258,284)(459,432)
3,089,509(2,480,333)

6,000

4,000

55,132

66,12336,331

607,581(36,162)(36,992)(332,281)

65,000(20,000)(1,364)92

35,000(20,000)(695)
76

597,262(183,773)(12,539)851–(4,064)–(6,333)
(781)
(225)

(4,716)
(304)
(157)

(58,200)(7,179)(2,075)

127,754

105,5021,173,890

(28)

(276)

(260)

7,678

15,85570,55569,91854,062642,452(179)–(1,651)Millions of yen

Notes
Cash flows from investing activities
Purchase of own-used assets
Proceeds from sale of own-used assets
Proceeds from sale and redemption of securities
Purchase of investment securities
Proceeds from sale and redemption of
investment securities
Purchase of shares of subsidiaries resulting inchange in scope of consolidation
Other, net

2

Net cash provided by (used in) investing
activities
Cash flows from financing activities
Net increase (decrease) in short-termborrowings
Net increase (decrease) in commercial papers
Proceeds from long-term borrowings
Repayments of long-term borrowings
Net increase (decrease) in payables under
securitization of lease receivables
Proceeds from securitization of leasereceivables
Repayments of payables under securitization oflease receivables
Proceeds from issuance of bonds
Redemption of bonds
Purchase of treasury shares
Proceeds from disposal of treasury shares
Purchase of shares of subsidiaries not resulting
in change in scope of consolidation
Dividends paid
Dividends paid to non-controlling interests
Other, net
Net cash provided by (used in) financing
activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents
resulting from change in scope of consolidation
Cash and cash equivalents at end of period

1¥77,416

The accompanying notes are an integral part of these statements.

- 12 -¥

69,918$711,356

Notes to consolidated financial statements
I.

Basis of presentation

Fuyo General Lease Co., Ltd. (the “Company”) and its domestic consolidated subsidiaries maintain theirbooks of account in conformity with generally accepted accounting principles in Japan, and its foreign
consolidated subsidiaries maintain their books of account in conformity with those of their countries of
domicile.
The accompanying consolidated financial statements have been compiled from the consolidated financial
statements prepared by the Company as required under the Financial Instruments and Exchange Act of Japanand have been prepared in accordance with generally accepted accounting principles in Japan.
Japanese yen amounts, which are indicated in millions of yen, are rounded down by truncating the figures
below one million. As a result, the totals do not necessarily agree with the sum of the individual amounts.
The amounts in US dollars presented in the consolidated financial statements are translated from the amounts
in Japanese yen at the exchange rate of ¥108.83 to US$1.00, in effect at March 31, 2020, solely for theconvenience of overseas readers. Therefore, this does not imply that those amounts in yen can be converted
into equivalent amounts in US dollars at this or any other exchange rate.
1.

Scope of consolidation(1) Number of consolidated subsidiaries
FY2019: 52 companies, FY2018: 49 companies
Names of significant consolidated subsidiaries:
Fuyo Auto Lease Co., Ltd.
Sharp Finance Co., Ltd.
Accretive Co., Ltd.
INVOICE Inc.
FGL Service Co., Ltd.
Fuyo Lease Sales Co., Ltd.
Fuyo General Lease (USA) Inc.
Fuyo General Lease (HK) Limited
Fuyo General Lease (Asia) Pte. Ltd.
Fuyo General Lease (China) Co., Ltd.
FGL Aircraft Ireland Limited
In the fiscal year ended March 31, 2020, LN Holidngs, Co., Ltd. and its subsidiaries, NOC
Outsourcing & Consulting Inc., NOC Techno-Solutions Inc. and NOC Biz Partners Inc. are includedin the scope of consolidation since the Company acquired 100% of the total issued shares of LN
Holidngs, Co., Ltd. In addition, Wells Fund LLC is included in the scope of consolidation as theCompany invested in the silent partnership operated by that company.
FI Walnut Leasing Ltd. has been excluded from the scope of consolidation as a result of thetermination of the silent partnership agreement. Note that the gains or losses occurred in the entity inthe period until the exclusion from the scope of consolidation are included in these consolidated
financial statements. In addition, FGL Aircraft Labuan Limited has been excluded from the scope of
consolidation due to its liquidation.
(2) Non-consolidated subsidiaries
Reason for exclusion from the scope of consolidation
Among the non-consolidated subsidiaries, 157 companies including FK Ignicion Leasing Ltd. (150companies in the fiscal year ended March 31, 2019) are mainly business operators, etc. of leasing
businesses conducted through silent partnerships. Their assets and gains or losses are effectively not
attributable to such subsidiaries or are immaterial, so they have been excluded from the scope of
consolidation pursuant to Article 5, paragraph (1), item (ii) of the Regulation on Terminology, Forms
and Preparation Methods of Consolidated Financial Statements.

- 13 -

(3) Special purpose entities subject to disclosure
For an overview of special purpose entities subject to disclosure, overview of transactions using
special purpose entities subject to disclosure, amount of transactions with special purpose entities
subject to disclosure, etc., see “Information on special purpose entities.”
2.

Application of equity method(1) Number of associates under the equity method
FY2019: 8 associates, FY2018: 6 associates
Names of significant associates:
Yokogawa Rental & Lease Corporation
Marubeni Fuyo Auto Investment (CANADA) Inc.
Pacific Rim Capital, Inc.
Saisai Seikatsu LLC was newly established in the fiscal year ended March 31, 2020 and is included
in entities accounted for using the equity method. In addition, the Company acquired additional
shares in MerryBiz Inc., so it is included in entities accounted for using the equity method.
(2) Non-consolidated subsidiaries and associates which the equity method was not applied
Reason the equity method was not applied to the companies
Among the non-consolidated subsidiaries, 157 companies including FK Ignicion Leasing Ltd. (150companies in the fiscal year ended March 31, 2019) are mainly business operators, etc. of leasing
businesses conducted through silent partnerships. Their assets and gains or losses are effectively not
attributable to such subsidiaries or are immaterial, so they are excluded from the scope of being
accounted for using the equity method. Investments in these companies are valued at cost.
(3) With regard to the entities accounted for using equity method whose balance sheet dates differ fromthe consolidated balance sheet date, the financial statements of these companies for their respective
fiscal years have been applied.
3.

Fiscal year ends of consolidated subsidiaries
Among the consolidated subsidiaries, 19 overseas consolidated subsidiaries (20 in the fiscal year
ended March 31, 2019) have balance sheet dates of December 31, while 19 domestic consolidated
subsidiaries including Fuyo Auto Lease Co., Ltd. (16 in the fiscal year ended March 31, 2019) havebalance sheet dates of March 31, 11 domestic consolidated subsidiaries including General
Incorporated Association C・C・S Holding (11 in the fiscal year ended March 31, 2019) have balance
sheet dates of January 31, and Wells Fund LLC has a balance sheet end date of December 31.
Financial statements of the respective subsidiaries for the respective fiscal years, with necessary
adjustments with regard to material activities transactions during the periods up to the consolidatedbalance sheet date, have been reflected in the consolidation.

4.

Summary of significant accounting policies(1) Standard and method of valuation of significant assets
1) Securities
Other securities
Other securities with fair value
Mainly by a fair value method based on average market prices, etc. during one month before
the consolidated balance sheet date for the Company and domestic consolidated subsidiaries
and the market price, etc. on the balance sheet end date for overseas consolidated subsidiaries.
- 14 -

Note that the cost of securities sold is computed based on the moving-average method. The
entire net unrealized gains or losses are booked directly as net assets.
Other securities without fair value
Stated at cost determined by the moving-average method
The amortized cost method is applied to the difference between the acquisition cost and theamount of bonds where interest rate adjustment is recognized.
2) Derivative financial instruments
Fair value method(2) Depreciation and amortization
1) Assets for lease
Mainly amortized over the lease agreement period using the straight-line method with the residual
value being the estimated amount to be realized when the lease agreement period ends
Note that an additional amount is booked as depreciation for the estimated amount of loss on
disposal of assets for lease due to cancellation of lease agreements or customer insolvency, etc.
2) Other operating assets
Straight-line method
3) Leased assets
Leased assets under finance leases that do not transfer ownership
Amortized over the lease agreement period using the straight-line method with no residual value4) Own-used assets
Declining balance method
However, the straight-line method is applied to buildings (excluding facilities attached tobuildings) acquired since April 1, 1998 and facilities attached to buildings and structures acquiredsince April 1, 2016, and is applied for overseas consolidated subsidiaries.
The estimated useful lives of own-used assets are principally as follows:
Buildings

3 to 50 years

Equipment

3 to 20 years5) Other intangible assets
Straight-line method
Computer software intended for internal use is amortized by the straight-line method over theestimated useful lives (5 to 10 years).
(3) Accounting method for deferred assets
1) Organization expenses
Organization expenses are amortized by the straight-line method within five years after the date offounding.
2) Business commencement expenses
Business commencement expenses are amortized by the straight-line method within five years after
the business commencement date.
3) Bond issuance costs
Bond issuance costs are expensed upon payment.
- 15 -

(4) Accounting policy for significant allowances and provisions
1) Allowance for doubtful accounts
To cover possible losses from bad debts, the Company sets aside an allowance for the estimatedamount of doubtful receivables deemed uncollectible. This allowance is based on historical default
rates for general receivables and the individual analysis of debtors’ financial positions for doubtfulreceivables, distressed receivables, etc.
With respect to the bankruptcy claims, etc., an estimated uncollectible amount is calculated bydirectly deducting amounts expected to be recovered from the amount of claims. The direct
deduction totaled ¥1,979 million (U.S.$18,189 thousand) in the fiscal year ended March 31, 2020and ¥1,819 million in the fiscal year ended March 31, 2019.
2) Provision for bonuses
To prepare for payment of bonuses to employees, a provision for the estimated payment amountborne in the fiscal year is recorded.
3) Provision for bonuses for directors (and other officers)
To prepare for payment of bonuses to directors, a provision for the estimated payment amountborne in the fiscal year is recorded.
4) Provision for future lease payments
To cover possible losses from future lease payment receivables for operating leases (subleases), a
provision for the amount deemed uncollectible is recorded. This provision is based on the historicaldefault rates for normal claims, the analysis of individual receivables with respect to classified
loans in addition to bankruptcy claims, etc.
5) Provision for loss on guarantees
To cover possible losses on guarantees, etc., the Company provides an allowance for estimated loss,
taking into consideration the financial condition of the financial guarantees as well as other factors.
6) Provision for retirement benefits for directors (and other officers)
Since this equates to the benefits for directors and corporate auditors, the entire amount that would
be required to be paid at the end of the fiscal year is recorded according to internal regulations.
7) Provision for share awards for directors (and other officers)
To prepare for the provision of the Company’s shares, etc. to directors and other officers of theCompany based on the Regulations for Provision of Shares to Officers, the Company posts theestimated amount of share-based benefit obligation as of the end of the fiscal year.
8) Provision for maintenance costs
To cover future payments for maintenance costs that are required in specific lease transactions andmaintenance services, a provision for estimated cost is recorded by the Company.
(5) Retirement benefits
1) The method for attributing estimated retirement benefits for periods of employee service
For the calculation of retirement benefit obligations, the benefit formula method is used to attribute
estimated retirement benefits for the period up to the end of the fiscal year.
2) Actuarial differences and prior service cost
With respect to prior service cost, the Company expenses the entire amount of it in the fiscal yearof occurrence, but one of the Company’s domestic consolidated subsidiaries amortizes it by thestraight-line method over a period (10 years) within the average remaining service years for
employees at the time of recognition, starting from the fiscal year of occurrence.

- 16 -

With respect to actuarial differences, the Company expenses the entire amount of them in the fiscal
year of occurrence, but one of the Company’s domestic consolidated subsidiaries amortizes themby the straight-line method over a period (10 years) within the average remaining service years for
employees at the time of recognition, starting from the fiscal year following the fiscal year ofoccurrence.
3) Unrecognized actuarial differences and unrecognized prior service cost
Unrecognized actuarial differences and unrecognized prior service cost after tax effect adjustments
are recorded as remeasurements of defined benefit plans classified in accumulated othercomprehensive income of net assets.
4) Simplified accounting method by small-scale businesses, etc.
Certain domestic consolidated subsidiaries use simplified accounting methods in relation to thecalculation of the retirement benefit liability and the retirement benefit expenses. In the case of thetermination allowance plan, retirement benefit obligations are recorded as the amount to be paidfor voluntary retirement as of fiscal year-end. In the case of the corporate pension plan, retirement
benefit obligations are recorded as the amount of actuarial liability calculated under the latest
pension funding program.
(6) Recognition of significant revenues and expenses
1) Accounting policy for sales and cost of sales arising from finance leases
Sales and cost of sales are recorded when lease payments should be received.
2) Accounting policy for revenue from operating leases
Based on the lease payments that should be received each month under the lease agreement basedon the lease agreement periods, recorded as lease payments corresponding to such transitional
period.
(7) Standard for translation of significant foreign-currency-denominated assets or liabilities into JapaneseyenForeign currency-denominated monetary receivables and payables are translated into Japanese yen at
the spot exchange rate on the consolidated balance sheet date, and exchange differences are treatedas gains or losses.
Meanwhile, the assets, liabilities, income and expenses of overseas subsidiaries, etc. are mainlytranslated into Japanese yen at the spot exchange rate on the consolidated balance sheet date, andexchange differences are recorded as foreign currency translation adjustment or non-controllinginterests of net assets.
(8) Significant hedge accounting methods
1) Hedge accounting
Hedging activities are accounted for by the deferred hedge method. Interest rate swaps that satisfy
the required conditions are subject to accounting under exceptional treatment.
2) Hedge instruments and hedged items(a) Hedging instruments

Interest rate swaps and forward exchange contracts(b) Hedged items

Borrowings and forecast transactions in foreign currencies

3) Hedging policies
The Company uses derivatives, in accordance with its internal “Basic Policy for Managing Market
and Liquidity Risks,” for the purpose of hedging risks associated with interest-rate and foreign
currency fluctuations arising from its sales and financial operations.

- 17 -

4) Assessing hedge effectivenessThe assessment of hedge effectiveness of interest rate swaps is by the correlation between thechange in aggregated amount of cash flow of the hedging instruments and the change in aggregatedamount of cash flow of the hedged items and other factors.
With regard to forward exchange contracts, when the principal terms for the hedged items andhedging instruments are substantially the same, the hedge relationship is considered highly
effective.
With regard to interest rate swaps subject to accounting under exceptional treatment an assessmentof hedge effectiveness is omitted.
(9) Amortization method and period of goodwill
Apart from immaterial amounts, evenly amortized over a period not exceeding 20 years from theeffective date.
(10) Scope of funds in consolidated statements of cash flows
Cash and cash equivalents in the consolidated statement of cash flows consist of cash on hand, demand
deposits and short-term investments with a maturity of three months or less from the date of acquisition,
which are readily convertible into cash and have an insignificant risk of changes in value.
(11) Other important matters for preparing consolidated financial statements
1) Consumption taxes
Transactions are recorded exclusive of consumption taxes and local consumption taxes.
2) Adoption of consolidated taxation system
Some of the consolidated subsidiaries have adopted the consolidated taxation system.

II.

Change in accounting policy
Not applicable- 18 -

III.

New accounting standards and implementation guidances not yet applied

Accounting Standard for Revenue Recognition and related implementation guidances‧

Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (ASBJ)
Statement No. 29, March 31, 2020)‧

Implementation Guidance on Accounting Standard for Revenue Recognition (ASBJ Guidance No. 30,
March 31, 2020)‧

Implementation Guidance on Disclosures about Fair Value of Financial Instruments (ASBJ GuidanceNo. 19, March 31, 2020)(1) Overview
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board(FASB) jointly developed comprehensive accounting standards for revenue recognition. In May 2014,
they published Revenue from Contracts with Customers (IFRS 15 for IASB and Topic 606 for FASB).
As IFRS 15 is effective from the fiscal year commencing on or after January 1, 2018 and Topic 606 is
effective from the fiscal year commencing after December 15, 2017, the ASBJ has developed
comprehensive accounting standard together with its implementation guidance.
As a basic policy for the development of the Accounting Standard for Revenue Recognition by the
ASBJ, from the viewpoint of comparability between financial statements, which is one of the benefits
consistent with IFRS 15, the basic principles of IFRS 15 shall be adopted as the starting point, andaccounting standards shall be established. In addition, in cases where there are items that should beconsidered in practice, etc., that have been conducted in Japan so far, alternative treatment shall be
added to an extent that does not impair comparability.
(2) Scheduled date of adoption
Effective from the beginning of the fiscal year ending in March 31, 2022.
(3) Impact of adoption of such accounting standards and implementation guidances
The amounts that affect the consolidated financial statements by adopting the Accounting Standard
for Revenue Recognition and related implementation guidances are currently being evaluated.
Accounting Standard for Fair Value Measurement, other standards and related implementation
guidances‧

Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019)‧

Accounting Standard for Measurement of Inventories (ASBJ Statement No. 9, July 4, 2019)‧

Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019)‧

Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Guidance No.
31, July 4, 2019)‧

Implementation Guidance on Disclosures about Fair Value of Financial Instruments (ASBJ GuidanceNo. 19, March 31, 2020)(1) Overview
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board(FASB) provide detailed guidance on fair value measurement that is similar in content (in International
Financial Reporting Standards (IFRS), IFRS 13, Fair Value Measurement, and in US GAAP,
Accounting Standards Codification Topic 820, Fair Value Measurement, respectively). In light of this,- 19 -

the ASBJ has been working to ensure the consistency of Japanese GAAP with international accounting
standards, primarily with respect to guidance and disclosures regarding the fair value of financial
instruments, and published the Accounting Standard for Fair Value Measurement, other standards andrelated implementation guidances.
As a basic policy for the development of the Accounting Standard for Fair Value Measurement by the
ASBJ, all provisions of IFRS 13 shall be basically incorporated from the viewpoint of improving
comparability of financial statements between companies in Japan and overseas by using a uniform
calculation method. In addition, other treatment of individual items shall be provided to the extent thatcomparability between financial statements is not significantly impaired, taking into account thepractices, etc., that have been conducted in Japan so far.
(2) Scheduled date of adoption
Effective from the beginning of the fiscal year ending in March 31, 2022.
(3) Impact of adoption of such accounting standards and implementation guidances
The amounts that affect the consolidated financial statements by adopting the Accounting Standard
for Fair Value Measurement, other standards and related implementation guidances have not yet been
determined.
Accounting Standard for Disclosure of Accounting Estimates‧

Accounting Standard for Disclosure of Accounting Estimates (ASBJ Statement No. 31, March 31,
2020)(1) Overview
The International Accounting Standards Board (IASB) issued International Accounting Standard(IAS) 1, Presentation of Financial Statements (“IAS 1”) in 2003. With respect to the sources of
estimation uncertainty that are required to be disclosed in paragraph 125 of IAS 1, considering
requesting the disclosure in the information of the notes under Japanese GAAP as information that is
highly useful to users of financial statements is requested. The ASBJ has developed and publishedAccounting Standard for Disclosure of Accounting Estimates (the “Accounting Standard”).
The basic policy of the ASBJ in developing the Accounting Standard is not to expand individual notes,
but to indicate principles (disclosure purposes) and to determine the specific content of disclosure inlight of the purpose of disclosure by the company. In developing the accounting standard, the ASBJ
referred to the provisions of paragraph 125 of IAS 1.
(2) Scheduled date of adoption
Effective from the end of the fiscal year ending in March 31, 2021.
Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections‧

Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections(ASBJ Statement No. 24, March 31, 2020)(1) Overview
In response to the recommendation to consider enhancing the information in the notes pertaining to
Accounting Principles and Procedures Adopted in Cases Where Provisions on Relevant AccountingStandards, Etc. Are Unclear, the ASBJ made the necessary revisions and issued them as Accounting- 20 -

Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections.
In order to enhance the information in the notes pertaining to Accounting Principles and Procedures
Adopted in Cases Where Provisions on Relevant Accounting Standards, Etc. Are Unclear, theprovisions of Notes on Corporate Accounting Principles (Note 1-2) shall be handed over in order not
to affect the practices to date in cases where the provisions on relevant accounting standards and otherregulations are clear.
(2) Scheduled date of adoption
Effective from the end of the fiscal year ending in March 31, 2021.

- 21 -

Additional information

IV.

Board Benefit Trust (BBT) Plan
Based on the resolution reached at the 49th Annual General Meeting of Shareholders held on June 22,
2018, the Company has introduced a new share-based payment plan or Board Benefit Trust (BBT) (the“Plan”) for the Company’s directors, excluding outside directors, (the “Eligible Directors”) and
executive officers who currently do not serve as directors (the “Executive Officers.” The Eligible
Directors and Executive Officers are hereinafter collectively referred to as the “Directors, etc.”).
(1) Overview of the transaction
The Plan is a share-based payment plan, under which the Company’s shares will be acquired by a trust(the trust to be established under the Plan is referred to hereinafter as the “Trust”) using funds that theCompany will contribute, and the Company’s shares and cash equivalent to the market price of theCompany’s shares (the “Company’s share, etc.”) will be provided to the Eligible Directors from theTrust in accordance with the Regulations for Provision of Shares to Officers established by theCompany. In principle, the Company’s shares, etc. will be provided to the Eligible Directors on theirretirement.
(2) Treasury shares remaining in trust
The shares of the Company remaining in trust are recorded as treasury shares under net assets basedon the book value in trust (excluding the amount of incidental costs). The book value and the numberof shares of treasury shares under the Plan are ¥680 million (U.S.$6,257 thousand) and 102,500 shares
as of March 31, 2020 and ¥694 million and 104,600 shares as of March 31, 2019.
(3) Book value of borrowings recorded based on the gross method
Not applicable
Impact of the spread of the Novel Coronavirus Disease (COVID-19) on accounting estimates
As of March 31, 2020, the Group calculated and considered reasonable amounts based on theinformation available at the time of preparing the consolidated financial statements for the collectabilityof lease receivables, etc., the profitability of assets for lease, etc., held by the Group, and determinationof impairment of goodwill, etc.
The outlook for the economy is expected to remain severe due to the ongoing and rapid deterioration of
economic activities caused by the global expansion of COVID-19.
However, the Group has made an accounting estimate based on the assumption that the spread of
COVID-19 will subside around the end of the first half of the fiscal year ending March 31, 2021.
Items and events that may have a significant impact on the consolidated financial statements as they
pertain to the spread of COVID-19 are as follows:a.

Allowance for doubtful accounts
The Group records an allowance for doubtful accounts for the estimated amount of losses incurredin the event of uncollectible receivables. Allowance for doubtful accounts is recorded at an amountestimated to be uncollectible based on the historical default rates for general receivables, and on
the basis of the collectability of doubtful receivables, distressed receivables, etc. on a case-by-casebasis. Allowance for doubtful accounts may require additional allowances due to changes in thehistorical default rates and the judgment of the collectability of individual receivables, depending- 22 -

on the occurrence of bad debts, the status of collection of individual receivables, etc., after the
spread of COVID-19.
b.

Impairment of non-current assets (assets for lease, etc.)
In assessing the recoverability of impairment of non-current assets, the Group groups assets bycompany, and for asset groups whose profitability has declined significantly, the book value of
non-current assets is written down to the recoverable amount, and the amount of the decrease isrecorded as an impairment loss.
The recoverable amount of non-current assets is calculated based on the assumptions of future cash
flows, discount rates, net sales value, etc. Therefore, if it becomes difficult to achieve the initialexpected revenue due to the impact of the spread of COVID-19, or if the assumptions such as future
cash flows change, an impairment loss on non-current assets may be recorded.

c.

Impairment of goodwill
The Group estimates the effective period of goodwill and amortizes the goodwill over such periodusing the straight-line method. In addition, the Group is considering the economic benefits ofgoodwill based on the operating results of subsidiaries and business plans, etc. Due to the impactof the spread of COVID-19, if it becomes difficult to achieve the initial expected revenue in the
future, and if the Group recognizes the need for impairment, it may record an impairment loss on
goodwill in the future.

- 23 -

Notes for consolidated balance sheetsV.
*1

Accumulated depreciation for property, plant and equipment
Thousands of
U.S. dollars

Millions of yen
Assets for lease
Other operating assets
Own-used assets*2

As of March 31, 2020

As of March 31, 2019

As of March 31, 2020

¥

¥

$

170,851
8,294
2,950

159,309
6,426
2,315

Investment securities in non-consolidated subsidiaries and associates were as follows:
Thousands of
U.S. dollars

Millions of yen
Investment securities (shares)(of which investment in joint ventures)*3

1,569,890
76,214
27,110

As of March 31, 2020

As of March 31, 2019

As of March 31, 2020

¥

¥

$

24,045(23,239)

23,921(23,013)220,948(213,541)

Assets pledged as collateral and liabilities secured by collateral(1) Assets pledged as collateralThousands of
U.S. dollars

Millions of yen

Cash and deposits
Installment receivables
Lease receivables and investments in leases
Accounts receivable - other loans tocustomers
Other (current assets)
Operating lease and other contract receivables
Assets for lease (property, plant andequipment)
Other operating assets (property, plant andequipment)
Own-used assets
Total

As of March 31, 2020

As of March 31, 2019

As of March 31, 2020

¥

¥

$

¥

2,392
820
19,8192,859
853
23,671

21,987
7,536
182,113

3,712

3,890

34,115

79
2,983

–
3,574

732
27,412

26,123

14,613240,039

19,02020,376

174,774

11,185–

102,782

86,137¥

69,839$791,490

Note: Besides the above assets pledged as collateral, the Company provided installment receivables (¥16 million(U.S.$147 thousand) in the fiscal year ended March 31, 2020, ¥26 million in the fiscal year ended March 31,2019) and investment securities (¥612 million (U.S.$5,625 thousand) in the fiscal year ended March 31, 2020,¥612 million in the fiscal year ended March 31, 2019) as third party security for bank loans taken out by business
partners. The Company maintains deposits of investment securities (¥3 million (U.S.$28 thousand) and ¥3 million
as of March 31, 2020 and March 31, 2019, respectively) for the purpose of sales transactions.

- 24 -

(2) Liabilities secured by collateralThousands of
U.S. dollars

Millions of yen

Other (current liabilities)
Long-term borrowings(current portion included)Long-term payables under securitization oflease receivables (current portion included)
Total

4

As of March 31, 2020

As of March 31, 2019

As of March 31, 2020

¥

¥

$

¥

23

35

217

44,956

38,832413,090

159

96

1,467

45,139¥38,963$414,775

Loan commitments in lending operations (as lender)
The unused credit balance, etc. in relation to loan commitment in lending operations was as follows:
Thousands of
U.S. dollars

Millions of yen

Total loan commitments
Balance of loans extended
Difference

As of March 31, 2020

As of March 31, 2019

As of March 31, 2020

¥

2,883
1,142

¥

4,715
560

$

26,498
10,495

¥

1,741

¥

4,155

$

16,004Note that the above loan commitment agreements, a condition of lending is review of the borrower’s
use of funds and credit standing, etc., so this does not necessarily mean the full amount of loans will
be extended.
5

Overdraft agreements and loan commitments (as borrower)
The Company has concluded overdraft agreements and loan commitment agreements with 79
correspondent financial institutions, etc. (72 in the fiscal year ended March 31, 2019) for the efficient
procurement of working capital. The unused balance, etc. at the end of the fiscal years ended March
31, 2020 and 2019 based on these agreements was as follows:
Thousands of
U.S. dollars

Millions of yen

Upper limit on overdrafts and total loan
commitments
Balance of borrowings drawn
Difference

As of March 31, 2020

As of March 31, 2019

As of March 31, 2020

¥

¥

$

972,809478,876¥493,932- 25 -

909,509438,865¥

470,6438,938,794
4,400,226$

4,538,568

6

Contingent liabilities(1) Guarantees provided on borrowings, etc. of business partners, etc.
Thousands of
U.S. dollars

Millions of yen
Mizuho Bank, Ltd. (Note)Marubeni Fuyo Auto Investment (CANADA)Inc.
FANTASTIC FUNDING CORPORATION(Note)
Fuyo General Lease (Asia) Pte. Ltd. (Note)
Sumitomo Realty & Development Co., Ltd.
(Note)AEON Mall Co., Ltd.
JAPAN SECURITIZATIONCORPORATION (Note)
MONEY PARTNERS CO., LTD.
AEON RETAIL CO., LTD.
XYMAX ALPHA Corporation (Note)
MaruzenJunkudo Bookstores Co., Ltd. (Note)
Sumitomo Mitsui Trust Bank, Limited (Note)
IBM Japan Credit LLC (Note)
Sumitomo Mitsui Banking Corporation(Note)JCAM AGRI. CO., LTD.
Employees (funds for purchasing housing)
Others(867 in the fiscal year ended March 31, 2020,
821 in the fiscal year ended March 31, 2019)

As of March 31, 2020

As of March 31, 2019

As of March 31, 2020

¥

¥

$

14,398–132,303

1,915

2,066

17,5991,748–

16,064

1,705

1,891

15,675

1,272

1,272

11,691

1,207

1,197

11,097

956

876

8,789

799
682
633
596
499
407

799
676
702
801
–
373

7,350
6,273
5,823
5,484
4,594
3,746

–

372

–

234
10

217
22

2,155
98

27,71624,082

254,679

Total¥
54,787¥35,353
Note: The Company has guaranteed loans, etc. held by Mizuho Bank, Ltd. and others.

$

503,419(2) One of the Company’s domestic consolidated subsidiaries engaged in business guarantee
operations and the balance of guarantees for borrowings of general customers and other entitieswas ¥47,028 million (U.S.$432,132 thousand) as of March 31, 2020 and ¥55,701 million as ofMarch 31, 2019.
*7

Non-recourse debt included in borrowings were as follows:
Thousands of
U.S. dollars

Millions of yen

Current portion of long-term non-recourse
borrowings
Long-term non-recourse borrowings
Total

As of March 31, 2020

As of March 31, 2019

As of March 31, 2020

¥

¥

$

4,531
39,126¥43,657- 26 -

4,580
37,846¥42,427

41,639359,516$

401,155

The assets corresponding to the non-recourse debt were as follows:
Thousands of
U.S. dollars

Millions of yen

Accounts receivable - other loans tocustomers
Assets for lease (property, plant andequipment)
Total

*8

As of March 31, 2020

As of March 31, 2019

As of March 31, 2020

¥

¥

$

39,454
5,767¥

45,22230,506
14,621¥45,127362,534
52,999$415,533

Payables under securitization of lease receivables, long-term payables under securitization of leasereceivables
Payables under securitization of lease receivables and long-term payables under securitization of leasereceivables include the amount of funds raised through securitization of lease agreement receivables,
etc.
Note that the balance of lease agreement receivables, etc. transferred through this was ¥147,132
million (U.S.$1,351,949 thousand) in the fiscal year ended March 31, 2020 and ¥106,730 million in
the fiscal year ended March 31, 2019.

*9

Bills that mature on the last day of the fiscal period
Bills that mature on the last day of the fiscal period are settled on the clearing date of the bills.
Note that since the last day of the fiscal year ended March 31, 2019 was a financial institution holiday,
the following amounts for bills that matured on the last day of the fiscal period have been included in
the balance at the end of the fiscal year.
Thousands of
U.S. dollars

Millions of yen

Notes receivable - trade(installment receivables, lease receivables andinvestments in leases and others included)
Notes payable - trade

As of March 31, 2020

As of March 31, 2019

As of March 31, 2020

¥

¥

$

–
–

- 27 -

169
757

–
–

VI.
*1

Notes for consolidated statements of income
Major components of selling, general and administrative expenses for the fiscal years ended March
31, 2020 and 2019, were as follows:
Thousands of
U.S. dollars

Millions of yen
FY2019(April 1, 2019 March 31, 2020)
Provision of allowance for doubtful accounts
Bad debts expenses
Employees’ salaries, allowances and bonuses
Provision for bonuses
Provision for bonuses for directors (and otherofficers)
Retirement benefit expenses
Provision for retirement benefits for directors(and other officers)
Provision for share awards for directors (andother officers)
Welfare expenses
Rent expenses
Depreciation
Amortization of goodwill

*2

¥

564
770
12,7202,135

FY2018(April 1, 2018 March 31, 2019)¥

FY2019(April 1, 2019 March 31, 2020)–
659
11,416
2,000

$

5,183
7,076
116,886
19,623

182

178

1,677

1,041

858

9,567

35

46

330

189

137

1,740

2,917
1,631
2,124
1,132

2,701
1,436
1,680
768

26,80614,992
19,523
10,404

Impairment losses
The Group recorded impairment losses for the following asset groups:
FY2019 (From April 1, 2019 to March 31, 2020)
Location

Use

Amount(Thousands of
U.S. dollars)

Amount(Millions of yen)

Type
¥

1,274

$

11,711

Chiyoda-ku, Tokyo

Business assets

SoftwareMinato-ku, Tokyo

Idle assets

Telephone subscription
rights1

12Kingdom of Thailand

Business assets

Buildings, etc.

769

The Group classifies its asset groups based on offices, etc., as the minimum unit for generating cash
flows. In addition, idle assets are grouped individually.
With respect to the software and buildings, etc., mentioned above, the Company and two domestic
consolidated subsidiaries reviewed the impairment of non-current assets in accordance with thisgrouping. As a result, the book value of an asset group whose profit or loss from operating activities
that is continually negative or is expected to be negative is reduced to the recoverable amount, andsuch reduced amount is recorded in extraordinary losses as an impairment loss. Excluding divertible
assets, the recoverable amount is measured based on the value in use. However, since no future cash
flows are expected, the value in use is evaluated as zero.
In addition, with respect to the telephone subscription rights mentioned above, due to a decrease indormitories and company housing, etc., for which integrated telecommunication services forresidential buildings are provided, one domestic consolidated subsidiary recorded an impairment loss
for the entire amount of the book value of telephone subscription rights classified as idle with amemorandum value of ¥1 and a market value of zero in extraordinary losses.

- 28 -

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

Use

Amount(Millions of yen)

Type

Tokyo metropolitan area, etc. Idle assets

Telephone subscription rights

Nemuro City, Hokkaido

Leased assets

Idle assets

¥

0
22

The Group classifies its asset groups based on offices, etc., as the minimum unit for generating cash
flows. In addition, idle assets are grouped individually.
With respect to the telephone subscription rights mentioned above, due to a decrease in dormitories
and company housing, etc., for which integrated telecommunication services for residential buildings
are provided, one domestic consolidated subsidiary recorded an impairment loss for the entire amountof the book value of telephone subscription rights classified as idle with a memorandum value of ¥1and a market value of zero in extraordinary losses.
In addition, with respect to the leased assets mentioned above, the book value of the above assets is
reduced to the recoverable amount due to the scheduled for retirement at one domestic consolidated
subsidiary, and such amount of reduction is recorded as an impairment loss in extraordinary losses.
The recoverable amount is measured based on the value in use. However, since no future cash flows
are expected, the value in use is zero.

*3

The breakdown of loss on disposal of non-current assets is as follows.
(1) Loss on sales of non-current assets
Thousands of
U.S. dollars

Millions of yen
FY2019(April 1, 2019 March 31, 2020)
Equipment¥–

FY2018(April 1, 2018 March 31, 2019)¥

2

FY2019(April 1, 2019 March 31, 2020)$–(2) Loss on retirement of non-current assets
Thousands of
U.S. dollars

Millions of yen
FY2019(April 1, 2019 March 31, 2020)

FY2018(April 1, 2018 March 31, 2019)

FY2019(April 1, 2019 March 31, 2020)

Buildings
Equipment
Software

¥

9
2
1

¥

2
4
1

$

90
24
14

Total

¥

14

¥

8

$

129

- 29 -

VII.
*1

Notes for consolidated statements of comprehensive income
Reclassification adjustments and income tax effect relating to other comprehensive income
Thousands of
U.S. dollars

Millions of yen
FY2019(April 1, 2019 March 31, 2020)
Valuation difference on available-for-salesecurities:
Gains or losses arising during the year
Reclassification adjustments to profit orloss¥

Amount before income tax effect
Income tax effect
Valuation difference on available-forsale securities¥

Deferred gains or losses on hedges:
Gains or losses arising during the year
Reclassification adjustments to profit orloss
Amount before income tax effect
Income tax effect
Deferred gains or losses on hedges¥

Foreign currency translation adjustment:
Gains or losses arising during the year
Foreign currency translation adjustment(3,948)FY2018(April 1, 2018 March 31, 2019)¥$(36,277)

504

(586)

4,631

(3,443)
1,063(6,539)1,986(31,646)
9,771(2,380)¥(4,553)$(21,875)

(91)

(478)

(838)

–

0

–

(91)
(37)

(478)
(0)

(838)
(343)

(128)

¥

(686)
¥

(5,953)

FY2019(April 1, 2019 March 31, 2020)

(686)

(478)

$

(1,066)¥(1,066)(1,181)(6,311)$(6,311)Remeasurements of defined benefit plans, netof tax:Gains or losses arising during the year
Reclassification adjustments to profit or
loss

(76)

(58)

(707)

(1)

44

(18)

Amount before income tax effect
Income tax effect

(78)
24

(14)
4

(725)
222

Remeasurements of defined benefit
plans, net of tax¥

Share of other comprehensive income ofentities accounted for using equity method:
Gains or losses arising during the year
Reclassification adjustments to profit or
loss

(54)

¥

(10)

$

(503)

(1,169)15(10,750)

12

9

116

Share of other comprehensive incomeof entities accounted for using equity
method

¥(1,157)¥24$(10,635)

Total other comprehensive income¥(4,408)¥(6,084)$(40,505)- 30 -

Notes for consolidated statements of changes in equity

VIII.

FY2019 (From April 1, 2019 to March 31, 2020)
1.

Type and total number of shares issued, and type and number of treasury shares
Number of shares atthe beginning of theyear (Shares)

Issued shares
Common shares
Total
Treasury shares
Common shares (Note)
Total
Notes: 1.
2.
3.

2.

Decrease(Shares)Number of shares atthe end of the year
(Shares)

30,287,810
30,287,810

–
–

–
–

30,287,810
30,287,810

142,465
142,465

204,569
204,569

31,30031,300315,734
315,734

The number of common shares in treasury shares at the end of the year includes the 102,500 of the Company’s
shares held by the Board Benefit Trust (BBT).
The 204,569 increase in the number of common shares in treasury shares is due to an increase of 204,500
shares through the acquisition of treasury shares by resolution of the Board of Directors and an increase of 69
shares through the acquisition of fractional unit shares.
The 31,300 decrease in the number of common shares in treasury shares was a 29,200 decrease due to theexercise of stock options and a 2,100 decrease due to provision to the Board Benefit Trust (BBT).

Share acquisition rights and treasury shares acquisition rights

Category

Reportingcompany(parent
company)

3.

Increase(Shares)

Type of
Number of shares to be issued upon exercise of
Balance atshares to beshare acquisition rights (Shares)
Balance atComponent of
the end ofissued upon
the end ofshare
the year
exercise of
the yearacquisition(Thousands
Beginning
End of theshare(Millions of
Increase
Decreaserightsof U.S.
of the year
year
acquisition
yen)dollars)
rightsShare
acquisition
–
–
–
–
– ¥
764 $ 7,022
rights as stock
options

Dividends(1) Dividends paid

(Resolution)
June 21, 2019
Annual General
Meeting of
Shareholders
November 6, 2019
Board of Directors
Notes: 1.
2.
3.

Type of shares

Total amount ofcash dividends(Millions of yen)

Dividend per share(Yen)

Common shares¥¥

Common shares

3,327
3,006

110
100

Record date

Effective date

March 31, 2019

June 24, 2019

September 30, 2019 December 3, 2019

Total amount of cash dividends which resolved at Annual General Meeting of Shareholders held on June 21,
2019, include cash dividends of ¥11 million for the Company’s shares held by Board Benefit Trust (BBT).
Dividend per share which resolved at Annual General Meeting of Shareholders held on June 21, 2019,
comprises an ordinary dividend of ¥96 and a commemorative dividend of ¥14.
Total amount of cash dividends which resolved at Board of Directors held on November 6, 2019, include cash
dividends of ¥10 million for the Company’s shares held by Board Benefit Trust (BBT).

- 31 -

(2) Dividends for which record date is in this fiscal year but the effective date for the dividends is in
the following fiscal year
Total amount ofcash dividends(Millions of yen)

(Resolution)

Type of shares

June 23, 2020
Annual General
Meeting of
Shareholders

Common shares ¥(Resolution)

Type of shares

Dividend per
share
(Yen)

Source ofdividends

3,157

Retainedearnings

Total amount ofcash dividends(Thousands of
U.S. dollars)

Source ofdividends¥

105

Dividend per
share(U.S. dollars)

Record date

Effective date

March 31, 2020

June 24, 2020

Record date

Effective dateJune 23, 2020
Annual General
Retained
Common shares $29,016$
0.96
March 31, 2020 June 24, 2020
Meeting of
earnings
Shareholders
Note: Total amount of cash dividends include cash dividends of ¥10 million (U.S.$99 thousand) for the Company’s shares
held by Board Benefit Trust (BBT).

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

Type and total number of shares issued, and type and number of treasury shares
Number of shares atthe beginning of theyear (Shares)

Issued shares
Common shares
Total
Treasury shares
Common shares (Note)
Total
Notes: 1.
2.
3.

2.

Increase(Shares)Number of shares atthe end of the year
(Shares)

Decrease(Shares)

30,287,810
30,287,810

–
–

–
–

30,287,810
30,287,810

64,93964,939104,726
104,726

27,20027,200142,465
142,465

The number of common shares in treasury shares at the end of the year includes the 104,600 of the Company’s
shares held by the Board Benefit Trust (BBT).
The 104,726 increase in the number of common shares in treasury shares is due to an increase of 104,600
shares through the acquisition by the Board Benefit Trust (BBT) and an increase of 126 shares through theacquisition of fractional unit shares.
The 27,200 decrease in the number of common shares in treasury shares was a decrease due to the exerciseof stock options.

Share acquisition rights and treasury shares acquisition rights

Category

Reportingcompany(parent
company)

Component of shareacquisition rights

Share acquisitionrights as stock
options

Type of
Number of shares to be issued upon exercise of share
shares to beacquisition rights (Shares)
Balance atissued upon
the end of theexercise ofyear
Beginning ofEnd of theshare(Millions of
Increase
Decrease
the yearyear
acquisitionyen)rights––- 32 -

–

–

–

¥

842

3.

Dividends(1) Dividends paid

(Resolution)
June 22, 2018
Annual General
Meeting of
Shareholders
November 6, 2018
Board of Directors

Type of shares

Total amount ofcash dividends(Millions of yen)

Dividend per share(Yen)

Common shares¥¥

Common shares

2,357
2,358

78
78

Record date

Effective date

March 31, 2018

June 25, 2018

September 30, 2018 December 4, 2018

(2) Dividends for which record date is in this fiscal year but the effective date for the dividends is in
the following fiscal year
(Resolution)

Type of shares

Total amount ofcash dividends(Millions of yen)

Source ofdividends

Dividend per
share
(Yen)

Record date

Effective dateJune 21, 2019
Annual General
Retained
Common shares ¥
3,327
¥
110
March 31, 2019 June 24, 2019
Meeting of
earnings
Shareholders
Notes: 1.
Total amount of cash dividends include cash dividends of ¥11 million for the Company’s shares held by Board
Benefit Trust (BBT).
2.
Dividend per share comprises an ordinary dividend of ¥96 and a commemorative dividend of ¥14.

- 33 -

IX.
*1

Notes for consolidated statements of cash flows
Relationship between cash and cash equivalents at end of period and cash and deposits stated on the
consolidated balance sheets
Thousands of
U.S. dollars

Millions of yen
FY2019(April 1, 2019 March 31, 2020)
Cash and deposits
Time deposits with maturity of over threemonths¥Cash and cash equivalents¥*2

77,436FY2018(April 1, 2018 March 31, 2019)¥71,173(19)
77,416FY2019(April 1, 2019 March 31, 2020)$(1,255)¥69,918711,534(178)$

711,356

Major components of assets and liabilities of a newly consolidated subsidiary due to acquisition ofshares

FY2019 (From April 1, 2019 to March 31, 2020)
The following includes the breakdown of assets and liabilities at the time of acquisition andconsolidation of LN Holdings, Co., Ltd., NOC Outsourcing & Consulting Inc., NOC Techno-Solutions
Inc., and NOC Biz Partners Inc., and the relation between the acquisition cost of shares and expenditure
for the acquisition (net price).
Millions of yen
Current assets
Non-current assets
Goodwill
Current liabilities
Non-current liabilities
Valuation difference

¥

3,139
3,213
6,946
(1,698)(2,116)(1,179)Acquisition cost of shares
Cash and cash equivalents
Difference: net consideration paid for
acquisition

$

8,304
(1,910)¥

6,393

Thousands of
U.S. dollars
28,84329,53063,825(15,610)(19,445)(10,841)
76,303(17,552)$

58,751FY2018 (From April 1, 2018 to March 31, 2019)
The following includes the breakdown of assets and liabilities at the time of acquisition andconsolidation of Kabushiki Kaisha GI Holdings and INVOICE Inc., and the relation between theacquisition cost of shares and expenditure for the acquisition (net price).
Current assets
Non-current assets
Goodwill
Current liabilities
Non-current liabilities
Valuation difference
Acquisition cost of shares
Cash and cash equivalents¥

Millions of yen
32,4382,346
10,379(35,612)(1,238)
1,302
9,615(7,291)

Difference: net consideration paid for¥
2,323
acquisition
Note: The amounts are presented using figures reflecting material changes to the initial allocation of acquisition costs,
which arose as a result of the finalization of the tentative accounting treatment of business combinations.

- 34 -

Lease transactionsX.

As lessee
1.

Finance leases (including intangible assets)
Finance lease transactions (including intangible assets) that do not transfer ownership
1)

Details of leased assets
Mainly servers, network equipment and office equipment.

2)

Depreciation method for leased assets
The depreciation method for leased assets is described in “4. Summary of significant accounting
policies (2) Depreciation and amortization” under “Basis of presentation.”

2.

Operating leases
Future lease payments under non-cancellable operating leases
Thousands of
U.S. dollars

Millions of yen

Within one year

As of March 31, 2020

As of March 31, 2019

As of March 31, 2020

¥

¥

$

590

Over one year

638

2,068
Total

¥

2,659

5,428

2,056
¥

19,007

2,695$

24,435As lessor
1.

Finance leases(1) Breakdown of investments in leases
Thousands of
U.S. dollars

Millions of yen
As of March 31, 2020

As of March 31, 2019

As of March 31, 2020

Lease receivables
Estimated residual value
Future interest income¥

1,011,779
13,891(116,139)¥

971,704
15,265(110,547)$

9,296,878
127,645(1,067,164)

Investments in leases¥

909,531¥

876,422$

8,357,358(2) Estimated collectible amount of portion of lease receivables arising from lease receivables andinvestments in leases after the consolidated balance sheet date(Millions of yen)
As of March 31, 2020
Within one
year
Lease receivables
Investments in leases¥

52,412287,795

Over one year Over two years
andandwithin two
within three
years
years
¥

45,852
202,639¥

43,435
172,453- 35 -

Over three
years andwithin four
years¥

30,201
108,626

Over four
years andwithin fiveyears¥

10,816
63,064

Over fiveyears¥

29,389177,199

(Thousands of U.S. dollars)
As of March 31, 2020
Within one
year
Lease receivables$

481,595

Investments in leases

Over one year Over two years
andandwithin two
within three
years
years
$

2,644,453

421,326$

1,861,984

399,111

Over three
years andwithin four
years$

1,584,611

277,511

Over four
years andwithin fiveyears$

998,126

99,385

Over fiveyears$

579,477

270,052
1,628,227(Millions of yen)
As of March 31, 2019
Within one
year
Lease receivables¥

Investments in leases

53,224

Over one year Over two years
andandwithin two
within three
years
years
¥

270,925

47,289204,629¥

40,176

Over three
years andwithin fouryears¥

149,70232,385

Over four
years andwithin fiveyears¥

120,816

22,21062,101

Over five years¥

28,257
163,528(3) For finance lease transactions that do not transfer ownership under lease agreements concluded
prior to April 1, 2008, the appropriate book value (net of accumulated depreciation or amortization)
for the assets for lease as of March 31, 2008 is recorded as the price of the investments in leases atthe beginning of the fiscal year.
In addition, the straight-line method is used for allocating to each period the equivalent amount ofinterest for such investments in leases for the period remaining after the application of theaccounting standards, etc.
Note that the consequent impact is omitted for both the fiscal years ended March 31, 2020 and2019 because of immateriality.
2.

Operating leases
Future lease payments required under non-cancellable operating leases
Thousands of
U.S. dollars

Millions of yen

Within one year

As of March 31, 2020

As of March 31, 2019

As of March 31, 2020

¥

¥

$

Over one year
Total

3.

53,313
266,201¥

319,51546,889238,757¥

285,647

489,879
2,446,031$

2,935,910

Sublease transactions
Lease receivables and investments in leases, and lease obligations under sublease transactions on the
consolidated balance sheets are before interest deductions
Thousands of
U.S. dollars

Millions of yen
Lease receivables and investments in leases
Lease obligations (current liabilities)

As of March 31, 2020

As of March 31, 2019

As of March 31, 2020

¥

¥

$

18,981
20,081- 36 -

23,23324,900174,411
184,526

XI.

Financial instruments

1.

Status of financial instruments(1) Policy on financial instruments
The Group is engaged in leasing and installment transactions for machinery, equipment, etc. andfinancial transactions such as the provision of operating loans. The Group uses direct and indirect
financing to procure funds for purchasing assets to lease or to sell through installment sales and forproviding operating loans to customers. The Group’s indirect financing mainly consists of loans
from financial institutions, and its direct financing includes issuing bonds payable, commercial
papers and securitization of receivables. As the Group holds financial assets and financial liabilities
that are subject to interest rate fluctuation, assets and liabilities are comprehensively managed
through asset-liability management (ALM) to mitigate the negative impact of interest rate
fluctuations.
Derivatives are only used for mitigating currency and interest rate fluctuation risks and are not used
for speculative purposes.
(2) Details of financial instruments and associated risks
Lease receivables and investments in leases, and operating loans are trade receivables due from
customers and subject to credit risks associated with customer default. Foreign currencydenominated receivables and payables arising from overseas business are subject to risks
associated with foreign currency fluctuations.
Operational investment securities and investment securities include business partners’ shares,
bonds, and investments in limited partnerships, etc. Those investments are subject to credit risks
associated with the issuers and market price fluctuation risks.
Bonds payable, commercial papers, lease obligations, long-term borrowings, and long-termpayables under securitization of lease receivables are used to procure funds for purchasing assets
to lease or sell through installment sales to customers. These payables are subject to risks that maycompel the Company to procure funds with exceptionally high interest rates and to liquidity risks(funding risks) that may negatively affect the Company’s ability to obtain funding and result in
losses.
A portion of long-term borrowings have floating interest rates and are therefore subject to interest
rate fluctuation risks.
The Company uses foreign currency-related derivatives to reduce risks associated with foreign
currency fluctuations that affect foreign currency-denominated receivables and payables. The
Company uses interest rate-related derivatives to reduce interest rate fluctuation risks that affectborrowings. Please refer to the aforementioned in “4. Summary of significant accounting policies(8) Significant hedge accounting methods” under “Basis of presentation” in regard to hedge
accounting methods for hedge accounting, hedging instruments and hedged items, hedging policies
and methods for assessing hedge effectiveness, etc.
(3) Risk management system for financial instruments
1)

Management of credit risks (default risks, etc.)
The Company’s management system and rules for credit risks are prescribed in its internal“Basic Policy for Managing Credit Risks.”
For all transactions that involve credit risks such as leases, installment sales, selling andpurchasing, financing, and guarantee operations, the Company uses a credit risk measurement
method, etc., identifies on a timely basis the location and size of credit risks, and responds
adequately as necessary.

- 37 -

The Company’s credit risk department is engaged in the following duties: 1) daily monitoringof the effectiveness of the credit risk management system, 2) screening and management ofcredit transactions involving business partners, 3) maintenance and enhancement of risk asset
soundness, 4) enhancement of protection against doubtful receivables and implementation of
measures related to collection of those receivables, and 5) guidance, support, etc. for theCompany’s offices and subsidiaries and associates. The department also rates debtors based on
their financial status, etc. and degree of credit risk (i.e., their ability to pay debts). The credit
ratings are used for credit risk management, portfolio investment and management, credit risk
measurement, guidelines on pricing of individual credits, and self-assessment and recognitionof adequate credit allowances, etc. based on the self-assessments. Further, the department
regularly monitors the status of the Company’s main business partners, manages payment-due
dates and credit balances on a customer-by-customer basis, and closely monitors customers to
identify potential impediments to the collectability of receivables (e.g., due to worsening
financial condition) and takes steps to mitigate such impediments.
The effectiveness and appropriateness of credit risk management are examined through internal
audits.
2)

Management of market risks (risks associated with foreign exchange rates, interest rates, etc.)
The Company’s market risk management rules and procedures are prescribed in its internal“Basic Policy for Managing Market and Liquidity Risks.”
Market risks are controlled by comprehensively examining various factors such as financial
position (revenues and shareholders’ equity), balance between target revenues and risk levels,interest rate prospects, market environments, past results, and the level of risk management forvarious risks. The Company manages its exposure to risks when deemed necessary for the
purpose of reducing risks and expanding revenues.
The Company’s ALM Committee meets once a month as a general rule, and on an ad-hoc basis
as needed, to review and examine practical measures related to market risk management and tomonitor performance. At the monthly meeting, etc., the finance division reports on mattersrelated to market risk management, including the status of market risk control, interest rate
prospects, developments of market environment, etc., and hedge transactions, etc.
The Company’s consolidated subsidiaries are subject to the Company’s “Basic Policy forManaging Market and Liquidity Risks.”(i)Interest rate fluctuation risk management
The Company comprehensively manages interest rate fluctuation risks using ALM. The
ALM Committee ascertains and monitors the status of ALM operations and discusses future
direction and strategy based on the Company’s ALM policies.

(ii) Foreign exchange risk management
The Company manages foreign exchange risk on a case-by-case basis, using forward
exchange contracts as a general rule.
(iii) Price fluctuation risk management
With regard to operational investment securities and investment securities, the Company
regularly monitors the fair value of these securities as well as the financial status of issuersand continuously reviews its financial position considering market conditions and its
relationship with the issuers.
(iv) Derivatives
With regard to derivatives, the Company uses forward exchange contracts for the purposeof hedging risks associated with foreign currency fluctuations that affect its foreign
currency-denominated receivables and payables. The Company uses interest rate swap
contracts for the purpose of hedging interest rate fluctuation risks that affect its borrowings.

- 38 -

The Company’s finance division is authorized to engage in and manage derivatives, inaccordance with internal regulations and individuals authorized on job responsibilities andpursuant to the approval of the Company’s president (CEO) or officer in charge of thefinance division.
The Company’s consolidated subsidiaries’ derivative-related transactions are subject to theCompany’s internal regulations “Basic Policy for Managing Market and Liquidity Risks.”
In accordance with the Company’s “Regulations on Managing Subsidiaries and Associates,”
the Company’s consolidated subsidiaries report to the Company on derivative-relatedtransactions. These reports explain the subsidiary’s policy on engaging in the transaction,
provide a validation of the transaction’s objective, and detail the derivatives’ status,
counterparties, outstanding positions, and unrealized gains or losses.
(v)

Quantitative information on market risk
The major types of financial instruments affected by interest rate risk, the Group’s main risk
factors, are “Installment receivables,” “Lease receivables and investments in leases,”“Operating loans,” other marketable securities recorded under “Operational investment
securities and investment securities,” “Bonds payable,” “Long-term borrowings,” “Longterm payables under securitization of lease receivables,” and interest rate swaps contracts
included in “Derivatives.” The Group performs quantitative analysis in managing the riskof interest rate fluctuations. This quantitative analysis incorporates the potential change invalue of these financial assets and liabilities based on a reasonable range of potential interest
rate movements. To calculate the potential change in value, the financial assets and liabilities
are split into fixed-rate and variable-rate categories. For the fixed-rate category, theCompany allocates the book value of the instruments into appropriate categories based on
their interest-payment dates and applies an appropriate potential range of interest rate
movements to each category. Assuming all risk factors other than interest rates remain
constant, as of the fiscal year-end, a 10 basis point (0.1%) change in interest rates would
result in a change of ¥3,784 million (U.S.$34,778 thousand) for the fiscal year ended March
31, 2020 and a change of ¥3,922 million for the fiscal year ended March 31, 2019 in the fairvalue of these financial assets and liabilities. This potential change in value is based on theassumption that all risk factors other than interest rates remain constant and does notincorporate the effects of correlation between interest rates and the other risk factors. If
interest rates fluctuate beyond the assumed reasonable range, the value of these financial
assets and liabilities may be affected by more than the Group has estimated.

3)

Management of liquidity risks associated with funding (risks of failure to pay on due date)
The Company’s management system and rules for liquidity risks are prescribed in its internal“Basic Policy for Managing Market and Liquidity Risks.”
With regard to liquidity risks (funding risks), the Company’s finance division rigorously
controls funding for ordinary operations. The division prepares daily statements of cash
receipts/disbursements and an outlook of weekly and monthly cash receipts/disbursements,
analyzes investment and cash receipt/disbursement data, and receives reports, etc. from eachdivision to determine the impact on the Company’s funding activities. The division also
adequately controls liquidity, enhances capital efficiency, and optimizes liquidity risks andfunding costs.
Funding is measured by adequately monitoring economic conditions, market environments, etc.
Liquidity risks are allocated to management categories by level of funding and managed basedon predetermined response policies and implementation standards for each category.
The Company’s finance division also monitors consolidated subsidiaries’ funding status andtakes appropriate action as necessary based on that status.

(4) Supplementary explanation related to fair values, etc. of financial instruments
The fair value of a financial instrument represents its market value or a reasonably calculated value
if a market value is not available. Because calculations involve variable inputs, the results of- 39 -

calculations may vary depending on what premises and assumptions are used. Contract amounts
and other derivatives data presented in “Derivatives” are nominal contract amounts or notionalamounts used in calculations and do not indicate the amount of exposure.
2.

Fair values, etc. of financial instruments
The book values, the fair values and their differences are as follows. The following table does notinclude financial instruments for which it is extremely difficult to determine the fair value (See Note2). Financial assets and liabilities, etc. not included in the following table are omitted from disclosure
as they are immaterial in terms of value.
As of March 31, 2020
Millions of yen
Book value (A)77,43678,362

Fair value (B)¥77,43679,706

Difference (B) - (A)(1) Cash and deposits(2) Installment receivables*1,2(3) Lease receivables and investments inleases*2(4) Operating loans*2(5) Operational investment securities andinvestment securities
Other securities

¥

¥

–
1,343

Total assets¥

1,774,937¥

1,833,373¥

58,435(1) Short-term borrowings(2) Commercial papers(3) Lease obligations(current liabilities and non-current
liabilities)(4) Bonds payable(current portion included)(5) Long-term borrowings(current portion included)(6) Long-term payables under securitizationof lease receivables(current portion included)¥

530,317450,700¥

530,317450,700¥––

Total liabilities¥

2,222,841¥

2,233,652¥

10,811

Derivatives*3(i) Hedge accounting not applied(ii) Hedge accounting applied

¥

–
(559)

¥

–
(716)

¥

–
(157)

Total derivatives

¥

(559)

¥

(716)

¥

(157)

1,105,398

1,159,082

53,683

306,444309,853

3,408

207,295

207,295–

20,72020,720–170,000

169,756(243)

954,837

965,448

10,61096,26596,710444- 40 -

Thousands of U.S. dollars
Book value (A)711,534
720,047

Fair value (B)$711,534
732,393

Difference (B) - (A)(1) Cash and deposits(2) Installment receivables*1,2(3) Lease receivables and investments inleases*2(4) Operating loans*2(5) Operational investment securities andinvestment securities
Other securities$$–
12,346

Total assets$

16,309,266$

16,846,211$

536,946(1) Short-term borrowings(2) Commercial papers(3) Lease obligations(current liabilities and non-current
liabilities)(4) Bonds payable(current portion included)(5) Long-term borrowings(current portion included)(6) Long-term payables under securitizationof lease receivables(current portion included)$

4,872,898
4,141,321$

4,872,898
4,141,321$––

Total liabilities

10,157,116

10,650,392

493,276

2,815,808

2,847,132

31,324

1,904,760

1,904,760–

190,390

190,390–

1,562,069

1,559,827(2,242)

8,773,665

8,871,163

97,498884,550

888,635

4,086$

20,424,893

Derivatives*3(i) Hedge accounting not applied(ii) Hedge accounting applied$

20,524,235

Total derivatives$

99,342$–(5,137)$–(6,584)$–(1,448)$(5,137)$(6,584)$(1,448)*1.

Net of deferred profit on installment sales.

*2.

Net of general and specific allowances for doubtful accounts related to installment receivables, lease receivables
and investments in leases, and Operating loans.

*3.

Assets and liabilities arising from derivatives are carried at net amounts with amounts in parentheses
representing a net liability position.

- 41 -

As of March 31, 2019
Millions of yen
Book value (A)71,17396,012

Fair value (B)¥71,173
97,466

Difference (B) - (A)(1) Cash and deposits(2) Installment receivables*1,2(3) Lease receivables and investments inleases*2(4) Operating loans*2(5) Operational investment securities andinvestment securities
Other securities

¥

¥

–
1,454

Total assets¥

1,747,878¥

1,806,542¥

58,664(1) Short-term borrowings(2) Commercial papers(3) Lease obligations(current liabilities and non-current
liabilities)(4) Bonds payable(current portion included)(5) Long-term borrowings(current portion included)(6) Long-term payables under securitizationof lease receivables(current portion included)¥491,659
500,700¥

491,659
500,700¥––

Total liabilities¥

2,099,754¥

2,113,437¥

13,682Derivatives*3(i) Hedge accounting not applied(ii) Hedge accounting applied

¥

–
(479)

¥

–
(655)

¥

–
(176)

Total derivatives

¥

(479)

¥

(655)

¥

(176)

1,082,446

1,133,875

51,429297,729

303,510

5,781

200,516

200,516–

25,696

25,696–125,000

124,943(56)

890,394

903,580

13,186

66,304

66,857553*1.

Net of deferred profit on installment sales.

*2.

Net of general and specific allowances for doubtful accounts related to Installment receivables, leasereceivables and investments in leases, and operating loans.

*3.

Assets and liabilities arising from derivatives are carried at net amounts with amounts in parentheses
representing a net liability position.

- 42 -

Notes: 1. Measurements of fair value of financial instruments, and securities and derivatives
Assets(1) Cash and deposits
The fair values of deposits that have no maturity are based on their book value, which closely
approximate their fair values.
(2) Installment receivables
Fair values are calculated by discounting uncollected receivables at the rate applied to newcontracts. The Company calculates the fair values of doubtful receivables by deducting
estimated losses on bad debts from their book values as of the consolidated balance sheet date.
The resulting amount closely approximates the doubtful receivables’ fair values. Estimatedlosses on bad debts are calculated based on estimated cash flows or estimated net realizablevalue, etc. covered by collateral or guaranty.
(3) Lease receivables and investments in leases
Present values of lease receivables and investments in leases are calculated by subtracting majoradministrative and maintenance expenses from the total of uncollected lease receivables andlease payment receivables. The Company calculates the fair values of doubtful receivables bydeducting estimated losses on bad debts from their book values as of the consolidated balance
sheet date. The resulting amount closely approximates the doubtful receivables’ fair values.
Estimated losses on bad debts are calculated based on estimated cash flows or estimated net
realizable value, etc. covered by collateral or guaranty.
Lease receivables and investments in leases under sublease contracts are recorded on the
consolidated balance sheets before interest deductions. The amount recorded as the fair value
is the book value on the consolidated balance sheet. The difference between (a) the fair valued
calculated by discounting at the rate applied to new contracts and (b) their book value of leasereceivables and investments in leases under sublease contracts is ¥390 million (U.S.$3,590
thousand) as of March 31, 2020 and ¥363 million as of March 31, 2019.
(4) Operating loans
Fair values of floating-rate operating loans are based on their book value. Market rates arereflected in the rates on floating-rate operating loans in a short period of time, so their bookvalue closely approximate their fair values as long as the borrower credit status does not changematerially after loan issuance. Fair values of fixed-rate operating loans are calculated bydiscounting total principal and interest for each borrower at the rate applied to new contracts.
The Company calculates the fair values of doubtful receivables by deducting estimated losses
on bad debts from their book values as of the consolidated balance sheet date. The resulting
amount closely approximates the doubtful receivables’ fair values. Estimated losses on bad
debts are calculated based on estimated cash flows or estimated net realizable value, etc.
covered by collateral or guaranty.
(5) Operational investment securities and investment securities
Fair values are based on amounts obtained from relevant financial and other institutions. In
addition, please refer to “Securities” in regard to other securities.
Liabilities(1) Short-term borrowings, (2) Commercial papers
Fair values of short-term borrowings and commercial papers are based on their book value
because they are settled over the short-term, so their book value closely approximate their fairvalues.
(3) Lease obligations (current liabilities and non-current liabilities)
Lease obligations are stated on the consolidated balance sheets before interest deductions. The
amount recorded as the fair value is their book value on the balance sheets. The difference- 43 -

between the fair value calculated by discounting at the rate applied to new contracts and theirbook value of lease obligations is ¥145 million (U.S.$1,333 thousand) as of March 31, 2020and ¥161 million as of March 31, 2019.
(4) Bonds payable (current portion included), (5) Long-term borrowings (current portion included),(6) Long-term payables under securitization of lease receivables (current portion included)
Fair values of floating-rate loans and payables in these categories are based on their book value.
Market rates are reflected in the rates on these loans and payables in a short period of time, andthe Company’s credit status has not changed materially since issuance, so their book value are
deemed to closely approximate to their fair values. To calculate the fair values of fixed-rateloans and payables in these categories, the instruments are first allocated to categories according
to maturity terms. Total principal and interest for each category is discounted at a notional ratethat is assumed would apply to borrowing in the same amount.
Derivatives
Please refer to “Derivatives.”
2. Financial instruments whose fair values are deemed extremely difficult to determine

Other securities
Unlisted shares*1
Subsidiary’s shares / associates’ shares*1
Preferred securities / beneficial interest in
trusts*1
Investments in limited partnerships, etc.*2
Total

Thousands of
U.S. dollars

Millions of yen

Category

As of March 31, 2020

As of March 31, 2019

As of March 31, 2020

¥

¥

$

¥

6,615
24,045

5,754
23,92160,792
220,948

5,225

2,600

48,016

83,63939,557

768,530

119,526¥

71,834$

1,098,286*1.

These are not included in “(5) Operational investment securities and investment securities” because their market
values are not available, and it is deemed extremely difficult to determine their fair values.

*2.

Within investments in limited partnerships, etc., the fair values of partnership assets consisting of investments
whose fair values are deemed extremely difficult to determine are not included.

- 44 -

3. Redemption schedule by term for monetary receivables and securities with maturity after the
consolidated balance sheet dates
As of March 31, 2020
Millions of yen
Within one year
Cash and deposits
Installment receivables
Lease receivables and investments inleasesOperating loans
Operational investment securities
and investment securities
Other securities with maturities
Bonds (government bonds)
Bonds (corporate bonds)
Bonds (other)
Other

¥

Total

¥

77,436
31,281

Over one year andwithin five years

Over five years andwithin ten years¥¥–
44,425–
1,993

Over ten years
¥

–
2,053

307,532

619,910

132,60746,78956,887

213,086

31,600

5,550

–
3,307
–
449

–
18,288–80,287–
11,243–30,918

–
–
–
3,346

476,895¥

975,997¥

208,363¥

57,739Thousands of U.S. dollars
Within one year
Cash and deposits
Installment receivables
Lease receivables and investments inleasesOperating loans
Operational investment securities
and investment securities
Other securities with maturities
Bonds (government bonds)
Bonds (corporate bonds)
Bonds (other)
Other

$

Total

$

711,534
287,435

Over one year andwithin five years

Over five years andwithin ten years$$–
408,209–18,315

Over ten years$–
18,8662,825,809

5,696,133

1,218,484

429,934

522,721

1,957,977

290,363

51,001–30,392–
4,131–
168,046–
737,732–
103,313–284,103–––30,7504,382,022$- 45 -

8,968,097$

1,914,577$

530,551

As of March 31, 2019
Millions of yen
Within one year
Cash and deposits
Installment receivables
Lease receivables and investments inleasesOperating loans
Operational investment securities
and investment securities
Other securities with maturities
Bonds (government bonds)
Bonds (corporate bonds)
Bonds (other)
Other

¥

Total

¥

71,17340,913

Over one year andwithin five years

Over five years andwithin ten years¥¥–
52,298–2,051

Over ten years
¥

–
2,189

293,371

623,455

127,286

39,416

63,778172,81255,356

6,484

–
4,701
–
22,309–16,280–37,641–
11,056–
14,454

–
–
–
2,411

496,248¥- 46 -

902,489¥

210,206¥

50,501

4. Repayment schedule by term for bonds payable, long-term borrowings, and other interestbearing debt after the consolidated balance sheet dates.
As of March 31, 2020
Millions of yen

Short-term borrowings
Commercial papers
Lease obligations
Bonds payable
Long-term borrowings
Long-term payables under
securitization of leasereceivables

Within one
year

Over one year
andwithin two
yearsOver twoyears andwithin three
years

Over three
years andwithin four
years

Over four
years andwithin five
years

¥

¥

¥

¥

¥

530,317450,700
7,417
20,000274,820
41,396

Total

–
–
4,999
30,000233,864––
3,510
30,000177,699

29,493298,356––
2,264
25,000104,495

17,023¥228,233

3,509¥

135,268––
1,051
35,00075,666

Over five
years
¥

4,792

¥ 1,324,651¥¥

116,510Within one
year

Over one year
andwithin two
yearsOver twoyears andwithin three
years

Over three
years andwithin four
years

Over four
years andwithin five
years

$

$

$

$

–
–
1,477
30,00088,291
51¥

119,820

Thousands of U.S. dollars––
45,936
275,659
2,148,897––
32,254
275,659
1,632,821––
20,806
229,716
960,169––
9,662
321,602695,269Over fiveyears

Short-term borrowings
Commercial papers
Lease obligations
Bonds payable
Long-term borrowings
Long-term payables under
securitization of leasereceivables$ 4,872,898
4,141,321
68,160183,773
2,525,226$––
13,573
275,659
811,283

380,375

271,001

156,419

32,24644,036473

Total$ 12,171,753$ 2,741,493$ 2,097,153$ 1,242,937$ 1,070,569$ 1,100,987

Within one
year

Over one year
andwithin two
yearsOver twoyears andwithin three
years

Over three
years andwithin four
years

Over four
years andwithin five
years

Over five
years

¥

¥

¥

¥

¥

As of March 31, 2019
Millions of yen

Short-term borrowings
Commercial papers
Lease obligations
Bonds payable
Long-term borrowings
Long-term payables under
securitization of leasereceivables
Total

491,659
500,700
10,37920,000244,023
27,802¥ 1,294,565

–
–
6,476
20,000207,414
18,348¥252,238––
3,984
30,000178,555
10,107¥- 47 -

222,648––
2,403
10,000107,752
4,046¥

124,202––
1,135
25,00064,697¥574¥

91,407––1,315
20,00087,9505,425¥

114,692

XII.

Securities

1.

Other securities
As of March 31, 2020
Millions of yen
TypeAcquisition
cost

Book value(1) Shares¥

59,723¥

13,746

Difference¥

45,977(2) Bonds
1)
Securities whose book value
exceeds their acquisition cost

Government bonds andlocal government bonds,
etc.

2)

Corporate bonds

3)

Other

(3) Other
Subtotal(1) Shares

–

–

–

64,87464,200

674

–

–

–

22,93020,883

2,047

147,528

98,82948,698

2,739

3,558

(819)

–

–

–

27,582

27,710(127)(2) Bonds
1)
Securities whose book value does
not exceed their acquisition cost

Government bonds andlocal government bonds,
etc.

2)

Corporate bonds

3)

Other

(3) Other
Subtotal
Total

¥

–

–

–

29,44430,512(1,068)59,766

61,781(2,014)

207,295¥

160,611¥

46,683Thousands of
U.S. dollars

Type

Acquisition
cost

Book value(1) Shares$

548,778$

126,310Difference$

422,468(2) Bonds
1)
Securities whose book value
exceeds their acquisition cost

Government bonds andlocal government bonds,
etc.

2)

Corporate bonds

3)

Other

(3) Other
Subtotal(1) Shares

–

–

–

596,105

589,911

6,194

–

–

–

210,701

191,887

18,814

1,355,584

908,108

447,476

25,17232,702(7,530)–––253,448

254,617(1,169)(2) Bonds
1)
Securities whose book value does
not exceed their acquisition cost

Government bonds andlocal government bonds,
etc.

2)

Corporate bonds

3)

Other

(3) Other
Subtotal
Total

$

–

–

–

270,557

280,373(9,816)549,177

567,692(18,515)

1,904,760$ 1,475,799$

428,961

Note: Unlisted shares, etc. (Book value ¥95,480 million (U.S.$877,338 thousand)) are not included in the above “Other
securities” because their market values are not available, and it is deemed extremely difficult to determine theirfair values.

- 48 -

As of March 31, 2019
Millions of yen
TypeAcquisition
cost

Book value(1) Shares¥

62,771¥

14,123Difference¥

48,648(2) Bonds
1)
Securities whose book value
exceeds their acquisition cost

Government bonds andlocal government bonds,
etc.

2)

Corporate bonds

3)

Other

(3) Other
Subtotal(1) Shares

–

–

–

73,68672,800

885

–

–

–

19,67418,084

1,590

156,132

105,008

51,124

1,822

2,515

(693)

–

–

–

8,600

8,600

–

(2) Bonds
1)
Securities whose book value does
not exceed their acquisition cost

Government bonds andlocal government bonds,
etc.

2)

Corporate bonds

3)

Other

(3) Other
Subtotal–––

33,961

34,298(336)

44,384

Total¥

200,516

45,414¥150,423(1,030)¥50,093

Note: Unlisted shares, etc. (Book value ¥47,912 million) are not included in the above “Other securities” because theirmarket values are not available, and it is deemed extremely difficult to determine their fair values.

- 49 -

2.

Other securities soldFY2019 (From April 1, 2019 to March 31, 2020)
Millions of yen

Type(1) Shares(2) Bonds
1) Government bonds andgovernment bonds, etc.
2) Corporate bonds3) Other(3) Other

Sales proceeds
¥
local

Total

¥

¥

Total loss

395

¥

0

–

–

–

–
–
–

–
–
–

–
–
–

406

¥

395

¥

0

Thousands of U.S. dollars

Type(1) Shares(2) Bonds
1) Government bonds andgovernment bonds, etc.
2) Corporate bonds3) Other(3) Other406

Total gain

Sales proceeds
$

3,735

local

Total

$

Total gain$

Total loss

3,635

$

0

–

–

–

–
–
–

–
–
–

–
–
–

3,735

$

3,635

$

0

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

Type(1) Shares(2) Bonds
1) Government bonds andgovernment bonds, etc.
2) Corporate bonds3) Other(3) Other

Sales proceeds
¥
local

Total

3.

¥

2,488

Total gain¥

Total loss

941

¥

–

–

–

–

–
–
–

–
–
–

–
–
–

2,488

¥

941

¥

–

Impairment losses on securities
During the fiscal year ended March 31, 2020, impairment loss recorded on securities amounted to¥545 million (U.S.$5,012 thousand) (securities classified as other securities: ¥545 million (U.S.$5,012
thousand)) and during the fiscal year ended March 31, 2019, impairment loss recorded on securities
amounted to ¥– million (securities classified as other securities: ¥– million).
The Company recognizes the impairment losses where the decline in the price at year end is greaterthan or equal to 50% of the acquisition cost. Where the decline in the price is between 30% and lessthan 50% of the acquisition cost, the Company may recognize impairment losses, taking into
consideration the credit rating of the issuer, the materiality of the amount, the likelihood of the
securities recovering in price, etc., as well as the analysis of the level of market price by looking at the
gap between the book value and the highest and lowest price and other data during the fiscal years
ended March 31, 2020 and 2019.

- 50 -

XIII.
1.

Derivatives
Derivatives to which hedge accounting is not applied(1) Foreign currency-related derivatives
As of March 31, 2020
Not applicable
As of March 31, 2019
Not applicable(2) Interest rate-related
As of March 31, 2020
Not applicable
As of March 31, 2019
Not applicable2.

Derivatives to which hedge accounting is applied(1) Foreign currency-related derivatives
As of March 31, 2020
Not applicable
As of March 31, 2019
Not applicable(2) Interest rate-related contracts
As of March 31, 2020
Millions of yen
Hedge accounting

Type of contracts

Principle treatment

Exceptional treatment ofinterest rate swaps

Interest rate swap
contracts:
Fixed rate payment,
floating rate receipt
Interest rate swap
contracts:
Fixed rate payment,
floating rate receipt

Hedged item

Contract
amount, etc.

Contract
amount, etc. ofover one year

Borrowings¥¥

Borrowings

Total

37,048¥- 51 -

101,266

138,31486,430Fair value¥

23,319¥109,749

(559)

(157)
¥

(716)

Thousands of U.S. dollars
Hedge accounting

Principle treatment

Exceptional treatment ofinterest rate swaps

Type of contracts
Interest rate swap
contracts:
Fixed rate payment,
floating rate receipt
Interest rate swap
contracts:
Fixed rate payment,
floating rate receipt

Hedged item

Contract
amount, etc.

Contract
amount, etc. ofover one year

Borrowings$$

Borrowings

Total
Note: Measurements of the fair value

930,498

794,183

340,423

214,271$ 1,270,921$ 1,008,454

Fair value$(5,137)(1,448)$(6,584)

The fair values are based on the amounts, etc. presented by relevant financial and other institutions.

As of March 31, 2019
Millions of yen
Hedge accounting

Principle treatment

Exceptional treatment ofinterest rate swaps

Type of contracts
Interest rate swap
contracts:
Fixed rate payment,
floating rate receipt
Interest rate swap
contracts:
Fixed rate payment,
floating rate receipt

Hedged item

Contract
amount, etc.

Contract
amount, etc. ofover one year

Borrowings¥¥

Borrowings

Total
Note: Measurements of the fair value

9,553

29,815¥39,3689,553

Fair value¥

26,176¥35,729(176)¥

The fair values are based on the amounts, etc. presented by relevant financial and other institutions.

- 52 -

(479)

(655)

XIV.
1.

Retirement benefits
Overview of the Group’s retirement benefits plan
The Company has a defined-benefit corporate pension fund plan (established by the Company andGroup companies) and a defined-benefit corporate pension plan as its defined-benefit system, and it
also has a defined-contribution pension plan as its defined-contribution system.
The defined-benefit corporate pension fund plan is the only fund type and provides a lump-sum
payment or pension based on the employees’ final salary points and lengths of service. Furthermore,certain defined-benefit corporate pension fund plans have retirement benefit trusts.
The defined-benefit corporate pension fund plan (established by the Company and Group companies)
which is multi-employer type of pension plan is accounted for in the same manner as a definedcontribution pension plan because it is not possible to reasonably estimate the value of plan assets
corresponding to the contribution of each company.
The defined-contribution pension plan was transferred from a termination allowance plan on
November 1, 2009. The defined-contribution pension plan, under which employees are participants,
is funded by the contributions based on the participant’s plan course and eligibility.
Some of the domestic consolidated subsidiaries have a defined-benefit corporate pension plan and atermination allowance plan as its defined-benefit pension system.
Some of the domestic consolidated subsidiaries, which have a defined-benefit corporate pension plan
and a termination allowance plan, use simplified accounting methods for calculation of retirement
benefit liability and retirement benefit expenses. In the termination allowance plan, retirement benefit
obligations are recorded in the amount to be paid for voluntary retirement as of fiscal year-end. In thecorporate pension plan, retirement benefit obligations are recorded in the amount of actuarial liability
calculated under the latest pension funding programs.
The Company and some of its domestic consolidated subsidiaries may make lump-sum payments ofpremium retirement benefits to some employees at their retirement and certain situation.

2.

Defined-benefit pension plan (excluding pension plans using the simplified accounting methods)(1) Reconciliation of retirement benefit obligations as of beginning of year and as of end of year
Thousands of
U.S. dollars

Millions of yen
FY2019(April 1, 2019 March 31, 2020)
Retirement benefit obligations at beginning ofyear
Service cost
Interest cost
Actuarial gains or losses
Retirement benefits paid
Retirement benefit obligations at end of year¥

11,581FY2018(April 1, 2018 March 31, 2019)
¥

571
58
7
(377)
¥

11,841- 53 -

11,244FY2019(April 1, 2019 March 31, 2020)
$

593
57
(6)
(307)
¥

11,581

106,414
5,255
539
67
(3,466)$

108,809(2) Reconciliation of plan assets as of beginning of year and as of end of year
Thousands of
U.S. dollars

Millions of yen
FY2019(April 1, 2019 March 31, 2020)

FY2018(April 1, 2018 March 31, 2019)

FY2019(April 1, 2019 March 31, 2020)

Plan assets at beginning of year
Expected return on plan assets
Actuarial gains or losses
Contribution from employer
Retirement benefits paid¥

10,392
249
(383)
473
(371)

¥

10,165
260
(196)
467
(304)

$

95,494
2,294(3,523)
4,353(3,414)

Plan assets at end of year¥

10,360¥

10,392$

95,202(3) Reconciliation of retirement benefit obligations and plan assets at end of fiscal year and retirement
benefit liability and retirement benefit asset recorded in the consolidated balance sheets
Thousands of
U.S. dollars

Millions of yen

Retirement benefit obligations for fundedpension plans
Plan assets

As of March 31, 2020

As of March 31, 2019

As of March 31, 2020

¥

¥

$

11,841

11,581

108,809(10,360)(10,392)(95,202)

1,480

1,188

13,607–––

Net assets or liabilities recorded in the
consolidated balance sheets

1,480

1,188

13,607Retirement benefit liability
Retirement benefit asset

1,480
–

1,188
–

13,607–Retirement benefit obligations for unfundedpension plans

Net assets or liabilities recorded in the
consolidated balance sheets

¥

1,480

¥

1,188

$

13,607(4) Breakdown of retirement benefit expenses
Thousands of
U.S. dollars

Millions of yen
FY2019(April 1, 2019 March 31, 2020)
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Amortization of prior service cost
Other
Retirement benefit expenses for definedbenefit pension plan

FY2018(April 1, 2018 March 31, 2019)

FY2019(April 1, 2019 March 31, 2020)

¥

571
58
(249)
311
–
(48)

¥

593
57
(260)
174
–
(44)

$

5,255
539
(2,294)
2,865
–
(449)

¥

643

¥

520

$

5,917

- 54 -

(5) Remeasurements of defined benefit plans
The components of items recorded in remeasurements of defined benefit plans, net of tax
included in other comprehensive income were as follows:
Thousands of
U.S. dollars

Millions of yen
FY2019(April 1, 2019 March 31, 2020)
Prior service cost
Actuarial gains or losses
Total

FY2018(April 1, 2018 March 31, 2019)

FY2019(April 1, 2019 March 31, 2020)

¥

–
(78)

¥

–
(14)

$

–
(725)

¥

(78)

¥

(14)

$

(725)

(6) Remeasurements of defined benefit plans
The components of items recorded in remeasurements of defined benefit plans, net of tax
included in accumulated other comprehensive income were as follows:
Thousands of
U.S. dollars

Millions of yen

Unrecognized prior service cost
Unrecognized actuarial gains or losses
Total

As of March 31, 2020

As of March 31, 2019

As of March 31, 2020

¥

–
176

¥

–
97

$

–
1,624

¥

176

¥

97

$

1,624

(7) Plan assets
1)

Breakdown of plan assets
Ratio of each major component of plan assets was as follows:

Bonds
SharesCash and deposits
General account
Other

As of March 31, 2020
%
38
15
6
31
10

As of March 31, 2019
%
38
19
3
30
10

Total
100
100
Note: The total includes retirement benefits trust established for corporate pension plan at 5% in the fiscal year ended
March 31, 2020 and 5% in the fiscal year ended March 31, 2019.

2)

Estimation of expected long-term rate of return on plan assets
Expected long-term rate of return on plan assets is estimated based on current and expected
future distribution of plan assets as well as current and expected future long-term rate of returnon various components of plan assets.

(8) Basis for actuarial calculation
Major basis for actuarial calculation

Discount rate
Expected long-term rate of return
Expected increase in salary

As of March 31, 2020%
0.37 - 0.98
2.37 - 2.50
1.28 - 3.75

- 55 -

As of March 31, 2019%0.37 - 0.98
2.50 - 2.58
1.37 - 3.75

3.

Defined-benefit pension plans using the simplified accounting methods(1) Reconciliation of retirement benefit liability for the pension plans using the simplified accounting
methods as of beginning of year and as of end of year
Thousands of
U.S. dollars

Millions of yen
FY2019(April 1, 2019 March 31, 2020)
Retirement benefit liability at beginning ofyear
Retirement benefit expenses
Retirement benefits paid
Increase by the new consolidated
subsidiary
Retirement benefit liability at end of year

¥

¥

681

FY2018(April 1, 2018 March 31, 2019)¥

401

FY2019(April 1, 2019 March 31, 2020)
$

6,259

135
(120)

84
(12)

1,248
(1,103)

–

207

–

696

¥

681

$

6,404

(2) Reconciliation of retirement benefit obligations and plan assets at end of fiscal year and retirement
benefit liability and retirement benefit asset recorded in the consolidated balance sheets
Thousands of
U.S. dollars

Millions of yen

Retirement benefit obligations for fundedpension plans
Plan assets

As of March 31, 2020

As of March 31, 2019

As of March 31, 2020

¥

¥

$

473

474

4,354

(145)

(141)

(1,339)

328

332

3,015

Retirement benefit obligations for unfundedpension plans

368

348

3,389

Net assets or liabilities recorded in the
consolidated balance sheets

696

681

6,404

Retirement benefit liability
Retirement benefit asset

696
–

681
–

6,404
–

Net assets or liabilities recorded in the
consolidated balance sheets

¥

696

¥

681

$

6,404

(3) Retirement benefit expenses
Retirement benefit expenses calculated by simplified accounting method
FY2019 (April 1, 2019 - March 31, 2020): ¥135 million (U.S.$1,248 thousand)
FY2018 (April 1, 2018 - March 31, 2019): ¥84 million
4.

Defined contribution plan
In the fiscal years ended March 31, 2020 and 2019 the amount required to be contributed by theCompany to the defined-contribution pension plan amounted to ¥84 million (U.S.$773 thousand)and ¥81 million, respectively.

5.

Multi-employer type of pension plan
In the fiscal years ended March 31, 2020 and 2019 the amount required to be contributed to thedefined-benefit corporate pension fund plan (established by the Company and Group companies)
of multi-employer type of pension plan amounted to ¥177 million (U.S.$1,630 thousand) and ¥171

- 56 -

million, respectively. The contribution is accounted for in the same manner with a definedcontribution pension plan.
(1) Most recent funded status of the multi-employer welfare pension plan
Thousands of
U.S. dollars

Millions of yen
As of March 31, 2020

As of March 31, 2019

As of March 31, 2020

As of March 31, 2019

As of March 31, 2018

As of March 31, 2019

Amount of plan assets
Actuarial liability under pension funding
programs¥¥$

Difference¥

13,171
13,929(758)

12,26013,496¥(1,235)

121,027
127,996$(6,968)(2) Premium contribution ratio for the Group’s contribution to multi-employer type of pension plan
FY2019: 13.476% (From April 1, 2019 to March 31, 2020)
FY2018: 13.188% (From April 1, 2018 to March 31, 2019)(3) Supplementary explanation
The main reasons for the difference in (1) above are the balance of prior service obligations underpension funding programs (¥5,480 million (U.S.$50,356 thousand) in the fiscal year ended March
31, 2020, ¥5,937 million in the fiscal year ended March 31, 2019 ), General reserve (¥4,721 million(U.S.$43,388 thousand) in the fiscal year ended March 31, 2020, ¥4,701 million in the fiscal year
ended March 31, 2019) and deductions for asset valuation adjustments due to the use of actuarial
valuation methods for asset valuations under pension funding (¥– million in the fiscal year ended
March 31, 2020, ¥– million in the fiscal year ended March 31, 2019).
The amortization method for prior service obligations in this system is even amortization ofprincipal and interest over 20 years. Were for some, unlikely reason, a shortage to occur for thebalance brought forward, this would be dealt with through methods such as raising special
premiums as necessary based on the recalculation of the financial situation.
Since the amount of the special premiums is calculated by multiplying the amount of base salaryat the time of premium contribution by the premium rate prescribed in advance, the ratio in (2)above is not the same as the actual burden ratio.

- 57 -XV.
1.

Stock options, etc.
Stock options-related expenses were recorded in the following accountThousands of
U.S. dollars

Millions of yen
FY2019(April 1, 2019 March 31, 2020)

FY2018(April 1, 2018 March 31, 2019)

FY2019(April 1, 2019 March 31, 2020)

Selling, general and administrative expenses
¥
–
¥
3
$
–
(share-based payment expenses)
Note: The Company abolished the share-based payment-type stock options plan at the 49th Annual General Meeting of
Shareholders held on June 22, 2018 and introduced the BBT (Board Benefit Trust) Plan.

2.

Gains on expiration of unexercised stock options
Thousands of
U.S. dollars

Millions of yen
FY2019(April 1, 2019 March 31, 2020)
Gain on reversal of share acquisition rights

3.

¥

–

FY2018(April 1, 2018 March 31, 2019)¥

8

FY2019(April 1, 2019 March 31, 2020)$–

Details, number and status of stock options(1) Details of stock options
Since the Company resolved at the 49th Annual General Meeting of Shareholders held on June 22,2018 to introduce the share-based payment plan or Board Benefit Trust (BBT) for its directors andexecutive officers and abolished the share-based payment-type stock options plan, there has been
no new granting of stock options.
Stock options for 2008

Stock options for 2009

Stock options for 2010

Directors of the Company: 8
Executive officers of theCompany: 16

Directors of the Company: 8
Executive officers of theCompany: 15

Directors of the Company: 7
Executive officers of theCompany: 17

Common shares: 57,800
sharesCommon shares: 84,600
sharesCommon shares: 61,300
shares

October 15, 2008

October 15, 2009

October 15, 2010

Vesting conditions(Note 3)(Note 3)(Note 3)Requisite service period(Note 4)(Note 4)(Note 4)

October 15, 2008
– October 14, 2038
(Note 5)October 15, 2009
– October 14, 2039
(Note 5)October 15, 2010
– October 14, 2040
(Note 5)Class and number of grantees(Note 1)
Number and type of stock
options (Note 2)
Grant date

Exercise period

Class and number of grantees(Note 1)
Number and type of stock
options (Note 2)
Grant date

Stock options for 2011

Stock options for 2012

Stock options for 2013

Directors of the Company: 7
Executive officers of theCompany: 16

Directors of the Company: 8
Executive officers of theCompany: 16

Directors of the Company: 8
Executive officers of theCompany: 18

Common shares: 54,800
sharesCommon shares: 73,000
sharesCommon shares: 42,000
shares

October 14, 2011

October 16, 2012

October 15, 2013

Vesting conditions(Note 3)(Note 3)(Note 3)Requisite service period(Note 4)(Note 4)(Note 4)

October 14, 2011
– October 13, 2041
(Note 5)October 16, 2012
– October 15, 2042
(Note 5)October 15, 2013
– October 14, 2043
(Note 5)

Exercise period- 58 -

Class and number of grantees(Note 1)
Number and type of stock
options (Note 2)
Grant date
Vesting conditions
Requisite service period
Exercise period

Stock options for 2014

Stock options for 2015

Stock options for 2016

Directors of the Company: 7
Executive officers of theCompany: 18

Directors of the Company: 7
Executive officers of theCompany: 19

Directors of the Company: 7
Executive officers of theCompany: 21

Common shares: 35,500
sharesCommon shares: 28,600
sharesCommon shares: 34,700
shares

October 15, 2014

October 15, 2015

October 14, 2016

(Note 3)(Note 3)(Note 3)(Note 4)(Note 4)(Note 4)

October 15, 2014
– October 14, 2044
(Note 5)October 15, 2015
– October 14, 2045
(Note 5)October 14, 2016
– October 13, 2046
(Note 5)

Stock options for 2017Class and number of grantees(Note 1)
Number and type of stock
options (Note 2)
Grant dateDirectors of the Company: 6
Executive officers of theCompany: 22
Common shares: 22,200
shares
October 16, 2017

Vesting conditions(Note 3)Requisite service period(Note 4)

Exercise period
Notes: 1.
2.
3.
4.
5.

October 16, 2017– October 15, 2047
(Note 5)
Excluding outside directors and outside corporate auditors
Converted to number of shares
No vesting conditions attached
No provision for requisite service period
Notwithstanding the above, if a share acquisition rights holder loses his/her position as director, corporate
auditor, or executive officer of the Company during the above term, he/she may exercise the rights withina period of five years beginning on the day that exactly one year has passed since the day immediately after
the day on which the holder loses his/her position.

- 59 -

(2) Movement in stock options
The number of stock options that existed during the fiscal year ended March 31, 2020 is translated
into the number of shares.
1)

Number of stock options
Stock options for 2008

Stock options for 2009

Stock options for 2010Pre-vesting (shares)
Previous fiscal year-end

–

–

–

Granted–––Expired–––

Vested–––Balance unvested

–

–

–

2,700

12,40021,200

–

–

–

1,400

2,000

4,900

–

–

–

1,300

10,40016,300Post-vesting (shares)
Previous fiscal year-end
VestedExercised
ExpiredBalance unexercised

Stock options for 2011

Stock options for 2012

Stock options for 2013

Pre-vesting (shares)
Previous fiscal year-end

–

–

–

Granted–––Expired–––

Vested–––Balance unvested

–

–

–

24,80041,50025,200

–

–

–

2,600

8,100

4,200

–

–

–

22,20033,40021,000Post-vesting (shares)
Previous fiscal year-end
VestedExercised
ExpiredBalance unexercised- 60 -

Stock options for 2014

Stock options for 2015

Stock options for 2016Pre-vesting (shares)
Previous fiscal year-end

–

–

–

Granted–––Expired–––

Vested–––Balance unvested

–

–

–

30,00027,30033,300Post-vesting (shares)
Previous fiscal year-end
VestedExercised
ExpiredBalance unexercised

–

–

–

2,600

3,400

–

–

–

–

27,40023,90033,300Stock options for 2017Pre-vesting (shares)
Previous fiscal year-end–

Granted–Expired–

Vested–Balance unvested–

Post-vesting (shares)
Previous fiscal year-end

22,200

Vested–Exercised–

Expired–Balance unexercised

2)

22,200

Unit price
Stock options for 2008
Yen

Exercise price¥1

Stock options for 2009
Yen
¥

1

Stock options for 2010
Yen
¥

1

Average price per share at
exercise

5,685

5,685

5,890

Fair value at grant date

1,610

1,668

2,218

Stock options for 2011
Yen
Exercise price¥1

Stock options for 2012
Yen
¥

1

Stock options for 2013
Yen
¥

1

Average price per share at
exercise

5,685

6,135

5,809

Fair value at grant date

2,449

1,943

3,556

Stock options for 2014
Yen
Exercise price¥1

Stock options for 2015
Yen
¥

1

Stock options for 2016
Yen
¥

1

Average price per share at
exercise

5,911

6,134

–

Fair value at grant date

3,584

4,653

4,606

- 61 -

Stock options for 2017
Yen
Exercise price
Average price per share at
exercise
Fair value at grant date

4.

¥

1
–
6,840

Estimation method for fair value of stock options
Not applicable

5.

Estimation method for the number of vested stock options
The Company generally uses the actual number of expired options to estimate the number of vested
options, because it is difficult to reasonably estimate how many options will expire in the future.

- 62 -XVI.
1.

Tax effect accounting
The respective breakdowns of deferred tax assets and deferred tax liabilities by major item
Thousands of
U.S. dollars

Millions of yen
As of March 31, 2020
Deferred tax assets
Excess of allowance for doubtful accounts ¥Guarantee deposits received
Accrued expenses
Retirement benefit liability
Loss on valuation of investment securities,
etc.
Provision for bonuses
Asset retirement obligations
Revenue recognized for tax purposes
Excess of depreciation
Prepaid expenses
Enterprise taxes payable
Gain on transfer of receivables
Share-based payment expenses
Tax loss carried forward (Note 2)
Other
Subtotal deferred tax assets
Valuation allowance related to tax loss
carried forward (Note 2)
Valuation allowance related to total
deductible temporary differences

1,531
934
806
715

As of March 31, 2019

As of March 31, 2020

¥

$

1,488
837
706
617

14,074
8,591
7,407
6,578

665

356

6,114

664
546
463
439
385
345
245
233
46
999

601
356
313
31
306
392
216
258
1,478
913

6,106
5,026
4,261
4,039
3,539
3,177
2,252
2,150
431
9,184

9,025

8,874

82,929

(0)

(6)

(8)

(122)

(47)

(1,125)

Subtotal valuation allowance (Note 1)

(123)

(54)

(1,133)

Total deferred tax assets
Deferred tax liabilities
Valuation difference on available-for-salesecurities
Intangible assets
Depreciation
Gain on valuation of investment securities
Foreign subsidiary’s unitary tax
Gain on transfer of receivables
Other

8,901

8,820

81,796¥

Total deferred tax liabilities
Net deferred tax liabilities¥(14,291)¥(15,348)$(131,322)(1,556)(1,546)(1,288)(1,269)
(897)
(995)

–
(998)
(1,268)
(675)
(541)
(634)

(14,306)(14,211)(11,836)(11,663)(8,245)(9,145)(21,845)(19,467)(200,728)(12,943)¥(10,646)$(118,932)

Notes: 1. Information on breakdown of valuation allowance
As of March 31, 2020
The amount of valuation allowance increased by ¥69 million (U.S.$635 thousand) from theprevious fiscal year. This increase was mainly due to a decrease of ¥5 million (U.S.$53 thousand)in valuation allowance for tax loss carried forward at consolidated subsidiaries, a decrease of ¥6
million (U.S.$57 thousand) in valuation allowance for allowance for doubtful accounts, and therecognition of ¥79 million (U.S.$734 thousand) in valuation allowance for business assets.
As of March 31, 2019
The amount of valuation allowance decreased by ¥420 million from the previous fiscal year. This

- 63 -

decrease was mainly due to the fact that consolidated subsidiaries no longer recognized a valuation
allowance of ¥421 million for tax loss carried forward recorded in the previous fiscal year.
2.

Tax loss carried forward and respective deferred tax assets will expire as follows:

As of March 31, 2020
Millions of yen

Tax loss carriedforward (*1)

Within one
year

Over oneyear andwithin two
yearsOver twoyears andwithin three
years

Over three
years andwithin four
years

Over four
years andwithin five
years

Over five
years

¥

¥

¥

¥

¥

¥

46

–

–

–

–

–

Total

¥

46

Valuation
allowance

(0)

–

–

–

–

–

(0)

Deferred tax assets

46

–

–

–

–

–

(*2)
46

Thousands of U.S. dollars

Tax loss carriedforward (*1)

Within one
year

Over oneyear andwithin two
yearsOver twoyears andwithin three
years

Over three
years andwithin four
years

Over four
years andwithin five
years

Over five
years

$

$

$

$

$

$

431

–

–

–

–

–

Total

$

431

Valuation
allowance

(8)

–

–

–

–

–

(8)

Deferred tax assets

423

–

–

–

–

–

(*2)
423

*1. Tax loss carried forward is measured using the statutory effective tax rate.
*2. With respect to the tax loss carried forward of ¥46 million (U.S.$431 thousand) (amount measured
using the statutory effective tax rate), the Company records deferred tax assets of ¥46 million(U.S.$423 thousand). The deferred tax assets of ¥46 million (U.S.$423 thousand) represent
deferred tax assets carried forward associated with the tax loss carried forward at a consolidated
subsidiary. The Company recognizes no valuation allowance for this tax loss carried forward since
it is recoverable due to sufficient taxable income expected for the next fiscal year.
As of March 31, 2019
Millions of yen

Tax loss carriedforward (*1)
Valuation
allowance
Deferred tax assets

Within one
year

Over oneyear andwithin two
yearsOver twoyears andwithin three
years

Over three
years andwithin four
years

Over four
years andwithin five
years

Over five
years

¥

¥

¥

¥

¥

¥

1,478

–

–

–

–

–

Total

¥

1,478

(6)

–

–

–

–

–

(6)

1,471

–

–

–

–

–

(*2)
1,471

*1. Tax loss carried forward is measured using the statutory effective tax rate.
*2. With respect to the tax loss carried forward of ¥1,478 million (amount measured using the statutory
effective tax rate), the Company records deferred tax assets of ¥1,471 million. The deferred tax
assets of ¥1,471 million represent deferred tax assets carried forward associated with the tax loss
carried forward at a consolidated subsidiary. The Company recognizes no valuation allowance for- 64 -

this tax loss carried forward since it is recoverable due to sufficient taxable income expected forthe next fiscal year.
2.

The respective breakdowns of major items that constituted the material difference between thestatutory effective tax rate and the effective tax rate after adoption of tax effect accounting
As of March 31, 2020
The note is omitted, because the difference between the statutory effective tax rate and the effective
tax rate after adoption of tax effect accounting is less than 5% of statutory effective tax rate.
As of March 31, 2019
The note is omitted, because the difference between the statutory effective tax rate and the effective
tax rate after adoption of tax effect accounting is less than 5% of statutory effective tax rate.

- 65 -XVII. Business combinations, etc.
Business combinations through acquisition
1.

Overview of the business combinations(1) Names of acquired companies and its business descriptions
1)

2)

3)

4)

Name of acquired company:

LN Holdings, Co., Ltd.

Business description:

Acquisition, holding, and disposal of shares, capital
contributions, other equity interests, and bonds of a stockcompany or any other juridical person; sale and purchaseof beneficial interest in trust; purchase business ofmonetary receivables; real estate investment; andinvestment and management in securities

Name of acquired company:

NOC Outsourcing & Consulting Inc.
(a subsidiary of LN Holdings, Co., Ltd.)Business description:

Comprehensive outsourcing business and IT outsourcing
business

Name of acquired company:

NOC Techno-Solutions Inc.
(a subsidiary of NOC Outsourcing & Consulting Inc.)

Business description:

IT outsourcing business

Name of acquired company:

NOC Biz Partners Inc.
(a subsidiary of NOC Outsourcing & Consulting Inc.)

Business description:

Operations in general affairs, accounting, humanresources, and backyard business(2) Reasons for the business combinations
The above four companies that have recently become consolidated subsidiaries (hereinafterreferred to as the “NOC Group”) provide a wide range of business outsourcing services, including
back-office services (accounting, personnel and salaries, general affairs, sales administration), IT
services, in-house shared center services, secretariat management agency services, and humanresources services, as a total outsourcer aiming to become the “No. 1 outsourcer in problem
solving.” The NOC Group provides high-quality outsourcing services to customers in a wide range
of industries and businesses by organizing teams that organically combine the value-providing
functions, business knowhow, and specialist human resources that the NOC Group has cultivatedover many years.
In addition, by strengthening our consulting functions, the NOC Group is working to streamline
and visualize the operations of client companies and propose business improvement measures. In
addition to providing outsourcing services, the NOC Group is also actively developing support
services for the introduction of robotic process automation (RPA) as the optimal solution.
By adding the above functions to the Company’s Business Process Outsourcing (BPO) Domain, it
will establish a system capable of responding to a wide range of business efficiency needs of ourbusiness partners. At the same time, the Company will be able to leverage its respective strengths
more effectively through the synergistic effect of mutual cooperation with existing BPO resources.
By combining the Group’s original financial solution functions with the above, the Company
believes that this will lead to the creation of a more multi-layered business relationship.
The Company also plans to utilize the advanced consulting capabilities of the NOC Group to
improve the working environment through optimal allocation of work, including thestandardization of the Group’s own clerical work.

- 66 -

(3) Date of the business combinations
August 15, 2019(4) Legal form of the business combinations
Acquisition of shares by cash(5) Name of the companies after the business combination
No change(6) Ratio of voting rights acquired
1)

2)

3)

4)

LN Holdings, Co., Ltd.
Ratio of voting rights held before the business combination date:–%

Ratio of voting rights acquired on the business combination date:

100.00%

Ratio of voting rights held after the acquisition:

100.00%NOC Outsourcing & Consulting Inc.
Ratio of voting rights held before the business combination date:–%

Ratio of voting rights acquired on the business combination date:

100.00%(including indirectownership of 100.00%)

Ratio of voting rights held after the acquisition:

100.00%(including indirectownership of 100.00%)

NOC Techno-Solutions Inc.
Ratio of voting rights held before the business combination date:–%

Ratio of voting rights acquired on the business combination date:

100.00%(including indirectownership of 100.00%)

Ratio of voting rights held after the acquisition:

100.00%(including indirectownership of 100.00%)

NOC Biz Partners Inc.
Ratio of voting rights held before the business combination date:–%

Ratio of voting rights acquired on the business combination date:

100.00%(including indirectownership of 100.00%)

Ratio of voting rights held after the acquisition:

100.00%(including indirectownership of 100.00%)(7) Primary basis for the determination of the acquirer
It is because the Company acquired 100.00% of the issued shares of LN Holdings, Co., Ltd.

- 67 -

2.

Period for which operating results of the acquired companies were included in the consolidated
financial statements
From October 1, 2019 to March 31, 2020

3.

Acquisition cost of the acquired companies and breakdown by type of consideration
Acquisition priceCash and deposits

Acquisition cost4.

¥8,304 million

U.S.$76,303 thousand¥8,304 million

U.S.$76,303 thousand

Details and amounts of main acquisition-related expenses
Fees to advisors, etc.: ¥170 million (U.S.$1,569 thousand)5.

Amount, cause, amortization method and period of goodwill recognized(1) Amount of goodwill recognized¥6,946 million (U.S.$63,825 thousand)(2) Cause of goodwill
Goodwill was recognized due to the future excess earning power expected based on businessexpansion going forward.
(3) Amortization method and period
Straight-line method over a period of 20 years

6.

Amount of assets received and liabilities assumed on the date of the business combination and theirmajor components
Millions of yen
Current assets
Non-current assets

3,139
3,213

$

Total assets

6,352

58,374Current liabilities
Non-current liabilities

1,698
2,116

15,61019,445

Total liabilities

7.

¥

Thousands of
U.S. dollars
28,84329,530

¥

3,815

$

35,055

Estimated amount of impact on the consolidated statement of income for the fiscal year under review
assuming that the business combination was completed on the start date of the fiscal year under review,and the measurement
Millions of yen
Net sales
Operating profit

¥

4,896
284

$

Thousands of
U.S. dollars
44,993
2,611

Ordinary profit

275

2,527

Profit before income taxes
Profit attributable to owners of parent

275
161

2,527
1,484

5.38 Yen

0.05 U.S. dollars

Basic earnings per share- 68 -

Calculating method of the estimated amountThe estimated amount of impact is the difference between net sales and profit or loss calculated on theassumption that the business combinations were completed on the start date of the fiscal year underreview and net sales and the profit or loss on the consolidated statements of income of the acquirer.
The information mentioned above has not been audited.
Finalization of the provisional accounting treatment for the business combinations
The business combinations with Kabushiki Kaisha GI Holdings and INVOICE Inc. that were concludedon October 31, 2018, were accounted for on a provisional basis in the fiscal year ended March 31, 2019,
but the acquisition cost allocation was finalized in the fiscal year ended March 31, 2020.
With the finalization of this provisional accounting treatment, the amount of the initial allocation of
acquisition cost was revised.
As a result, “other” in intangible assets mainly increased, and the provisionally calculated amount of
goodwill of ¥11,970 million (U.S.$109,991 thousand) decreased by ¥1,591 million (U.S.$14,621
thousand) to ¥10,379 million (U.S.$95,370 thousand) due to the finalization of the accounting treatment.
XVIII. Asset retirement obligations
This information has been omitted because of immateriality.

XIX.

Real estate leasing business

The Company and some of its consolidated subsidiaries own assets such as commercial facilities forlease and office buildings (including land) for lease in Tokyo and other regions. Net lease income fromthese assets amounted to ¥5,814 million (U.S.$53,426 thousand) and ¥5,170 million (lease income andlease cost were generally recorded as net sales and cost of sales, respectively) for the fiscal years ended
March 31, 2020 and 2019, respectively.
The book value on the consolidated balance sheets, net changes, and fair value of these assets are as
follows:
Thousands of
U.S. dollars

Millions of yen
FY2019(April 1, 2019 March 31, 2020)

FY2018(April 1, 2018 March 31, 2019)

FY2019(April 1, 2019 March 31, 2020)

Book value
Beginning of year¥

231,132¥

176,765$

2,123,798

Net change

15,71154,367

144,372

End of year

246,844

231,132

2,268,170

Fair value at end of year¥

262,319¥245,287$2,410,359

Notes: 1. The book value on the consolidated balance sheet is the amount after deduction of accumulated depreciationfrom acquisition cost.
2. The increase of book value is mainly attributable to the purchase of real estate of ¥133,872 million(U.S.$1,230,102 thousand) and ¥75,028 million, in the fiscal years ended March 31, 2020 and 2019,respectively.
3. The fair value of properties is mainly estimated based on income approach in accordance with Real EstateAppraisal standards as of March 31, 2020. For other properties, the Company reasonably estimated the fairvalue based on income approach or market approach while the Company used their book value as the fairvalue for certain properties.

- 69 -

XX.

Segment information, etc.

Segment information
1.

Description of reportable segments
The Group’s reportable segments are components of the Group for which separate financial
information is available. These segments are subject to periodic examinations undertaken to enable
the Board of Directors of the Group to make decisions on allocating resources and to evaluate
performance.
The Group is primarily engaged in leasing and installment sales, and its operations are divided into
three reportable segments based on the major types of transactions handled, namely the Lease andInstallment Sales segment, the Financing segment, and the Other segment.
The Lease and Installment Sales segment conducts businesses including leasing of IT and officeequipment, industrial machinery, and other assets (includes the sale, etc. of off-lease assets upon lease
expiration or termination) and leasing of real estate, and sells commercial/service equipment,
production facilities, medical devices, and other assets on an installment basis. The Financing segment
is mainly engaged in operating loans, investment in marketable securities for financial income,forming tokumei-kumiai (silent partnership) arrangements, etc. The Other segment primarily engages
in environmental and energy-related businesses, fee handling, BPO services (new business fields), etc.

2.

Explanation of measurements of sales, profit (loss), asset, liability, and other items for each reportablesegment
Measurements used in accounting for reportable segment are the same as those disclosed in “Basis ofpresentation.” Profit of reportable segment is based on operating profit. Transactions with othersegments are based on prevailing market prices.
The segment information for the fiscal year ended March 31, 2019 is presented using figures thatreflect material changes to the initial allocation of acquisition costs, which arose as a result of the
finalization of the provisional accounting treatment of business combinations.

3.

Disclosure of sales, profit (loss), asset, liability, and other items for each reportable segment
FY2019 (From April 1, 2019 to March 31, 2020)
Millions of yen
Lease andInstallment Sales

Sales
Revenues from externalcustomers
Transactions with other segments¥

528,853

Financing

¥

1,026

Net sales

15,979

Other

¥

3,708

529,880

Total

167,497¥

1,078

19,688712,330
5,813

168,575

718,143

Segment profit¥

33,134¥

11,330

¥

9,254

¥

53,719Segment assets¥

1,704,786¥

804,101¥

128,744¥2,637,632

Other items
Depreciation
Amortization of goodwill
Investments in entities accounted
for using equity method
Increase in property, plant andequipment and intangible assets¥

33,694
–

–
324

2,397
807

36,091
1,132

–

–

–

–

178,524¥- 70 -–¥

12,424¥

190,948

Thousands of U.S. dollars
Lease andInstallment Sales
Sales
Revenues from externalcustomers
Transactions with other segments$

4,859,448

Financing$

146,828

9,433

Net sales

Other

$

1,539,074

34,0794,868,881

Total

$

9,907

180,9076,545,349
53,4191,548,981

6,598,768

Segment profit$

304,464$

104,108$

85,037$493,609

Segment assets$

15,664,673$

7,388,600$

1,182,986$

24,236,259

Other items
Depreciation
Amortization of goodwill
Investments in entities accounted
for using equity method
Increase in property, plant andequipment and intangible assets$

309,603––
2,981

22,0287,423

331,631
10,404––––

1,640,398$–$

114,160$

1,754,558

FY2018 (From April 1, 2018 to March 31, 2019)
Millions of yen
Lease andInstallment Sales
Sales
Revenues from externalcustomers
Transactions with other segments¥

Net sales

517,726

Financing

¥

Other

14,980¥Total

85,412¥

618,119

1,017

3,103

1,051

5,172

518,743

18,08486,464623,292

Segment profit¥

29,892¥

10,308

¥

7,299

¥

47,501

Segment assets¥

1,676,976¥

730,907¥

101,670¥2,509,555

Other items
Depreciation
Amortization of goodwill
Investments in entities accounted
for using equity method
Increase in property, plant andequipment and intangible assets

4.

¥

30,066
–

–
324

1,777
443

31,844
768

–

–

–

–

156,941¥–¥

12,488¥

169,429

Description of nature of differences between amounts of reportable segments total and consolidated
financial statements
Thousands of
U.S. dollars

Millions of yen
Net sales

Reportable segments total
Eliminations
Net sales reported on the consolidated
statements of income

FY2019(April 1, 2019 March 31, 2020)

FY2018(April 1, 2018 March 31, 2019)

FY2019(April 1, 2019 March 31, 2020)¥

718,143(5,813)¥

623,292(5,172)$

6,598,768(53,419)¥712,330¥

618,119$

6,545,349- 71 -

Thousands of
U.S. dollars

Millions of yen
ProfitReportable segments total
Eliminations
Corporate expenses (Note)
Operating profit reported on the consolidated
statements of income

FY2019(April 1, 2019 March 31, 2020)

FY2018(April 1, 2018 March 31, 2019)

FY2019(April 1, 2019 March 31, 2020)¥

53,719(2,486)(9,808)¥47,501(2,028)(9,792)$493,609(22,851)(90,130)¥

41,423¥35,680$380,628

Note: Corporate expenses are mainly selling, general and administrative expenses that are not attributable to any reportablesegment.

Thousands of
U.S. dollars

Millions of yen
AssetsReportable segments total
Corporate assets (Note)
Total assets reported on the consolidatedbalance sheets

FY2019(April 1, 2019 March 31, 2020)

FY2018(April 1, 2018 March 31, 2019)

FY2019(April 1, 2019 March 31, 2020)¥

2,637,632
114,966¥

2,509,555
83,426$24,236,259
1,056,383¥

2,752,598¥

2,592,981$

25,292,642

Note: Corporate assets include surplus funds (cash and deposits, etc.), long-term investment funds (investment securities) andassets related to administrative divisions that are not attributable to any reportable segment.

Millions of yen
Depreciation

FY2019(April 1, 2019 March 31, 2020)¥
36,091
1,768

FY2018(April 1, 2018 March 31, 2019)¥
31,844
1,570

Reportable segments total
Adjustment
Amounts reported on the consolidated¥
37,859¥financial statements
Note: Depreciation adjustments mainly represent depreciation on own-used assets.

33,414

Reportable segments total
Adjustment
Amounts reported on the consolidated
financial statements

347,881

FY2019(April 1, 2019 March 31, 2020)
¥
1,132
–

FY2018(April 1, 2018 March 31, 2019)
¥
768
–

¥

¥

$

1,132

768

Millions of yen
Investments in entities accounted for using
equity method$

Thousands of
U.S. dollars
FY2019(April 1, 2019 March 31, 2020)$
10,404–

Millions of yen
Amortization of goodwill

Thousands of
U.S. dollars
FY2019(April 1, 2019 March 31, 2020)$
331,631
16,249FY2019(April 1, 2019 March 31, 2020)¥–
23,657FY2018(April 1, 2018 March 31, 2019)¥–23,423

10,404

Thousands of
U.S. dollars
FY2019(April 1, 2019 March 31, 2020)$–
217,378

Reportable segments total
Adjustment
Amounts reported on the consolidated¥
23,657¥23,423$
217,378
financial statements
Note: Adjustments for investments in entities accounted for using equity method mainly represent the amount of funds
invested in entities accounted for using equity method.

- 72 -

Millions of yen
Increase in property, plant and equipment andintangible assets

FY2019(April 1, 2019 March 31, 2020)¥
190,9481,690

FY2018(April 1, 2018 March 31, 2019)¥
169,429
1,275

Thousands of
U.S. dollars
FY2019(April 1, 2019 March 31, 2020)$
1,754,558
15,529

Reportable segments total
Adjustment
Amounts reported on the consolidated¥
192,638¥
170,705$
1,770,087
financial statements
Note: Adjustments on increase in property, plant and equipment and intangible assets mainly represent capital investment in
own-used assets.

- 73 -

Information associated with reportable segments
1.

Information for each product or service
FY2019 (From April 1, 2019 to March 31, 2020)
This information is omitted as it is identical to that in segment information.
FY2018 (From April 1, 2018 to March 31, 2019)
This information is omitted as it is identical to that in segment information.

2.

Information for each region
FY2019 (From April 1, 2019 to March 31, 2020)(1) Revenues from external customers
It is omitted since revenues from external customers in Japan exceeds 90% of net sales on the
consolidated statement of income.
(2) Property, plant and equipment
Millions of yenJapan¥407,674

North America
and Latin
America¥
9,384EuropeIreland
¥

Asia

Other

130,213

¥

3

¥

5,835

Total
¥

553,111

Thousands of U.S. dollars
Japan$3,745,976

Notes:

North America
and Latin
America$
86,232EuropeIreland
$

Asia

Other

1,196,489

$

31

$

53,621

Total$

5,082,349

1.

The figures shown are presented according to the respective countries and regions of theCompany and its consolidated subsidiaries.

2.

The following geographic categories primarily include the respective countries and regions
shown below.
North America and Latin America: United States
Europe: United Kingdom, Ireland
Asia: China, Singapore, Malaysia, Thailand

FY2018 (From April 1, 2018 to March 31, 2019)(1) Revenues from external customers
It is omitted since revenues from external customers in Japan exceeds 90% of net sales on the
consolidated statement of income.
(2) Property, plant and equipment
Millions of yen
Japan¥
Notes:

380,700
1.

North America
and Latin
America¥
9,917

EuropeIreland¥129,644

Asia

Other
¥

1

¥

5,794

Total
¥

526,059

The figures shown are presented according to the respective countries and regions of theCompany and its consolidated subsidiaries.

- 74 -

2.

The following geographic categories primarily include the respective countries and regions
shown below.
North America and Latin America: United States
Europe: United Kingdom, Ireland
Asia: China, Malaysia, Thailand

3.

Information for each of main customers

FY2019 (From April 1, 2019 to March 31, 2020)
It is omitted since among the revenues from external customers, there are no specific customers
accounting for 10% or more of net sales on the consolidated statement of income.
FY2018 (From April 1, 2018 to March 31, 2019)
It is omitted since among the revenues from external customers, there are no specific customers
accounting for 10% or more of net sales on the consolidated statement of income.

- 75 -

Disclosure of Impairment losses on non-current assets for each reportable segment
FY2019 (From April 1, 2019 to March 31, 2020)
Millions of yen
Lease andInstallment Sales
Impairment losses¥–

Financing¥

Corporate/
Elimination

Other
–

¥

1

¥

1,281

Total
¥

1,283

Thousands of U.S. dollars
Lease andInstallment Sales
Impairment losses
Note:

$

–

Financing$

Corporate/
Elimination

Other
–

$

12

$

11,779

Total$

11,792

The amount in “Corporate/Elimination” is the impairment losses relating to corporate assets that are not attributable
to any particular segment.

FY2018 (From April 1, 2018 to March 31, 2019)
Millions of yen
Lease andInstallment Sales
Impairment losses¥–

Financing¥

Corporate/
Elimination

Other
–

¥

22

¥

–

Total
¥

22

Amortization and unamortized balance of goodwill for each reportable segment
FY2019 (From April 1, 2019 to March 31, 2020)
Millions of yen
Lease andInstallment Sales
Balance at end of period¥–

Financing¥

5,433

Corporate/
Elimination

Other
¥

16,315

¥

–

Total
¥

21,749Thousands of U.S. dollars
Lease andInstallment Sales
Balance at end of period
Note:

$

–

Financing$

49,929Corporate/
Elimination

Other
$

149,916

$

–

Total
$

199,845

The information about amortization of goodwill is omitted as it is identical to that in segment information .

FY2018 (From April 1, 2018 to March 31, 2019)
Millions of yen
Lease andInstallment Sales
Balance at end of period¥–

Financing¥

5,758

Corporate/
Elimination

Other
¥

10,177

¥

–

Total
¥

15,935

Notes: 1. The information about amortization of goodwill is omitted as it is identical to that in segment information.
2. The amount of “Other” is the amount which reflects the material changes to the initially allocated acquisition
costs that were carried out due to the finalization of the provisional accounting treatment for businesscombinations.

Information about gain on bargain purchase for each reportable segment
FY2019 (From April 1, 2019 to March 31, 2020)
Not applicable- 76 -

FY2018 (From April 1, 2018 to March 31, 2019)
Not applicable- 77 -

XXI. Related parties
1.

Related party transactions(1) Transactions of the company reporting the consolidated financial statements with related parties
Parent company of the company reporting the consolidated financial statements and major
shareholders (limited to companies, etc.), etc.
FY2019 (From April 1, 2019 to March 31, 2020)

Type

Name

Percentage
CapitalRelationsYear-end
Transactionof voting(Millions Business orwithAccount balance
Transaction amount
Locationrightsdetails (Millions ofof yen) occupation
related
title(Millionsholdingyen)
partiesof yen)(held) (%)

Hulic Co., Chuo-ku,
Majorshareholder
Ltd.
Tokyo

¥62,718Real
estateleasingbusiness

Name

Direct(Held)
14.0

Percentage

Capital

Type

Lease
Directpayments
Lease(Holdings)
transactions received
6.0

of voting(Thousands
Business or
Locationrightsofoccupation
U.S.
holding
dollars)(held) (%)

Hulic Co., Chuo-ku,
Major$576,293
shareholder
Ltd.
Tokyo

Real
estateleasingbusiness

Purchase ofoperatingassetsPurchaseofoperatingassets¥29,032

Year-end
Transaction
RelationsamountbalancewithTransaction (Thousands Account (Thousands
detailsofrelated
title
of
U.S.
U.S.
partiesdollars)

Lease
Directpayments
Lease(Holdings)
transactions received
6.0
Direct(Held)
14.0¥4,818

Lease
receivables
and¥60,322
investments
in leases

Purchase ofoperatingassetsdollars)
Lease
receivables
and$44,275$554,283
investments
in leases

Purchaseof$266,774
operatingassets

Notes: 1. The above amounts do not include consumption taxes.
2. The purchase of operating assets is determined based on the actual market price. The transaction amount records
the total transaction amount that occurred in the fiscal year ended March 31, 2020.

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

Type

Name

Percentage
CapitalRelationsYear-end
Transactionof voting(Millions Business orwithAccount balance
Transaction amount
Locationrightsdetails (Millions ofof yen) occupation
related
title(Millionsholdingyen)
partiesof yen)(held) (%)

Hulic Co., Chuo-ku,
Majorshareholder
Ltd.
Tokyo

¥62,718Real
estateleasingbusiness

DirectLease(Holdings)
transactions
6.1
Direct(Held)
13.9- 78 -

Purchase ofoperatingassetsLease
payments
received¥4,572

Sale ofleased¥34,081properties
Purchaseof¥24,402
operatingassetsLease
receivables
and¥60,361
investments
in leases

Notes: 1. The above amounts do not include consumption taxes.
2. The purchase of operating assets is determined based on the actual market price. The transaction amount records
the total transaction amount that occurred in the fiscal year ended March 31, 2019.

(2) Transactions of consolidated subsidiaries of the company reporting the consolidated financial
statements with related parties
Parent company of the company reporting the consolidated financial statements and major
shareholders (limited to companies, etc.), etc.
FY2019 (From April 1, 2019 to March 31, 2020)
Not applicable
FY2018 (From April 1, 2018 to March 31, 2019)
Not applicable2.

Notes to parent company and significant associates(1) Parent company’s information
There is no parent company.
(2) Summary financial information for significant associates
There are no significant associates.

- 79 -XXII. Information on special purpose entities
1.

Overview of special purpose entities subject to disclosure and of transactions using special purpose
entities subject to disclosure
For the diversification of funding sources and stable financing, the Company promotes securitizationof lease receivables, etc. The Company use stock companies as special purpose entities.
When performing the securitization, the Company transfers the lease receivables, etc. to special
purpose entities and receives the funds as proceeds from the transfer of the assets to the special purpose
entity through a loan, etc.
As a result of the securitization, the Company has transactions outstanding with the following special
purpose entities. The Company owns shares, etc. with voting rights of the special purpose entities andthe employees of the Company concurrently are assigned as corporate officer positions by the entities.
Thousands of
U.S. dollars

Millions of yen
As of March 31, 2020

As of March 31, 2019

As of March 31, 2020

Two companies

One company

Two companies

Number of special purpose entities
Total value of assets as of the latest balance
sheet date (without elimination of intercompany transactions)

¥

4,540

Total value of liabilities as of the latest
balance sheet date (without elimination ofinter-company transactions)

2.

¥

1,135

4,535

$

41,7201,132

41,671

Amount of transactions, etc. with special purpose entities subject to disclosure
FY2019 (From April 1, 2019 to March 31, 2020)
Amount of majortransactions or thebalance as of the end of
the fiscal year
(Millions of yen)Transferred assets (Note 1)
Lease receivables and investments inleasesInstallment receivables

¥

2,531

Major gain or loss

Gain on transfer(Note 2)

¥

109

733
Amount of majortransactions or thebalance as of the end of
the fiscal year
(Thousands of
U.S. dollars)

Transferred assets (Note 1)
Lease receivables and investments inleasesInstallment receivables

Amount(Millions of yen)

Item

$

23,263Major gain or loss
Amount(Thousands of
U.S. dollars)

Item

Gain on transfer(Note 2)$

6,739

Notes: 1. The amount of transactions related to transferred assets is the book value as of the time of transfer.
2. Gain on transfer related to transferred assets is presented in net sales.

- 80 -

1,005

FY2018 (From April 1, 2018 to March 31, 2019)
Amount of majortransactions or thebalance as of the end of
the fiscal year
(Millions of yen)Transferred assets (Note 1)
Lease receivables and investments inleasesInstallment receivables¥

597

Major gain or loss
Amount(Millions of yen)

Item

Gain on transfer(Note 2)¥500

Notes: 1. The amount of transactions related to transferred assets is the book value as of the time of transfer.
2. Gain on transfer related to transferred assets is presented in net sales.

- 81 -

33

XXIII. Per share information
Yen

U.S. dollars

FY2019(April 1, 2019 March 31, 2020)
Net assets per share¥

9,204.20

FY2018(April 1, 2018 March 31, 2019)¥

8,680.32

FY2019(April 1, 2019 March 31, 2020)
$

84.57

Basic earnings per share

871.95844.698.01

Diluted earnings per share

865.56

837.77

7.95

Notes: 1. Treasury shares are deducted when calculating the number of common shares as of the fiscal year-end, used in
the computation of the net assets per share and includes the Company’s shares owned by the Board Benefit Trust(BBT). The number of treasury shares owned by the Board Benefit Trust (BBT) as of the fiscal year-end is102,500 shares for the fiscal year ended March 31, 2020 and 104,600 shares for the fiscal year ended March 31,
2019.
2. Treasury shares are deducted when calculating the average number of shares during the period, used in thecomputation of the basic earnings per share and includes the Company’s shares owned by the Board Benefit
Trust (BBT). The average number of treasury shares owned by the Board Benefit Trust (BBT) during the period
is 102,618 shares for the fiscal year ended March 31, 2020 and 100,198 shares for the fiscal year ended March
31, 2019.
3. Net assets per share, basic earnings per share and diluted earnings per share for the fiscal year ended March 31,
2019 are calculated using the amounts which reflect the material changes to the initially allocated acquisition
costs that were carried out due to the finalization of the provisional accounting treatment for businesscombinations.
4. Calculation basis of net assets per share is as follows.
Thousands of
U.S. dollars

Millions of yen

Total net assets

As of March 31, 2020

As of March 31, 2019

As of March 31, 2020

¥

¥

$

311,819

295,039

2,865,197

Amounts excluded from total net assets

35,95033,368330,335

Of which, share acquisition rights

764

842

7,022

Of which, non-controlling interests

35,18632,525323,313

Net assets attributable to common shares

275,869

261,6712,534,862

Number of common shares as of the fiscal
year-end used in the calculation of net assets
per share (thousands shares)

29,97230,14529,972- 82 -

5.

Calculation basis of basic earnings per share and diluted earnings per share is as follows
Thousands of
U.S. dollars

Millions of yen
FY2019(April 1, 2019 March 31, 2020)

FY2018(April 1, 2018 March 31, 2019)

FY2019(April 1, 2019 March 31, 2020)

Basic earnings per share
Profit attributable to owners of parent¥

26,187¥25,515$

240,625

Amount not attributable to commonshareholders

–

–

–

Profit attributable to owners of parent
attributable to common shares

26,18725,515

240,625

Average number of shares during theperiod (thousands shares)

30,03330,20630,033

Diluted earnings per share
Adjustments to profit attributable toowners of parent
Increase in the number of common shares(thousands shares)
Residual securities that are not dilutive andnot included in the calculation of diluted
earnings per share

¥

–

¥

–

$

–

221

249

221

──────

──────

──────

- 83 -

XXIV. Subsequent events
Business combination through acquisition of shares
The Company resolved at a Board of Directors meeting held on January 30, 2020 to acquire 60% of theissued common shares of YAMATO LEASE CO., LTD. (President and Chief Executive Officer: Naomi
Ogata; hereinafter “YL”), a wholly owned subsidiary of Yamato Holdings Co., Ltd. (Head office: Chuoku, Tokyo; Representative Director, Executive Officer and President: Yutaka Nagao; hereinafter “YHD”),
and to collaborate on businesses with YHD. The Company concluded a share transfer agreement with
YHD and acquired the shares on April 1, 2020. Following the acquisition, YL became a consolidated
subsidiary of the Company.
1.

Overview of the business combination(1) Name of acquired company and its business description
Name of acquired company: YAMATO LEASE CO., LTD.
Business description:

Leasing business, primarily focused on trucks, vehicle
distribution support business, others (business succession support
business, etc.)(2) Reasons for the business combination
By combining the business bases, expertise, etc., of the Fuyo Lease Group and the Yamato Group,
collaborating on businesses with YHD will enable both companies to strengthen YL’s competitive
advantage and expand its business domains with a view to further expanding its business. Bothcompanies have also agreed in addition to collaborating on businesses with YHD to begin
discussions on producing business synergies by providing and utilizing each other’s management
resources and strengths, and on the potential for further business alliance.
The Company and YHD recognize that cross-industry partnerships are set to become increasingly
important for realizing the sustainable growth of companies by solving issues in the logistics
industry. Based on this, both companies have promoted discussion and examination on YL’s
growth strategies and a business alliance. As a result, both companies have agreed to collaborate
on businesses with potential for powerful alliance effects, combining YHD’s business base with
Fuyo Lease Group’s diverse solutions and expertise in financial risk management functions toincrease the sophistication of its solutions and expand its service lineup with a view to expanding
its business domains and increasing its corporate value. Looking ahead, both companies aim to
expand YL’s business by having YL provide diverse transport business providers with Fuyo Lease
Group’s services and expertise, including increasing the sophistication of financial services,
strengthening the vehicle management and maintenance systems, managing logistics facility assets,
and BPO (Business Process Outsourcing: services to efficiently carry out a business’s
administrative work, etc.) that realizes industry workstyle reforms. In doing so, they will expand
YL’s business and contribute to productivity improvements and sustainable growth for the entire
logistics industry.
(3) Date of the business combination
April 1, 2020
(4) Legal form of the business combination
Acquisition of shares by cash(5) Name of the company after the combination
No change- 84 -

(6) Ratio of voting rights acquired
Ratio of voting rights held before the business combination date:–%

Ratio of voting rights acquired on the business combination date:

60.00%

Ratio of voting rights held after the acquisition:

60.00%(7) Primary basis for the determination of the acquirer
It is because the Company acquired 60.00% of the issued shares of YAMATO LEASE CO., LTD.
2.

Acquisition cost of the acquired company and breakdown by type of consideration
Acquisition priceCash and deposits

Acquisition cost3.

¥3,300 million

U.S.$30,323 thousand¥3,300 million

U.S.$30,323 thousand

Details and amounts of main acquisition-related expenses
Not yet determined.

4.

Amount, cause, amortization method and period of goodwill recognizedNot yet determined.

5.

Amounts of assets received and liabilities assumed on the date of the business combination and theirmajor components
Not yet determined.

Corporate bond issuance
The Company issued straight bonds as follows:(1) Issue name:

Fuyo General Lease Co., Ltd., No. 24 unsecured straight bond(2) Issuance amount:¥ 20,000 million (U.S.$183,773 thousand)(3) Issuance date:June 17, 2020

(4) Issue price:¥100 per ¥100 of face value(5) Coupon rate:

0.250% per year(6) Redemption date:June 17, 2025

(7) Use of proceeds:

To fund capital investments- 85 -