IBJ Leasing Group Fifth Mid-term Management Plan

May 10, 2017

IBJ Leasing Co., Ltd.

867.4 894.2 942.8 1,032.6 1,105.8 1,088.1

343.9 368.9 400.3

399.7

475.2 520.6 1,211.3 1,263.1

1,343.0 1,432.3

1,581.0 1,608.7

400

800

1,200

1,600

End of Mar 2012 End of Mar 2013 End of Mar 2014 End of Mar 2015 End of Mar 2016 End of Mar 2017

Leasing and installment sales Financing

●Vision

A multimodal financial services group fully in tune

with needs and trends of the times and

uniquely positioned to grow with clients

－Exploit the characteristics of a highly flexible

leasing company and achieve growth

based on new profit drivers attuned to the needs

of the times

FY11 FY12 FY13 FY14 FY15 FY16

4.3 8.9 10.5 11.1 11.6 12.4

Net income

attributable to

owners of the

parent

Operating

assets

Achieved steady growth with new profit drivers by responding to changes in the

business environment

(¥bn) Period covered by Fourth Mid-term Management Plan

Real estate business

Aircraft leasing business

Specialized financing

Profit drivers Initiatives under

the Fourth Mid-

term Management

Plan

Net income

attributable to

owners of the

parent

¥12.0 billion

Operating assets

¥1,500 billion

Target figures

Review of the Fourth Mid-term Management Plan

1

Vigorously increased operating assets by

expanding “real estate leasing” and “bridge

schemes” while reducing “non-recourse

loans” from the viewpoint of risk-return

Entered the aircraft operating leasing

business by establishing a JV with Aircastle

Limited of US in February 2016, in addition

to the existing aircraft-backed collateral

loans

Real estate

Aircraft

Specialized

financing

(¥bn)

Track record greatly expanded by

addressing syndicated loans and hybrid

financing, etc. in Japan and overseas

43.7 33.0 22.0

15.1 19.6 20.5

12.8 31.3 62.4

63.2

112.7 114.5 134.9

196.6 219.3

0

50

100

150

200

250

End of Mar

2014

End of Mar

2015

End of Mar

2016

End of Mar

2017

Real estate leasing

REIT financing

Factoring

Asset finance

100.7 100.2

150.8

192.3

0

50

100

150

200

End of Mar

2014

End of Mar

2015

End of Mar

2016

End of Mar

2017

133.0

61.0

144.0

176.9

76.0

31.3 33.8 37.1

6.2 5.9

19.2

19.5

37.5 39.7

56.3

0

20

40

60

End of Mar

2014

End of Mar

2015

End of Mar

2016

End of Mar

2017

Leasing andinstallment sales

Financing

Profit drivers operating assets

2

Define new focus areas in response to “changes in social and industrial structures”

Changes in the social structure

• Respond to aging with a low birth rate

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

• Respond to global issues, such as population increase and global warming

Changes in the industrial structure • Respond to businesses leading Industry 4.0

Fifth Mid-term Management Plan Positioning and Basic Policy

We achieved the targets of the Fourth Mid-term Management Plan and recorded the highest-ever

net income attributable to owners of the parent for 4 consecutive years

With the Fifth Mid-term Management Plan, we aim to take a big stride forward in the runup to our 50th anniversary（December,2019)

－ Create new profit drivers and tackle creation of value for stakeholders

Positioning

3

New focus areas

So far, our business model has centered on leasing and installment sales for large and mid-sized

companies. Leveraging expertise and financial strengths gained through achieving the targets

of the Fourth Mid-term Management Plan, vigorously promote more profitable businesses

(1) Orientation toward marketing emphasizing high added value and differentiation by

thoroughly cultivating core businesses, leveraging expertise concerning physical items

(2) Commitment to new focus areas through more sophisticated portfolio management and

appropriate risk taking reflecting our financial strengths

Basic policy

• • • Medical and healthcare

• • • Global

• • • Environment and energy

• • • Technology

Value-creating company tackling challenges

together with clients

Value creation for stakeholders

Offer flexible and extensive capabilities to

resolve issues in response to changes in social

and industrial structures

Resolve social issues through promotion of business

Fulfill social responsibility including ESG

Develop human resources and cultivate

corporate culture conducive to tackling

transformation and realize working style reforms

Enhance corporate value and return profit to

shareholders by realizing sustainable growth Clients

Society Employees

Share-

holders

Flow for realization of the vision

Vision of the Fifth Mid-term Management Plan

Thorough client-

oriented approach

Fulfill

corporate

social

responsibility

Promote business

together with

clients as their

partner

Tackle new business

domains

transcending the

framework of

financing

4

Real estate

Existing client base Large and mid-sized companies

“Further expand real estate business” by leveraging expertise

[Continuing focus]

• Retail space leasing through collaboration with major store developers

• Bridge schemes for major REIT sponsors

[New focus]

• Tackle new domains such as healthcare, childcare facilities, hotels,

and overseas real estate

Co

ntin

uin

g fo

cu

s a

rea

s (c

ore

bu

sin

esses)

Business domain

“Cultivate core businesses” centering on large and mid-sized

companies

• Leverage strong relations with clients mainly in manufacturing and

domestic-demand-oriented industries

• In addition to financing solutions, in which we excel, promote a new

business strategy that contributes to clients’ business promotion

⇒More profitable business

(1) Support clients’ commercial distribution

(2) Jointly promote service business with clients

(3) Promote JVs with clients

Marketing Target / Strategy

Continuing Focus Areas (Core Businesses)

Focus area (2)

New business strategy

Focus area (1)

5

Cultivate Core Businesses

6

In addition to leasing and installment sales in response to clients’ capital investment, promote a new

business strategy that contributes to clients’ business promotion so as to further enhance earnings power

Tackle new business domains transcending the framework of financing by leveraging strong relations

with clients and promoting business as partners

In addition to conventional facility leasing and installment sales for clients, strive for further

improvement in earnings power by “fee income on trading etc.,” “obtaining gain on investment by

promoting JVs,” and “expanding the vendor financing domain”

Focus Area (1)

New business strategy

Vigorously involve in every phase of clients’ commercial distribution and expand income opportunities Acquire fee income by expanding “commercial distribution financing” and “leveraging trading company

functions”

Support the evolving of business models as client’s partner

Expand the vendor financing domain through alliances

Joint promotion of service businesses

As a business promotion partner, capture investment opportunities such as equity contribution

Select and implement projects from the viewpoint of risk-return based on portfolio management

Promote JVs with clients

Commercial distribution support

Further Expand Real Estate Business

Continue focus on “real estate leasing” and “bridge schemes”

Strengthen initiatives in fields where social needs are increasing, such as healthcare, childcare

facilities, and hotels by leveraging expertise accumulated during the Fourth Mid-term Management

Plan and collaboration with prominent partners for further expansion of business domains

Regarding investment in overseas real estate, development projects, etc., identify risk-return in

advance

7

Leasing

Bridge scheme

Investment

Balance at the end of FY16

¥220 billion

Building leasing in collaboration with major store developers

Continue emphasis on bridge schemes targeting REITs

by leveraging strong relations with prominent partners

Overseas real estate, development projects, etc.

Expand the scope of the business by addressing fields where social

needs are increasing, such as hotels, healthcare, and childcare

Continuing

focus

Balance at the end of the final year

¥350 billion

Focus Area (2)

New

focu

s a

rea

s

New Focus Areas

Aircraft

Overseas

subsidiaries

Medical and

healthcare

Environment and

energy

Technology

• Expand the scope from sales to hospitals

“Community-based integrated care system”

“Data health and preventive health

management”

• Develop service business

• Integrate with the real estate business

• Strengthening of collaboration with

various healthcare-related partners

• Collaboration with medical equipment

manufacturers and trading companies of

used medical equipment

• Collaboration with real estate

developers

Specific initiatives Marketing strategy Market trend Business domain

• Support overseas business

development of Japanese companies

• Cultivate business with non-

Japanese companies at full scale

• Collaboration with Japanese

companies in vendor financing

• M&A and asset purchases

Global

• Expand business in line with the

progress of IoT, AI, etc.

• Initiatives for establishing services

utilizing financing functions

• Collaboration with pioneers in each field

New

• Start full-scale operation of the

aircraft JV

• Expand the scope to cover engines

and parts

• Promotion of collaboration in the

aircraft JV

• Consider business development in

new domains by leveraging expertise

• Extensively capture demand associated

with companies’ investment in energy

saving

Strengthen consulting functions

• Expand coverage of the power-related

business and capture demand －Power generation, transmission and

distribution, energy supply

• Collaboration with engineering

companies

• Utilization of subsidies for energy-saving

initiatives

• Setting up new business models,

such as ESCO contracts

• Participation in project financing

Focus area (3)

New Focus area (4)

New Focus area (5)

New Focus area (6)

8

Medical and Healthcare

Expand the scope from conventional “hospital” sales centering on financing for medical

equipment to “community-based integrated care system” and “data health and health

management”

Develop service business in collaboration with healthcare-related partners and medical

equipment manufacturers

Cultivate real estate business in collaboration with real estate developers

Equipment finance Cultivate real estate business Service-based business

■Hospital field

■Public health insurance business

■Medical equipment, vehicles, etc.

■Community-based integrated care system field

(homes, healthcare, nursing care, preventive

care, livelihood support)

■Public health insurance + Public long-term care

insurance business

■Fee-based home for the elderly, housing for the

elderly with supportive services, rental assistive

devices, etc.

■Data health and health management

field (preventive health management

service)

■Business for services not covered by

public insurances

■Nursing robots, use of IoT etc., health

service, etc.

Contract execution volume

in FY16: ¥30 billion

Contract execution volume in the final year: ¥55 billion

Collaboration

with Siemens

Focus Area (3) New

9

Environment and Energy

*ESCO business: business in which the cost required for refurbishment for energy saving is covered by the reduction in utility cost

Extensively capture demand associated with companies’ investment in energy saving in collaboration with manufacturers and engineering companies

Use subsidies, offer sophisticated consulting for energy saving, promote new business models

such as ESCO

Expand the scope by launching the power-related business ••• Consider participation in project financing, etc.

Background: Japan has already adopted the Paris Agreement, an agreement under the international framework. Measures are being

implemented to achieve the target of 26% reduction in greenhouse gas emissions in 2030 compared with 2013.

Enhancement of

subsidies for

energy-saving initiatives

LED lighting Co-generation Photovoltaic power

generation

Small-scale hydroelectric / biomass power generation

Distribution of CO2 emission rights

Wind power generation

Natural refrigerant equipment

Air conditioners, boilers Batteries

Capturing demand in overseas markets

Use of project financing

Response to ESCO and energy service contracts

Approaches /

fields

Merchandise

Setting up of JVs as operating companies

Geothermal power generation

Capturing demand from municipalities

Investment in funds for renewables, bridge financing

Contract execution volume in FY16: ¥18 billion

Energy-saving machine tools

Contract execution volume in the final year: ¥50 billion

Focus Area (4) New

Power transmission and distribution

10

Capture business opportunities from an early stage in line with technological progress of IoT, AI, etc.

Respond agilely to change in the industrial structure, that is, the shift from “sales to services,” and

provide solutions

Accelerate business development through collaboration with pioneers in each field

Change in the

industrial structure Solutions

Business

opportunities

✔ Financing solutions

attuned to the business

model

✔ Sales financing for

devices and AI systems

✔ Services in collaboration

with IoT suppliers, etc.

✔ Discovery of potential

needs by business

matching

✔ Real estate leasing for

data centers, etc.

Sensing stage Increase in

investment in sensing

devices

IoT Investment in

communications

equipment/systems

Big Data

Investment in data centers in

line with the increasing needs

for data storage and

utilization

AI

Investment in data analytics

systems

Development of machine

learning functions

Stage for offering

services

Needs of service

providers for financial

solutions

注力分野⑤ Technology Focus Area (5) New

11

Global Business (Aircraft)

Promotion of JV business with Aircastle Limited is the core strategy, while utilizing the

accumulated expertise in subsequent business development

－Get the operating leasing business up and running

－Consider starting business related to engines, parts, and other aircraft peripherals

－Set up more Japanese Operating Lease (JOL) projects

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

Expand the “aircraft operating leasing business” launched in FY16

Expand diversified investment in airlines worldwide centering on

general-purpose narrow-body aircraft

Aircraft-backed collateralized loans Selective approach by identifying risk-return in view of competition with foreign banks

Japanese Operating Lease (JOL)

Amount in FY16

¥8.8 billion

Consider starting “new business” such as engine and parts leasing and

PDP financing

Leasing

Amount in the final year

¥12 billion

Financing

Fee

JV with Aircastle Limited

Balance at the end of FY16

¥56 billion Balance at the end of the final year

¥110 billion

12

Focus Area (6)-1 New

Strengthening of sales to

prominent local companies

Strengthen sales to prominent local

companies that are customers of our

JVs and of Japanese companies

Collaboration with Japanese

companies in vendor financing

Expand transactions with non-

Japanese companies through vendor

financing

Expand

transactions

with non-

Japanese

companies

Alliances / asset purchases

Use strengths of local players

centering on Asia

Global Business (Overseas Subsidiaries)

Strengthen collaboration with Japanese companies in sales financing; also consider M&A and

asset purchases

Focus on Asia and cultivate business with non-Japanese companies in full scale

Transactions with Japanese companies

Strengthen sales to prominent local

companies

Non-organic growth through

M&As

Collaboration with Japanese

companies in vendor financing

13

Sales target Business model Balance at the end

of FY16

¥66 billion

Balance at the end of

the final year

¥120 billion

Focus Area (6)-2 New

Realize a more flexible and robust organization capable of

tackling new challenges and transformation

Introduction of a flexible employment system

(employment type)

Resource Strategy

14

Strengthen the foundation for business growth

－Position promotion of diversity as a key management strategy and provide systematic support

for advancement of diverse human resources in workplaces

－Optimize administrative processes and IT systems throughout the Group to improve

operational productivity

Promotion of diversity Advancement of diverse human resources

in workplaces

Improvement of operational productivity

Double the performance

Expansion of systems to support a balance

between work and child-rearing/nursing care

Expansion of education and training systems

Strengthening of corporate system planning

function

Sophisticated management data analysis

environment

Unification of administrative processes and IT

systems throughout the Group

Strengthening of Risk-Return Management

Under the Fifth Mid-term Management Plan, promote initiatives to tackle new businesses while

working to expand core businesses

More sophisticated portfolio management is essential

Clarification of types and the total amount of risks to be

taken

Strengthen risk-return management of each portfolio.

Pursue the optimum allocation of businesses and assets

to enhance the quality of overall assets

Portfolio management

Risk-return analysis of individual businesses and assets

Verification of effective capital allocation

Verification of the financial position suitable for the risk

characteristics of each portfolio

Risk management

Optimum financing and ALM operation attuned to

portfolio structure

Financial ALM

Integrated operation of business portfolio and financial ALM for

appropriate risk-return management

15

Consolidated net income attributable to owners of the parent

ROE 9.4%

Consolidated dividend payout ratio 22.0%

16

Target Figures

Consolidated net income attributable to owners of the parent in FY19

ROE in FY19

Consolidated dividend payout ratio

FY16 results

¥15.0 billion

10％

Maintain 20%

or more

¥12.4 billion