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Results Presentation for the Fiscal YearEnded March 31, 2010
Results Presentation for the Fiscal YearEnded March 31, 2010
April 30, 2010NEC Capital Solutions Limited
© NEC Capital Solutions Limited 2010Page 2
Contents1. Report of Financial Results for FY 2009
(the Fiscal Year Ended March 31, 2010)1) Business Environment2) Financial Summary3) Consolidated Revenue by Business4) Consolidated Operation by Business5) Credit Costs6) Funding
2. Progress of Third Medium-Term Business Plan1) Outline of Third Medium-Term Business Plan2) Progress of Business Portfolio Strategy3) Progress of Strategy for Strengthening Management Functions
and Policy to Enhance Governance, CSR
3. Effort to FY20101) To Expansion of Business
4. Plans for FY20101) Financial Results Forecast
© NEC Capital Solutions Limited 2010Page 3
010000
2000030000
4000050000
6000070000
8000090000
’05上半期 ’05下半期 ’06上半期 ’06下半期 ’07上半期 ’07下半期 ’08上半期 ’08下半期 ’09上半期 ’09下半期
01000
20003000
40005000
60007000
80009000
1. Report of Financial Results for FY2009
(%)
(Billions of Yen)
The overall leasing industry continues to face a severe business environment.- Fall in the total number of leasing contracts- Impacted by a decline in capital expenditure and changes in lease
accounting - Corporate bankruptcy and funding situations have been stabilized.
1) Business Environment
▌Bankruptcies(total liabilities/ number of bankruptcies)
(Number of bankruptcies)
’05 ’05 ’06 ’06 ’07 ’07 ’08 ’08 ‘091H 2H 1H 2H 1H 2H 1H 2H 1H
-30
-20
-10
0
10
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09
▌Year-on-year change in total leasing contracts
Number of bankruptcies Total liabilities
(Source: Lease statistics of Japan Leasing Association) (Source: Bankruptcy information on the website of Teikoku Data Bank; liabilities of companies filed for bankruptcy)
△19.0%
¥4.9trillion
© NEC Capital Solutions Limited 2010Page 4
1%670.0662.7Operating Assets
Y to Y
Equity Ratio(%)
Net Income per Share (Yen) -145.01△176.75
-8.1%7.5%-44.0044.00Interim Dividends per Share (yen)
-3.1△3.8Net Income
112%7.73.6Operating Income
6%60.056.4Net Assets
128%7.63.4Ordinary Income
△9%237.4261.0Net Sales
March2010
March 2009
(Billions of Yen)
March 2009
2) Consolidated Financial Summary
▌Major factors in year-on-year changesin ordinary income
- Decline in the number of new leasing contractsLower net sales
- Gain on valuation of derivatives an improvement in funding costs changes in accounting standards etc.
Higher ordinary income
March 2010
A rise in profit associated with the revision of the Accounting Standard for Lease Transactions and the expansion of the Loan Business
A fall in funding costs
Profit from valuation of derivatives
An increase in bad debts charges
A rise in SG&A(Billions of Yen)
1. Report of Financial Results for FY2009
3.4
7.6
2.4
3.0
0.32.0
2.9
© NEC Capital Solutions Limited 2010Page 5
△2.05.97.9Funding Costs
△0.10.10.2Funding Costs
△0.10.60.7Funding Costs
△1.85.27.0Funding Costs
7.027.320.3Gross Profit
2.85.32.6Gross Profit
△3.110.713.8Costs
0.63.22.6Gross Profit
0.00.00.0Costs
3.618.715.0Gross Profit
△25.5193.5219.0Costs
Net Sales
Net Sales
Net Sales
Net Sales
Changes
Costs △28.6204.2232.8
△23.6237.4261.0Total
0.53.83.4Loan Business
△0.416.116.5Other Business
△23.7217.4241.1LeasingBusiness
March 2010March 2009(Billions of Yen)
Leasing Business• Lower sales, as a result of a decline in new leasing contracts•Improvement in funding costs•Changes in accounting standards
Loan Business•Increase in loans to companies
Other Business•Gain on valuation of derivatives
3) Consolidated Revenue by Business
1. Report of Financial Results for FY2009
© NEC Capital Solutions Limited 2010Page 6
Others
Packaged factoring
△ 49.6247.8297.4Business Loan
△ 7.96.013.9Installment Sales
2.5102.7100.3
△ 52.1145.1197.1
Changes
△ 85.64.37.5523.1Total
△ 57.5253.8311.3Loan Business
1.73.92.2Other Business
△29.8179.9209.7Leasing Business
March2010
March2009
△ 29.8
△ 4.5
△ 0.0
△ 3.0
△ 5.8
△ 16.4
△ 25.2
Changes
85.8%
81.5%
99.7%
79.3%
92.8%
77.3%
85.0%
NEC Capital Solutions
Comparison of Y to Y changes (%)
81.0%
79.0%
81.1%
89.6%
82.4%
83.2%
84.3%
Comparison
17.317.3Office Equipment
55.772.1Computers Hardware
11.514.5Telecommunication Equipment
75.481.2Computers Software
179.9209.7Total
142.6167.8Information and communications Equipment
20.024.5Others
March2010
March2009
570.1 515.4 492.7
177.2147.3139.3
0200400600800
Mar. 2008 Mar. 2009 Mar.2010
Loan
Leasing
(Billions of Yen)
(Billions of Yen)
4) Consolidated Operation by Business
▌Leasing Business: Contracts Executed by Equipment
▌Contracts Executed by Business ▌Operating Assets by Business
709.4 662.7 670.0
(Billions of Yen)
1. Report of Financial Results for FY2009
(Source: Lease statistics of Japan Leasing Association)
© NEC Capital Solutions Limited 2010Page 7
2.9
5.8
8.7
0.36%
0.59%
0.93%
0.00%
0.25%
0.50%
0.75%
1.00%
Mar.2008 Mar.2009 Mar.20100.0
2.5
5.0
7.5
10.0(Billions of Yen)
Rate of client bankruptcy (%)= Defaults arising from new bankruptcies/ (Average balance of operating assets + Average balance of claims in bankruptcy and in rehabilitation )*Defaults arising from new bankruptcies = Claims in bankruptcy and in rehabilitation + Potential non-performing loans
Credit costs
Rate of bankruptcy
5) Credit Costs (Consolidated)
- Credit costs inclined to rise, given large-scale individual bankruptcies and the adoption of stricter asset assessment.- Early bankruptcies fell significantly, the result of initiatives taken to strengthen the review structure.
▌Transaction of credit cost ▌Number and amount of early bankruptcies(Billions of Yen)
1. Report of Financial Results for FY2009
0.1
1.6
6
37
0
10
20
30
40
50
Mar.2009 Mar.2010
0
0.5
1
1.5
2
Number of bankruptcies
Bankruptcy amount
© NEC Capital Solutions Limited 2010Page 8
0.92%
1.21%1.01%
0.5%0.6%0.7%0.8%0.9%1.0%1.1%1.2%1.3%1.4%1.5%
Mar. 2008 Mar. 2009 Mar. 2010
0%
20%
40%
60%
80%
100%
Mar. 2008 Mar. 2009 Mar. 2010
資金原価率(%)
=資金原価÷有利子負債平残
Short-termloans
Long-term loans
Securitization
CP
BondsDirect
funding ratio29%
6) Funding (Consolidated)
-The funding environment has improved, and the cost of funding ratio has declined.
- A diversification of funding methods was examined.
▐ Cost of funding ratio
▐ Composition of interest-bearing debts
CompositionComposition
640.9
6.8
10.0
170.0
442.5
11.6
March 2010
100%
1.1%
1.6%
26.5%
69.0%
1.8%
100%647.5Total
2.3%15.0Securitization
1.5%10.0Bonds
25.9%168.0CP
63.4%410.8Long-term loans
6.8%43.8Short-term loans
March 2009
▐ Interest-bearing debts(Billions of Yen)
Cost of funding ratio(%) = Cost of funding / average balance of interest - bearing debts
1. Report of Financial Results for FY2009
© NEC Capital Solutions Limited 2010Page 9
New Business Domains
Management Strategy
1 Five core businesses
2 Specifics of the businessstrategy
1 Bolstering Consolidatedmanagement
2 Promoting BPR3 Enhancing ERM4 Human resources management
1 Enhancing governance
2 Promoting CSR
(1) Business portfolio strategy (2) Strategy for strengthening management functions (3) Enhancing governance / CSR
The Existing DomainThe Key Domains
Financial Solutions Assets Solutions Vendor Solutions
-The situation at the time of formulating Third Medium-term Business Plan---・Change in lease accounting standards and tax system, acceleration of industry
reorganization, impact of rising interest rates, behind the other listed leasing companies in profitability and efficiency
-In response to rapid changes in the business environment, we developed the third medium-term business plan for new growth ahead of schedule. We will rebuild the operating basis by executing the third medium-term business plan
2. Progress of Third Medium-Term Business Plan
1) Outline of Third Medium-Term Business Plan (Formulated at March 2008)
© NEC Capital Solutions Limited 2010Page 10
Financial Solutions Domain
- Commencement of the collaboration with RISA Partners Inc., and steady growth from the second half
•Development of a project information route and the capturing of new projects through cooperative marketing to regional financial institutions in alliance with RISA
2. Progress of Third Medium-Term Business Plan
2) Progress of Business Portfolio Strategy(1/3)
- Handling of finance projects for a wide range of customers who are not limited to those in NEC’s existing business channels
•Rise in the amount of financing• Expansion of business opportunities by proposing a range of securitization schemes
•Establishment and review of financing schemes that meet customers’funding needs and needs for off balance-sheet products
© NEC Capital Solutions Limited 2010Page 11
Assets Solutions Domain
- Expansion of ICT asset management service (PC-PIT)- Full scale operations of the kitting center- Reboot Technology Services, Ltd. became profitable for the fiscal year.
2) Progress of Business Portfolio Strategy (2/3)
▐ Major destinations of exports from Reboot Technology Services, Ltd.
▐ The Kitting Center
▐ Expanding the ICT asset management service (PC-PIT)
Procurement support
Introduction / Deployment
Removal / Sellout
Operation / Management
2. Progress of Third Medium-Term Business Plan
Established on Aug. 2008 (Chofu, Tokyo)
★RTS
© NEC Capital Solutions Limited 2010Page 12
CFO and the finance dept.
Taking advantage of the sole financial institution in the NEC Group, new projects and customers have been identified and captured by strengthening the approach to customers’ CFOs, and finance and accounting departments.
Information about CAPEX
plans Front marketing→ Continuous contact through finance transactions→ Understanding investment needs
Sharing and introduction of projects
NEC Capital Solutions
NECProposals of collaboration
Customers
2) Progress of Business Portfolio Strategy(3/3)
Establishment of new relationships with NEC (Win-Win)
2. Progress of Third Medium-Term Business Plan
© NEC Capital Solutions Limited 2010Page 13
Strategy for Strengthening Management Functions
Policy to Enhance Governance and CSR
- Steady progress of the system project (the full renewal of the main system that is expected to start operating in 2012)
- Development of a monitoring system of balance sheet risks- Strengthening of the credit review structure (the revision of sanction authority standards and the development of a bankruptcy forecasting tool)
- Establishment of a human resources training system that accommodates the business portfolio that is created under the medium-term plan
- Strengthening of IR•Strengthening of the information consolidation system by allocating personnel concurrently in charge of IR to major departments
- CSR activities•Acquired the highest rating for the sixth consecutive year for environmental rating loans of the Development Bank of Japan Inc.•Environment: Development of biotopes (Actual development: 5 schools; Accumulated number: 12 schools)
3) Progress of Strategy for Strengthening Management Functions and Policy to Enhance Governance, CSR
2. Progress of Third Medium-Term Business Plan
© NEC Capital Solutions Limited 2010Page 14
Corporate Planning Division
Operations Planning Division
Business Strategy Division
3. Effort to FY2010
1) To expansion of Business
• Improve OHR by improving operating efficiency and developing new systems.
Strengthen the solution business and improve management efficiency
Introduction of a three division structure
• Develop a business portfolio by taking into consideration the Fourth Medium-Term Business Plan.• Create business opportunities through alliances.
• Strengthen the market-oriented solution business structure.• Cooperation for the NEC Group’s services• Develop a range of business schemes, and introduce them to the market.
To the 4th Medium-Term Business Plan
© NEC Capital Solutions Limited 2010Page 15
185.764.07.07.0
225.0
March 2011(Forecast) Y to Y
Net Income per Share (Yen) -145.0128.1%3.1Net Income
△8.8%7.7Operating Income
△8.5%7.6Ordinary Income
△5.2%237.4Net Sales
March 2010(Actual)
22.00
Forecast
22.00
Year-end
44.00
Forecast
44.00
Annual
22.00Actual for the March 2010
Actual
22.00Forecast for the March 2011
Interim
1) Financial Results Forecast (Consolidated)
4. Plan for FY2010
▐ Dividend per Share (Yen)
(Billions of Yen)
© NEC Capital Solutions Limited 2010Page 16
This presentation material is intended to provide our corporate information and not to solicit you to purchase, sell, or invest in the securities issued by NEC Capital Solutions Limited. We request that the investment decision shall be made at your own discretion.This presentation material contains forward-looking statements pertaining to NEC Capital Solutions Limited’s plans, strategies and financial targets, and they depend on currently available assumptions, data, or methods that may be incorrect or imprecise and NEC Capital Solutions Limited may not be able to realize the results expected by them.You should not place undue reliance on forward-looking statements, which reflect NEC Capital Solutions Limited’s analysis and expectations only. Forward-looking statements are not guarantees of future performance and involve inherent risks and uncertainties. A number of important factors that could cause actual results to differ materially from such statements include (i) change in general economic conditions and laws/regulations in NEC Capital Solutions Limited’s market, (ii) potential legal liability relating to NEC Capital Solutions Limited’s business and operations, (iii) fluctuating demand for, and competitive pricing pressure on NEC Capital Solutions SolutionsLimited’s services, (iv) deterioration of the global economic and financial environment, (v) downturn of domestic and international stock markets, and so forth. Risks and uncertainties also include the impact of any future events with material unforeseen impacts.Any forward-looking statements speak only as of the date on which they are made. New risks and uncertainties come up from time to time, and it is impossible for NEC Capital Solutions Limited to predict these events or how they may affect NEC Capital Solutions Limited.