BALANCE SHEET (Translation) As of March 31, 2013 (Millions of yen)

Transcription

1 BALANCE SHEET (Translation) As of March 31, 2013 Account item Amount Account item Amount ASSETS LIABILITIES Current assets 1,006,437 Current liabilities 587,913 Cash and deposits 15,778 Notes payable-trade 4,387 Notes receivable-trade 43 Accounts payable-trade 19,593 Installment contract 109,489 Short-term borrowings 50,912 Lease 99,056 Current portion of long-term debt 121,906 Lease investment assets 479,645 Commercial paper 329,920 Loan from customers 111,958 Payables under fluidity lease 23,218 Other loan from customers 46,760 Lease payables 1,485 Lease contract 1,344 Accounts payable 8,848 Other operating assets 6,852 Accrued income taxes 216 Securities 9 Accrued expenses 1,231 Advance on contracts 1,252 Advances received on lease contracts 7,338 Prepaid expenses 1,420 Deposits received 5,294 Accrued income 433 Deferred income 31 Short-term loan 124,578 Unrealized gross profits on installment contracts 12,321 Deferred tax assets 9,041 Provision for bonuses 819 Other current assets 13,626 Other current liabilities 386 Allowance for doubtful (14,855) Long-term liabilities 482,200 Fixed assets 207,282 Long-term debt 433,608 Tangible assets 18,475 Long-term payables under fluidity lease 37,499 Property for lease and rent 17,978 Guarantee deposits received 6,320 Property for lease and rent 18,047 Provision for employees retirement benefits 2,486 Allowance for loss on disposal of property for lease and rent (69) Other long-term liabilities 2,285 Own-used assets 497 Total liabilities 1,070,114 Intangible assets 3,732 NET ASSETS Property for lease and rent 451 Stockholders equity 142,322 Property for lease and rent 452 Capital stock 32,000 Allowance for loss on disposal of property for lease and rent (1) Capital surplus 66,264 Software 2,847 Legal capital surplus 30,000 Other intangible assets 433 Other capital surplus 36,264 Retained earnings 44,057 Investments and other assets 185,074 Earned surplus reserve 412 Investment securities 13,122 Other retained earnings 43,645 Investments in affiliated companies 27,520 Unappropriated 43,645 Long-term loan 140,687 Valuation and translation adjustments 1,283 Claims provable in bankruptcy, in 2,297 Net unrealized gain on 2,482 rehabilitation and other available-for-sale securities Long-term prepaid expenses 121 Deferred gains (losses) on hedges (1,198) Long-term deferred tax assets 6,515 Long-term money deposited 1,864 Other investments 2,005 Allowance for doubtful (9,059) Total net assets 143,606 Total assets 1,213,720 Total liabilities and net assets 1,213,720 1

2 STATEMENT OF INCOME (Translation) For the year ended March 31, 2013 Account item Amount Revenues Lease revenue 237,228 Installment sales 31,600 Finance revenue 3,633 Other revenue 8, ,902 Costs Cost of lease 211,748 Cost of installment sales 28,159 Cost of finance 299 Cost of other sales 7,188 Financing costs 4, ,273 Gross profit 28,629 Selling, general and administrative expenses 15,217 Operating income 13,412 Non-operating income Interest and dividends received 5,212 Other 243 5,456 Non-operating expenses Interest expense 1,738 Other 175 1,913 Ordinary income 16,955 Special gains Gain on sales of fixed assets 39 Subsidy income 1 Gain on sales of investment securities Special losses Loss on retirement of fixed assets 36 Impairment losses 15 Loss on sales of investment securities 11 Loss on valuation of investment securities 404 Loss on sales of investments in affiliated companies 994 Loss on liquidation of investments in affiliated companies 4 Loss on valuation of investments in affiliated companies 13 1,480 Income before income taxes 15,632 Income taxes-current 5,367 Income taxes-deferred (1,198) Net income 11,462 2

3 STATEMENT OF CHANGES IN NET ASSETS (Translation) For the year ended March 31, 2013 Stockholders equity Balance at beginning of the year (Changes during the year) Capital stock Capital surplus Legal capital surplus Other capital surplus Total capital surplus 32,000 30,000 36,264 66,264 Dividends from surplus Net income Changes during the year for items other than stockholders equity (net) Total of changes during the year Balance at end of the year 32,000 30,000 36,264 66,264 Stockholders equity Balance at beginning of the year (Changes during the year) Earned surplus reserve Retained earnings Other retained earnings Unappropriated Total retained earnings Total stockholders equity ,618 35, ,296 Dividends from surplus (2,436) (2,436) (2,436) Net income 11,462 11,462 11,462 Changes during the year for items other than stockholders equity (net) Total of changes during the year 9,026 9,026 9,026 Balance at end of the year ,645 44, ,322 3

4 Balance at beginning of the year (Changes during the year) Net unrealized gain on available-for-sale securities Valuation and translation adjustments Deferred gains (losses) on hedges Total valuation and translation adjustments Total net assets 1,407 (1,060) ,643 Dividends from surplus (2,436) Net income 11,462 Changes during the year for items other than stockholders equity (net) Total of changes during the year 1,074 (138) ,074 (138) 935 9,962 Balance at end of the year 2,482 (1,198) 1, ,606 4

5 NOTES TO FINANCIAL STATEMENTS (Translation) For the year ended March 31, 2013 (Notes to Significant Accounting Policies) 1. Valuation basis and methods applied for assets (1) Securities Held-to-maturity debt securities. At amortized cost or accumulated cost Investments in subsidiaries and associates. At cost determined by the moving-average method Available-for-sale securities Those with determinable fair values... At fair value based on market price etc., as of the balance-sheet date. (All valuation differences are reported as a component of net assets. The cost of securities sold is determined by the moving-average method.) Those without determinable fair values... At cost determined by the moving-average method (2) Derivative financial instruments... At fair value 2. Methods of depreciation and amortization applied for fixed assets (1) Property for lease and rent Property for lease and rent is depreciated under the straight-line method within the estimated lease and rent period, assuming that useful lives are the same as the estimated lease and rent period, and that residual values are the disposal price estimable at the end of the estimated lease and rent period. In some of the property for lease and rent, tangible assets are depreciated under the declining-balance method. Intangible assets are amortized under the straight-line method. (2) Other fixed assets Of the other fixed assets, tangible assets are depreciated under the declining-balance method while intangible assets are amortized under the straight-line method. Software for internal use is amortized under the straight-line method over internal useful lives (5 years). 3. Significant allowance and provisions (1) Allowance for doubtful For general, allowance for estimated uncollectible is provided for at an adequate rate calculated based on the probability of bankruptcy, while allowance for certain categories including seriously doubtful is provided for based on case-by-case collectability assessment. (2) Allowance for loss on disposal of property for lease and rent Allowance for estimated loss is provided for potential losses associated with disposals of property for lease and rent. (3) Provision for bonuses Of the estimated amount of bonuses payable to employees in the following fiscal year, the portion attributable to their service during current fiscal year has been set aside as provision for employees bonuses. (4) Provision for employees retirement benefits The Company provides for the estimated year-end liabilities for retirement benefits based on the projected benefit obligations and plan assets at the balance sheet date. Past service liabilities are recognized in each fiscal year as they arise. Actuarial differences are charged to income on a straight-line basis, beginning from the year after they are recognized, over the then average remaining years of service of employees (13 to 15 years). 5

6 4. Lease accounting Accounting policy for revenues and costs from finance lease transactions The Company adopts the method in which lease revenue and cost of lease are recorded at the time when lease fees are collectible. Accounting policy for revenues from operating lease transactions The Company records lease revenues corresponding to the elapsed period of the lease contract term, on the basis of the monthly lease fees collectible according to the lease contract for such contract term. 5. Accounting for installment contracts The Company accounts for the full amount of contracts as installment contract upon delivery of goods and records installment sales and costs of installment sales as each payment becomes due. Unrealized gross profits on installment contract with installment payments becoming due at later dates are deferred. Meanwhile, for some of the installment contracts, amount equivalent to interest is allocated to each period as installment sales. 6. Accounting treatment for financial expenses Total assets are divided into assets based on sales transactions and other assets, where financial expenses corresponding to the former are recorded as financing costs under the heading of operating expenses while financial expenses corresponding to the latter are recorded as non-operating expense, based on the balance proportion of such assets. Financial expenses related to operating assets less corresponding interest received, etc. are recorded as financing costs. 7. The method of hedge accounting Gains or losses on derivatives are deferred until maturity of the hedged items. For interest rate swap, the Company applies the exceptional method as far as it qualifies for the required rules. 8. Translation of foreign currency accounts All monetary and payables denominated in foreign currencies are translated into Japanese yen at the spot exchange rates on the balance sheet date, and the foreign exchange gains and losses therefrom are recognized in the statement of income. 9. Other significant matters that serve as the basis for preparing financial statements (1) Accounting treatment for consumption taxes Consumption tax and local consumption tax are accounted for by the tax exclusion method. (2) Amortization of goodwill Goodwill is amortized over five years under the straight-line method. (Notes to Change in Accounting Policies) 1. Change in method of depreciation With the enforcement of amendments to the Corporate Tax Act, the Company changed the method of depreciation for tangible assets (including part of property for lease and rent) acquired on and after April 1, 2012 to comply with the amended law from the fiscal year. This change had an immaterial impact on the Company s profit and loss. 6

7 (Notes to Balance Sheet) 1. Assets pledged as collateral and corresponding liabilities (1) Assets pledged as collateral Installment contract 1,302 Lease 20,098 Lease investment assets 54,748 Other loan to customers 1,326 Property for lease and rent 359 Investment securities 9 Other investments 5 Total 77,851 (2) Liabilities corresponding to assets pledged as collateral Payables under fluidity lease 15,718 Long-term payables under fluidity lease 37,499 Other liabilities 115 Total 53, Accumulated depreciation of tangible assets Property for lease and rent 24,294 Other tangible assets 978 Total 25, Contingent liabilities Contingent liabilities for the subsidiaries borrowing liabilities etc. from financial institutions PT. Mitsui Leasing Capital Indonesia 46,856 Altair Lines S.A. 39,093 JA Mitsui Leasing Singapore Pte.Ltd. 12,019 JA MITSUI LEASING TATEMONO CO., LTD. 2,072 PT. JA Mitsui Leasing Indonesia 1,675 Others 1,548 Total 103, Breakout of lease and lease investment assets Lease Lease investment assets Amount of 117, ,128 Estimated residual value 24,984 Amount equivalent to interest 17,987 42,467 Total 99, ,645 7

8 5. Notes received as guarantees Notes received for installment contract 9,341 Notes received for lease 22 Notes received for lease investment assets 1,876 Notes received for other loan to customers 2, Operating lease contract under the remaining lease terms Other lease contract 11, Trade due after one year Installment contract 69,016 Lease 69,495 Lease investment assets 320,146 Loan from customers 65,435 Other loan from customers 24,141 Operating lease contract under the remaining lease terms 6,921 Total 555, Receivables and payables with affiliated companies Short-term 132,141 Long-term 141,466 Short-term payables 37,463 Long-term payables 27, Notes receivable and payable maturing on the balance sheet date Notes receivable and payable maturing on the balance sheet date are treated as if they were settled at the clearing date of notes. Consequently, as the balance sheet date for the fiscal year was a bank holiday, the following notes receivable and payable maturing on the balance sheet date were included in the amount of each balance at March 31, Notes receivable-trade 2 Notes received for installment contract 639 Notes received for lease 0 Notes received for lease investment assets 70 Notes received for other loan to customers 287 Notes payable-trade 80 8

9 (Notes to Statement of Income) 1. Transactions with affiliated companies Amount of operating transactions Revenues 3,727 Costs 452 Selling, general and administrative expenses (145) Amount of non-operating transactions 5,125 (Notes to Statement of Changes in Net Assets) 1. Number of issued and outstanding shares Class of shares Number of shares at the beginning of the fiscal year Number of increased shares during the fiscal year Number of decreased shares during the fiscal year Number of shares at the end of the fiscal year Issued and outstanding shares Ordinary shares 32,415,296 32,415,296 Class I classified shares 4,077,528 4,077,528 Class II classified shares 33,448,582 33,448,582 Class III classified shares 3,883,500 3,883,500 Total 73,824,906 73,824, Matters regarding dividends from surplus (1) Amount of dividend payments Dividend payments resolved at the 4th annual general meeting of shareholders held on June 28, 2012 Total amount of dividends 2,436 million Dividend per share Ordinary shares 33 Class I classified shares 33 Class II classified shares 33 Class III classified shares 33 Dividend record date March 31, 2012 Effective date June 29, 2012 (2) Dividends with a record date within the current fiscal year but effective date in the next fiscal year At the 5th annual general meeting of shareholders scheduled to be held on June 27, 2013, the Company will make the following proposals to be discussed and resolved. Total amount of dividends 3,617 million Dividend per share Ordinary shares 49 Class I classified shares 49 Class II classified shares 49 Class III classified shares 49 Dividend record date March 31, 2013 Effective date June 28,

10 (Notes to Income Taxes) 1. Significant components of the Company s deferred tax assets and liabilities Deferred tax assets Allowance for doubtful 9,207 Excess provision for depreciation and amortization 3,829 Investment securities 1,228 Investments in affiliated companies 977 Provision for employees retirement benefits 911 Other 2,064 Subtotal 18,220 Less valuation allowance (1,462) Total deferred tax assets 16,758 Deferred tax liabilities Net unrealized gain on available-for-sale securities (1,136) Other (64) Total deferred tax liabilities (1,201) Net deferred tax assets 15,557 (Notes to leased fixed assets) In addition to fixed assets stated in the balance sheet, the Company uses information equipments and vehicles under lease contracts. 10

11 (Notes to Financial Instruments) 1. Matters relating to the status of financial instruments (1) The Company s policy in handling financial instruments The Company engages in its core business leasing and other financial service businesses including installment sales and loans to customers. To ensure constant financial liquidity to carry out these businesses, the Company raises funds by direct financing such as issuance of commercial paper and bonds as well as securitization of, along with indirect financing including bank borrowing. Since the Company s business involves holding of financial assets and liabilities exposed to interest rate volatility, it engages in derivative transactions as part of the comprehensive asset and liability management (ALM) in an effort to avoid unexpected losses due to the fluctuations of interest rate. (2) Details of financial instruments and their risks Financial assets held by the Company are primarily lease, lease investment assets, installment contract and loans to customers involving domestic clientele, all of which are exposed to credit risk associated with the event of default by customers. Bank borrowing and issuance of commercial paper and bonds are all exposed to liquidity risk involving difficulty in ensuring the procurement of sufficient fund via normal fund raising activities in the event of significant dysfunction of the financial/capital market. Furthermore, borrowing at variable interest rate is exposed to interest rate risk, which, however, is partially avoided by interest rate swap transactions. Lease, installment sales and loan transactions denominated in foreign currencies are exposed to exchange risk, which, however, is mitigated by foreign currency denominated borrowing. One area of the derivative transactions engaged by the Company is interest rate swap transactions deployed as hedging instruments as part of ALM in which interest rate risk associated with the hedged borrowing is subject to hedge accounting. Under hedge accounting, the Company compares the cumulative changes in cash flows of the hedged items against those of the hedging instruments during the period from the start of the hedging until the time to determine the its effectiveness. This comparison serves as the basis to evaluate the effectiveness of hedging. (3) Risk management system for financial instruments Management of credit risks In accordance with the internal rules for credit risk management, the Company has developed and maintains credit management system in respect of its trade, including credit assessment and management of credit limits and credit data on case-by-case basis, internal credit rating, application of ceiling system to avoid credit concentration risk, arrangement of guarantee and security, and response to questionable. Management of market risks The Company manages interest rate risk on the basis of the comprehensive management of its assets and liabilities (ALM). Details of the methods and procedures of the risk management are set out under the Company s Risk Management Policies, while analysis of information on the financial market trend and identification/confirmation of interest rate risk position, along with discussion/approval on the future policies for handling this type of risk are carried out by the Integrated ALM Committee. Exchange risk is managed on case-by-case basis. Furthermore, as quantitative analysis of the interest rate risk, the Company calculates the amount of impact on profit and loss by simulating the reasonably expected moving range of interest rate risk after the year-end; and assuming that all risk variables other than interest rates remain the same, calculations indicate that income before income taxes for the following fiscal year will decrease by 2,834 million based on the scenario where the benchmark interest rate increases 100 basis points (1%) as of March 31,

12 Management of liquidity risks concerning financing The Company engages in liquidity management of company-wide fund via the ALM, along with other measures including the maintenance of adequate balance of cash and deposits, diversification of fund-raising methods, establishment of commitment lines from a number of financial institutions and optimum mix of short-term and long-term financing in consideration of the market environment. 12

13 2. Matters relating to the fair value of financial instruments Balance sheet amounts, fair values, and the differences as of March 31, 2013 are as follows: Balance sheet amount Fair value Difference (1) Installment contract 95,578 96, Installment contract (*1) 97,167 Allowance for doubtful (*2) (1,589) (2) Lease 98,495 98, Lease 99,056 Allowance for doubtful (*2) (560) (3) Lease investment assets 452, ,578 7,351 Lease investment assets 479,645 Estimated residual value (*3) (24,984) Allowance for doubtful (*2) (2,434) (4) Loan from customers 105, ,591 2,068 Loan from customers 111,958 Allowance for doubtful (*2) (6,435) (5) Other loan from customers 45,485 46, Other loan from customers 46,760 Allowance for doubtful (*2) (1,275) (6) Short and long-term loan 256, ,275 4,286 Short-term loan 88,506 Long-term loan 176,758 Allowance for doubtful (*2) (8,276) (7) Claims provable in bankruptcy, in rehabilitation and other Claims provable in bankruptcy, in rehabilitation and other 2,297 Allowance for doubtful (*2) (2,031) Total assets 1,054,564 1,069,878 15,314 (1) Short-term borrowings 50,912 50,912 (2) Commercial paper 329, ,920 (3) Payables under fluidity lease (*4) 7,500 7,500 (4) Long-term debt (*5) 555, ,573 2,057 (5) Long-term payables under fluidity lease (*6) 53,217 53,167 (50) Total liabilities 997, ,073 2,007 Derivative transactions (*7) 1) Derivative transactions to which hedge accounting is not applied (236) (236) 2) Derivative transactions to which hedge accounting is applied (1,862) (1,862) Total derivative transactions (2,099) (2,099) (*1) Deferred unrealized gross profits on installment contracts have been deducted from installment contract. (*2) Corresponding allowance for doubtful has been deducted. (*3) Estimated residual value included in lease investment assets has been deducted. (*4) Long-term payables under fluidity lease scheduled to be repaid within one year as included in payables under fluidity lease have been deducted. (*5) Current portion of long-term debt is included. (*6) Long-term payables under fluidity lease scheduled to be repaid within one year as included in payables under fluidity lease are included also in long-term payables under fluidity lease. (*7) Actual and payables derived from derivative transactions are represented by net amounts. Net payables are presented in parentheses. 13

14 (Note 1) Matters relating to the calculation method of fair value of financial instruments and derivative transactions Assets (1) Installment contract, (2) Lease, (3) Lease investment assets, (4) Loan to customers, (5) Other loan to customers and (6) Short and long-term loan Financial instruments based on variable interest rate reflect market rate at shorter intervals, thus their book value approximate their fair value unless credit standing of the customers involved therein changes significantly. Hence they are stated at book values. Meanwhile, financial instruments based on fixed interest rate are calculated by discounting the sum of principal and interest using the hypothetical interest rate assumed applicable to the new borrowing on similar conditions, by type of receivable, by grade of internal rating and by term basis. On the other hand, doubtful are calculated based on the estimated amount recoverable through repossession or guarantee, in which their balance sheet amount less estimated bad debt at the closing date are approximate to their fair value, and thus are stated as such. (7) Claims provable in bankruptcy, in rehabilitation and other Receivables from businesses under bankruptcy or rehabilitation process are calculated based on the estimated amount recoverable through repossession or guarantee, in which their balance sheet amount at the closing date less the currently estimated bad debt are approximate to their fair value, and thus stated as such. Liabilities (1) Short-term borrowings, (2) Commercial paper and (3) Payables under fluidity lease Since these are settled in a short period and their book value is approximate to their fair value, they are stated at book values. (4) Long-term debt and (5) Long-term payables under fluidity lease Of the long-term debt, those based on variable interest rate reflecting market rate at short intervals with the Company s credit standing remaining without significant change since the borrowing, are stated at their book value which is believed to approximate their fair value. Meanwhile, those based on fixed interest rate are stated at their fair value calculated by discounting the sum of their principal and interest (*) for each of certain time periods within the term, using the hypothetical interest rate assumed applicable to the borrowing on similar conditions as at the end of each such time period. (*) For long-term borrowings applicable to the exceptional method for interest rate swap transactions (See Derivative transactions. below), they are the sum of their principal and interest (calculated by the rate applicable to such interest rate swap transactions) 14

15 Derivative transactions Derivative transactions to which hedge accounting is not applied For the derivative transactions not applicable to hedge accounting, contract amounts, the contractual sums of their principal and interest, fair value and valuation profit or loss as at the closing date, and the methods to calculate such fair values are shown as follows by type of hedged item. (a) Currency related Classification Transactions outside market transactions Derivative transaction type etc. 15 Contract amount etc. Fair value (*) Valuation profit or loss Forward exchange transactions Open interest on seller s side US$ 669 (36) (36) Open interest on buyer s side US$ Total 1, (*) Fair value is calculated using prices quoted by financial institutions. (b) Interest rates related Classification Transactions outside market transactions Derivative transaction type etc. Interest rate swap transactions Fixed rate receivable/variable rate payable Fixed rate payable/variable rate receivable Payable at LIBOR/Receivable at TIBOR Contract amount etc. Fair value (*) Valuation profit or loss 5, ,000 (241) (241) 1, Total 19,040 (236) (236) (*) Fair value is calculated using prices quoted by financial institutions. Derivative transactions to which hedge accounting is applied For the derivative transactions applicable to hedge accounting, contract amounts and the contractual sums of their principal and interest as at the closing date are shown as follows by type of hedge accounting method. Hedge accounting method Basic accounting method Exceptional method for interest rate swap transactions Derivative transaction type etc. Interest rate swap transaction Fixed rate receivable/variable rate payable Fixed rate receivable/variable rate payable Interest rate swap transaction Fixed rate receivable/variable rate payable Fixed rate payable/variable rate Main hedged items Long-term debt Long-term debt Contract amount etc. Fair value 2, ,766 (1,890) 6,500 (*) 152,975 Fair value calculation method Fair values are calculated using prices quoted by financial institutions. receivable Total 252,031 (1,862) (*) As those applicable to the exceptional method for interest rate swap transactions are treated as part of the hedged long-term borrowings, their fair value is included in the fair value of such long-term borrowings (See Liabilities (4) ).

16 (Notes to Related Party Transactions) 1. Parent company and corporate major stockholder Attributes Other affiliated company Name of related company The Norinchukin Bank Percentage of voting rights of the Company Directly 28.48% Relationship with related party Loan Doubled as director Description of the transaction Borrowings (*1) Payment of the interest Transactions (Millions of yen) Account 200,242 Short-term borrowings Current portion of long-term debt Balance (Millions of yen) 21,907 10,600 Long-term debt 27, Accrued expenses 5 The terms and conditions of the above transactions and its policy making, etc. (*1) Interest rates, etc. are subject to general terms and conditions. 16

17 2. Associated companies, etc. Attributes Name of related company Equity ownership percentage Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary JA Mitsui Leasing Auto, Ltd. Nishi-Nippon Sogo Lease Co., Ltd. Altair Lines S.A. Mitsui CM Leasing, Ltd. JA MITSUI LEASING TATEMON O CO., LTD. PT. Mitsui Leasing Capital Indonesia GLOBAL TANKSHIPS S.A. Directly 100% Directly 85.10% Directly 100% Directly 100% Directly 100% Directly 85.00% Indirectly 14.99% Directly 100% Relationship with related party Loan Doubled as executive officer Loan Doubled as executive officer Loan Guarantee of liability Loan Doubled as executive officer Loan Doubled as executive officer Guarantee of liability Loan Description of the transaction Transactions (Millions of yen) Account Loan (*1) 292,462 Short-term loan Receipt of the interest Long-term loan Balance (Millions of yen) 33,854 10, Accrued income 9 Loan (*1) 137,100 Short-term loan Receipt of the interest Long-term loan 12,735 12, Accrued income 12 Loan (*1) 44,009 Short-term loan Receipt of the interest Guarantee of liabilities (*2) Receipt of the guarantee fee Long-term loan 5,647 59, Accrued income 36 39, Accrued income 30 Loan (*1) 217,400 Short-term loan Receipt of the interest 17, Accrued income 3 Loan (*1) 289,840 Short-term loan Receipt of the interest Guarantee of liabilities (*2) Receipt of the guarantee fee Loan (*1) Receipt of the interest Long-term loan 34,320 18, Accrued income 10 46, Accrued income 17 Short-term loan 144 Long-term loan ,557 Accrued income 5 The terms and conditions of the above transactions and its policy making, etc. (*1) The terms and conditions of the loans are determined in consideration of the prevailing market prices and other factors. No collateral is received from the borrower. (*2) The guarantees of liabilities are for borrowings from financial institutions. 17

18 3. Fellow subsidiaries, etc. Attributes Subsidiary of other affiliated company Name of related company Mitsui & Co. Plant Systems, Ltd. Percentage of voting rights (of the Company) None Relationship with related party Equipment lease Description of the transaction Receipt of the lease fees (*1) Transactions (Millions of yen) The terms and conditions of the above transactions and its policy making, etc. Account 1,736 Lease investment assets Balance (Millions of yen) 17,503 (*1) The terms and conditions of the lease transactions are determined on similar terms and conditions applied to general transactions, in consideration of the prevailing market prices and other factors. (Notes to Per Share Information) 1. Net assets per share of ordinary shares 2, Net income per share of ordinary shares

19 (Translation) Audit Report by the Board of Corporate Auditors Certified Copy Audit Report The board of corporate auditors, following deliberations on the reports made by each corporate auditor concerning the audit of performance of duties by directors of the Company for the 5th fiscal year from April 1, 2012 to March 31, 2013, has prepared this Audit Report, and hereby reports as follows: 1. Auditing Method Used by Each Corporate Auditor and the Board of Corporate Auditors and Details Thereof The board of corporate auditors established auditing policies, assignment of duties and other relevant matters, and received reports from each corporate auditor regarding the progress and results of audits, as well as received reports from the directors, other relevant personnel and the independent auditors regarding the performance of their duties, and sought explanations as necessary. In conformity with the corporate auditors auditing standard policies established by the board of corporate auditors, and in accordance with the auditing policies, assignment of duties and other relevant matters, each corporate auditor endeavored to gather information and to create an improved environment for auditing through close communication with the directors, employees including those working in the Internal Audit Department and other relevant personnel. Each corporate auditor also attended meetings of the board of directors and other important meetings, received reports from the directors, employees and other relevant personnel regarding the performance of their duties, sought explanations as necessary, inspected documents involving important resolutions, and examined the operations and financial position of the Company at the Head Office and other principal offices of the Company. Also, each corporate auditor monitored and verified the content and the status of the resolution of the board of directors to establish the systems provided by Article 100, Section 1 and 3 of the Ordinance for Enforcement of the Companies Act and the systems established pursuant to such resolution (the Internal Control System ), which are necessary to establish the systems to ensure directors carry out their duties described in the business report in accordance with laws and regulations and the Company s Articles of Incorporation and other systems to ensure appropriateness of the Company s business. As for the subsidiaries of the Company, each corporate auditor endeavored to keep communication and shared information with the directors, corporate auditors and other related personnel of the subsidiaries, and received reports from the subsidiaries regarding their businesses as necessary. Based on the foregoing method, the corporate auditors examined the business report for the fiscal year. Furthermore, the corporate auditors monitored and verified whether the independent auditors maintained its independence and implemented appropriate audits, as well as received reports from the independent auditors regarding the performance of its duties and sought explanations as necessary. Each corporate auditor was notified by the independent auditors that it has established a system to ensure that duties of independent auditors are being conducted properly (matters prescribed in each item of Article 131 of the Corporate Accounting Regulations) and that the system is developed and implemented in accordance with the Quality Control Standards for Audit (Business Accounting Council, October 28, 2005) and other applicable standards, and sought explanation as necessary. Based on the foregoing method, the corporate auditors reviewed the financial statements for the fiscal year (balance sheet, statement of income, statement of changes in net assets and the related notes) and supplementary schedules thereto. 19

20 2. Audit Results (1) Audit Results on the Business Report, etc. 1) In our opinion, the business report fairly represents the Company s condition in conformity with the applicable laws and regulations as well as the Articles of Incorporation of the Company. 2) We have found no evidence of misconduct or material facts in violation of the applicable laws and regulations, nor of any violation with respect to the Articles of Incorporation of the Company, related to performance of duties by the directors. 3) In our opinion, the status of the operation and maintenance of the Internal Control System is appropriate. We have found no issues to be mentioned on the contents of the business report and the directors performance of their duties with respect to the Internal Control System. (2) Results of Audit of the Financial Statements and Supplementary Schedules In our opinion, the method and the results of the audit used and conducted by Deloitte Touche Tohmatsu LLC, the independent auditors are appropriate. May 28, 2013 The board of corporate auditors of JA Mitsui Leasing, Ltd. Standing corporate auditor Ryuhei Kida (Seal) Standing corporate auditor Keisuke Kudo (Seal) Corporate auditor Katsuhisa Kiyozuka (Seal) (Note) Ryuhei Kida and Keisuke Kudo, standing corporate auditors, and Katsuhisa Kiyozuka, corporate auditor, are the outside corporate auditors as set forth in Article 2, Item 16 and Article 335, Section 3 of the Companies Act. 20

21 (TRANSLATION) INDEPENDENT AUDITOR'S REPORT May 16, 2013 To the Board of Directors of JA MITSUI LEASING, Ltd.: Deloitte Touche Tohmatsu LLC Designated Unlimited Liability Partner, Engagement Partner, Certified Public Accountant: Tomomitsu Umezu Designated Unlimited Liability Partner, Engagement Partner, Certified Public Accountant: Haruhiko Ohno Pursuant to the first item, second paragraph of Article 436 of the Companies Act, we have audited the financial statements, namely, the balance sheet as of March 31, 2013 of JA MITSUI LEASING, Ltd. (the Company ), and the related statements of income and changes in net assets for the fifth fiscal year from April 1, 2012 to March 31, 2013, and a summary of significant accounting policies and other explanatory information, and the accompanying supplemental schedules. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements and the accompanying supplemental schedules in conformity with accounting principles generally accepted in Japan and for such internal control as management determines is necessary to enable the preparation of financial statements and the accompanying supplemental schedules that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements and the accompanying supplemental schedules based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the accompanying supplemental schedules are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the accompanying supplemental schedules. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements and the accompanying supplemental schedules, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements and the accompanying supplemental schedules in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of

22 accounting estimates made by management, as well as evaluating the overall presentation of the financial statements and the accompanying supplemental schedules. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Audit Opinion In our opinion, the financial statements and the accompanying supplemental schedules referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2013, and the results of its operations for the year then ended in conformity with accounting principles generally accepted in Japan. Interest Our firm and the engagement partners do not have any interest in the Company for which disclosure is required under the provisions of the Certified Public Accountants Act. The above represents a translation, for convenience only, of the original report issued in the Japanese language and "the accompanying supplemental schedules" referred to in this report are not included in the attached financial documents.