Ricoh Leasing Company, Ltd. Performance Summary (Fiscal Year Ended - - PowerPoint PPT Presentation

April 28, 2017 Fiscal Year Ended March 2017 (FY2016) Briefing

• n Financial

Results

Ricoh Leasing Company, Ltd.

1

Performance Summary (Fiscal Year Ended March 2017)

 Net Sales: 291,116 million yen Posted another record high for the third consecutive period  Operating Profit: 17,333 million yen Expanded income for three consecutive periods; posted another record high  Net Income: 11,772 million yen Posted another record high for the second consecutive period  Total Operating Assets (substantial): 808,686 million yen Posted another record high for the 6th consecutive period  Transaction Volume:369,037 million yen Posted another record high for the fourth consecutive period

2

• 1. Performance Overview

(Fiscal Year Ended March 2017)

3

16/3 17/3

Actual

Medium-Term Management Strategy Target

Forecast Actual Ratio against Forecast Growth Rate

Net Sales 2,758 2,800 2,850 2,911 102.1 5.5 Gross Profit 303

• 310

311 100.5 2.6 SGA Expenses 134

• 137

138 100.9 3.0 Operating Profit 169 175 173 173 100.2 2.3

(Operating Profit / Net Sales)

6.1 6.3 6.1 6.0

• (0.1)

Ordinary Profit 168

• 171

171 100.5 2.0 Net Income 110 109 115 117 102.4 6.5

Variance Year-on-year in forecast change (in yen)

Earnings Per Share

353.96

• 368.39

377.12 8.73 23.16

Dividend Per Share

55.00

• 60.00

60.00 0.00 5.00

Consolidated Results

(100 millions of yen, %) *The Medium-Term Management Strategy Target represents figures announced on April 25, 2014. Forecast figures are those announced on April 28, 2016. “Profit Attributable to Owners of Parent” is presented as “Net Income.”

4

Factors Affecting Operating Profit

Gross Profit calculation SGA Expenses (100 millions of yen)

17,333 million yen 17/3 Actual 16,951 million yen

400 million yen

Allowance for Doubtful Accounts Increase in

16/3 Actual +2

Increase in Financial Income Increase in Gross Margin for the Leases and Installment Sales Business ±0 Increase in Expenses

3 +3

Decrease in Financial Expenses

1 17,033 million yen 17/3 Actual

(Excluding factors

• n the right)

+3

Cancellation

• f Large

Contracts, etc.

5

Transaction Volume by Business

* Transaction volumes are calculated on an inspection basis.

16/3 17/3

Actual Growth Rate Actual Growth Rate

Finance Leases

2,663

1.6

2,599

(2.4) Operating Leases

127

1.7

125

(1.4) Installment Sales

547

12.8

637

16.5 Leases and Installment Sales Business

3,337

3.3

3,362

0.7 Financial Services Business

264

1.7

327

24.0 Total Transaction Volume

3,601

3.2

3,690

2.5

(100 millions of yen, %)

6

Transaction Volume by Product: Leases and Installment Sales Business

16/3 17/3

Japan Leasing Association Total (16/4–17/3)

Actual Forecast Actual Difference Growth Rate Growth Rate Office and IT-Related Equipment

1,794 1,800 1,801 1

0.4 (2.3) Medical Equipment

432 455 415 (39)

(3.8) 2.0 Industrial Machinery

337 356 321 (34)

(5.0) (8.7) Commercial and Service Equipment

328 335 335

2.3 2.3 Transport Equipment

139 144 168 24

20.2 2.3 Others

305 310 320 10

4.9 1.6 Total Transaction Volume

3,337 3,400 3,362 (37)

0.7 (1.3) * Forecast figures are those announced on October 21, 2016. (100 millions of yen, %)

7

Operating Results by Segment (Leases and Installment Sales Business)

Net sales (left bar) Segment Profit (right bar)

2,277 2,818 2,388 2,673 146 154 138 142 500 1,000 1,500 2,000 2,500 17/3 13/3 14/3 16/3 50 100 150 200 2,511 144 15/3

(100 millions

• f yen)

(100 millions

• f yen)

8

Operating Results by Segment (Financial Services Business)

Net Sales Segment Profit

13.3% 16.8% 16.0% 19.6% 19.2% 49.6 54.4 59.4 65.3 68.8 22.7 27.0 26.3 33.1 33.2 20 40 60 13/3 14/3 15/3 16/3 17/3

% of Operating Profit ( Commission Received)

(Medium-Term Management Strategy Target: 20%)

(100 millions

• f yen)

9

Financial Services Business Collection Agency Services and

Factoring Services for Nursing-Care Facilities

Number of Monthly Transaction Cases of Collection Agency Services

(Unit: 10,000)

Factoring Services for Nursing-Care Facilities - Annual Transaction Volume

92 106 128 137 160

50 100 150

13/3 14/3 15/3 16/3 17/3 90 198 326 471 606

200 400 600

13/3 14/3 15/3 16/3 17/3

170

Medium-Term Management Strategy Target

600

Medium-Term Management Strategy Target (100 millions of yen)

10 10

Transition of Gross Profit (Before Deducting Financial Expenses)

*Gross Profit (before deducting Financial Expenses): Net Sales - Cost of sales. The sum of each product sales amount net of Cost of Sales is the Gross Profit before Financial Expenses deduction.

% of Gross Profit (before deducting Financial Expenses) = Amount of Gross Profit (before deducting Financial Expenses) / Average Operating Assets

200 300 13/3 14/3 15/3 16/3 17/3 5.18 4.77 4.53 4.35 4.21 306 305 313 318 323

Leases Operating Loans Installment Sales Others

(Sales Commission, etc.)

% of Gross Profit (before deducting Financial Expenses)

(%)

221 213 216 215 207 13 14 16 18 24 22 23 24 26 25 49 53 55 58 65 257 252 258 260 257

(100 millions

• f yen)

11

Operating Assets and Changes in Default Rate

Leases (including

securitized portions)

Loans Installment Sales Default Rate

(%)

Default Rate = Default Loss Amount / Average Operating Assets

0.37 0.25 0.19 0.18 0.18 4,785 (244) 5,265 (245) 5,486 (246) 5,704 (247) 5,836 (247) 508 612 725 837 958 1,039 1,099 1,142 1,231 1,292 4,000 5,000 6,000 7,000 8,000 13/3 14/3 15/3 16/3 17/3 6,333 6,978 7,354 7,773 8,086

*Balances shown include securitized portions of lease receivables.

(100 millions of yen)

12 12

Total Procurement Amount and Financial Expenses

[External Rating] JCR AA- R&I A S&P A-

Procurement Rate(%) Financial Expenses Liabilities

• utstanding

Financial Expenses Ratio = Financial Expenses / Average Operating Assets

Long

• term

Short- term

0.34 0.30 0.22 0.20 0.15 1,000 2,000 3,000 4,000 5,000 6,000 7,000 13/3 14/3 15/3 16/3 17/3 5,988 6,866 5,425 6,710 11 19 20 6,337 15 14

*Liabilities outstanding represent the balance including the amount of procurement through securitized portions of lease receivables. Financial expenses shown are expenses included in the calculation of gross profit.

(100 millions

• f yen)

13 13

Changes in Selling, General and Administrative Expenses

67 63 62 64 67 4 50 100 150 17/3 13/3 14/3 15/3 16/3 127 125 121 123 115 126 125 133 138 134

Others Personnel Expenses Allowance for Doubtful Accounts Figures in parentheses represent the number of employees at fiscal year-end

• n consolidated basis

(900) (916) (928) (917) (894) 59 59 59 58 62 (10) 9 7 11

(100 millions of yen)

14

• 2. Mid-Term Management

Plan

(FY2017 to FY2019)

15

Current Business Environment Customers/ Markets Competitors Company

• Change in value “from ownership to use” and “from products to services”
• Stagnation in domestic capital investments, leasing market; concerns about the impact of IFRS
• Low default rate and market interest rate despite concerns about a turnaround
• Change in population trends (declining number of children, aging population, lower ratio of working-

age population)

• Technological innovation, e.g., AI, robotics and IoT
• Overcoming environmental energy restrictions and expansion of investment (energy-saving/energy-

creation markets)

• Intensified competition with other industries, such as regional banks (monetary relaxation / lowering
• f market interest rates) and lowering of industrial barriers
• Expansion of business platforms and earnings platforms through new businesses beyond financial

boundaries and advancement of international businesses

• Growth and expansion through capital alliances, acquisitions
• Strengthening of earning power and improvement of corporate structure through enhancement of

strong areas and specialty areas

• Investment for the future in fields such as robotics, smart agriculture and IoT
• Decline in the composition ratio of office and IT-related equipment, which used to account for a high

percentage

• Asset in which the traditional eases and installment sales business accounts for a large percentage
• Delay in entering new business areas due to restrained investment

16

Mid-Term Management Plan — Vision

Beyond leasing

17

What “Beyond Leasing” Signifies

FY2014–FY2016 Mid-Term Management Plan FY2017–FY2019 Mid-Term Management Plan Next-period Mid-Term Management Plan

Expansion of business areas

• Enter new business areas and take risks in order to achieve business growth and income growth.
• Pursue research/development of businesses and products to respond to the expectations of customers

and to further get a head start on future expectations.

Expansion of core businesses Advance into new businesses around the core business fields by responding to customers’ expectations. Grow to become a company that can not only provide services/products in leasing and financial services markets but also

• ffer ones that contribute to the

development of the environment, society and customers.

Business Areas Leases and Installment Sales Financial Services

18

Mid-Term Management Plan — Management Strategy

Taking on challenges in new environmental fields centered on energy-creation and energy-saving

• Reinforce initiatives toward establishing environmental and renewable energy facilities

Reinforcing alliances with vendors and establishing a firm sales & marketing platform by maximizing the customer network

• Provide effective offering model to vendors and reinforce relationships through strategic alliances
• Strengthen points of contact in the customer network comprising 400,000 firms

Deployment of lease + service business through collaboration with RICOH Group companies

• Create new services and business models by combining the strengths of group companies in regard to

production, sales, logistics, etc.

Development and provision of financial services to accommodate changes and resolve issues in society

• Strengthen response to diversifying settlement means
• Develop and provide financial services that respond to the changes in population trends
• Aim to have the Financial Services Business account for 30% of Operating Profit

Creation of value provided other than leasing

• Develop products and businesses demanded by customers, markets and the era
• Expand business areas by taking new risks

Business Growth Strategy

2. 3. 5. 1. 4.

• Further heighten consulting and other expert capabilities and promote the use and

expansion of the customer network

• Actively expand nursing-care fee factoring and medical service fee factoring
• Transaction volume for the factoring business: 60,600 million yen in the year ended

March 2017 ⇒ 100,000 million yen in the year ending March 2020

• Expand through active risk-taking using diverse schemes
• Take initiatives toward establishing new power generation facilities for biomass power

generation, etc. beyond solar power generation

• Develop and provide services and businesses toward realizing a zero-energy-based

society

• Transaction volume for leases and installment sales business: 24,100 million yen in the

year ended March 2017 ⇒ 50,000 million yen in the year ending March 2020

• Develop new provision formats using the RICOH Group’s infrastructure
• Provide distinguished products in deploying services that respond to the shift from

“products” to “services”

• Deploy business based on a proprietary approach in line with the domestic

population trend ⇒ Launch of rental housing business

• Develop and provide diverse services for real estate business operators and

lessors

19

Areas of Focus

Medical / Nursing Care Field Environmental Field Office & IT-Related Field Real Estate Field

Mid-Term Management Plan — Management Strategy

20

Mid-Term Management Plan — Management Strategy

Construction of a new platform to further enhance product competitiveness and operating efficiency in response to diversifying needs and services

• Establish an IT infrastructure that supports the development and provision of new businesses, services and

products

• Promote operational efficiency by using AI and other new technologies

Human resources management in response to changes in society, markets and working styles

• Shift workforce toward productivity improvement and business growth by implementing flexible working

styles that are not bound by time and location

• Increase motivation to grow and take on challenges by introducing a remuneration system that rewards

contributions made to operating performance

1. 2.

Strategy for Enhancement of Organizational Strength Further Promotion of CSR

(1) Reduction of Environmental Burden through Business Activities

• Expand environmental business activities aimed at increasing the magnitude of environmental contribution

(2) Contribution to each Stakeholder for Realizing Sustainable Growth

• Promote activities in the order of priority toward resolving social issues

(3) Continuous Enhancement of Corporate Governance

• Increase corporate value through reinforcing the PDCA cycle

21

Financial Targets

Operating Profit

(100 millions of yen)

183 173 160

ROA

(Return on Assets Ratio)

1.30%

(Medium- Term Target)

1.31% 1.29%

Operating Assets

(100 millions of yen, including securitized portions)

9,000 8,086 6,978

Fiscal Year Ending March 2020 Fiscal Year Ended March 2017 Fiscal Year Ended March 2014

Financial Targets / P&L

1.8%

• 3.6%

Fiscal year ended March 2017 to Fiscal year ending March 2020 CAGR

22

Operating Targets

Transaction Volume of Leases and Installment Sales Business

(Environmental Field) (100 millions of yen)

3,675

(500)

3,362

(241)

3,209

Number of Annual Transaction Cases of Collection Agency Services

(10,000 cases)

2,500 1,755 1,152

Transaction Volume for Medical / Nursing- Care Factoring

(100 millions of yen)

1,000 606 198

Fiscal Year Ending March 2020 Fiscal Year Ended March 2017 Fiscal Year Ended March 2014 Fiscal year ended March 2017 to Fiscal year ending March 2020 CAGR

3.0%

(27.5%)

12.5% 18.1%

Operating Targets

23

• 3. Financial Forecast

(Fiscal Year Ending March 2018)

24

Consolidated Income Forecast

(100 millions of yen, %)

17/3 18/3

Actual Forecast Growth Rate

Net Sales

2,911 2,973 2.1

Gross Profit

311 313 0.5

SGA Expenses

138 145 4.9

Operating Profit

173 168 (3.1)

(Operating Profit Ratio) 6.0 5.7 (0.3)

Ordinary Profit

171 165 (4.0)

Net Income

117 113 (4.0)

Year-on-year change

Total Operating Assets

8,086 8,385 299

ROA

1.31% 1.21% (0.10%)

ROE

7.8% 7.1% (0.7)

Earnings Per Share (yen)

377.12 361.99 (15.13)

Dividends Per Share (yen)

60.00 70.00 10.00

*Total Operating Assets shown include securitized portions of lease receivables.

25

Projected Factors Affecting Operating Profit

(100 millions of yen)

16,800 million yen 18/3 Forecast 17,333 million yen

5 Gross Profit calculation SGA Expenses

17/3 Actual +3

Increase in Financial Income Increase in Gross Margin for the Leases and Installment Sales Business Increase in Expenses

2

Increase in Financial Expenses

1 +3 4 17,033 million yen 17/3 Actual

(excluding factors

• n the left)

Cancellation

• f Large

Contracts, etc.

+3

Increase in Allowance for Doubtful Accounts

1

Strategy Expenses

26

Transaction Volume Forecast by Business

(100 millions of yen, %)

17/3 18/3

Actual Forecast Growth Rate

Finance Leases

2,599 2,600

0.0 Operating Leases

125 130

3.8 Installment Sales

637 650

1.9 Leases and Installment Sales Business

3,362 3,380

0.5 Financial Services Business

327 270

(17.6) Total Transaction Volume

3,690 3,650

(1.1)

27

Transaction Volume Forecast by Product: Leases and Installment Sales Business

(100 millions of yen, %)

17/3 18/3

Actual Forecast Growth Rate

Office and IT-Related Equipment

1,801 1,805

0.2 Medical Equipment

415 420

1.0 Industrial Machinery

321 340

5.9 Commercial and Service Equipment

335 320

(4.7) Transport Equipment

168 170

1.1 Others

320 325

1.4 Total Transaction Volume

3,362 3,380

0.5

28

Policy on Return to Shareholders

Dividend Payout Ratio Dividend per share 15.4% 15.5%

Fiscal Year Ended March 2015 Fiscal Year Ended March 2016

15.9%

Fiscal Year Ended March 2017

25%

50 yen 55 yen 60 yen

Medium- Term Target

70 yen

19.3%

Fiscal Year Ending March 2018 (Plan)

The Company strives to steadily increase dividends to shareholders by ensuring growth and appropriate capital enhancement and strengthening its financial position. In pursuing further return of profits to shareholders, the Company aims at realizing a dividend payout ratio of 25% in the medium term (in three to five years).

29

Forward-looking statements including earnings forecasts contained in this document are based on certain assumptions deemed to be rational in light of the information available to the Company at the time of preparing the document, and are not intended to be guarantees of future performance. Actual results may differ significantly from plans and forecasts due to a variety of factors.

Reliability for the Future

Ricoh Leasing Company, Ltd.

Ricoh Leasing Company, Ltd.

30

<Reference> Breakdown of Sales for Fiscal Year Ended March 2016

(100 millions of yen, %)

16/3 17/3

Actual Forecast Actual Ratio against Forecast Growth Rate

Leases

2,124 2,190 2,179

99.5 2.6 Installment Sales

352 390 414

106.3 17.8 Loans

26 27 25

95.6 (2.1) Commission Received

44 48 48

100.5 8.8 Others

211 195 243

124.6 15.1 Total Net Sales

2,758 2,850 2,911

102.1 5.5

31

<Reference> Breakdown of Sales Forecast for Fiscal Year Ending March 2018

(100 millions of yen, %)

17/3 18/3

Actual

Forecast Growth Rate Leases

2,179 2,218

1.8 Installment Sales

414 450

8.5 Loans

25 26

0.8 Commission Received

48 50

3.6 Others

243 229

(5.8) Total Net Sales

2,911 2,973

2.1

32

14/3

Medium-Term Management Strategy Target (17/3)

17/3

Actual Actual Compared with 14/3 Compared with plan

Net Sales

2,459 2,800 2,911

118.4 104.0 Operating Profit

160 175 173

107.9 99.0 Net Income

95 109 117

123.3 108.0

Operating Profit / Net Sales

6.5 6.3 6.0

(0.5) (0.3) ROA

1.29

1.3 or above

1.31

+0.02 +0.01 ROE

7.8

7.4 or above

7.8

+0.0 +0.4

(100 millions of yen, %)

<Reference> Previous Medium-Term Strategy Results (Operating Performance/Management Indicators)

Increase/ Decrease

Variance

33

<Reference> Previous Medium-Term Strategy Results (Operating Performance)

14/3

Medium-Term Management Strategy Target (17/3)

17/3

Actual Actual

Compared with 14/3 Compared with plan

Office and IT-Related Equipment

2,028 2,200 1,801

88.8 81.9 Medical Equipment

440 500 415

94.4 83.2 Leasing and Installment Sales Business

3,209 3,660 3,362

104.8 91.9 Financial Services Business

248 340 327

131.9 96.3 Total Transaction Volume

3,457 4,000 3,690

106.7 92.3 Total Operating Assets

6,978 7,800 8,086

115.9 103.7 Collection Agency Services

1,060,000

cases

1,700,000

cases

1,600,000

cases 150.9 94.1 Factoring Services for Nursing-Care Facilities

198 600 606

306.1 101.0 (100 millions of yen, %)

*Figures for collection agency services are calculated based on the largest monthly number of items in a year. *Operating assets shown include securitized portions of lease receivables.