Second Quarter of Fiscal Year Ending March 2019 (FY2018) Financial - - PowerPoint PPT Presentation

Second Quarter of Fiscal Year Ending March 2019(FY2018) Financial Highlights October 25, 2018 Ricoh Leasing Company, Ltd.

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Table of Contents

• 1. Consolidated Results for the Second

Quarter of Fiscal Year Ending March 2019

• 2. Topics on Mid-Term Management Plan

(FY2017 - FY2019)

• 3. Consolidated Income Forecast for Fiscal

Year Ending March 2019

• 4. Reference Material

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.

3

• 1. Consolidated Results for the Second

Quarter of Fiscal Year Ending March 2019

4

 Net Sales : 155,412 million yen (+2.8%)

Expanded income for nine consecutive periods; posted another record high

 Gross Profit : 16,147 million yen (+3.9%)

Posted another record high

 Operating Profit : 8,643 million yen (+2.2%)  Net Income : 5,988 million yen (+3.9%)  Total Transaction Volume : 202,060 million yen

Posted another record high

 Operating Assets (substantial) : 885,427 million yen

Posted another record high

Performance Overview

5

* In this document, “Profit Attributable to Owners of Parent” is presented as “Net Income”

 Gross Profit recorded the highest in its history due to improvements in acquired yields of new contracts and a steady increase in Operating Assets.

Consolidated Results

• Net Sales increased for the ninth consecutive period and posted another record high due to steady accumulation
• f Operating Assets.
• The increase in Gross Profit absorbed the increase in expenses, and Operating Profit increased by 2.2% year-on-

year.

6

(100 millions of yen) 17/9 Actual 18/9 Full-Year Forecast Progress Rate Actual Growth Rate Net Sales

1,511 1,554 2.8% 3,135 49.6%

Gross Profit

155 161 3.9% 327 49.4%

SGA Expenses

70 75 5.9% 157 47.8%

Operating Profit

84 86 2.2% 170 50.8%

Ordinary Profit

83 87 3.9% 167 52.1%

Net Income

57 59 3.9% 114 52.5%

YoY change

Dividend per Share (yen)

35.00 40.00 5.00 80.00

• Earnings per Share (yen)

184.58 191.84 7.26 365.19

• Dividend Payout Ratio

19.0% 20.9% 1.9% 21.9%

• ROA (Return on Asset Ratio)

1.24% 1.21% (0.03%) 1.15%

• ROE (Return on Equity Ratio)

7.3% 7.1% (0.2%) 6.7%

• *Actual ROA and ROE are annualized numerical figures

Factors Affecting Operating Profit

7

• Due to the increase in gross margin for Leases and Installment Sales Business and gross margin for Financial

Services Business, Gross Profit increased by 604 million yen.

• Expenses increased by 416 million yen due to an increase in Personnel Expenses and Other Expenses including

Strategic Expenses.

Gross Profit Calculation SGA Expenses Calculation

8,455

million yen

Increase in Allowance for Doubtful Accounts

17/9 Actual

Increase in gross margin for Financial Services Business Increase in Other Expenses Decrease in Financial Expenses

8,643

million yen

18/9 Actual

+0.5 (0.6) (2.1)

(100 millions of yen)

(0.6) +3.2

Others Increase in gross margin for Leases and Installment Sales Business

+2.8 188 million yen (1.4)

Increase in Personnel Expenses

1,246 1,320 1,402 1,460 1,499 71 71 74 70 70

20 40 60 80 100 120 140 200 400 600 800 1,000 1,200 1,400 1,600 1,800

14/9 15/9 16/9 17/9 18/9

売上高 セグメント利益

29 32 35 36 41 13 16 16 17 19 16.9% 19.2% 18.9% 21.2% 22.7%

0% 10% 20% 10 20 30 40 50 60 70

14/9 15/9 16/9 17/9 18/9

売上高 セグメント利益 営業利益構成比

 Leases and Installment Sales Business  Financial Services Business

Performance by Segment

• In the Leases and Installment Sales Business, Net Sales increased by 2.6% due to a rise in Operating Assets.

The Segment Profit increased by 0.7% due to a rise in expenses such as Personnel Expenses.

• Financial Services Business posted greater income on higher sales thanks to the stable commission business,

including Collection Agency Services and Factoring Services for Nursing-Care Facilities, and Loans.

(100 millions of yen) (100 millions of yen)

*% of Operating Profit = Financial Services Business Segment Profit / Operating Income

8

Net Sales Segment Profit Net Sales Segment Profit % of operating profit

Leases and Installment Sales Business: Transaction Volume by Contract/Product

• The performance in Environmental Field declined due to a rebound of large transactions in the previous year, but

progressed as planned. From 2Q, the Company started the power generation business.

• Commercial and Service Equipment and Transportation Equipment demonstrated double-digit growth.

9

(100 millions of yen)

Transaction volumes are presented on an inspection basis.

 Transaction Volume by Contract  Transaction Volume by Product

17/9 Actual

18/9

Initial Full- Year Forecast Progress Rate Actual Growth Rate Finance Leases

1,336 1,322 (1.1%) 2,720 48.6%

Operating Leases

72 110 53.5% 160 69.2%

Installment Sales

409 369 (9.8%) 810 45.6%

Total

1,818 1,802 (0.9%) 3,690 48.8%

 Environmental Field

17/9 Actual

18/9

Initial Full- Year Forecast Progress Rate

Japan Leasing Association

(cumulative total from 18/4 to 18/8)

Growth Rate

Actual Growth Rate Office and IT-Related Equipment

945 955 1.0% 1,925 49.6% 5.2%

Medical Equipment

190 165 (12.7%) 360 46.1% (11.0%)

Industrial Machinery

246 177 (28.0%) 455 39.0% (4.8%)

Commercial and Service Equipment

154 193 24.9% 355 54.4% (0.9%)

Transportation Equipment

81 105 28.9% 165 63.7% 5.1%

Others

199 205 3.0% 430 47.8% 13.6%

Total

1,818 1,802 (0.9%) 3,690 48.8% 3.2%

Transaction Volume for Leases and Installment Sales

195 134 (27.8%) 350 40.4%

Investment Amount (Power Generation Business)

• 6

117 139 172 109 218 142 124 154 234 259 264 327 343 1,052 1,106 1,216 1,374 1,483 200 400 600 800 1,000 1,200 1,400 1,600 100 200 300 400 500 600 15/3 16/3 17/3 18/3 18/9 上期 下期 残高 149 217 291 353 380 176 254 314 367 326 471 606 720 32 49 59 67 74

• 50
• 30
• 10

10 30 50 70 90 200 400 600 800 1000 1200 15/3 16/3 17/3 18/3 18/9 上期 下期 残高 656 785 857 886 985 735 822 897 933 1,392 1,607 1,755 1,819 15/3 16/3 17/3 18/3 18/9 上期 下期

[Commission business]

• In Collection Agency Services, the number of new

customers grew steadily due to web marketing and the Number of Transactions increased by 11.1% year-on- year.

• In Factoring Services for Nursing-Care Facilities, the

Transaction Volume increased by 7.5% year-on-year as a result of capturing new customers and increasing the use of services by existing customers.

[Loans]

• Corporate lending was mainly favorable, and the

Transaction Volume jumped 99.9% year-on-year.

Financial Services Business: Number of Transactions/Transaction Volume

 Number of Transactions in Collection Agency Services  Loan Transaction Volume  Transaction Volume of Factoring Services for Nursing-Care Facilities

(100 millions of yen) (100 millions of yen) (10,000 cases)

10

First half Balance Second half First half Second half First half Balance Second half

5,327 5,517 5,627 5,761 5,807 158 187 208 230 266 725 837 958 1,113 1,179 1,142 1,231 1,292 1,458 1,599 7,354 7,773 8,086 8,563 8,854 0.19% 0.18% 0.18% 0.17% 0.16%

• 10.00%
• 8.00%
• 6.00%
• 4.00%
• 2.00%

0.00%

15/3 16/3 17/3 18/3 18/9

リース オペリース 割賦 金融ｻｰﾋﾞｽ／その他 事故率

• Operating Assets increased by 29.0 billion yen from the end of the previous fiscal year and posted another record

high as a result of steadily capturing contracts in Leases and Installment Sales Business.

• The default rate declined due to a higher balance of Operating Assets although default loss amount slightly

increased year-on-year. * Default rate = Default loss amount / Average Operating Assets (for 18/9, default loss amount was annualized to calculate the default rate) * Operating Assets shown includes securitized portions of lease receivables.

Operating Assets and Changes in Default Rate

11

(100 millions of yen)

Financial Services/Others Installment Sales Operating Leases Finance Leases Default Rate

(+376) (+418) (+313) (+477) (+290)

213 216 215 207 204 14 16 18 24 24 23 24 26 25 26 53 55 58 65 67 305 313 318 323 323 4.77% 4.53% 4.35% 4.21% 4.00%

• 7.50%
• 5.50%
• 3.50%
• 1.50%

0.50% 2.50% 4.50% 6.50%

14/3 15/3 16/3 17/3 18/3

リース 割賦 融資 その他(受取手数料等) 差引利益率 52 51 50 51 51

5 6 5 6 6 6 6 6 7 7 14 16 18 18 17 79 80 81 83 83 3.95% 3.99% 3.99% 3.97% 3.90%

• 7.50%
• 5.50%
• 3.50%
• 1.50%

0.50% 2.50% 4.50% 6.50%

17-2Q 17-3Q 17-4Q 18-1Q 18-2Q

* Gross Profit = Net Sales − Cost of Sales (excluding Financial Expenses) * % of Gross Profit (before deducting Financial Expenses) = Gross Profit (before deducting Financial Expenses) / Average Operating Assets (for 18/9, the amount of Gross Profit (before deducting Financial Expenses) was annualized to calculate the % of Gross Profit (before deducting Financial Expenses)).

• From FY2017 2Q onwards, the decline in Operating Asset yields ceased due to improvements in acquired yields
• f new contracts.
• % of Gross Profit (before deducting Financial Expenses) of FY2018 2Q declined to 3.95% when special factors

are excluded.

Transition of Gross Profit (before deducting Financial Expenses)

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(100 millions of yen)

Leases Installment Sales Loans Others (Commission Received, etc.) % of Gross Profit (before deducting Financial Expenses)

4,902 5,378 5,745 6,156 6,443 1,434 1,332 1,121 1,110 1,112 6,337 6,710 6,866 7,266 7,555 15/3 16/3 17/3 18/3 18/9 長期 短期 7.7 7.3 6.0 5.5 5.1 7.4 7.2 5.6 5.2 15.1 14.5 11.6 10.8 0.22% 0.20% 0.15% 0.13% 0.12%

• 0.50%
• 0.40%
• 0.30%
• 0.20%
• 0.10%

0.00% 0.10% 0.20% 0.30%

15/3 16/3 17/3 18/3 18/9 上期 下期 資金原価率

Interest-Bearing Debt Outstanding

* Financial Expenses Ratio = Financial Expenses / Average Operating Assets * For 18/9, Financial Expenses was annualized to calculate the Financial Expenses Ratio. * The balance includes the amount of procurement through securitized portions of lease receivables. * Current portion of Long-term liabilities within one year is included in long-term debt.

• Interest-bearing debt increased in line with the rise in Operating Assets.
• Continued to procure funds at low interest rates while Financial Expenses and the Financial Expenses

ratio decreased.

Financial Expenses and Financial Expenses Ratio

Total Procurement Amount and Financial Expenses

13

(100 millions of yen) (100 millions of yen)

Short-term Long-term Financial Expenses Ratio Second half First half

32 33 33 33 35 30 30 30 30 32 3 3 5 6 6 66 67 68 70 75 40.1% 40.3% 39.0% 40.2% 41.0%

20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 20 40 60 80 100 120 14/9 15/9 16/9 17/9 18/9 人件費 その他 貸倒費用 OHR

Changes in Selling, General and Administrative Expenses

• A year-on-year increase of 5.9% due to Personnel Expenses and Strategic Expenses.
• Bad Debt Expenses slightly increased.

* OHR = (Selling, General and Administrative Expenses − Bad Debt Expenses) / (Gross Profit + Financial Expenses)

14

(100 millions of yen)

Bad Debt Expenses Others Personnel Expenses OHR

• 2. Topics on Mid-Term Management Plan

(FY2017 - FY2019)

15 For strategies of the Mid-Term Management Plan, please see Reference Material.

Matching via app

Topic 1: New measures for “Beyond Leasing”

• Market with the room to grow (balance of

accounts receivable about 200 trillion yen)

• Diversification of the formats of service

provision

 Business alliance with eGuarantee, Inc.

Mid-Term Management Plan: Business Growth Strategy (2) “Creation of value provided other than leasing”

16

 Investment in PeaceTecLab Co., Ltd.

Market environ- ment Aiming for the goal Future develop- ment Market environ- ment Aiming for the goal

• Provision of new value for customer base
• Enhancement of commission revenue
• Try hard in Tokyo area for the first year

while considering establishing a joint corporation

• Change of consumers’ consciousness from

“ownership” to “utilization and sharing”

• Growth of sharing business
• Pursue the possibility of BtoC rental/

sharing service

Conclusion of business matching contract Introduction of “Account receivable guarantee service” to customers

<Customer base> Number of customers 400,000 companies Number of vendors 6,000 companies

CtoC and BtoC rental platform Operation of Alice.style

Borrow and try!

• I want to use a

premium product without buying it.

• I would like to compare

products in the same category before purchasing.

• I do not want to own

many things.

I would like to receive money by loaning out my item.

• There are things that I don’t

use every day but that take up a lot of space

• I have an item that I bought

without any particular reason and do not use

• I have an item that I keep in

self-storage *Alice.style will be released soon

Introduction of customers Contingency fee

Ricoh Leasing Company, Ltd.

Topic 2: Housing Rental Business

Mid-Term Management Plan: Business Growth Strategy (5) "Development and provision of financial services to accommodate changes and resolve issues in society”

17

Housing Rental Business (September 2017–)

Societal issues RL existing business New business

• Declining birthrate and increase in aging

population living alone due to a trend toward two- generation families, increase in foreign residents. ⇒ Securing a house that anyone can live in without worry

Finance

• Apartment loan for

investment purpose

• Loan for apartment

management association

×

Commission business

• Collection Agency

Services (with guaranteed rent)

• Securing stable investment income
• As a general rule, apartments shall be purchased by

unit

• Size of property from studio to one-bedroom

apartment

• The target area is restricted to Tokyo area
• Development of new business utilizing alliance
• Detection of issues related to residents, management

associations and companies

• Development of a service that goes beyond the

boundaries of “finance” and “real estate”

Number of units owned Actual/Target of Mid-Term Management Plan

End of September 2018 (Actual) End of March 2020 (Target)

500 units 170 units

“Restoration of buildings” for collective housing such as apartments Joint promotion of “the activation of communities”

• Loan for management association, Apartment

restoration loan

• Verification test to establish an effective

method utilizing IoT to manage collective housing

 Business tie-up with JS Corporation.

• Renovate units in apartments with

the concept of “unit that makes it easy to raise children”

Topic 3: To achieve SDGs

18

http://www.r-lease.co.jp/csr/download/index.html Sustainability Report 2018

Creating a healthy, strong company Creating common value ​through business Contribution to realization of decarbonized and recycling society Support for revitalizing communities

Four important themes 13 Priority Issues Identified Goal by measure, KPI (To be established)

Contribute to achieve SDGs

• Promotion of diversity and inclusion
• Improvement to achieve an efficient

work style/Realization of work-life balance

• Human resource development
• Realization of safety, health and

comfort in work environment

• Pursuit of customer satisfaction
• Contribution to solving societal issues

and revitalizing the Japanese economy

• Strengthen partnerships with the

Group companies and business partners

• Continuous operation and

improvement of environment management system

• Mitigation of and adaptation to climate

change

• Resource circulation
• Conservation of biodiversity
• Contribution and

donation/reconstruction assistance to communities

• Collaboration with communities

Establish SDGs commitment on 13 Priority Issues Identified By linking internal contribution index and performance contribution index, aim to achieve SDGs simultaneously.

Having SDGs as the base for management and taking an active role in resolving social issues, aim to create new value and continuously improve corporate value

CSV

• 3. Consolidated Income Forecast for

Fiscal Year Ending March 2019

19

Customers and markets Competition Our company

• Recovery in corporate performance with strong external demand, inbound demand, etc.
• Active streamlining and labor saving, and investment in inbound business demand.
• Concern about the increase in corporate bankruptcies due to shortage of workers and

excessive investment.

• Although monetary policy is expected to be maintained for the time being, overseas countries

started raising interest rates.

• Development of new business that capitalizes on new technologies (AI, IoT, FinTech, etc.)
• Uncertainty of overseas situation due to the opposing attitude to increasing protectionism of

the United States

• Decline in FIT price for solar power generation, tightened regulations for some projects that

have not started operating

• Active investment in focus areas such as aircraft, real estate and overseas.
• New techniques and initiatives in new areas through business alliances and collaborations

across industries.

• Intensified competition with other industries such as regional banks (monetary easing /

lowering interest rate).

• Transaction volume showed a recovery led by Office and IT-Related Equipment.
• Steady accumulation of renewable energy assets. Diversify the range of measures
• Start of new initiatives such as Housing Rental Business and alliance with JS Corporation.
• Due to improvements in newly acquired yields, the decline in Operating Asset yields came to

an end.

Environmental Awareness

20

18/3 Actual 19/3 Forecast Growth Rate Net Sales

3,043 3,135 3.0%

Gross Profit

312 327 4.6%

SGA Expenses

147 157 6.7%

Operating Profit

165 170 2.7%

Ordinary Profit

164 167 1.7%

Net Income

113 114 0.8%

YoY change

Dividend per Share (yen)

70.00 80.00 10.00

Earnings per Share (yen)

362.19 365.19 3.00

Dividend Payout Ratio

19.3% 21.9% 2.6%

ROA (Return on Asset Ratio)

1.20% 1.15% (0.05%)

ROE (Return on Equity Ratio)

7.1% 6.7% (0.4%)

YoY change

Operating Assets

8,563 9,053 489

Consolidated Income Forecast

21

* Operating Assets shown includes securitized portions of lease receivables. (100 millions of yen)

Transaction Volume Forecast by Product

22

(100 millions of yen) * Transaction volumes are presented on an inspection basis.

 Leases and Installment Sales Business by Product  Financial Services Business

18/3 Actual 19/3 19/3 Revised Forecast Revised Amount Growth Rate Initial Forecast Growth Rate Office and IT-Related Equipment

1,887 1,945 20 3.0% 1,925 2.0%

Medical Equipment

358 350 (10) (2.3%) 360 0.5%

Industrial Machinery

413 455 10.1% 455 10.1%

Commercial and Service Equipment

348 355 1.9% 355 1.9%

Transportation Equipment

163 175 10 7.0% 165 0.9%

Others

399 430 7.5% 430 7.5%

Transaction Total for Leases and Installment Sales Business

3,571 3,710 20 3.9% 3,690 3.3%

 Environmental Field

18/3 Actual 19/3 19/3 Revised Forecast Revised Amount Growth Rate Initial Forecast Growth Rate Number of Transactions of Collection Agency Services (10,000 cases)

1,819

cases

2,060

cases

13.2% 2,060

cases

13.2%

Transaction Volume of Factoring Services for Healthcare & Nursing- Care Facilities

720 910 26.2% 910 26.2%

Loan Transaction Volume

343 380 50 10.6% 330 (3.9%)

Transaction Volume for Leases and Installment Sales

315 350 11.1% 350 11.1%

Investment Amount (Power Generation Business)

• (100 millions of yen)

• 4. Reference Material

23

Overview of Consolidated Statements of Income

24

(millions of yen) 18/3 19/3 19/3 Second Quarter Growth Rate Second Quarter Growth Rate Full-Year Forecast Growth Rate Net Sales 151,181 4.4% 155,412 2.8% 313,500 3.0% Leases 111,009 2.2% 114,256 2.9% 228,400 2.2% Installment Sales 23,706 17.5% 24,563 3.6% 50,100 6.9% Loans 1,283 (1.5%) 1,427 11.2% 2,900 11.4% Commission Received 2,673 8.3% 2,879 7.7% 5,600 5.4% Others 12,508 1.1% 12,285 (1.8%) 26,500 1.4% Cost of Sales 135,638 5.0% 139,265 2.7% 280,800 2.8% Leases 100,702 2.6% 103,901 3.2%

• Installment Sales

22,430 18.0% 23,234 3.6%

• Financial Expenses

558 (7.9%) 510 (8.5%)

• Others

11,947 4.5% 11,619 (2.7%)

• Gross Profit

15,542 (0.9%) 16,147 3.9% 32,700 4.6% Selling, General and Administrative Expenses 7,087 3.1% 7,503 5.9% 15,700 6.7% Personnel Expenses 3,375 1.0% 3,590 6.4% 7,200 4.5% Provision of Allowance for Doubtful Accounts 617 17.5% 677 9.7% 1,400 (9.7%) Operating Profit 8,455 (3.9%) 8,643 2.2% 17,000 2.7% Ordinary Profit 8,372 (4.0%) 8,700 3.9% 16,700 1.7% Net Income 5,761 (4.3%) 5,988 3.9% 11,400 0.8%

Breakdown of Operating Assets

25

(millions of yen) * Operating Assets shown is after securitized portions of lease receivables are deducted.

18/3 Actual 19/3 19/3 Year-End Year-on- Year Change Second Quarter Change from Previous FYE Year-End Forecast Year-on- Year Change Finance Leases

551,398 13,369 556,052 4,654 563,500 12,101

Operating Leases

23,059 2,164 26,676 3,617 24,000 940

Total Leases

574,457 15,534 582,729 8,272 587,500 13,042

Installment Sales

111,313 15,499 117,974 6,660 129,000 17,686

Total Leases and Installment Sales Business

685,771 31,033 700,703 14,932 716,500 30,728

Financial Services Business

139,562 17,895 152,206 12,643 157,500 17,937

Subtotal

825,333 48,928 852,909 27,576 874,000 48,666

Others

6,312 (1,238) 7,779 1,467 6,300 (12)

Total Operating Assets

831,645 47,690 860,689 29,043 880,300 48,654

Net sales and profit by segment

 Net Sales  Segment Profit

26

(millions of yen) (millions of yen) * “Others” are the business segments which are not included in reporting segments, and include

• utsourcing technology services such as measurement, calibration and device inspection, loan and

factoring within Ricoh group and the operation of a domestic cash management system.

18/3 19/3 Second Quarter Growth Rate Second Quarter Growth Rate Leases and Installment Sales Business

146,098 4.2% 149,962 2.6%

Financial Services Business

3,684 5.1% 4,106 11.4%

Others

1,398 19.7% 1,343 (3.9%)

Total

151,181 4.4% 155,412 2.8%

18/3 19/3 Second Quarter Growth Rate Second Quarter Growth Rate Leases and Installment Sales Business

7,003 (6.5%) 7,052 0.7%

Financial Services Business

1,790 7.7% 1,960 9.4%

Others

112 (5.0%) 103 (8.2%)

Total

8,907 (3.9%) 9,116 2.3%

CSR of Ricoh Leasing

27

Four important themes 13 Priority Issues Identified CSR Goal in Mid-Term Management Plan (Indicators for the major initiatives) <Target> <Progress> Creating a healthy, strong company

Promotion of diversity and inclusion

(1) Female manager ratio: 20% in 2020 (2) Nursing care leave: 0 (3) Employment ratio of persons with disability: 2.5% (1) Beginning of FY2017 11.9% → End of FY2017 13.3% (2) FY2017 Nursing care leave: 1 (3) End of FY2016 2.03% → End of FY2017 2.15%

Improvement to achieve an efficient work style Realization of work-life balance

(1) Total working hours: Less than 1,700 (2) Overtime: Less than 10 hours (3) Paid leave acquisition rate: 100% (1) 2016 1,672 hours → 2017 1,688 hours (2) FY2016 8.0 hours → FY2017 10.4 hours (3) 2016 78.8% → 2017 84.8%

Human resource development

Achievement rate of the plan to obtain and develop professional human resources that are required for the business reform: 100% The number of acquisition of professional qualification doubled from the previous year, 100% execution of recruitment plan

Realization of safety, health and comfort in work environment

(1) Health check examination rate: 100% (2) Smoking rate: Within 20% (1) FY2016 100% → FY2017 100% (1) FY2016 23.1% → FY2017 20.7%

Creating common value ​through business

Pursuit of customer satisfaction

R&D on businesses and products that meet and anticipate customer expectations Some examples are introduced in Sustainability Report

Contribution to solving societal issues and revitalizing the Japanese economy

(1) % of Operating Profit in Financial Services: 30% (2) Transaction Volume of Factoring Services : 100,000 million yen (3) Number of Transactions in Collection Agency Services: 25 million cases (1) FY2016 19.2% → FY2017 20.6% (2) FY2016 60.6 billion yen → FY2017 72.0 billion yen (3) FY2016 17.55 million cases → FY2017 18.19 million cases

Strengthen partnerships with the Group companies and business partners

Creation of new services and business models that combine the strengths of each Group companies Some examples are introduced in Sustainability Report

Contribution to realization of decarbonized and recycling society

Continuous operation and improvement

• f environment management system

Achievement of every EMS targets Refer to Sustainability Report

Mitigation of and adaptation to climate change

(1) 1,022 tons—CO2 (FY2019) (2) Transaction Volume in Environmental Field: 50 billion yen FY2016 1,089 tons → 2017 1,039 tons FY2016 24.1 billion yen → FY2017 31.5 billion yen

Resource circulation

Further promotion of 3R

• Resource saving and reduction of waste by

appropriate collection and disposal Recycling rate of properties whose lease period has expired FY2016 88.4% → FY2017 88.0%

Support for revitalizing communities

Conservation of biodiversity

5% increase in the number of participants each year In FY2017, 17% year-on-year increase

Contribution and donation/reconstruction assistance to communities

Implement community-based CSR

• Increase number of participants by 10% each year In FY2017, 18% year-on-year decrease

Collaboration with local communities

Development of CSR activities in line with social contribution priority areas

• Create opportunities for collaboration and

cooperation with NPOs and NGOs Some examples are introduced in Sustainability Report Cooperative bodies: 5 organizations

http://www.r-lease.co.jp/csr/download/index.html

Sustainability Report 2018

Mid-Term Management Plan — Vision “Beyond Leasing”

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 offer

• nes that contribute to the

development of the environment, society and customers.

Business Areas Leases and Installment Sales Financial Services

28

Mid-Term Management Plan — Management Strategy

29

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 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.

Mid-Term Management Plan — Management Strategy

30

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

expansion of the customer network

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

March 2017 ⇒ 100,000 million yen in Fiscal 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 Housing Rental Business for singles

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

Areas of Focus

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

Mid-Term Management Plan — Management Strategy

31

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

Mid-Term Management Plan — Financial Targets

32 Operating Profit

(100 millions of yen)

183 173 160

ROA

(Return on Assets Ratio)

1.30％

(Mid-Term Target)

1.31％ 1.29％

Operating Assets

(100 millions of yen, including securitized portions)

9,000 8,086 6,978

1.8％

Fiscal Year Ending March 2020 Fiscal Year Ended March 2017 Fiscal Year Ended March 2014 Financial Targets/P&L

－ 3.6％

Fiscal Year Ended March 2017 to Fiscal Year Ending March 2020 CAGR

Mid-Term Management Plan — Operating Targets

33

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

• f 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

<Contact>

Ricoh Leasing Company, Ltd. Corporate Planning Department Tel: 03-6204-0608 Email: ir@rle.ricoh.co.jp URL: http://www.r-lease.co.jp

Reliability for the Future

Ricoh Leasing Company, Ltd.