60 years and beyond - クレジットカードのジャッ … lineup. in new businesses, jaccs...

60 YEARS AND BEYOND

Annual Report 2014For the Fiscal Year Ended March 31, 2014

Profi le

JACCS Co., Ltd., started out as Depart Sinyohanbai Co., Ltd., in Hakodate,

Hokkaido, in 1954. In the 60 years since then, JACCS has continued to

expand its business nationwide in Japan under a founding philosophy that

values trust and reliability. With a total volume of new contracts exceeding

¥2,784 billion, JACCS is one of the leading names in Japan’s consumer

credit sector.

JACCS issues standard credit cards under the Visa, MasterCard,

and JCB brands, and has a membership base of approximately 6,800

thousand cardholders, including those with cards from affi liate partners.

JACCS became a member of Mitsubishi UFJ Financial Group, Inc.

(MUFG), in 2008 through a third-party allocation of new shares.

In April 2012, JACCS launched a new three-year medium-term

business plan, “ACT11.” This plan sets a medium- to long-term vision

of becoming “an innovative consumer fi nance company with its roots

in Japan,” and targets “accelerating growth by turning around and

expanding operating revenue (top line).” ACT11 encompasses the

revitalization of JACCS’ existing businesses, the acceleration of overseas

business expansion, and the development of new businesses.

In overseas operations, the JACCS Group commenced with the

provision of motorcycle loan services in Vietnam in 2010, and continued

its expansion in the ASEAN region through the launch of business

operations in Indonesia in 2013, where it is progressively increasing its

product lineup. In new businesses, JACCS entered the prepaid card

business in 2013.

• With core businesses focused on the consumer credit industry, JACCS continuously strives for excellence in its credit systems.

• JACCS helps consumers realize rich, satisfying lives.

• JACCS contributes to the enhancement of its business partners’ operating performance.

• JACCS approaches all tasks with enthusiasm and good faith.

Management Principles

Focusing management

resources on growth in

our three core operations

Developing our overseas

operations and

new businesses

CreditBusiness

FinancingBusiness

Credit CardBusiness

OverseasOperations

NewBusinesses

To coincide with the 60th anniversary of JACCS’ founding, the

Company introduced a new corporate logo design, replacing

the logo it has used for 38 years since adopting its current

corporate name. The new logo was launched in April 2014.

The new design incorporates elements that express

modernity, innovation, and speed, each of which is a feature

of JACCS’ long-term vision.

The financial data and other business-related information in this publication has been prepared to inform JACCS stakeholders about the business. Any

forecasts regarding future performance contained in these materials are based on estimates and the best judgments of the Company, without guarantee or

security. Readers are advised not to make investment decisions based solely on the information contained in these materials. All business and financial data

relate to the consolidated operations of the Company, unless otherwise noted.

FORWARD-LOOKING STATEMENTS

ContentsGrowth Trajectory 2

Progress of 2014 4

Five-Year Financial Highlights 5

Operational Highlights 5

To Our Stakeholders 6

Expanding Market Presence in Indonesia 9

Creating New Businesses 11

Review of Operations 12

Corporate Governance 16

Founders / Board of Directors and Audit & Supervisory Board Members 18

Executive Offi cers 19

CSR Activities 20

Financial Information 21

Corporate Directory 50

Investor Information 51

JACCS CO., LTD. ｜ Annual Report 2014 1

Growth Trajectory

60 YEARSAND BEYOND

JACCS was founded in June 1954 as Depart Sinyohanbai Co., Ltd., in Hakodate, Hokkaido.

The Company celebrated its 60th anniversary in June 2014.

Looking back over the most recent decade, the Company has faced a range of challenges

in its operating environment. These have included changes in laws covering the credit industry,

reductions in the maximum allowable interest rates, and claims for the repayment of excess

interest, which have had a severe effect on the entire industry.

Against this backdrop, in the fiscal year ended March 31, 2008, the Company formed

a business and capital alliance with The Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU), and

Mitsubishi UFJ NICOS Co., Ltd., and became an equity-method affiliate of BTMU. JACCS

also focused on further strengthening its management structure to ensure adaptability to

environmental change. This included an overhaul of the Company’s cost structure and the

Th e essence of JACCS’ founding philosophy is expressed in these Chinese characters, which may be translated as,

“Trust is the basis for all.” Since JACCS’ establishment, we have remained faithful to our founding philosophy—a

strong belief that trust and reliability form the cornerstone of all our activities, taking precedence in our relationships

with consumers and business partners.

JACCS’ Founding Philosophy

June 1954Depart Sinyohanbai Co., Ltd., established in Hakodate,

Hokkaido, with paid-in capital of ¥3.3 million. Began monthly

installment credit service for use at department stores based

on the issuance of installment-shopping coupons to members

who have joined through their workplace

Apr. 1989Began issuing internationally accepted

credit cards, JACCS Visa Card and

JACCS MasterCard

July 1959To coincide with the 5th anniversary

of establishment, the Company’s

name was changed to Kitanihon

Sinyohanbai Co., Ltd.

Dec. 1959Began a credit guarantee service for

fi nancial institutions, the fi rst service of

its type in Japan

Mar. 1969In collaboration with large manufacturers,

began providing a full-fl edged shopping

credit service

July 1972Established the Tokyo Offi ce (currently

the Tokyo Branch) as the Company’s

fi rst presence in the Kanto region

Apr. 1973Shares listed on the Sapporo

Securities Exchange

Aug. 1975Head offi ce functions transferred to Tokyo

Apr. 1976Company name was changed

to JACCS Co., Ltd.

Sept. 1978Listed on the First Section of the Tokyo

Stock Exchange

Apr. 1983Established the Housing Loan Center

(currently the Tokyo Housing Loan Center)

1950 1970 19801960

Sapporo Securities Exchange

Tokyo head offi ce JACCS’ fi rst internationally

accepted credit cards

Corporate brochures

JACCS CO., LTD. ｜ Annual Report 20142

implementation of strategies to improve business profitability.

In fiscal 2013, on a non-consolidated basis, the Company recorded an increase in total operating

revenue for the first time in seven fiscal years, and began to see other positive signs that it was on the

path to achieving sustainable profit growth. JACCS also worked to accurately meet customer needs

through the accelerated development of its overseas operations and the creation of new businesses.

These moves were part of strategic initiatives designed to pave the way for dynamic growth.

Underpinned by JACCS’ founding philosophy, the Company is striving to realize the medium-

to long-term vision of becoming “an innovative consumer finance company with its roots in Japan.”

As the Company looks toward its 70th and 80th anniversaries, and further ahead to its centenary,

everyone at JACCS is committed to achieving steady progress toward the Company’s vision and goals.

Jan. 1991Began issuing JACCS JCB Card

Nov. 1994Head offi ce transferred to the Company’s

new main building, Ebisu Neonato, in

Shibuya-ku, Tokyo

May 2001Began operating a state-of-the-art core

computer system called JANET, the fi rst

such online system in the industry to run

24-hours-a-day, 365-days-a-year

June 2004Celebrated the 50th anniversary of

JACCS’ establishment

Mar. 2008JACCS became an equity-method affi liate

of The Bank of Tokyo-Mitsubishi UFJ,

Ltd., through a third-party allocation of

new shares

Apr. 2008Took over the shopping credit business of

Mitsubishi UFJ NICOS Co., Ltd.

June 2010Established overseas subsidiary JACCS

International Vietnam Finance Co., Ltd.

Dec. 2012Acquired a 40% equity stake in

Indonesian company PT Sasana Artha

Finance

June 2014Celebrated the 60th anniversary of

JACCS’ establishment

May 2014Newly merged PT Mitra

Pinasthika Mustika Finance

(MPMF) commenced operations

Apr. 2014Renewal of the corporate logo

200

150

100

50

0 2006 2007 2008 2009 2010 2011 2012 2013 2014

Medium-term

business plansGrowing 1 VIC10 ACT11

Reinforcement of business foundations

Turnaround

Billions of Yen

2015Target

1990 2000

Current Tokyo head offi ce, Ebisu Neonato JANET

Signing ceremony for the MPMF

merger agreement

Total Operating Revenue

Gearing up for the Next

Ceremony to commemorate

JACCS’ 60th anniversary


Progress of 2014JACCS CO., LTD. and Consolidated Subsidiaries

Year ended March 31, 2014

Number of JACCS Cardholders

6,828 thousand

-6.2%

Volume of New Contracts:Credit Card

¥899.9 billion

14.4%

Total Volume of New Contracts

¥2,784.5 billion

12.3%

Volume of New Contracts:Installment Sales Finance

¥293.0 billion

38.5%

Volume of New Contracts:Credit Guarantee

¥687.6 billion

8.0%

Volume of New Contracts:Financing

¥79.0 billion

-4.8%


¥104.1 billion

1.1%

Operating Income

¥12.2 billion

30.0%

Ordinary Income

¥12.2 billion

4.1%

Net Income

¥6.5 billion

-14.9%

Net Income Per Share

¥37.71

-13.7%

Cash Dividends Per Share

¥14.00

27.3%


Millions of YenThousands ofU.S. Dollars

Years ended March 31 2010 2011 2012 2013 2014 2014

Summary of operations for the year:

Number of JACCS cardholders (Thousands) 9,920 9,601 8,419 7,281 6,828 —

Total volume of new contracts ¥2,316,012 ¥2,328,294 ¥2,387,501 ¥2,480,470 ¥2,784,532 $27,299,333

Volume of new contracts: Credit card 704,064 738,947 749,720 786,669 899,957 8,823,107

Volume of new contracts: Installment sales fi nance 241,957 227,300 230,352 211,539 293,029 2,872,833

Volume of new contracts: Credit guarantee 515,934 551,465 603,873 636,770 687,669 6,741,852

Volume of new contracts: Financing 178,181 118,673 86,418 83,022 79,010 774,607

Volume of new contracts: Other operations 675,874 691,907 717,136 762,469 824,866 8,086,921

Total operating revenue 127,101 116,241 107,384 102,950 104,134 1,020,921

Operating income 8,845 3,137 10,972 9,413 12,236 119,960

Ordinary income 10,433 5,479 13,271 11,750 12,238 119,980

Net income 3,569 4,398 6,822 7,642 6,504 63,764

At year-end:

Total assets ¥2,827,806 ¥2,786,288 ¥2,725,816 ¥2,718,518 ¥2,896,405 $28,396,127

Total net assets 103,273 105,261 111,348 117,486 122,712 1,203,058

Yen U.S. Dollars

Per share data:

Net income ¥ 20.39 ¥ 25.12 ¥ 38.97 ¥ 43.72 ¥ 37.71 $0.36

Net assets 589.74 601.13 636.17 678.38 715.38 7.01

Cash dividends 5.00 5.00 10.00 11.00 14.00 0.13

Note: The U.S. dollar amounts in this report represent translations of Japanese yen, for convenience only, at the rate of ¥102= U.S.$1.00, the prevailing approximate exchange rate at March 31, 2014.

Operational Highlights

Five-Year Financial Highlights

2013

AprilBegan issuing Japan’s fi rst offi cial Ferrari-branded credit card. Cardholders enjoy special benefi ts, including discounts when making purchases at

Ferrari S.p.A.’s offi cial online store.

JuneLaunched a business collaboration with The Shikoku Bank, Ltd., involving guarantees for personal loans specifi cally catering to seniors receiving a

pension. The product is designed so that loan repayments are made in months when pension payments are received (even-numbered months).

JuneCollaboration with Visa Worldwide (Japan) Co., Ltd., and Citibank Japan, Ltd., in the prepaid card business. In July, began issuing Japan’s fi rst multi-

currency prepaid card.

SeptemberCommenced a business collaboration with The Bank of Yokohama, Ltd., involving guarantees for a personal unsecured loan product that covers

auto loans, education loans, and home renovation loans.

NovemberCommenced in-store credit card membership applications using tablet computers. By moving to a paperless system, security is enhanced in the

management of personal information and the operational burden of application processing is reduced.

December

Commenced the industry’s fi rst rent guarantee system to include insurance for tenant suicide and solitary death. The rent guarantee system is

combined with Owner’s Safety* and fi re insurance.* Note: Owner’s Safety is an insurance product covering the event of a solitary death, suicide, or death due to crime within a rented housing property. The insurance provides the property

owner with indemnifi cation for rent loss due to property vacancy and costs to restore the property to its original state. The insurance product was developed by ACE Insurance.

2014

FebruaryReorganized the Group’s Indonesian fi nance company with the aim of expanding the sales network and service lineup. (Please refer to the special

feature on page 9 for details.)

FebruaryAlliance with Kakaku.com, Inc. Began issuing REX CARD Lite, which does not incur annual membership fees and has one of the highest loyalty point-earning

ratios of any Japanese credit card.

FebruaryBegan issuing “The Beatles Club Membership Card” on behalf of the official Beatles fan club in Japan. The membership card includes a

credit card.

MarchBegan issuing the Visa TravelMoney “Gonna” prepaid card, which includes foreign currency exchange functions. (Please refer to the special feature

on page 11 for details.)


To Our Stakeholders

Operating Performance: Increase in Operating Revenue Coupled with Significant

Progress in Business Development

In fiscal 2013, ended March 31, 2014, JACCS achieved a turnaround in operating revenue, while both

operating income and ordinary income also increased.

We addressed key tasks in each of the Group’s three main businesses—the credit business, credit

card business, and financing business—and worked to expand new business partnerships and further

deepen existing partnerships. Driven by expectations generated by the economic program of Prime

Minister Shinzo Abe’s administration (often referred to as “Abenomics”) as well as extra demand in the

lead-up to the increase in the consumption tax rate, the total volume of new contracts grew steadily.

These factors contributed to the realization of a turnaround in the Group’s top line (operating revenue).

In the Group’s overseas operations, consolidated subsidiary JACCS International Vietnam Finance

Co., Ltd. (JIVF), expanded its sales territory, leading to an increase in motorcycle dealers joining its

member network as well as a rise in the number of loans handled. In Indonesia, the Company’s equity-

method affiliate PT Sasana Artha Finance (SAF) agreed in February 2014 to a merger with finance

company PT Mitra Pinasthika Mustika Finance (MPMF). The latter company is a member of the corporate


group led by JACCS’ Indonesian business partner PT Mitra Pinasthika Mustika (MPM). Through this

merger, in addition to the motorcycle sales finance business, JACCS’ Indonesian operations will be able to

expand into the auto sales finance business and the leasing business. For further details on initiatives in

the Group’s Indonesian business, please refer to page 9 of this report.

In fiscal 2013, we made substantial progress in the development of new businesses. In July 2013,

we began issuing a prepaid card specifically for overseas use, called Visa TravelMoney “Gonna.” We

followed this up in March 2014 by commencing the issue of a new version of Visa TravelMoney “Gonna”

with expanded functions, including foreign currency exchange and shopping functions that can be used

at Visa-affiliated merchants both in Japan and overseas. This marked progress in our expansion of the

cashless settlement business. For further details on initiatives in the Group’s new businesses, please refer

to page 11 of this report.

As a result of the factors outlined above, on a consolidated basis, the total volume of new contracts

increased 12.3% compared with the previous fiscal year, to ¥2,784,532 million, total operating revenue

rose 1.1%, to ¥104,134 million, and ordinary income increased 4.1%, to ¥12,238 million. Accompanying

the absorption-type merger with consolidated subsidiary JNS Collection Service Co., Ltd., on April 1,

2013, the Company reversed a portion of its deferred tax assets. As a result, there was an increase in

income taxes-deferred, and net income decreased 14.9% compared with the previous fiscal year, to

¥6,504 million.

Progress in the Second-Year of ACT11: Turnaround in Operating Revenue

Under JACCS’ three-year medium-term business plan “ACT11”—spanning the three fiscal years from

April 1, 2012, to March 31, 2015—we have set three core policies:

• Accelerating growth by turning around and expanding operating revenue (top line)

• Further strengthening our management structure to ensure adaptability to environmental change

• Continuously enhancing our compliance system


2013 2014 2015Target

150

120

90

60

30

0

(Billions of Yen)

104.1102.9 106.9

Ordinary Income

2013 2014 2015Target

15

12

9

6

3

0

(Billions of Yen)

12.211.712.6


In fiscal 2013—the second year of “ACT11”—with regard to the first core policy, we achieved a

turnaround in operating revenue driven by such factors as an increase in shopping credits in the credit

business, an expansion in auto loans in the credit business, an increase in the volume of new contracts

and the balance of revolving payments in the credit card business, and a build-up in the balance of loan

guarantees for banks in the financing business.

With regard to the second core policy, through progress in enhancing the quality of our credit

portfolio, we achieved a decrease in bad debt-related expenses for the second consecutive fiscal year.

A build-up in the balance of deferred installment income also contributed to progress in the further

strengthening of our management structure.

With regard to the third core policy, we implemented such measures as the establishment of the

compliance credit control center in February 2014 and other initiatives to build an advanced compliance

system, the preparation of a Business Continuity Plan (BCP) and the implementation of related

training programs to strengthen our business continuity system, and the promotion of corporate social

responsibility (CSR) through various programs that contribute to society.

Outlook for Fiscal 2014, Ending March 31, 2015

In the fiscal year ending March 31, 2015—the final year of “ACT11”—we are shifting our focus from

a turnaround to an expansion in operating revenue, as we gear up for the next stage of growth.

To accomplish this shift to a new growth phase, within the credit business, in shopping credits

JACCS is undertaking measures to expand its lineup of Web-based products, including through the

development of new Web products and quality enhancement of existing Web products. In addition, we

are working to further expand the volume of new contracts in housing-related products by bolstering

the volume of housing renovation loans and other measures. In the auto loan field, JACCS is aiming to

expand its market share by increasing the volume of new contracts in strategic products—such as the

“WeBBy Auto” loan application service—and by rolling out various initiatives targeting auto dealers.

In the credit card business, we are implementing such measures as a strategy of developing

relationships with new business partners that are likely to provide opportunities to expand the number

of high-usage card members, the development of concept cards, and the build-up of the balance of

revolving payments.

In the financing business, in personal loan guarantees for banks, we are targeting an increase in

the balance of guarantees by strengthening our alliance with The Bank of Tokyo-Mitsubishi UFJ, Ltd.,

and other measures. In housing loan guarantees, we will work to maintain a balance of loan guarantees

over one trillion yen and retain our top market share. In bill collection services, we are striving to secure

stable revenue by increasing the number of invoices handled based on a strategy targeting the regular bill

payment market.

In new businesses, the Group is looking to enter the market for deferred-payment settlement

services and is promoting its prepaid card business.

In overseas operations, in Vietnam we are implementing strategies to increase the volume of

In Indonesia, through a reorganization of our affiliated finance

company, we will enter the auto sales finance business.


Expanding Market Presence

in IndonesiaJACCS is accelerating its overseas business development focusing on

the Asia region. In fiscal 2013, JACCS reorganized its Group finance

company in Indonesia with the aim of expanding operations there.

Merger of PT Sasana Artha Finance and PT Mitra Pinasthika

Mustika Finance

In 2012, JACCS acquired a 40% equity stake in Indonesian finance

company PT Sasana Artha Finance (SAF), and began participating in

the company’s management. In February 2014, JACCS reached an

agreement with its Indonesian business partner, PT Mitra Pinasthika

Mustika (MPM), regarding the merger of SAF and PT Mitra Pinasthika

Mustika Finance (MPMF), a finance company within the MPM Group.

MPMF was made the surviving entity of the merger, and JACCS agreed

to acquire new shares issued by MPMF based on a further investment

of 510 billion rupiahs (¥4.5 billion). Through this transaction, JACCS

retained a 40% equity stake in the merged entity. In May 2014, the

newly merged company commenced operations, and MPMF appointed

two directors from JACCS as part of its participation in the company’s

management.

Entry into Auto Sales Finance and Expansion of Operations

to Cover All of Indonesia

The newly merged company has total assets of over ¥45.0 billion,

making it one of Indonesia’s largest finance companies with an

extensive sales network covering the entire country. Previously, SAF

was focused mainly on the eastern Java region, primarily providing

sales finance for Honda motorcycles. Through the merger with MPMF,

which has sales finance and lease operations throughout Indonesia, the

company will work to further increase the scale of its operations and

maximize synergies. This will specifically involve ongoing growth in the

Honda motorcycle sales finance business, and sales finance for Nissan

automobiles—a business that MPM has newly entered. The Indonesian

automobile market is very large, reaching 1.2 million units sold in 2013.

By the end of 2016, JACCS forecasts that total assets of the merged

company will reach ¥80.0 billion, or 1.7 times the current level. MPMF

aims to become one of Indonesia’s top-10 finance companies.

The Indonesian Market and MPM

Indonesia is the world’s fourth most populous country, with 247 million

people. Over the medium to long term, domestic demand is anticipated

to expand and the country is expected to record significant economic

growth. JACCS’ business partner, MPM, is affiliated with Saratoga,

one of Indonesia’s leading corporate groups, and is broadly developing

its business in the area of automobiles, motorcycles, and related

operations.

Summary of PT Mitra Pinasthika Mustika Finance

・ Head office: Jakarta

・ Establishment: May 3, 1990

・ Principal businesses: 1. Motorcycle and auto sales

finance (installment finance); 2. Finance leases

・ Capital: 1,224 billion rupiahs (¥10.6 billion)

・ Number of employees: 2,878

Indonesia: Key Facts

• Population: 247 million (2012)

• Land area: Approx. 1.89 million square kilometers

• Real GDP growth rate: 5.8% (2013)

Source: Ministry of Foreign Affairs of Japan

Number of automobiles sold (2013):

1,229,901 units (10.2% year-on-year growth)

Source: The Association of Indonesian Automotive Industries (GAIKINDO)

Number of motorcycles sold (2013):

7,743,879 units (9.6% year-on-year growth)

Source: Indonesian Motorcycles Industry Association (AISI)

PT Mitra Pinasthika Mustika Finance

(as of June 30, 2014)


motorcycle sales finance handled, while expanding our product lineup and sales territory. In Indonesia,

through a reorganization of our affiliated finance company, we will enter the auto sales finance business.

Based on the measures outlined above, for fiscal 2014, ending March 31, 2015, on a consolidated

basis we have set management targets of achieving operating revenue of ¥106,900 million, along with

ordinary income of ¥12,600 million, and net income of ¥7,600 million.

Delivering Shareholder Value, Celebrating JACCS’ 60th Anniversary

The Company sees stable shareholder return as a key management issue. Simultaneously, we also

recognize that shareholder return must be in line with business performance. Hence, our basic policy

regarding profit distribution strives to reinforce our financial base and keep adequate internal reserves

while implementing dividends based on a comprehensive evaluation of such factors as net income,

financial position, and payout ratio.

In June 2014, JACCS celebrated the 60th anniversary of its founding. Our reaching this milestone

was primarily thanks to the cooperation of our shareholders and all other stakeholders, and we wish to

convey our sincere gratitude for this support. As an expression of this appreciation to our shareholders,

in fiscal 2013 the Company implemented a commemorative dividend of ¥2.00 per share. As a result,

the year-end dividend of ¥8.00 per share comprises an ordinary dividend of ¥6.00 per share along with

the aforementioned commemorative dividend. Consequently, the cash dividend applicable to fiscal 2013

totaled ¥14.00 per share, including an interim dividend of ¥6.00 per share.

Gearing Up for the Next Stage

JACCS is pursuing growth across all spheres of its operations—the credit business, credit card business,

financing business, overseas operations, and new businesses. In fiscal 2014, we will complete “ACT11,”

the Group’s three-year medium-term business plan. We are also striving to realize our medium- to long-

term vision of becoming “an innovative consumer finance company with its roots in Japan.” As we work

to achieve these goals, we look forward to the ongoing support and understanding of our shareholders,

investors, customers, partner companies, and local communities.

August 2014

Yasuyoshi Itagaki

President, CEO, COO and Representative Director

We are looking to enter the market for deferred-payment

settlement services and are promoting our prepaid card business.


Creating New BusinessesAggressively Promoting New Businesses

Under JACCS’ three-year medium-term business plan “ACT11,” one of the Group’s key strategies is the development of new businesses. As part of

this strategy, the Group is aggressively developing new products in such areas as prepaid cards and deferred-payment settlement services, and is

launching a range of products in the market.

Prepaid Card Business

JACCS has developed a new product called “Tametoku Prepaid,” which includes bill collection and prepaid card

functions—the first service of its type in Japan. It is designed to be used for the purchase of goods with a high unit price

and low purchase frequency, and operates on a system whereby a fixed amount of money is transferred monthly from the

card member’s bank account to the prepaid card over a pre-determined period of time (approximately 1–3 years). As an

example of customization of the “Tametoku Prepaid” product, in June 2014 JACCS began issuing “Tametoku10” as an

original prepaid card for partner company CarBell Co., Ltd. This is a prepaid card designed specifically for the purchase

of an automobile, and is the first case of such a product being launched in the auto sales industry in Japan. As a premium

service for card members, when funds are automatically transferred each month to replenish the card’s balance, the

member receives a high bonus—equivalent to 10% of the transferred amount. JACCS intends to roll out “Tametoku

Prepaid” for a wide range of high-unit-price product categories.

Prepaid Cards Featuring Foreign Currency Exchange Functions

In July 2013, JACCS began issuing Visa TravelMoney “Gonna”—Japan’s first multi-currency prepaid card. This card is

based on Visa TravelMoney offered by Visa Worldwide (Japan) Co., Ltd., but features multi-currency use as an extra level

of functionality provided by JACCS. In March 2014, JACCS added new functionality to the card, including foreign currency

exchange and shopping functions that can be used at Visa-affiliated merchants both in Japan and overseas. The card can

be used in over 200 countries and regions worldwide at 38 million Visa-affiliated merchants. It can also be used at over 2.1

million ATMs displaying the Visa and Plus logos. Furthermore, in May 2014 JACCS launched the “Visa TravelMoney “Gonna”

Banco do Brasil Affiliate Card,” which is the first prepaid card in Japan to offer settlement denominated in Brazilian reals.

This product is aimed at enhancing convenience for tourists travelling to Brazil, which is the host country for the 2014

FIFA World Cup and the 2016 Summer Olympics. JACCS intends to expand its range of prepaid card partner companies

to increase market penetration of the “Gonna” brand.

Deferred-Payment Settlement Services

In April 2014, JACCS began offering deferred-payment settlement services targeting the mail-order and online shopping market. This is the first

service of its type in Japan’s shopping credit and credit card industry. The name of the new service is “ATODENE.” This service allows the user to

pay for purchased goods at a convenience store, bank, or other such locations anytime up to two weeks after the receipt of goods from a mail-

order or online retailer. JACCS provides settlement on behalf of the purchaser when the goods are shipped. Through this service, the user can pay

for goods after they have arrived, and it enables users who do not have a credit card to make purchases. For retailers, the risk of non-payment is

eliminated since JACCS provides settlement on behalf of

the purchaser. In addition, the risk of order cancellation is

reduced since shipment of goods can be made immediately

after the receipt of an order. The maximum purchase

amount handled by this service is ¥54,000. In the initial

year following service launch, JACCS aims to sign up 600

retail partners, and is targeting a volume of new contracts

of ¥2,000 million.

• ATODENE Deferred-Payment Settlement System

1. Order (from a PC or mobile device)

4. Shipment of goods

8. Payment made within two

weeks at a convenience

store or other location

2. Request for credit

screening

5. Shipping slip

6. Dispatch of

Invoice

3. Credit screening result

7. Settlement of payment

for goods

Customer Affiliated Store


Credit Business

Review of Operations

Further Expansion in the Web Channel, Housing-Related Fields,

Five Major Business Categories, and Auto Loan Market

Strengthening of marketing channels in major business categories

Centering on the five major business categories of home renovation and other housing-related fields,

motorcycles, jewelry, kimono, and consumer electronics, the Company enhanced its lineup of high-usability

Web-based products, and strengthened promotion activities in collaboration with partner stores as it worked to

increase its share of in-store purchases. These efforts contributed to year-on-year growth in the volume of new

contracts across all five categories.

Neo-Variable Plan

This product offers users flexibility in auto loan repayment amounts. Users are free to set their own pattern of

monthly repayments when the loan agreement is signed. After the loan is taken out, the product allows customers

to change (or extend) the number of repayments by bringing forward a portion of repayments or reducing the

monthly repayment amount. JACCS has positioned “WeBBy Auto” and “Neo-Variable Plan ” as strategic

products, and this is leading to growth in the volume of new contracts.

OverviewJACCS shopping credit supports consumers at various life stages, including in such areas as home renovation and

other housing-related fields, as well as in the purchase of jewelry, educational, bridal, and healthcare services.

JACCS also offers Web-based products and other products that meet changing market needs. In the auto loan field,

through partnerships with auto dealers, JACCS facilitates purchases in a broad array of vehicle categories, from

domestic and foreign new vehicles through to used vehicles.

Operating Performance (Non-Consolidated)In shopping credits, the volume of new contracts and operating revenue increased, driven by expansion in major

business categories and heightened demand in the lead-up to the rise in Japan’s consumption tax rate. There was

a turnaround in operating revenue, which rose, reflecting a higher volume of new contracts and an increase in

reversal of deferred installment income.

In auto loans, the volume of new contracts rose, driven by strengthened collaboration with auto dealers and an

increase in the number of dealerships active. Operating revenue rose, reflecting a higher volume of new contracts

and an increase in reversal of deferred installment income.

Strategy under ACT11In shopping credits, JACCS is developing a new lineup of Web-based products to enhance service quality, working

to increase the volume of housing renovation loan contracts through collaboration with housing manufacturers, and

targeting expansion in the volume of new contracts by implementing a range of sales promotion programs centered

on major business categories.

In auto loans, JACCS is implementing sales promotion measures aimed at expanding the volume of “WeBBy

Auto” contracts, working to increase its market share by planning and executing strategies targeting each category

of dealer—domestic brand, foreign brand, and used vehicles—and striving to expand the volume of “Neo-Variable

Plan ” contracts, a product that allows users flexibility in auto loan repayments.

Operating Revenuein Shopping Credits

(Non-Consolidated)

2012 2013 2014

22.0Billions of Yen

Operating Revenuein Auto Loans

(Non-Consolidated)

2012 2013 2014

15.7Billions of Yen

Key Initiatives

Yearly Growth Rate of Volume of New Contracts

in Five Major Business Categories

Home renovation and other

housing-related fields8.8%

Motorcycles 2.9%

Jewelry 21.4%

Kimono 7.0%

Consumer electronics 57.2%


Credit Card Business


Expanding the Membership Base and Promoting

Increased Card Usage

In-store credit card membership applications using tablet

computers

JACCS commenced receiving credit card applications using tablet computers

for its co-branded card with major sporting goods retailer Alpen Co., Ltd. This

program allows customers to fill out in-store applications for the Alpen Group

Card. Compared to conventional paper-based application procedures, personal information is made much more

secure through electronic encryption of data, the burden for filling out applications is reduced, and the system

contributes to a shortened period necessary for card issuance.

Dedicated department tasked with building up the balance of

revolving payments

To further build up the balance of revolving payments, JACCS established a

dedicated department (call center) to strengthen outbound / inbound programs.

OverviewIn addition to standard credit cards with attractive add-on services, JACCS also issues cards in partnership with

a wide variety of organizations and companies. Through collaborative partnerships with member stores—a key

strength that leverages JACCS’ status as an independent credit card issuer not affiliated with any particular retail

group—we focus on enhancing the value-added of co-branded cards. We are also promoting increased cardholder

use of revolving payment services.

Operating Performance (Non-Consolidated)In card shopping, ongoing promotional campaigns contributed to an increase in the average usage amount per

cardholder and led to a rise in the volume of new contracts. Increases in the volume of new contracts and the

balance of revolving payments underpinned growth in operating revenue.

The volume of new contracts from cash advances declined owing to the continued impact of regulations

concerning the total amount that individual consumers are permitted to borrow. Operating revenue from cash

advances decreased owing to declines in the volume of new contracts and the balance of cash advances.

Strategy under ACT11The core strategy of the credit card business is to expand the cardholder base. We are implementing such measures

as a strategy of developing relationships with new business partners that are likely to provide opportunities to

expand the number of high-usage card members, increasing the range of channels used for recruiting card

members, ongoing reinforcement of the infrastructure for recruiting card members through the Web, and expanding

the lineup of co-branded cards. For existing card members, we are working to stimulate card usage through

continuous promotional campaigns. We are also stepping up outbound / inbound programs, as we work to build

up the balance of revolving payments. In cash advances, we are striving to increase the volume of new contracts

through the running of sales promotion campaigns.

Operating Revenue in Credit Card Business for

Shopping

(Non-Consolidated)

2012 2013 2014

26.7Billions of Yen

Operating Revenue in Credit Card Business for

Cash Advances

(Non-Consolidated)

2012 2013 2014

14.7Billions of Yen

Number and Ratio ofActive Cardholders

2012 2013 2014

341Tens of Thousands

49.9

Number of Active CardholdersRatio of Active Cardholders

%

Key Initiatives


Financing Business


Pursuing Alliances with Financial Institutions and Boosting

Product Appeal

Expansion of partner financial institutions by building a

Web-based system

JACCS has built a system that leverages the particular features of the Web,

and this has enabled the Group to expand its partnerships with financial

institutions.

“Star Rent System” rent guarantee system

Targeting real estate management companies and property owners, JACCS

began offering a rent guarantee system that adds on two insurance

products—“Owner’s Safety” and “Household Contents Insurance” (please

refer to page 5). As a packaged product, this system is a first in the industry,

and JACCS is aggressively marketing it as a core rent guarantee product.

OverviewThe financing business comprises credit guarantees for personal loans extended by banks, credit guarantees for

housing loans, and bill collection services. Housing loan guarantee services specialize in mortgage guarantees on

studio-type apartments purchased for investment purposes. JACCS conducts this business specifically in Tokyo,

Osaka, and Fukuoka, where apartments have sound rental income-earning potential.

Operating Performance (Non-Consolidated)In personal loan guarantees for banks, we successfully expanded transactions with The Bank of Tokyo-Mitsubishi

UFJ, Ltd. (BTMU), and bolstered alliances with leading regional banks. As a result, the balance of loan guarantees

grew and operating revenue increased. In housing loan guarantees, we maintained a stable balance of loan

guarantees above one trillion yen. Operating revenue declined. In bill collection services, operating revenue

increased, driven by growth in the number of invoices handled.

Strategy under ACT11In personal loan guarantees for banks, we are working continuously to expand the balance of loan guarantees by

strengthening collaboration with BTMU. We are also pursuing further partnerships with leading financial institutions

by expanding our lineup of products to meet the needs of our partners.

JACCS is working to maintain its balance of housing loan guarantees at a level exceeding one trillion yen as

well as keep the top market share. We plan to undertake measures to strengthen partnerships with leading real

estate developers.

In bill collection services, JACCS is focusing on making rapid inroads into the market for regular payment

services. By developing superior, differentiated products, we are targeting rent payment collection services for real

estate management companies and membership fee collection services for fitness clubs.

Key Initiatives

Revenue fromGuarantees for Housing

Loans

(Non-Consolidated)

2012 2013 2014

15.4Billions of Yen

2012 2013 2014

3.2Billions of Yen

2012 2013 2014

2.5Billions of Yen

Revenue from Guarantees for Personal Bank Loans

(Non-Consolidated)

Revenue fromBill Collection Services


Overseas Operations


Expanding the Sales Territory in Vietnam and Striving

for Increased Business Scale in Indonesia

OverviewJACCS is currently developing businesses in Vietnam and Indonesia. In Vietnam, which JACCS entered in 2010, the

Company is expanding its operations by focusing on the motorcycle sales finance business. In Indonesia, JACCS

entered the motorcycle sales finance business in 2012, and in the fiscal year under review successfully entered the

auto sales finance business through a reorganization of local finance companies. We are providing the know-how

we have accumulated in Japan as we aim to expand our business in these regions.

Operating Performance (Non-Consolidated)In Vietnam, the number of motorcycle dealers in our sales network, the number of loans handled, and the balance of

operating receivables are all growing. The business is centered on the southern part of Vietnam, which includes Ho Chi

Minh City. We have also begun offering unsecured loans to customers who have fully paid off their motorcycle loan.

In Indonesia, we steadily grew the volume of new contracts and number of loans in the motorcycle sales

finance business.

Strategy under ACT11Consolidated subsidiary JACCS International Vietnam Finance Co., Ltd. (JIVF), plans to expand its sales territory to

include Hanoi in the northern part of the country. We are also working to expand unsecured loans to customers who

have fully paid off their motorcycle loan.

In Indonesia, we are striving for further growth driven by robust conditions in the motorcycle sales market.

Through the reorganization of local finance companies, we are aiming for greater business scale and to maximize

synergies. This includes developing an auto sales finance business covering all of Indonesia, and expanding the

sales territory of our Honda motorcycle sales finance business. We are also planning to commence handling sales

finance for Nissan automobiles.

Aggressive expansion of sales territory in Vietnam

Following the lifting of regulatory restrictions on store openings that

were implemented in October 2012, we have almost tripled the

number of dealers in our sales network year on year.

Reorganization of finance companies in Indonesia

Indonesian finance company PT Sasana Artha Finance (SAF) merged

with PT Mitra Pinasthika Mustika Finance (MPMF), and JACCS made

a new equity investment in MPMF as the surviving entity. We are

participating in the management of this company, and this has given

us a sound platform for development of the finance business in

Indonesia (please refer to page 9).

Key Initiatives

Balance of OperatingReceivables in Vietnam

2011 2012 2013

1,817Millions of Yen

(Years ended December 31)

Number of MemberStores in Vietnam

2011 2012 2013

314

(Years ended December 31)


Corporate Governance

Corporate Governance Structure

Election / Dismissal Election / Dismissal Election / Dismissal

Audit & Supervisory BoardBoard of Directors

Cooperation

General Meeting of Shareholders

Cooperation

Individual DepartmentsDirectors, Executive Officers, Others

Internal Control Committee

Compliance Committee

Personal Information Protection Committee

and Others

President, CEO, COO andRepresentative Director

Audit Office

Accounting Auditor

Operational Audit

Accounting AuditManagementCommittee

Fundamental Corporate Governance PhilosophyThe Company works to maintain the trust and respond to the expectations of a

broad cross-section of stakeholders, including shareholders, business partners,

employees, consumers, and local communities. Furthermore, the Company

pursues management that places signifi cant importance on corporate social

responsibility (CSR), and believes that enhancing corporate value and

contributing to society as well as the realization of a society based on trust

are key management issues. To achieve these goals, the Company works to

increase the soundness of its business, improve transparency, and strengthen

its management control systems and audit functions, while undertaking

corporate activities in accordance with principles of social justice.

Corporate Governance Structure Under its corporate governance structure, the Company appoints a Board of

Directors and an Audit & Supervisory Board, and has introduced a system of

executive offi cers.

Board of Directors

As of June 27, 2014, the Board of Directors comprises nine members

(including two outside directors). The Board of Directors determines the

Company’s basic management policies, and makes decisions regarding

important operational matters and other matters delegated by resolution

of the General Meeting of Shareholders. The Board of Directors also makes

decisions on matters stipulated by law and the Company’s Articles of

Incorporation, and receives reports regarding the status of signifi cant

operational matters. Based on this structure, the Board of Directors oversees

the operational execution of the Company’s management. The term of

appointment for directors is one year.

Audit & Supervisory Board Members and the Audit & Supervisory Board

As of June 27, 2014, the Company had four Audit & Supervisory Board

Members (including two outside Audit & Supervisory Board Members). As

independent offi cers functioning under a mandate from the General Meeting

of Shareholders, the Audit & Supervisory Board Members audit the directors’

execution of duties. The Audit & Supervisory Board is a body that holds

discussions and makes decisions regarding the audits undertaken by the

Audit & Supervisory Board Members for the purpose of formulating opinions.

Each Audit & Supervisory Board Member utilizes the Audit & Supervisory

Board as a means of ensuring effectiveness. As a body to support the Audit

& Supervisory Board Members’ execution of duties, the Company has

established the Audit & Supervisory Board Members’ Secretariat and has

appointed dedicated staff to this body.

Management Committee

As an advisory body to the COO, the Management Committee comprises

mainly executive offi cers responsible for supervising each function of the

Company’s business organization. In principle, the Management Committee

convenes three times per month and broadly considers and debates matters

delegated by the Board of Directors, important operational matters and various

issues, as part of a system designed to facilitate expeditious execution.

Audit Offi ce

The Audit Offi ce functions as an internal auditing unit, which reports directly

to the President, CEO, COO and Representative Director and maintains

independence from the rest of the Company’s organization. As of June 27,

2014, the Audit Offi ce comprised 20 staff, including the Audit Offi ce General

Manager. The Audit Offi ce considers and evaluates overall business-related


risk management control and the effectiveness of governance processes

at each of the Group’s operational sites, and conducts internal auditing

operations based on the Company’s internal control system policies.

Committees

• Internal Control Committee

The Internal Control Committee is tasked with establishing systems to

ensure that the Group’s operations are conducted appropriately, and has

the objective of promoting integrated and effi cient internal control and

risk management.

• Compliance Committee

The Compliance Committee has the objective of promoting business

operations within the Group that achieve an extremely rigorous level of

compliance.

• Personal Information Protection Committee

The Company acquires personal information and provides credit as part of

its business operations. For this reason, it is essential that the entire Group

works to ensure the protection of personal information. The Personal

Information Protection Committee is the Company’s highest body responsible

for matters relating to the handling of personal information.

The reason the Company adopted this corporate governance structure is to

enhance the effectiveness of the Board of Directors’ decision-making and

oversight and the Audit & Supervisory Board Members’ (Audit & Supervisory

Board) management audit functions. Furthermore, this structure clearly

defi nes the respective roles and responsibilities of directors and executive

offi cers who have a deep knowledge of the Company’s operations, and

day-to-day management. Hence, the Company believes that this structure is

optimal for facilitating autonomous, responsible, and speedy management.

Internal Control and Compliance StructureIn addition to building an expeditious and effi cient structure for operational

execution, the Company believes that strengthening the compliance system

of the entire Group and establishing a highly independent internal audit

system is extremely important. Hence, the Company has established

specialist organizational units responsible for each of these functions. The

Company has passed a resolution regarding its “Policy for the Establishment

of the Internal Control System,” and is building its internal control system

based on this policy.

Outside Directors and Outside Audit & Supervisory

Board MembersThe Company has appointed two outside directors and two outside Audit &

Supervisory Board Members.

Although the Company has not established any specifi c standards

relating to independence in the appointment of outside directors and outside

Audit & Supervisory Board Members, appointment decisions are based on

the principles that persons appointed must not have any benefi cial interests

in the Company, be able to express opinions and advice from an independent

and objective perspective so as to sustain the soundness and transparency

of the Company’s management, and must not have the risk of confl icts of

interest arising with ordinary shareholders of the Company.

Compensation of Offi cers

Offi cer category

Total com-pensation

(millions of yen)

Total compensation by type (millions of yen) Number ofdirectors

or Audit & Supervi-

sory Board Members

Basic compensa-

tion

Stockoptions

BonusesRetirement allowance

Directors (excluding outside directors)

241 219 21 __ __ 9

Audit & Supervisory Board Members (excluding outside Audit & Supervisory Board Members)

30 30 __ __ __ 3

Outside offi cers 21 21 __ __ __ 5

Note: The above table includes three directors and one Audit & Supervisory Board Member who

retired as of the Ordinary General Meeting of Shareholders held on June 27, 2013, and one

Audit & Supervisory Board Member who retired on August 31, 2013.

Information Disclosure SystemTo ensure management transparency and enhance accountability, the

Company conducts timely, appropriate, and fair information disclosure

through investor relations (IR) activities aimed at shareholders and investors.

Measures to Revitalize the General Meeting of Shareholders and Promote

the Exercise of Voting Rights

The Company works to dispatch notices of General Meeting of

Shareholders as early as possible. Notice of the Ordinary General Meeting

of Shareholders held on June 26, 2014, was dispatched on June 6, 2014.

To promote the exercise of voting rights, the Company participates in an

electronic voting platform.

IR Activities

The Company holds briefi ngs for analysts and institutional investors twice

yearly approximately one week after the results announcement. In addition

to the results announcement at the Tokyo Stock Exchange (TSE), the

Company posts its securities fi ling (Yuka Shoken Hokokusho), briefi ng

materials for analysts and institutional investors, shareholders’ newsletters,

English annual report, and other materials on its website.

http://www.jaccs.co.jp/corporate/ir/index.html

A dedicated IR manager is appointed within the Corporate Planning and

Communication Department.


Founder and Honorary Chairman

Kaname Yamane

Founder and Counselor

Tatsuya Watanabe

Senior Adviser

Naoe Sugimoto

President, CEO, COO

and Representative Director

Yasuyoshi Itagaki

Deputy President and

Representative Director

Tsutomu Sugiyama

Director and Senior Managing

Executive Offi cer

Hidechika Kobayashi

Credit and Credit Card, Business Strategy

Directors and Managing

Executive Offi cers

Noboru Kawakami

General Affairs, Personnel and Compliance

Minekazu Sugano

Information System

Directors and Senior Executive Offi cers

Kojun Sato

Corporate Planning

Shigeki Ogata

Accounting and Finance

Haruo Kamioka*

Kuniaki Hara*

* Outside Directors

Audit & Supervisory Board Members

Akihiro Urabe (Full-time)

Takayuki Hiroi (Full-time)

Saburosuke Fujisaki*

Satoru Fujimura*

* Outside Audit & Supervisory Board Members

(Front, from

left to right)

(Back, from

left to right)

Director and Managing

Executive Offi cer

Noboru Kawakami

Deputy President and


Tsutomu Sugiyama

Director and Senior

Executive Offi cer

Shigeki Ogata

President, CEO, COO and


Yasuyoshi Itagaki

Director and Managing

Executive Offi cer

Minekazu Sugano

Director and Senior

Managing Executive Offi cer

Hidechika Kobayashi

Director and Senior

Executive Offi cer

Kojun Sato

Founders / Board of Directors and Audit & Supervisory Board Members As of June 27, 2014


Managing Executive Offi cer

Satoru Shiroishi

Shutoken Area

Senior Executive Offi cers

Akira Furukawa

Kita-Kanto Area

Yoshinao Osawa

Finance Business, Business Strategy

Yukihiko Kamagata

Audit

Hitoshi Chino

Credit Supervision and Operation

Hideo Yoshino

PT Mitra Pinasthika Mustika Finance (Indonesia)

Kenichi Oshima

Credit Administration

Toru Yamazaki

Kinki Area

Takahiro Nagoshi

Sales, Business Strategy

Akira Kuzukami

Chubu Area

Executive Offi cers

Masayuki Nemoto

Credit Card Business Promotion, Business Strategy

Isao Yanagihara

Hokkaido Area

Ryo Murakami

Credit Business Promotion, Business Strategy

Shingo Yuzue

Housing Loan Guarantee, Business Strategy

Toshio Sotoguchi

Auto Loans, Business Strategy

Masatoshi Kishi

Chugoku-Shikoku Area

Kazuo Yamamoto

Corporate Planning

Noboru Taniguchi

Credit Administration

Masahiro Hasukawa

Credit Supervision and Operation

Toshiyuki Hijikata

Compliance

Hiroki Yoshida

Tohoku Area

Atsushi Hazawa

Kyushu Area

Executive Offi cersAs of June 27, 2014


CSR Activities

Ongoing seminar program for member stores

Every year, JACCS holds seminars with the objective of supporting member stores’ efforts

to strengthen their compliance systems. In fi scal 2013, we held 39 seminars nationwide

under such themes as “Avoiding Consumer Disputes,” “Legal Aspects of Handling

Complaints,” and “Dealing with Workplace Bullying.” A total of 1,521 participants from

567 companies took part in these seminars. Participants reported that the seminars had

contributed to enhanced business performance and smoother operations at member

stores. We will continue to organize seminars as we strive to maintain our position as

a trusted partner.

Contributing to society through credit cards

As part of JACCS’ efforts to contribute to society through its business activities, the

Company issues credit cards that provide a charitable donation based on usage. A certain

percentage of the card’s total annual purchase amount is donated to a specifi ed charitable

organization or local area. JACCS fully incurs the amount that is donated to charity, and no

monetary cost is borne by the cardholder. The aim is to support efforts to revitalize local

economies as well as raise awareness of the importance of making a social contribution.

Members may select from the following card lineup.

“Through all of our interactions with society, we aim to honor the trust placed in us by our stakeholders, and strive to

enhance the level of satisfaction we provide.” This statement conveys JACCS’ core CSR philosophy. When undertaking

CSR activities, we are also conscious of our commitment to being “a company that generates sustainable profi ts and

always acts in good faith.”

Japan Guide Dog Association Card

Donations go to the Japan Guide

Dog Association (JGDA)

Kumamoto Card

Donations go to the “Kumamoto

Hometown Support” program

JACCS CARD Link

When joining, members select a

charitable organization—which

receives donations—from an

extensive list. The list includes

such organizations as the Japan

Committee for UNICEF, the

Japanese Red Cross Society, and

the Japan Association for UNHCR.

Hakodate Card HOKKAIDO I CARD

Donations go to Hakodate City to

support aid programs for child-

rearing and other social welfare

programs

Donations go to the Hokkaido

Heritage Council


Seven-Year Financial Summary

Years ended March 31Millions of Yen

2008 2009 2010 2011 2012 2013 2014

Summary of operations for the year:

Total volume of new contracts ¥2,448,288 ¥2,412,646 ¥2,316,012 ¥2,328,294 ¥2,387,501 ¥2,480,470 ¥2,784,532

Volume of new contracts: Credit card 714,783 723,126 704,064 738,947 749,720 786,669 899,957

Volume of new contracts: Installment sales fi nance 325,794 306,343 241,957 227,300 230,352 211,539 293,029

Volume of new contracts: Credit guarantee 562,889 527,433 515,934 551,465 603,873 636,770 687,669

Volume of new contracts: Financing 251,888 211,317 178,181 118,673 86,418 83,022 79,010

Volume of new contracts: Other operations 592,933 644,425 675,874 691,907 717,136 762,469 824,866

Total operating revenue 139,912 142,039 127,101 116,241 107,384 102,950 104,134

Operating income (loss) (8,020) 5,271 8,845 3,137 10,972 9,413 12,236

Income (loss) before income taxes and minority interests (15,457) 4,711 7,460 5,571 12,203 11,764 12,730

Net income (loss)　 (9,758) 2,587 3,569 4,398 6,822 7,642 6,504

Net cash provided by (used in) operating activities 58,022 94,774 122,877 104,111 36,236 15,157 (89,429)

Net cash provided by (used in) investing activities (5,511) (4,956) 1,708 (4,533) (4,181) (8,934) (8,355)

Net cash provided by (used in) fi nancing activities 22,731 (124,126) (116,864) (33,883) (61,147) (47,933) 72,821

At year-end:

Total assets ¥2,788,607 ¥3,024,588 ¥2,827,806 ¥2,786,288 ¥2,725,816 ¥2,718,518 ¥2,896,405

Total net assets 99,538 97,849 103,273 105,261 111,348 117,486 122,712

Yen

Per share data:

Net income (loss) ¥ (65.90) ¥ 14.78 ¥ 20.39 ¥ 25.12 ¥ 38.97 ¥ 43.72 ¥ 37.71

Net assets 568.30 558.74 589.74 601.13 636.17 678.38 715.38

Cash dividends — 4.00 5.00 5.00 10.00 11.00 14.00

Key ratios (%):

ROA (0.3)% 0.2% 0.4% 0.2% 0.5% 0.4% 0.4%

ROE (9.5) 2.6 3.6 4.2 6.3 6.7 5.4

Equity ratio 3.6 3.2 3.7 3.8 4.1 4.3 4.2

Supplementary data:

Number of JACCS cardholders (Thousands) 9,911 9,714 9,920 9,601 8,419 7,281 6,828

Number of shares outstanding at year-end 175,395,808 175,395,808 175,395,808 175,395,808 175,395,808 175,395,808 175,395,808

Number of employees 2,934 2,977 2,714 2,839 2,977 3,096 3,355

Financial Information

21 Seven-Year Financial Summary

22 Management’s Discussion and Analysis

26 Business Risks

28 Consolidated Balance Sheets

30 Consolidated Statements of Income

31 Consolidated Statements of Changes in Net Assets

33 Consolidated Statements of Cash Flows

34 Notes to the Consolidated Financial Statements

48 Independent Auditor’s Report


About Five Key Business Lines

The three core businesses operated by JACCS

that are introduced on pages 12–14 are classifi ed

according to the following fi ve business segments

for Japanese accounting and regulatory disclosure

purposes.

Credit Card

JACCS issues credit cards to customers who pass

a credit check conducted by JACCS. Customers who

become cardholders receive offers for shopping and

other services by presenting their card and signing at

member stores partnering with JACCS. These include

department stores, specialty stores, dining establishments,

hotels, leisure facilities, and more. JACCS pays member

stores for purchases in a single lump payment, and

collects the money from the cardholder using payment

methods set down in the contract. Aside from the proper

card issued by JACCS, there also exists partner cards,

called house cards.

Installment Sales Finance

When a consumer makes a purchase at a member

store partnering with JACCS, JACCS pays the purchase

amount for customers who pass the credit check

conducted by JACCS. In other words, consumers who

do not have credit cards can also make high-priced

purchases. Consumers have the option of making

several payments, or paying all at once. This is the

business area where JACCS is stronger than other

credit card companies.

Analysis of Operating Performance

Overview

In fi scal 2013, ended March 31, 2014, the second year of JACCS’ three-year medium-term business

plan—“ACT11”—the Group addressed the highest priority task set under the plan of turning around and

expanding operating revenue (top line). Specifi cally, the Group implemented measures to stimulate growth

in its three core businesses—the credit business, credit card business, and fi nancing business—while

reinforcing initiatives aimed at developing its overseas operations and new businesses. As a result, the

Company achieved a turnaround in its top line.

On a consolidated basis, the total volume of new contracts amounted to ¥2,784,532 million

(US$27,299 million), an increase of ¥304,062 million (US$2,981 million), or 12.3%, compared with the

previous fi scal year. Total operating revenue grew ¥1,184 million (US$11 million), or 1.1%, to ¥104,134

million (US$1,020 million).

Results by Business

Credit Card

In credit card operations, the volume of new contracts grew steadily, underpinned by new membership

campaigns and an array of promotions JACCS ran to stimulate card usage. Expansion in the volume of

new contracts was also driven by growth in the Reader’s Card, KAMPO STYLE CLUB CARD, and REX

CARD—which have built a strong reputation and offer users enhanced point-earning ratios—as well

as co-branded cards issued in collaboration with major consumer electronics retail chains. In addition,

JACCS began providing various new services to enhance the convenience for customers and affi liate

stores. This included receiving credit card applications in-store using tablet computers for a co-

branded card with a major sporting goods retailer.

As a result, on a consolidated basis, in the credit card business, the volume of new contracts

increased 14.4% compared with the previous fiscal year, to ¥899,957 million (US$8,823 million),

and operating revenue increased ¥2,937 million (US$28 million), or 13.7%, to ¥24,418 million

(US$239 million).

Management’s Discussion and Analysis

Composition of Total Volume

of New Contracts (%)

Credit Card32.3%

Installment SalesFinance10.5%Credit Guarantee

24.7%

Financing2.8%

Other Operations29.7%


Credit Guarantee

Member stores such as automobile dealerships or

housing companies who partner with JACCS can have

JACCS run a credit check on those consumers when

they apply to make a purchase. Consumers who pass

the check get fi nancing from a partner fi nancial

institution, and JACCS handles debt guarantees, as well as

collection for installment payments. Most of our guarantee

operations are in auto loans and housing loans.

Financing

Cash advance services are available at cash dispensers

and ATMs for holders of JACCS credit cards or loan

cards. Credit checks are run on consumers who apply

for loans from JACCS, and persons who pass can borrow

money in the form of collateralized or uncollateralized

direct fi nancing and housing loans.

Other Operations

This area is dominated by our bill collection services, in

which JACCS acts as an agent for partner companies in

collecting payments, eliminating the need for the partner

company to allocate its own time, personnel, and money.

The bill collection business is an asset-less, fee-based

business which sees stable income once a contract is

signed.

Installment Sales Finance

In shopping credits, in addition to a recovery in purchases of big-ticket items, such major business

categories as motorcycles, jewelry, kimono, and consumer electronics performed strongly. In particular,

consumer electronics purchases remained robust from the start of the fi scal year and recorded

substantial year-on-year growth. In the focus area of Web-related services, JACCS added new

functionality to the “WeBBy” in-store credit application service, resulting in an increase in usage.

In auto loans, as well as focusing on foreign new vehicles, JACCS worked to strengthen its

partnerships with domestic-brand automobile dealerships and used-vehicle dealers through a range of

marketing programs. JACCS also promoted the adoption and usage of its “WeBBy Auto” service—a

Web-based paperless auto loan application system.

In both shopping credits and auto loans, from the third quarter of the fi scal year extra demand

moved into full swing in the run-up to the increase in Japan’s consumption tax rate in April 2014. This

helped to drive a large increase in the volume of new contracts.

As a result, on a consolidated basis, the installment sales fi nance business recorded a 38.5%

increase in the volume of new contracts, to ¥293,029 million (US$2,872 million). Operating revenue

increased ¥1,158 million (US$11 million), or 7.1%, to ¥17,475 million (US$171 million).

Credit Guarantee

Within personal loan guarantees for banks, new partnerships with regional banks, an expanded lineup

of products handled, and a strengthened alliance with BTMU contributed to a robust performance by

loans on deed, including personal auto loan guarantees.

In housing loan guarantees on condominiums for investment purposes, as competition intensifi ed

due to such factors as the market entry of new participants, JACCS achieved steady performance

underpinned by ongoing, effective sales activities. In housing-related products, JACCS maintained

robust results in such areas as loans for commercial solar power generation systems and housing

renovation loans. Auto loan guarantees achieved a similar performance to auto loans in the installment

sales fi nance business.

As a result, on a consolidated basis, the credit guarantee business recorded an 8.0% increase in

Total Volume of New Contracts

Otheroperations

Financing

Creditguarantee

Installmentsales finance

Credit card

2010

2,316 2,3282,387

2,480

2,784

2011 2012 2013 2014

3,000

2,500

2,000

1,500

1,000

500

0

(Billions of Yen)


the volume of new contracts, to ¥687,669 million (US$6,741 million). Operating revenue rose ¥628

million (US$6 million), or 1.6%, to ¥39,183 million (US$384 million).

Financing

The implementation of promotional campaigns to attract new customers and stimulate usage among

existing customers led to a bottoming out of the declining trend in the consolidated volume of new

contracts for cash advances.

As a result, on a consolidated basis, the fi nancing business posted a 4.8% decrease in the

volume of new contracts, to ¥79,010 million (US$774 million). Operating revenue fell ¥3,566 million

(US$34 million), or 19.4%, to ¥14,782 million (US$144 million).

Other Operations

Bill collection services achieved a robust volume of new contracts, driven by such areas as rent

collection and fi tness club membership fees. JACCS also revamped its bill collection system, enabling

it to offer services with a greater level of functionality. Consolidated subsidiaries in other operations

focused on expanding such businesses as non-life and life insurance agency services, leasing, and

servicer operations.

As a result, on a consolidated basis, other operations posted an 8.2% increase in the volume

of new contracts, to ¥824,866 million (US$8,086 million). Operating revenue* increased ¥28 million

(US$0.2 million), or 0.3%, to ¥8,274 million (US$81 million).

* Operating revenue presented for other operations is the sum of other operating revenue and fi nancial revenue.

Operating Expenses and Net Income

Total operating expenses declined ¥1,639 million (US$16 million), or 1.8%, compared with the

previous fi scal year, to ¥91,898 million (US$900 million).

Operating income increased ¥2,823 million (US$27 million), or 30.0%, compared with the

previous fi scal year, to ¥12,236 million (US$119 million), and ordinary income rose ¥488 million

(US$4 million), or 4.1%, to ¥12,238 million (US$119 million).

Accompanying the absorption-type merger with consolidated subsidiary JNS Collection Service Co.,

Ltd., on April 1, 2013, the Company reversed a portion of its deferred tax assets. As a result, there was

an increase in income taxes-deferred. Consequently, consolidated net income decreased ¥1,138 million

(US$11 million), or 14.9%, compared with the previous fi scal year, to ¥6,504 million (US$63 million).

Net income per share amounted to ¥37.71 (US$0.36), a decrease of 13.7% compared with the

previous fi scal year. The Company implemented cash dividends totaling ¥14.00 (US$0.13) per share

applicable to the fi scal year under review, an increase of 27.3% compared with the previous fi scal year.

Analysis of Financial Position

Fund Procurement

The Company’s basic fund procurement policy is to maintain and strengthen the relationships it has

Net Income

2010

3.5

4.3

6.8

7.6

6.5

2011 2012 2013 2014

8

6

4

2

0

(Billions of Yen)

Total Assets

2010

2,827 2,786 2,725

2011 2012 2013 2014

3,500

2,800

2,100

1,400

700

0

(Billions of Yen)

2,718

2,896


2010

127

116

107102 104

2011 2012 2013 2014

150

120

90

60

30

0

(Billions of Yen)


established to date with fi nancial institutions while diversifying fund procurement, and emphasizing

stability and cost considerations.

Since the Company undertakes direct financing in capital markets, it obtains credit ratings for

its bonds.

Financial Position

Total assets at March 31, 2014, amounted to ¥2,896,405 million (US$28,396 million), an increase

of ¥177,887 million (US$1,743 million), or 6.5%, compared with the previous fi scal year-end. Total

current assets increased ¥174,287 million (US$1,708 million), to ¥2,831,720 million (US$27,761

million). Although cash and deposits decreased, there were increases in accounts receivable-

installment and accounts receivable-installment sales-credit guarantee. Total noncurrent assets

increased ¥3,598 million (US$35 million) compared with the previous fi scal year-end, to ¥64,684

million (US$634 million), refl ecting increases in software.

Total current liabilities at March 31, 2014, amounted to ¥2,339,788 million (US$22,939 million),

an increase of ¥102,146 million (US$1,001 million) compared with the previous fi scal year-end,

refl ecting increases in accounts payable-credit guarantee and commercial papers. Total noncurrent

liabilities at fi scal year-end increased ¥70,513 million (US$691 million), to ¥433,903 million

(US$4,253 million), refl ecting increases in such items as bonds payable and long-term loans payable.

Total net assets increased ¥5,226 million (US$51 million), to ¥122,712 million (US$1,203

million), refl ecting an increase in retained earnings. The equity ratio fell 0.1 percentage point, to 4.2%.

Net assets per share amounted to ¥715.38 (US$7.01) at fi scal year-end, an increase of 5.4%

compared with the previous fi scal year-end.

Cash Flows

Net cash used in operating activities amounted to ¥89,429 million (US$876 million). Signifi cant items

included increase in notes and accounts payable-trade of ¥85,967 million (US$842 million), income

before income taxes and minority interests of ¥12,730 million (US$124 million), and increase in notes

and accounts receivable-trade of ¥191,937 million (US$1,881 million).

Net cash used in investing activities amounted to ¥8,355 million (US$81 million). Signifi cant

items included proceeds from sales of investment securities of ¥1,906 million (US$18 million) and

purchase of property, plant and equipment and intangible assets of ¥10,591 million (US$103 million).

Net cash provided by fi nancing activities amounted to ¥72,821 million (US$713 million).

Signifi cant items included proceeds from long-term loans payable of ¥113,415 million (US$1,111

million), net increase in commercial papers of ¥59,900 million (US$587 million), repayment of long-

term loans payable of ¥113,508 million (US$1,112 million), and redemption of bonds of ¥30,000

million (US$294 million).

As a result, cash and cash equivalents at end of period totaled ¥70,883 million (US$694 million),

a decrease of ¥24,836 million (US$243 million) compared with the previous fi scal year-end.

Total Net Assets

2010

103105

111

2011 2012 2013 2014

125

100

75

50

25

0

(Billions of Yen)

117122

Cash Flows

2010

-116.8

-33.8

-61.1

-4.5 -4.1

1.7

104.1

122.8

36.2

2011 2012 2013 2014

150

100

50

0

-50

-100

-150

(Billions of Yen)

CF from Operating Activities

CF from Investing Activities

CF from Financing Activities

-47.9

-89.4

-8.9 -8.3

15.1

72.8

Credit Rating

R&IR&I JCRJCR

Long termLong term A-A- A-A-

Short termShort term a-1a-1 J-1J-1


Business Risks

1. Credit risk

Risk of increase in allowance for doubtful accounts

The incidence of customer arrears is at a stable level, and at present the Company

does not see any factors likely to lead to a large increase in arrears cases. Hence, the

Company expects the quality of its receivables portfolio to remain high. Accompanying

growth in the total amount of receivables, although the Company anticipates that a

certain percentage of receivables will fall into arrears, cases of arrears due to customers

declaring bankruptcy or debt-workout—the main causes of write-offs of doubtful

accounts—are on a declining trend, and the impact of such cases on the Company’s

operating performance is likely to be minimal.

Claims for the repayment of excess interest are likely to have a minimal impact on

the Company’s operating performance since the Company complied with the interest

rate ceilings stipulated in the Interest Limitation Law.

Member store risk

There is the possibility that member stores may fall into bankruptcy owing to deterioration

in fi nancial soundness, and that such stores may cease the provision of services or the

delivery of goods to the Company’s customers. In such cases, the Company may suffer

damage, which may affect its operating performance.

Pursuant to a revision of the Installment Sales Law in 2008, if a specifi ed-contract

member store were to engage in inappropriate sales activity (excessive-volume sales,

misrepresentation, etc.), customers subject to such behavior would be able to withdraw

their declaration of intent regarding the application to enter into a contract with the

seller. If inappropriate sales activity were recognized to have occurred, affected

customers could claim refunds from the credit company. If there were an increase in

inappropriate sales activity by member stores, the Company may suffer damage, which

may affect its operating performance.

2. Market-related risk

Risk of increase in funding interest rates

As of March 31, 2014, the Group’s overall fund procurement (including straight

corporate bonds and commercial papers) fi xed interest-rate ratio (including swaps)

stood at 57.0%, and the fl oating interest-rate ratio stood at 43.0%. While funding

interest rates fl uctuate according to market trends, interest rates applied to loans

extended by the Company and transaction conditions between the Company and

member stores and customers in its credit card operations and installment sales

fi nance operations are determined comprehensively through a variety of factors,

including competitive conditions, and furthermore are contingent upon changes in

member rules and contracts. Consequently, since a time lag arises before any increase

in interest rates is refl ected in transaction conditions, a change in the fi nancial situation

leading to funding interest rate fl uctuations may affect the Group’s operating

performance. As of March 31, 2014, the Company has received the following credit

ratings from Japan Credit Rating Agency, Ltd. (JCR), and Rating and Investment

Information, Inc. (R&I): Long-term bonds both A-, commercial papers J-1 (JCR) and a-1

(R&I). The Company’s commercial paper issuing limit is set at ¥300 billion (US$3,191

million), and there are unlikely to be diffi culties in fund procurement in the near term.

However, if the Group’s operating performance were to deteriorate, its credit ratings and

creditworthiness would be downgraded and it would be forced to raise funds at higher

interest rates than normal. Consequently, the Company would face higher funding costs

from capital markets and fi nancial institutions, which may affect its operating performance.

Risk of decline in prices of investment securities

As of March 31, 2014, the Group holds investment securities amounting to ¥16,222

million (US$159 million) (market-listed and unlisted shares, etc.) and property, plant

and equipment amounting to ¥20,446 million (US$200 million) (land, buildings and

structures, etc.). There is the possibility that the Company may record valuation losses

on such holdings owing to declines in market prices or impairment of investment value.

3. Administrative risk

In the operation of its businesses, the Group conducts a wide variety and high volume

of administrative processing. The Group works to ensure that all administrative

processing is carried out correctly and in accordance with fundamental rules, and aims

to enhance the effi ciency of these operations, including through the implementation of

measures to improve the accuracy of processing, prevent fraud, and increase the level

of processing systemization. However, in the event that an accident or fraud were to

occur stemming from a failure to carry out correct administrative processing, depending

on the nature and scale of such an occurrence, it may affect the trust of the Group’s

customers or member store businesses. In such a case, the Company may face liability

for damages and a loss of public credibility, which may affect the Group’s operating

performance.

4. System risk

While the Company’s core information system comprises the security management

structures outlined below, in the event of a malfunction or stoppage in the core

information system, the Group’s operations may be halted, which may affect the

Company’s operating performance.

(1) The Company’s core computer system, called “JANET,” comprises three main

systems—processing, input/output (I/O), and operational monitoring. All three systems

are installed in an information center managed by a contracted operations company.

This information center has taken earthquake countermeasures and installed multiple

electric power supply lines as well as electrical generator equipment. Hence, even if

outside supply were disrupted, the center could remain operational for several days

using its own supply. The information center makes a backup of data necessary for

the resumption of operations, which is stored at a separate location more than 60

kilometers away. Furthermore, in case of a contingency affecting I/O center processing,

such critical operations as member store settlement operations can be performed at an

alternate processing center. In such a case, since operations would be carried out on a

temporary basis, customer services may be adversely affected.

(2) The Company uses the JANET system to manage most information relating to its

operations, including customer personal and credit information and member store

transaction conditions. JANET comprises a dedicated network, and although external

access paths are completely blocked, the Company implements a range of other

measures as part of its security management, as summarized below:

(i) JANET terminal functions are set up in such a way that each user is restricted to an

authorized set of functions necessary for business operations, depending on the

terminal’s location and the user’s position and job.

(ii) Each set of terminal operations is recorded in a log, which is monitored to ensure

that operations are valid.

(iii) Terminals are all controlled through a system of locks, and the terminal equipment

cannot be removed from its installed location.

(iv) Terminals do not include I/O ports for removable recording media, and the

equipment is confi gured so that individuals cannot introduce, input, output, or

record data.

(v) System access for system developers and operators must be authorized in advance

and requires the application for and approval of a user ID, which must be

surrendered again after use. Monitoring is carried out on a daily basis to ensure

that usage is appropriate.

(vi) Within the scope of “Management of the JANET Host System Development,

Maintenance and Operation,” the Company has acquired certifi cation under the

international standard relating to information security, ISO/IEC 27001:2005. Based

on this standard, the Company is able to effectively pursue measures relating to

information security.

5. Compliance risk

Within the Group, the Company conducts money lending, credit card, and installment

sales fi nance operations, and the Company’s consolidated subsidiaries conduct servicer

and other operations. Pursuant to laws and regulations, these businesses require

registration with or permits issued by the relevant authorities. From the fi scal year

ended March 31, 2014, the Company has commenced several new businesses in such

areas as advance-payment methods and the transfer of funds. The scale of these new


businesses is still small. To ensure strict compliance with laws and regulations, the

Group has established compliance systems as outlined below. However, in the event

that the Group engaged in activity that was in violation of laws or regulations, the Group

may be subject to punishment by relevant authorities pursuant to laws and regulations

(business improvement order, partial or full business suspension order, revocation of

registration, etc.), which may affect the Company’s operating performance.

Installment Sales Law and Special Transactions Law

The Company’s credit card and installment sales fi nance operations are subject to the

Installment Sales Law. For this reason, the Company is subject to a variety of regulations

(excessive credit prevention, member store investigation, disclosure of transaction

conditions, delivery of written documents, plea for suspension of payments, cooling off/

release/cancellation of credit contracts, damages relating to cancellation of contracts,

appropriate management of credit card numbers, etc.). The Company must also comply

with the voluntary rules of the Accredited Installment Sales Association, which are

based on the Installment Sales Law. This law’s objectives are to “strive for the sound

development of transactions relating to installment sales, etc., through the assurance

of fair transactions, prevention of infringements against purchasers, and establishment

of measures necessary for the appropriate management of credit card numbers, etc.,

as well as to protect the interests of purchasers, facilitate the smooth distribution of

goods and provision of services, and thereby contribute to the country’s economic

development.” The Company conducts its business operations so that these objectives

are properly realized.

Pursuant to the 2008 revision of the Installment Sales Law, the Company

implemented a major review of its business relationships with stores that are subject

to the Special Transactions Law to ensure that the Company executes appropriate

examination of such stores. The Company also reformed its organization and undertook

development of its processing system to ensure its ability to investigate and estimate

the potential amount customers are capable of paying. Although the impact on the

Company’s operating performance was not insignifi cant immediately following the law’s

revision, the abovementioned measures also led to a remarkable improvement in the

quality of receivables. At present, the Company is conducting business operations in

accordance with the Installment Sales Law without any particular problems.

Money Lender Business Law and Interest Limitation Law

The Company’s fi nancing business is subject to the Money Lender Business Law, the

Law on Regulation of Receipt of Capital Subscription, Deposits, and Interest Rates, etc.,

and the Interest Limitation Law. For this reason, the Company’s fi nancing business, to

which the Money Lender Business Law applies, is subject to a variety of regulations

(prohibition of excessive lending, disclosure of lending conditions and indicators,

delivery of written documents, keeping of account ledger, collection activity regulation,

return of claim deed, etc.). In the execution of its lending business, the Company

conducts its operations so as not to violate these regulations.

In the consumer credit industry, the impact of claims for the repayment of excess

interest, regulation limiting total credit extension to a borrower, and reduction of

maximum permitted interest rates has led to a large contraction in the market. However,

in the fi scal year ended March 31, 2014, the market appeared to make a turnaround

after bottoming out.

6. Information-related risk

The nature of the Group’s business involves the acquisition, retention, and use of

a large volume of personal information, particularly centered on personal credit

information (including credit card numbers and other stand-alone information). Although

the Group has rigorously handled such information since prior to the enactment of

the Personal Information Protection Law, in the event of a leak or loss of personal

information from the Group or its outside contractors, or the fraudulent use of such

information, the Group may face a loss of credibility and liability for damages, which

may affect the Company’s operating performance. In addition, if the Company were to

commit a legal violation as a business operator that handles personal information, it

may be subject to administrative measures, including recommendations and orders.

Led by the Compliance Control Department, the Group strives to ensure that

personal information is handled appropriately and to maintain sound security

management. The Company and three of its consolidated subsidiaries have acquired

Privacy Mark certifi cation—a system to assess measures to protect personal

information—from the Japan Information Processing Development Corporation

(JIPDEC), and are working to ensure its effectiveness.

7. Disaster risk

In preparation for unexpected situations, including earthquakes, large-scale disasters,

and accidents, the Group has established a safety-confi rmation system, prepared

a major-disaster response manual, formulated operational rules for its Emergency

Response Committee, and established a Business Continuity Plan (BCP). These and

other measures are focused on building the Group’s crisis management system.

However, in the event of a crisis whose scale exceeds the Group’s assumptions, leading

to decisive damage to the Group’s physical and human assets, there is the possibility

that this may result in the suspension of operations or make the continuation of

operations problematic.

8. Tangible asset risk

There is the possibility that tangible assets owned by the Group may sustain damage

owing to natural disasters, such as earthquakes and typhoons, or man-made disasters,

such as acts of terrorism. The Group regularly ascertains the status of the movable

property and real estate assets that it manages, and implements disaster prevention

and crime prevention measures.

9. Personnel risk

Since the Group undertakes business operations involving a wide array of fi elds, it has

an ongoing program for recruiting high-quality personnel, and it is essential for the

Group to develop and train the people it has employed. However, if the Group were

unable to recruit or retain high-quality personnel, or it became unable to adequately

train its employees, this may affect the Group’s operating performance.

10. Reputation risk

The Group’s reputation is extremely important to the maintenance of its relationships

with customers, investors, regulatory agencies, and society in general. The Group’s

reputation may be damaged by any of a diverse range of factors, including compliance

violations, employee fraud, computer system failures, or the behavior of third parties

that is diffi cult or impossible to control. If the Group were unable to avoid such factors

or respond adequately to such factors, it may lose current or future customers or

investors, and this may affect the Group’s operating performance.

11. Related-company risk

The Group comprises the Company and its affi liates (fi ve consolidated subsidiaries and

one equity-method affi liate). The Group’s consolidated-to-nonconsolidated ratio stands

at 0.99 on a total assets basis, and 1.01 on an operating revenue basis (as of March

31, 2014). Hence, within the Group’s businesses, the proportion accounted for by the

Company is extremely high. Consequently, even in the event that a business risk relating

to a subsidiary materialized, it would not immediately have a signifi cant effect on the

Group as a whole. However, in the event of the occurrence of an adverse situation, this

may affect the Group’s operating performance.

The business risks outlined above are based on information available to the Group as

of the fi ling date of the Company’s fi nancial results for the fi scal year ended March 31,

2014, and include information regarding major potential business risks envisaged by

the Group. However, this summary of risks does not cover all possible risks, and there

is the possibility that new risks may occur owing to a variety of contingent factors,

including changes in the future economic situation or the industry’s operating

environment.


Consolidated Balance SheetsJACCS CO., LTD. and Consolidated Subsidiaries

As of March 31Millions of Yen

Thousands ofU.S. Dollars

2014 2013 2014

ASSETS

Current assets:

Cash and deposits ¥ 70,883 ¥ 95,968 $ 694,931

Accounts receivable-installment 943,782 832,684 9,252,764

Accounts receivable-installment sales-credit guarantee 1,762,417 1,685,888 17,278,598

Lease investment assets 14,145 9,134 138,676

Prepaid expenses 1,461 1,346 14,323

Deferred tax assets 2,499 2,705 24,500

Advances paid 32,175 28,570 315,441

Accounts receivable-other 16,434 15,752 161,117

Other 1,391 1,115 13,637

Allowance for doubtful accounts (13,472) (15,733) (132,078)

Total current assets 2,831,720 2,657,432 27,761,960

Noncurrent assets:

Property, plant and equipment:

Buildings and structures 8,310 8,166 81,470

Accumulated depreciation (4,714) (4,521) (46,215)

Buildings and structures, net 3,596 3,644 35,254

Land 14,988 14,988 146,941

Other 4,012 2,824 39,333

Accumulated depreciation (2,150) (1,731) (21,078)

Other, net 1,861 1,093 18,245

Total property, plant and equipment 20,446 19,727 200,450

Intangible assets:

Software 19,612 13,890 192,274

Other 35 35 343

Total intangible assets 19,648 13,925 192,627

Investments and other assets:

Investment securities 16,222 16,194 159,039

Bad debts 2,840 3,445 27,843

Long-term prepaid expenses 364 284 3,568

Deferred tax assets 13 2,957 127

Guarantee deposits 1,883 2,055 18,460

Prepaid pension cost — 4,273 —

Net defi ned benefi t asset 4,165 — 40,833

Other 1,199 619 11,754

Allowance for doubtful accounts (2,098) (2,397) (20,568)

Total investments and other assets 24,589 27,433 241,068

Total noncurrent assets 64,684 61,086 634,156

Total assets ¥ 2,896,405 ¥ 2,718,518 $ 28,396,127

The accompanying notes are an integral part of these statements. Previous year’s fi gures are presented solely for the convenience of readers.


As of March 31Millions of Yen


2014 2013 2014

LIABILITIES

Current liabilities:

Notes and accounts payable-trade ¥ 39,877 ¥ 30,496 $ 390,950

Accounts payable-credit guarantee 1,762,417 1,685,888 17,278,598

Short-term loans payable 150,679 149,829 1,477,245

Current portion of bonds payable — 30,000 —

Current portion of long-term loans payable 86,341 110,208 846,480

Commercial papers 148,700 88,800 1,457,843

Accounts payable-other 2,454 2,565 24,058

Accrued expenses 1,062 1,171 10,411

Income taxes payable 265 2,910 2,598

Deposits received 44,933 42,740 440,519

Unearned revenue 287 369 2,813

Provision for bonuses 2,665 2,661 26,127

Provision for point card certifi cates 2,534 2,137 24,843

Deferred installment income 93,002 84,487 911,784

Other 4,564 3,375 44,745

Total current liabilities 2,339,788 2,237,641 22,939,098

Noncurrent liabilities:

Bonds payable 47,300 2,300 463,725

Long-term loans payable 380,592 356,819 3,731,294

Provision for retirement benefi ts — 24 —

Provision for directors’ retirement benefi ts 29 75 284

Provision for loss on interest repayment 1,319 1,418 12,931

Deferred tax liabilities 1,838 — 18,019

Long-term guarantee deposited 2,681 2,496 26,284

Other 142 255 1,392

Total noncurrent liabilities 433,903 363,390 4,253,950

Total liabilities 2,773,692 2,601,031 27,193,058

NET ASSETS

Shareholders’ equity:

Capital stock 16,138 16,138 158,215

Capital surplus 30,482 30,468 298,843

Retained earnings 74,359 69,830 729,009

Treasury stock (1,768) (997) (17,333)

Total shareholders’ equity 119,211 115,439 1,168,735

Accumulated other comprehensive income:

Valuation difference on available-for-sale securities 3,190 2,416 31,274

Deferred gains or losses on hedges (31) (38) (303)

Foreign currency translation adjustment (8) (385) (78)

Remeasurements of defi ned benefi t plans 276 — 2,705

Total accumulated other comprehensive income 3,426 1,993 33,588

Subscription rights to shares 74 36 725

Minority interests — 17 —

Total net assets 122,712 117,486 1,203,058

Total liabilities and net assets ¥ 2,896,405 ¥ 2,718,518 $ 28,396,127


Consolidated Statements of IncomeJACCS CO., LTD. and Consolidated Subsidiaries



2014 2013 2014

Operating revenue:

Revenue from credit card business ¥ 24,418 ¥ 21,481 $ 239,392

Revenue from installment sales fi nance business 17,475 16,317 171,323

Revenue from credit guarantee 39,183 38,555 384,147

Financing revenue 14,782 18,348 144,921

Other operating revenue 7,841 7,754 76,872

Financial revenue

Interest income 112 193 1,098

Dividends income 320 298 3,137

Other fi nancial revenue 0 0 0

Total fi nancial revenue 433 492 4,245

Total operating revenue 104,134 102,950 1,020,921

Operating expenses:

Selling, general and administrative expenses 83,045 83,833 814,166

Financial expenses:

Interest on loans 7,499 8,215 73,519

Interest on commercial papers 176 153 1,725

Other fi nancial expenses 1,176 1,334 11,529

Total fi nancial expenses 8,852 9,704 86,784

Total operating expenses 91,898 93,537 900,960

Operating income 12,236 9,413 119,960

Non-operating income:

Amortization of negative goodwill — 2,403 —

Equity in earnings of affi liates 108 — 1,058

Miscellaneous income 79 83 774

Total non-operating income 187 2,486 1,833

Non-operating expenses

Provision for loss on interest repayment 162 65 1,588

Loss on derivative settlement — 55 —

Miscellaneous loss 23 27 225

Total non-operating expenses 185 149 1,813

Ordinary income 12,238 11,750 119,980

Extraordinary income:

Gain on sales of investment securities 560 92 5,490

Total extraordinary income 560 92 5,490

Extraordinary loss:

Loss on retirement of noncurrent assets 53 27 519

Loss on sales of investment securities — 8 —

Loss on valuation of investment securities 14 3 137

Impairment loss — 39 —

Total extraordinary losses 68 79 666

Income before income taxes and minority interests 12,730 11,764 124,803

Income taxes-current 1,785 4,569 17,500

Income taxes-deferred 4,439 (448) 43,519

Total income taxes 6,225 4,121 61,029

Income before minority interests 6,505 7,643 63,774

Minority interests in income 0 0 0

Net income ¥ 6,504 ¥ 7,642 $ 63,764



Consolidated Statements of Changes in Net AssetsJACCS CO., LTD. and Consolidated Subsidiaries

Millions of Yen

Shareholders’ equity

Year ended March 31, 2014 Capital stock Capital surplus Retained earnings Treasury stock Total shareholders’ equity

Balance at beginning of year ¥ 16,138 ¥ 30,468 ¥ 69,830 ¥ (997) ¥ 115,439

Changes during the consolidated fi scal year

Dividends from surplus — — (2,078) — (2,078)

Net income — — 6,504 — 6,504

Purchase of treasury stock — — — (916) (916)

Disposal of treasury stock — 13 — 146 159

Changes in the scope of consolidation — — 103 — 103

Inserted directly into net assets-foreign currecy translation adjustment

— — — — —

Net changes of items other than shareholders’ equity

— — — — —

Total changes during the consolidated fi scal year

— 13 4,529 (770) 3,771

Balance as of March 31, 2014 ¥ 16,138 ¥ 30,482 ¥ 74,359 ¥ (1,768) ¥ 119,211

Millions of Yen



Balance at beginning of year ¥ 16,138 ¥ 30,468 ¥ 64,815 ¥ (184) ¥ 111,237



Net income — — 7,642 — 7,642

Purchase of treasury stock — — — (831) (831)

Disposal of treasury stock — — (2) 17 15

Changes in the scope of consolidation — — — — —


— — — — —


— — — — —


— — 5,015 (813) 4,201

Balance as of March 31, 2013 ¥ 16,138 ¥ 30,468 ¥ 69,830 ¥ (997) ¥ 115,439

Millions of Yen

Accumulated other comprehensive income


Valuation differ-ence on available-for-sale securities

Deferred gains or losses on

hedges

Foreign cur-rency translation

adjustment

Remeasure-ments of

defi ned benefi t plans

Total accumulated other comprehensive income

Subscription rights toshares

Minorityinterests

Total netassets

Balance at beginning of year ¥ 2,416 ¥ (38) ¥ (385) ¥ — ¥ 1,993 ¥ 36 ¥ 17 ¥ 117,486


Dividends from surplus — — — — — — — (2,078)

Net income — — — — — — — 6,504

Purchase of treasury stock — — — — — — — (916)

Disposal of treasury stock — — — — — — — 159

Changes in the scope of consolidation — — — — — — — 103


— — 377 — 377 — — 377


773 6 — 276 1,056 37 (17) 1,076


773 6 377 276 1,433 37 (17) 5,226

Balance as of March 31, 2014 ¥ 3,190 ¥ (31) ¥ (8) ¥ 276 ¥ 3,426 ¥ 74 ¥ — ¥ 122,712



Millions of Yen





hedges


adjustment

Remeasure-ments of




Minorityinterests

Total netassets

Balance at beginning of year ¥ 725 ¥ (19) ¥ (612) ¥ — ¥ 93 ¥ — ¥ 16 ¥ 111,348



Net income — — — — — — — 7,642

Purchase of treasury stock — — — — — — — (831)

Disposal of treasury stock — — — — — — — 15

Changes in the scope of consolidation — — — — — — — —


— — 227 — 227 — — 227


1,691 (18) — — 1,672 36 0 1,709


1,691 (18) 227 — 1,899 36 0 6,138

Balance as of March 31, 2013 ¥2,416 ¥ (38) ¥ (385) ¥ — ¥ 1,993 ¥ 36 ¥ 17 ¥ 117,486

Thousands of U.S. Dollars



Balance at beginning of year $ 158,215 $ 298,705 $ 684,607 $ (9,774) $ 1,131,754



Net income — — 63,764 — 63,764

Purchase of treasury stock — — — (8,980) (8,980)

Disposal of treasury stock — 127 — 1,431 1,558

Changes in the scope of consolidation — — 1,009 — 1,009


— — — — —


— — — — —


— 127 44,401 (7,549) 36,970

Balance as of March 31, 2014 $ 158,215 $ 298,843 $ 729,009 $ (17,333) $ 1,168,735






hedges


adjustment

Remeasure-ments of




Minorityinterests

Total netassets

Balance at beginning of year $ 23,686 $ (372) $ (3,774) $ — $ 19,539 $ 352 $ 166 $ 1,151,823



Net income — — — — — — — 63,764

Purchase of treasury stock — — — — — — — (8,980)

Disposal of treasury stock — — — — — — — 1,558

Changes in the scope of consolidation — — — — — — — 1,009


— — 3,696 — 3,696 — — 3,696


7,578 58 — 2,705 10,352 362 (166) 10,549


7,578 58 3,696 2,705 14,049 362 (166) 51,235

Balance as of March 31, 2014 $ 31,274 $ (303) $ (78) $ 2,705 $ 33,588 $ 725 $ — $ 1,203,058


Consolidated Statements of Cash FlowsJACCS CO., LTD. and Consolidated Subsidiaries



2014 2013 2014

Cash fl ows from operating activities:

Income before income taxes and minority interests ¥12,730 ¥ 11,764 $124,803

Depreciation and amortization 4,406 3,279 43,196

Amortization of negative goodwill — (2,403) —

Increase (decrease) in allowance for doubtful accounts (2,563) (4,143) (25,127)

Increase (decrease) in provision for bonuses 10 167 98

Increase (decrease) in provision for point card certifi cates 397 292 3,892

Increase (decrease) in provision for retirement benefi ts 1 (1) 9

Increase (decrease) in provision for loss on interest repayment (99) (207) (970)

Interest and dividends income (433) (492) (4,245)

Interest expenses 8,076 8,917 79,176

Foreign exchange losses (gains) 10 4 98

Loss on retirement of property, plant and equipment and intangible assets 53 27 519

Loss (gain) on sales of investment securities (560) (83) (5,490)

Loss (gain) on valuation of investment securities 14 3 137

Equity in earnings (losses) of affi liates (108) — (1,058)

Impairment loss — 39 —

Decrease (increase) in notes and accounts receivable-trade (191,937) (13,510) (1,881,735)

Decrease (increase) in accounts receivable-other (680) (5,589) (6,666)

Decrease (increase) in prepaid pension costs 4,273 265 41,892

Decrease (increase) in net defi ned benefi t asset (3,739) — (36,656)

Increase (decrease) in notes and accounts payable-trade 85,967 30,121 842,813

Increase (decrease) in deferred installment income 8,504 3,649 83,372

Decrease (increase) in other assets (5,349) (3,366) (52,441)

Increase (decrease) in other liabilities 3,816 4 37,411

Subtotal (77,208) 28,736 (756,941)

Interest and dividends income received 442 511 4,333

Interest expenses paid (8,210) (9,040) (80,490)

Income taxes paid (4,452) (5,050) (43,647)

Net cash provided by (used in) operating activities (89,429) 15,157 (876,754)

Cash fl ows from investing activities:

Payments into time deposits — (520) —

Proceeds from redemption of time deposits 278 749 2,725

Purchase of property, plant and equipment and intangible assets (10,591) (7,062) (103,833)

Purchase of investment securities (18) (1,902) (176)

Proceeds from sales of investment securities 1,906 106 18,686

Payments for guarantee deposits (96) (410) (941)

Proceeds from collection of guarantee deposits 152 90 1,490

Payments of loans receivable (11) (17) (107)

Collection of loans receivable 25 32 245

Net decrease (increase) in short-term loans receivable — 0 —

Net cash provided by (used in) investing activities (8,355) (8,934) (81,911)

Cash fl ows from fi nancing activities:

Net increase (decrease) in short-term loans payable 850 (820) 8,333

Net increase (decrease) in commercial papers 59,900 3,700 587,254

Proceeds from long-term loans payable 113,415 96,323 1,111,911

Repayment of long-term loans payable (113,508) (129,194) (1,112,823)

Proceeds from issuance of bonds 45,000 — 441,176

Redemption of bonds (30,000) (14,500) (294,117)

Proceeds from sales of treasury stock 159 13 1,558

Purchase of treasury stock (916) (831) (8,980)

Cash dividends paid (2,078) (2,624) (20,372)

Net cash provided by (used in) fi nancing activities 72,821 (47,933) 713,931

Effect of exchange rate change on cash and cash equivalents 126 94 1,235

Net increase (decrease) in cash and cash equivalents (24,836) (41,616) (243,490)

Cash and cash equivalents at beginning of year 95,720 137,337 938,431

Cash and cash equivalents at end of year ¥70,883 ¥ 95,720 $694,931



Notes to the Consolidated Financial StatementsJACCS CO., LTD. and Consolidated Subsidiaries

Basis of Presenting the Consolidated Financial Statements

The accompanying consolidated fi nancial statements of JACCS CO., LTD. (the “Company”) and consolidated subsidiaries (together the “Group”) have been

prepared in accordance with accounting principles generally accepted in Japan (“Japanese GAAP”). The consolidated balance sheets, statements of income,

changes in net assets and related notes are translated into English from the consolidated statutory report required under Japanese Companies Act. The

consolidated statements of cash fl ows and related notes, which are not required under Japanese Companies Act, are prepared and presented in accordance

with the accounting principles and practices applicable to the consolidated statements of cash fl ows under the Financial Instruments Exchange Law of Japan.

The Company has included the consolidated statements of cash fl ows and related notes in the consolidated fi nancial statements solely for the convenience of

readers outside Japan.

Certain accounting principles and practices under Japanese GAAP are different in certain respects from International Financial Reporting Standards and

standards in other countries as to application and disclosure requirements. Accordingly, the accompanying consolidated fi nancial statements are intended for

use only by those who are informed about Japanese GAAP.

Translations of Japanese yen amounts into U.S. dollars are presented solely for convenience, using the prevailing approximate exchange rate at March 31,

2014, which was ¥102 to US$1. These translations should not be construed as a representation that Japanese yen amounts have been, could have been or

could in the future be converted into U.S. dollars at this or any other rate of exchange.

Comparative information is not required to be disclosed under Japanese Companies Act, but is disclosed for the convenience of readers.

1. Scope of Consolidation

(1) Number of consolidated subsidiaries: 5

JACCS Loan-Collection Service Co., Ltd.

JACCS Total Service Co., Ltd.

JACCS Lease Co., Ltd.

JACCS Payment Solutions Co., Ltd.

JACCS International Vietnam Finance Co., Ltd.

Notes:

1. On April 1, 2013, the name of JACCS Car Lease Co., Ltd., was changed to JACCS Lease Co., Ltd.

2. On April 1, 2013, JNS Collection Service Co., Ltd., was merged by the Company.

3. On July 1, 2013, JACCS Information System Service Co., Ltd., was merged by the Company.

4. On August 1, 2013, JACCS Business Support Co., Ltd., was merged by JACCS Total Service Co., Ltd.

5. On September 1, 2013, the Company sold all shares of SUPPORT CORPORATION.

(2) Name of non-consolidated subsidiary

JACCS INTERNATIONAL (Hong Kong) Co., Ltd.

(Reason for excluding from the scope of consolidation)

This non-consolidated subsidiary is small in size and its total assets, operating revenue, net income/loss for the Company’s equity interest and retained

earnings for the Company’s equity interest do not have a signifi cant impact on the consolidated fi nancial statements.

2. Application of the Equity Method

(1) Number of equity-method affiliates: 1

PT Sasana Artha Finance

(2) Name of non-consolidated subsidiary not accounted for by the equity method


(Reason for excluding from application of the equity method)

The equity method does not apply to the above subsidiary because its net income/loss and retained earnings for the Company’s equity interest do not have a

signifi cant impact on the consolidated fi nancial statements on an individual basis, nor on an aggregate basis.

(3) Matters of particular importance related to procedures for the application of the equity method

Owing to the difference in fi scal year-end date of PT Sasana Artha Finance from the consolidated fi scal year-end, the fi nancial statements of PT Sasana Artha

Finance with its individual balance sheet date is used in preparing the consolidated fi nancial statements.

3. Fiscal Years of Consolidated Subsidiaries

The fi scal year-end date of JACCS International Vietnam Finance Co., Ltd. is December 31. The fi nancial statements of JACCS International Vietnam Finance

Co., Ltd. as of and for the year ended December 31 is used in preparing the consolidated fi nancial statements of the Company. All material transactions that

occur during the period from January 1 to March 31 are adjusted for in the consolidation process.


4. Summary of Signifi cant Accounting Policies

(1) Basis and method of valuation of signifi cant assets

1. Securities

Available-for-sale securities with fair market value readily available are stated at fair value as of the balance sheet date. The related valuation differences are

directly included in net assets and the cost of available-for-sale securities sold is determined by the moving-average method. Available-for-sale securities

without fair market value readily available are stated at the moving-average cost.

2. Derivatives

Derivatives are stated at fair value.

(2) Depreciation of signifi cant depreciable assets

1. Property, plant and equipment (except for leased assets)

The declining-balance method is used, however, the straight-line method is used for buildings (excluding building fi xtures) acquired on or after April 1, 1998.

2. Intangible assets (except for leased assets)

Software for internal use is amortized over the estimated useful lives using the straight-line method (the maximum period being 5 years).

3. Leased assets

Leased assets related to fi nance leases without transferring ownership are depreciated over the lease period as useful life using the straight-line method with

no residual value.

(3) Accounting for signifi cant allowance and provisions

1. Allowance for doubtful accounts

Allowance for doubtful accounts is provided for possible losses on the collection of receivables. The amount of the allowance for general receivables is based

on the past write-off ratio. For certain receivables, such as the ones from debtors whose solvency is in doubt, the recoverability of each receivable is examined

individually and the estimated unrecoverable amounts are recognized as the allowance.

2. Provision for bonuses

For payment of bonuses to employees and executive offi cers having employee positions, provision for bonuses is provided for in the amount that is expected

to be paid.

3. Provision for point card certifi cates

For covering the cost of future card-point redemption when credit card members use their card-points given by the Company, the provision for point card

certifi cates is provided for in the amount that is expected to be used as of the balance sheet date.

4. Provision for directors’ retirement benefi ts

For payment of retirement benefi ts to directors and corporate auditors, provision for directors’ retirement benefi ts is provided for in the amount required to be

accrued at year-end in accordance with internal rules. Provided amounts on the consolidated balance sheets are solely for consolidated subsidiaries.

5. Provision for loss on interest repayment

Provision for loss on interest repayment is provided in order to prepare for requests for the repayment of interest on loans exceeding the Interest Rate Restriction

Act in the future, in the amount deemed necessary based on an estimate of the future repayment amount in consideration of the actual past results.

(4) Accounting method for employee retirement benefi ts

1. Method of period attribution for estimated retirement benefi ts

To calculate the employee retirement benefi t obligations, the point criteria is applied in attributing the estimated retirement benefi ts up to the end of this

consolidated fi scal year.

2. Methods for amortizing actuarial differences and past service costs

Past service costs are amortized using the straight-line method over a certain number of years (5 years) within the average remaining service period of the

employees as of the time such costs are incurred. With respect to actuarial differences for each consolidated fi scal year, the amount divided proportionally using

the straight-line method over a certain number of years (5 years) within the average remaining service period of employees as of the arising of such differences is

amortized from the immediately following consolidated fi scal year.

(5) Recognition of operating revenues

a. Revenue from individual customers

Revenue from individual customers is recognized at the time of payment due date by the following method:

• Revenue from credit card business: remaining debt balance method

• Revenue from installment sales fi nance business: remaining debt balance method

• Revenue from credit guarantee: remaining debt balance method(partially at time of concluding the guarantee contract)

• Financing revenue: remaining debt balance method


b. Commission from member stores

Commission from member stores is recognized at the time of computing volume of new contracts.

(6) Translation of signifi cant assets and liabilities denominated in foreign currencies into yen

Monetary assets and liabilities denominated in foreign currencies have been translated into yen at the exchange rates in effect at the fi scal year-end. The

resulting exchange gain or loss is charged or credited to income. Assets and liabilities of the overseas subsidiary have been translated into yen at the

exchange rates in effect as of the settlement date of them, and revenues and expenses of the overseas subsidiary have been translated into yen at the

average rates prevailing during the period. The resulting translation differences are included in “foreign currency translation adjustment” in net assets.

(7) Accounting for signifi cant hedging activities

a. Accounting for hedging activities

When derivative fi nancial instruments are used as hedges and meet certain hedging criteria, gains or losses resulting from changes in the fair values of the

derivative fi nancial instruments are deferred until the corresponding losses or gains on the hedged items are recognized.

Interest rate swaps which qualify for exceptional treatments are accounted for according to the exceptional treatments.

b. Hedging instruments and hedged items

Hedging instruments...........Derivatives transactions (interest rate swap)

Hedged items......................Loans payable

c. Hedging policy

Derivatives transactions are utilized to reduce risks arising from interest rate and foreign exchange fl uctuations in the future.

d. Assessment of the effi cacy of hedging activities

The aggregate of changes in cash fl ows from the hedging instruments and the hedged items is compared to every quarterly account, and evaluation of the

effectiveness of hedging activities is made. With regard to interest rate swaps accounted for according to the exceptional treatments, assessment of the

effectiveness is omitted.

(8) Amortization of negative goodwill

Negative goodwill is amortized equally over fi ve years.

(9) Other signifi cant basis of presenting the consolidated fi nancial statements

Accounting for consumption taxes

Consumption taxes are excluded from each transaction amount. Consumption taxes paid at acquisition of noncurrent assets, which are not deducted on the

consumption taxes calculation, are recorded as “Other” in investments and other assets and amortized equally over fi ve years.

Changes in Accounting Policies

Effective from the year ended March 31, 2014, the Company and its consolidated domestic subsidiaries have applied the Accounting Standard for Retirement

Benefits (ASBJ Statement No. 26, May 17, 2012 (hereinafter, the “Accounting Standard”)) and the Guidance on Accounting Standard for Retirement Benefits

(ASBJ Guidance No. 25, May 17, 2012 (hereinafter, the “Guidance”)) except for the article 35 of the Accounting Standard and the article 67 of the Guidance and

actuarial gains and losses and past service costs that are yet to be recognized have been recognized and the difference between retirement benefit obligations

and plan assets has been recognized as a net defined benefit asset.

In accordance with article 37 of the Accounting Standard, the effect of the change in accounting policies arising from initial application has been recognized

in remeasurements of defined benefit plans in accumulated other comprehensive income.

As a result of the application, a net defined benefit asset in the amount of ¥426 million (US$4,176 thousand) has been recognized, deferred tax liabilities

has increased by ¥151 million (US$1,480 thousand) and accumulated other comprehensive income has increased by ¥274 million (US$2,686 thousand)

at this year end. However, remeasurements of defined benefit plans for an equity method company abroad are not included in the amount affected by this

accounting policy change.

In addition, net assets per share has increased by ¥1.60 (US$0.01).


Change in Method of Presentation

Prior to April 1, 2013, “Purchase of investments in subsidiaries resulting in change in scope of consolidation” was disclosed separately in cash flows from

investing activities of the consolidated statement of cash flows. Since during this fiscal year ended March 31, 2014, the items of this account have been

reviewed with the objective of increasing clarity, such amount is now included in “Purchase of investment securities” within cash flows from investing

activities of the consolidated statement of cash flows. The amount included in “Purchase of investment securities” for the year ended March 31, 2013, was

¥4 million (US$39 thousand).

Notes to the Consolidated Balance Sheets

Notes: Comparative information is not required to be disclosed under Japanese Companies Act, but is disclosed for the convenience of readers.

1. Pledged Assets


2014 2013 2014

Assets pledged as collateral:

Accounts receivable-installment ¥ 284,259 ¥ 320,401 $ 2,786,852

Debt secured by the above collateral:

Short-term loans payable ¥ 59,925 ¥ 78,075 $ 587,500

Current portion of long-term loans payable 34,324 70,263 336,509

Long-term loans payable 190,772 172,501 1,870,313

Total ¥ 285,021 ¥ 320,839 $ 2,794,323

2. Guarantee obligations

The Company has a guarantee obligation in relation to the borrowings from fi nancial institutions of a company outside the scope of consolidation.

PT Sasana Artha Finance ¥1,958 million (US$19,196 thousand)

(220,000 million Indonesian rupiahs)

Foreign currency-denominated guarantee obligations are translated into yen at the exchange rate prevailing on the account closing date.

Note: Comparative information is not required to be disclosed under Japanese Companies Act, but is disclosed for the convenience of readers.

3. Deferred Installment Income


2014 2013 2014

Credit card business ¥ 834 ¥ 783 $ 8,176

Installment sales fi nance 29,907 22,623 293,205

Credit guarantee 62,228 61,032 610,078

Financing 32 47 313

Other 0 0 0

Total ¥ 93,002 ¥ 84,487 $ 911,784


Notes to the Consolidated Statements of Changes in Net Assets

1. Type and Number of Shares Issued as of March 31, 2014 and 2013

2014 2013

Common stock: 175,395,808 shares 175,395,808 shares

2. Matters Concerning Dividends

2014

(1) Cash dividends paid

(2) Of the dividends whose record date belongs to the current fi scal year, the dividend whose effective date falls in the following fi scal year is as follows:

Resolution Type of shares Total amount of dividend Dividend per share Record date Effective date

June 27, 2013 Ordinary General

Meeting of Shareholders Common stock

¥1,050 million

(US$10,294 thousand)

¥6.00

(US$0.058) March 31, 2013 June 28, 2013

November 5, 2013

Board of Directors’ Meeting Common stock

¥1,049 million


6.00

(US$0.058) September 30, 2013 December 5, 2013

Resolution Type of shares Dividend source Total amount of dividend Dividend per share Record date Effective date


Meeting of Shareholders Common stock Retained earnings

¥1,383 million


¥8.00

(US$0.078) March 31, 2014 June 27, 2014

Note: The total dividend amount planned for a resolution at the Ordinary General Meeting of Shareholders held on June 26, 2014, includes ¥12 million (US$117 thousand) for The

Master Trust Bank of Japan, Ltd. (Employee Shareholding ESOP Trust Account 75579).

Notes: The total dividend amount approved by a resolution of the Ordinary General Meeting of Shareholders held on June 27, 2013, includes ¥11 million (US$107 thousand) for The

Master Trust Bank of Japan, Ltd. (Employee Shareholding ESOP Trust Account 75579).

The total dividend amount approved by a resolution of the Board of Directors on November 5, 2013, includes ¥10 million (US$98 thousand) for The Master Trust Bank of

Japan, Ltd. (Employee Shareholding ESOP Trust Account 75579).

2013

(1) Cash dividends paid

Resolution Type of shares Total amount of dividend Dividend per share Record date Effective date


Meeting of ShareholdersCommon stock ¥1,750 million ¥10.00 March 31, 2012 June 29, 2012

November 5, 2012

Board of Directors’ MeetingCommon stock ¥874 million ¥5.00 September 30, 2012 December 10, 2012

(2) Of the dividends whose record date belongs to the fi scal year ended March 31, 2013, the dividend whose effective date falls in the following fi scal year is as follows:

Resolution Type of shares Dividend source Total amount of dividend Dividend per share Record date Effective date


Meeting of ShareholdersCommon stock Retained earnings ¥1,050 million ¥6.00 March 31, 2013 June 28, 2013

Note: The total dividend amount approved by a resolution of the Ordinary General Meeting of Shareholders held on June 27, 2013, includes ¥11 million for The Master Trust Bank of

Japan, Ltd. (Employee Shareholding ESOP Trust Account 75579).

3. Subscription rights to shares as of March 31, 2014 and 2013

2014 2013

Common stock: 385,000 shares 289,000 shares




Reconciliation of cash and cash equivalents in the consolidated statements of cash fl ows and the consolidated balance sheets


2014 2013 2014

Cash and deposits ¥ 70,883 ¥ 95,968 $ 694,931

Less: Time deposits with deposit term of over 3 months — (247) —

Cash and cash equivalents ¥ 70,883 ¥ 95,720 $ 694,931

Notes to the Consolidated Statements of Cash Flows

Notes to Financial Instruments

1. Outline of Utilization of Financial Instruments

(1) Management policies

The Group operates consumer credit services including installment sales, credit card, credit guarantee and fi nancing. To do such business, the Group

borrows money from banks as indirect fi nance, and raises money by issuing bonds and commercial papers in consideration of market conditions and length

of fi nance. Thereby, the Group holds fi nancial assets and liabilities having interest rate fl uctuation risks. To avoid its unfavorable effect, the Company applies

asset liability management (ALM) using derivatives transactions as a measure. In addition, a consolidated subsidiary operates leasing business.

(2) Contents of fi nancial instruments and their risks

Financial assets held by the Group, which are mainly installment receivables on domestic installment sales fi nance and credit card business, are exposed to

the credit risks of the corresponding customers’ default of payments.

In terms of investment securities, which are mainly composed of equity stocks related to business or capital tie-ups and the like with business partners,

these assets are exposed to the credit risk of the issuer and the risk of market value fl uctuations.

Loans payable, bonds payable and commercial papers are exposed to liquidity risk. There exists the possibility that the Group may have diffi culty making

payment on a due date, such as the Company may not be able to raise funds in the markets under certain circumstances. Loans payable with variable

interest rates expose the Company to the risk of interest rate fl uctuation. To avoid such risks, a part of loans payable is hedged by interest swap transactions.

Deposits at banks in foreign currencies are exposed to fl uctuation of foreign exchanges.

Derivatives transactions include interest swap transactions which are carried as a measure of ALM. Interest fl uctuation risks on loans payable hedged

by such hedging instruments are accounted for by the hedge accounting method. The effectiveness of hedging is assessed by comparing and evaluating

accumulated cash fl ow change of hedged items and that of hedging instruments during the period from the start of hedging and assessment time. In

addition, the Company uses exceptional treatments permitted for interest rate swaps hedging long-term loans payable.

(3) Risk management system of fi nancial instruments

1. Control of credit risk

The Group establishes and operates credit control systems which practice credit assessment, establishment of credit limit, credit information control,

internal rating, setting of guarantee and mortgage and response to loans in trouble in conformity with the rules of credit control for each installment

loan. These credit controls are carried out by each credit investigation section and each area control division. In addition, conditions of credit control are

reviewed by the Credit Supervision & Operation Department, the Credit Administration Department and the Inspection Department.

2. Control of market risk

a. Control of interest risk

The Group controls interest fl uctuation risk by means of ALM. Regulations and internal rules of ALM specify risk control measures and procedures and

the results of control are confi rmed by the Board of Directors in conformity with ALM policies decided by the ALM Committee. The Finance Department

analyzes daily interest rate sensitivity based on estimated interest rates and makes a report every other month to the ALM Committee. Interest fl uctuation

risks are hedged by interest rate swaps as a part of ALM.

b. Control of foreign exchange risk

The Group utilizes partially forward contracts, as for each matter, to cope with foreign exchange fl uctuation risks, and there is not the handling now, but

may use part forward exchange contracts in future.

c. Control of market fl uctuation risk

As investment securities are mainly composed of equity shares issued by companies which have relations with the Company in transactions or in capital

coalition, market environment and fi nancial conditions of the issuing companies are monitored periodically. The Company carries out ongoing monitoring

of prices of investment securities. By considering the circumstances comprehensively and reporting these to senior management, the Company aims to

reduce the price fl uctuation risk of its equity securities holdings.


d. Derivatives transactions

Each section of execution of derivatives transactions, assessment of hedge effectiveness and operation control is separated to enhance internal checks.

Operations are carried out in conformity with regulations and internal rules.

e. Quantitative information relating to market risk

Financial instruments for trading purposes

The Company does not hold any fi nancial instruments for trading purposes.

Financial instruments for other than trading purposes

The fi nancial instruments most affected by the interest rate risk that is a main risk variable are mainly “short-term loans payable,” “long-term loans

payable,” “bonds payable” and “interest swap transactions.”

As for these fi nancial instruments, the Company calculates the amount of infl uence that gives profi t and loss of six months for the time being, using the

rational expected band of the interest rate of around six months after the term end. The Company uses the calculated amount of infl uence in a quantitative

analysis on managing the change risk of the interest rate. In calculations of the amount of infl uence concerned, the Company separates the fi nancial

instruments concerned into the fi xed interest rate group and the fl oating interest rate group. The Company then calculates the amount of infl uence that

gives profi t and loss using the interest rate band during each appropriate period depending on an interest rate date. The Company assumes the risk

variable except for the interest rate is constant. That is, the Company does not consider correlation between interest rate and other risk variables.

As of March 31, 2014, the Company calculates that if the index interest rate had been higher by 10 basis point (0.1%), fi nancial expenses would

increase ¥179 million (US$1,754 thousand).

However, infl uence exceeding the amount of calculation may occur if a fl uctuation occurs beyond the rational expected band of the interest rate.

3. Control of liquidity risk on fundraising

The Group controls timely fund operations of the total group by ALM and manages liquidity risk by diversifi cation of fundraising measures, acquisition of

commitment lines from multiple fi nancial institutions and adjustment of length of fundraising in consideration of the market environment.

(4) Supplementary explanation to fair values of fi nancial instruments

Fair values of fi nancial instruments are composed of market prices and rationally computed prices in case market prices are not available. As the

computation of prices is subject to certain presumptions, prices may change under different presumptions. Contractual values of derivatives transactions in “2.

Fair Values of Financial Instruments” do not represent the market risks on derivatives themselves.

2. Fair Values of Financial Instruments

The tables below show the amounts of fi nancial instruments recorded in the consolidated balance sheets and their fair values as of March 31, 2014 and 2013,

as well as their differences. Financial instruments of which fair values were hardly available are not represented herein (See Note 2).

March 31, 2014

Millions of Yen

Consolidated balance sheet amount

Fair value Differences

Cash and deposits ¥ 70,883 ¥ 70,883 ¥ —

Accounts receivable-installment: 943,782

Allowance for doubtful accounts (13,472)

Deferred installment income (30,541)

899,768 927,193 27,425

Investment securities:

Available-for-sale securities 13,925 13,925 —

Total assets ¥ 984,578 ¥1,012,003 ¥ 27,425

Short-term loans payable ¥ 150,679 ¥ 150,679 ¥ —

Commercial papers 148,700 148,700 —

Bonds payable*1 47,300 48,098 798

Long-term loans payable*2 466,934 470,206 3,271

Total liabilities ¥ 813,613 ¥ 817,683 ¥ 4,070

Derivatives transactions*3:

Hedge accounting applied ¥ (49) ¥ (49) ¥ —

Total derivatives transactions ¥ (49) ¥ (49) ¥ —

Other:

Loan guarantee contracts ¥ 209,229

*1 Current portion of long-term loans payable is included in long-term loans payable.

*2 Figures presented are net receivable or payable totals resulting from derivatives transactions. If the total is a payable amount, the fi gure is shown in ( ).


March 31, 2013

Millions of Yen



Cash and deposits ¥ 95,968 ¥ 95,968 ¥ —

Accounts receivable-installment: 832,684



793,632 824,485 30,853



Total assets ¥ 903,550 ¥ 934,403 ¥ 30,853

Short-term loans payable ¥ 149,829 ¥ 149,829 ¥ —

Commercial papers 88,800 88,800 —

Bonds payable*1 32,300 32,442 142

Long-term loans payable*2 467,028 472,299 5,271

Total liabilities ¥ 737,957 ¥ 743,371 ¥ 5,414


Hedge accounting applied ¥ (59) ¥ (59) ¥ —

Total derivatives transactions ¥ (59) ¥ (59) ¥ —

Other:

Loan guarantee contracts ¥ 209,455

*1 Current portion of bonds payable is included in bonds payable.



March 31, 2014




Cash and deposits $ 694,931 $ 694,931 $ —

Accounts receivable-installment: 9,252,764



8,821,254 9,090,127 268,872



Total assets $ 9,652,725 $ 9,921,598 $ 268,872

Short-term loans payable $ 1,477,245 $ 1,477,245 $ —

Commercial papers 1,457,843 1,457,843 —

Bonds payable*1 463,725 471,549 7,823

Long-term loans payable*2 4,577,784 4,609,862 32,068

Total liabilities $ 7,976,598 $ 8,016,500 $ 39,901


Hedge accounting applied $ (480) $ (480) $ —

Total derivatives transactions $ (480) $ (480) $ —

Other:

Loan guarantee contracts $ 2,051,264



Note 1: Measurement of fair value of fi nancial instruments and matters on securities and derivatives transactions

Assets:

(1) Cash and deposits

The book values are used as the fair values since all the deposits are short-term and the fair values approximate their book values.


(2) Accounts receivable-installment

Fair values of accounts receivable-installment are computed by discounting probable collection amounts of principals and interest by secure interest rates

corresponding to the remaining period.

(3) Investment securities

Fair market values readily available are used as the fair values of available-for-sale securities.

Liabilities:

(1) Short-term loans payable

These instruments are settled in a short time and fair value is closely equal to book value. The fair value is, therefore, stated at book value.

(2) Commercial papers

These instruments are settled in a short time and fair value is closely equal to book value. The fair value is, therefore, stated at book value.

(3) Bonds payable

Fair values of bonds payable are measured at market prices.

(4) Long-term loans payable

Book values of long-term loans payable with variable interest rate are deemed fair values as the prices refl ect market timely and credit conditions of the

Company have not changed signifi cantly after time of borrowing. Book values of long-term loans payable with fi xed interest are computed by discounting

probable payment amounts of principals and interest by expected interest rate of similar borrowing, by group of length of borrowing.

March 31, 2014 Millions of Yen

Accounting for hedging activities Type of derivatives transactions Hedged itemsContractual value

Fair valueTotal Over 1 year

PrincipleInterest rate swap

Payment fi xed/Receipt variableShort-term loans payable ¥ 4,000 ¥ 4,000 ¥ (49)*1

Total ¥ 4,000 ¥ 4,000 ¥ (49)

March 31, 2014 Thousands of U.S. Dollars




Payment fi xed/Receipt variableShort-term loans payable $ 39,215 $ 39,215 $ (480)*1

Total $ 39,215 $ 39,215 $ (480)





Payment fi xed/Receipt variableShort-term loans payable ¥ 5,000 ¥ 4,000 ¥ (59)*1

Exceptional treatment of

interest rate swap

Interest rate swap

Payment fi xed/Receipt variableLong-term loans payable 1,500 — —*2

Total ¥ 6,500 ¥ 4,000 ¥ (59)

Derivatives transactions:

Contractual values or principal equivalents under the contracts of derivatives transactions as of March 31, 2014 and 2013, accounted for by hedge accounting,

are shown below, by each accounting for hedging activity.

*1 Fair value is based on the price presented by the related fi nancial institutions.

*2 As fair value of interest rate swap accounted for by exceptional treatment is measured along with long-term loans payable (hedged item), the details are shown in the above “Liabilities (4).”


Other:

(Credit guarantee contracts)

Market values of credit guarantee contracts are measured by discounting collectible amounts of guarantee commissions, less uncollectible portion by

subrogation estimated by possibility of guarantee fulfi llment and mortgage value, at the secure interest rate corresponding to length of remaining periods.

Note 2: Financial instruments of which fair market values are hardly available are as follows.

Fair values of the above shares without market prices are not represented herein as calculation of their fair values are hardly available. For the year ended March 31, 2013,

impairment loss of the unlisted shares amounted to ¥3 million.


2014 2013 2014

Description Book value Book value Book value

Unlisted shares ¥ 2,296 ¥ 2,244 $ 22,509

Note 3: Maturity of monetary assets after the balance sheet date


Within one year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years Over 5 years

Cash and deposits ¥ 70,883 ¥ — ¥ — ¥ — ¥ — ¥ —

Accounts receivable-installment 327,937 153,006 109,746 73,889 47,409 231,791

Total ¥ 398,821 ¥ 153,006 ¥ 109,746 ¥ 73,889 ¥ 47,409 ¥ 231,791



Cash and deposits ¥ 95 968 ¥ — ¥ — ¥ — ¥ — ¥ —

Accounts receivable-installment 298,917 136,698 96,715 66,875 37,357 196,119

Total ¥ 394,886 ¥ 136,698 ¥ 96,715 ¥ 66,875 ¥ 37,357 ¥ 196,119

Note 4: Repayment schedule of bonds payable, long-term loans payable and other interest-bearing liabilities after the balance sheet date



Short-term loans payable ¥ 150,679 ¥ — ¥ — ¥ — ¥ — ¥ —Commercial papers 148,700 — — — — —Bonds payable — 2,300 — — 15,000 30,000

Long-term loans payable 86,341 106,700 143,426 63,715 36,850 29,900

Total ¥ 385,720 ¥ 109,000 ¥ 143,426 ¥ 63,715 ¥ 51,850 ¥ 59,900



Short-term loans payable ¥ 149,829 ¥ — ¥ — ¥ — ¥ — ¥ —Commercial papers 88,800 — — — — —Bonds payable 30,000 — 2,300 — — —Long-term loans payable 110,208 86,341 106,700 86,261 58,715 18,800

Total ¥ 378,837 ¥ 86,341 ¥ 109,000 ¥ 86,261 ¥ 58,715 ¥ 18,800



Cash and deposits $ 694,931 $ — $ — $ — $ — $ —Accounts receivable – installment 3,215,068 1,500,058 1,075,941 724,401 464,794 2,272,460

Total $ 3,910,009 $ 1,500,058 $ 1,075,941 $ 724,401 $ 464,794 $ 2,272,460


Other Notes

1. Income Taxes

(1) Signifi cant components of deferred tax assets and liabilities as of March 31, 2014 and 2013 are as follows:

(2) Modifi cations to the amount of deferred tax assets and liabilities due to changes of corporate taxation rates

Due to the promulgation of the “Act for Partial Amendment of the Income Tax Act, etc.” (Act No.10, 2014) on March 31, 2014, the Special Reconstruction Corporation

Tax will not be imposed from the fi scal year starting from April 1, 2014 or later. As a result, the effective statutory tax rate to be used in the calculation of deferred

tax assets and liabilities, in association with temporary differences that are expected to be settled in the fi scal year starting from April 1, 2014, has been revised to

35.5% from 37.9% of the prior fi scal year. The effect of these changes for this consolidated fi scal year is immaterial on the consolidated fi nancial statement.

(Per share information)Yen U.S. Dollars

2014 2013 2014

Net assets per share ¥ 715.38 ¥ 678.38 $ 7.01

Net income per share 37.71 43.72 0.36



2014 2013 2014

Deferred tax assets:

Operating loss carryforwards ¥ 625 ¥ 4,012 $ 6,127

Provision for bonuses 939 1,004 9,205

Provision for point card certifi cates 899 810 8,813

Allowance for doubtful accounts 31 26 303

Valuation difference on investments in subsidiaries — 4,555 —

Provision for loss on interest repayment 468 537 4,588

Investment securities 490 494 4,803

Depreciation 579 388 5,676

Other 782 1,273 7,666

Less amounts offset against deferred tax liabilities (1,083) (2,625) (10,617)

Subtotal 3,733 10,477 36,598

Valuation allowance (1,220) (4,814) (11,960)

Total deferred tax assets ¥ 2,512 ¥ 5,662 $ 24,627

Deferred tax liabilities:

Prepaid pension cost ¥ — ¥ (1,573) $ —

Net defi ned benefi t asset (1,478) — (14,490)

Valuation difference on available-for-sale securities (1,442) (1,051) (14,137)

Other (0) (1) (0)

Less amounts offset against deferred tax assets 1,083 2,625 10,617

Total deferred tax liabilities ¥ (1,838) ¥ — $ (18,019)

Net deferred tax assets ¥ 673 ¥ 5,662 $ 6,598




Short-term loans payable $ 1,477,245 $ — $ — $ — $ — $ —Commercial papers 1,457,843 — — — — —Bonds payable — 22,549 — — 147,058 294,117

Long-term loans payable 846,480 1,046,078 1,406,137 624,656 361,274 293,137

Total $ 3,781,568 $ 1,068,627 $ 1,406,137 $ 624,656 $ 508,333 $ 587,254

(Investment and rental properties)

Disclosure has been omitted since this is considered immaterial.



2. Retirement Benefi ts

2014

(1) Overview of the retirement benefi t plans adopted

To provide for employee retirement benefi ts, the Company and its consolidated subsidiaries operate a funded defi ned-benefi t plan and a defi ned contribution

plan. Under the defi ned benefi t corporate pension plan (fully funded plan), a lump sum or pension are paid in accordance with the employee’s salary and the

length of service.

(2) Defi ned benefi t plans

① Movement in retirement benefi t obligations, except plan applied simplifi ed method

Millions of Yen Thousand of U.S. Dollars

2014 2014

Balance at April 1, 2013 ¥19,264 $188,862

Service cost 1,047 10,264

Interest cost 192 1,882

Actuarial loss 85 833

Benefi ts paid (756) (7,411)

Balance at March 31, 2014 ¥19,834 $194,450

② Movement in plan assets, except plan applied simplifi ed method


2014 2014

Balance at April 1, 2013 ¥22,428 $219,882

Expected return on plan assets 448 4,392

Actuarial gain 810 7,941

Contributions paid by the employer 1,068 10,470

Benefi ts paid (756) (7,411)

Balance at March 31, 2014 ¥23,999 $235,284

③ Movement in liability for retirement benefi ts of plan applied simplifi ed method


2014 2014

Balance at April 1, 2013 ¥ 24 $ 235

Retirement benefi t costs 1 9

Benefi ts paid — —

Contributions paid by the employer — —

Other (25) (245)

Balance at March 31, 2014 ¥ — $ —

④ Reconciliation from retirement benefi t obligations and net defi ned benefi t liability (asset)


2014 2014

Funded retirement benefi t obligations ¥ 19,834 $ 194,450

Pension assets (23,999) (235,284)

(4,165) (40,833)

Unfunded retirement benefi t obligations — —

Net defi ned benefi t liability (asset) at March 31, 2014 (4,165) (40,833)

Liabilities for retirement benefi ts — —

Assets for retirement benefi ts (4,165) (40,833)

Net defi ned benefi t liability (asset) at March 31, 2014 ¥ (4,165) $ (40,833)


2. Long-term expected rate of return

Current and target asset allocations, historical and expected returns on various categories of plan assets have been considered in determining the long-term

expected rate of return.

⑦ Plan assets

1. Plan assets comprise:

2014

Bonds 43%

Equity securities 24%

General account 28%

Cash and deposits 2%

Other 3%

Total 100%

(3) Defi ned contribution plan

The required contribution amount for the Company and its consolidated subsidiaries to the defi ned contribution plan is ¥458 million (U.S.$4,490 thousand).

⑧ Actuarial assumptions

The principal actuarial assumptions at March 31, 2014 follow:

2014

Discount rate 1.0%

Long-term expected rate of return 2.0%

⑤ Retirement benefi t costs


2014 2014

Service cost ¥1,047 $10,264

Interest cost 192 1,882

Expected return on plan assets (448) (4,392)

Net actuarial loss amortization 810 7,941

Past service costs amortization — —

Retirement benefi t costs based on the simplifi ed method 1 9

Other 30 294

Total retirement benefi t costs for the fi scal year ended March 31, 2014 ¥1,633 $16,009

⑥ Remeasurements of defi ned benefi t plans


2014 2014

Past service costs that are yet to be recognized ¥ — $ —

Actuarial gains and losses that are yet to be recognized (426) (4,176)

Total balance at March 31, 2014 ¥(426) $(4,176)


2013

(1) Overview of the retirement benefi t plan adopted

The Company and its domestic consolidated subsidiaries have a defi ned benefi t corporate pension plan as its defi ned-benefi t plan. There are also cases when

an employee is given a severance pay premium on leaving the Company.

(2) Projected benefi t obligation

Note: Domestic consolidated subsidiaries apply the simplifi ed method for calculating projected benefi t obligation.

(3) Retirement benefi t expenses

Millions of Yen

2013

① Projected benefi t obligation ¥ (19,288)

② Pension assets 22.428

③ Unfunded projected benefi t obligation (①+②) 3.139

④ Unrecognized actuarial differences 1,109

⑤ Unrecognized prior service cost —⑥ Net amount (③+④+⑤) 4,249

⑦ Prepaid pension cost 4,273

⑧ Provision for retirement benefi ts (⑥-⑦) ¥ (24)

Millions of Yen

2013

① Service costs ¥ 892

② Interest cost on projected benefi t obligation 342

③ Expected return on plan assets 393

④ Amortization of actuarial differences 1,361

⑤ Additional retirement benefi ts paid 17

⑥ Contribution to defi ned contribution pension plan 451

⑦ Retirement benefi t expenses ¥ 2,672

(4) Assumptions in calculating projected benefi t obligation2013

① Period allocation method of estimated retirement payments Point basis

② Discount rate 1.0%

③ Expected rate of return on plan assets 2.0%

④ Amortization of prior service costs 5 years

⑤ Amortization of actuarial differences 5 years

⑥ Difference incurred on accounting change Charged to income at occurrence

Notes: Comparative information is not required to be disclosed under Japanese Companies Act, but is disclosed for the convenience of readers.Figures in these consolidated fi nancial statements are rounded down to the nearest million of yen.


Independent Auditor’s Report

To the Board of Directors of JACCS Co., Ltd.

We have audited the accompanying consolidated fi nancial statements of JACCS Co., Ltd. and its consolidated subsidiaries, which comprise the consolidated balance sheets

as at March 31, 2014 and the consolidated statements of income, statements of changes in net assets and statements of cash fl ows for the years then ended and the

related notes.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated fi nancial statements in accordance with accounting principles generally accepted

in Japan, and for such internal control as management determines is necessary to enable the preparation of consolidated fi nancial statements that are free from material

misstatements, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on the consolidated fi nancial statements based on our audit as independent auditor. 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 consolidated

fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated fi nancial statements. The procedures selected

depend on our judgement, including the assessment of the risks of material misstatement of the consolidated fi nancial statements, whether due to fraud or error. In making

those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the consolidated fi nancial statements in order to design audit

procedures that are appropriate in the circumstances, while the objective of the fi nancial statement audit is 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 accounting estimates made by

management, as well as evaluating the overall presentation of the consolidated fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated fi nancial statements present fairly, in all material respects, the fi nancial position of JACCS Co., Ltd. and its consolidated subsidiaries as at

March 31, 2014 and its fi nancial performance and cash fl ows for the years then ended in accordance with accounting principles generally accepted in Japan.

Emphasis of Matter

Without qualifying our opinion, we draw attention to the notes to the consolidated fi nancial statements, which describe the basis of accounting. The consolidated balance

sheets, consolidated statements of income, consolidated statements of changes in net assets and related notes have been translated into English from the consolidated

statutory reports required under Japanese Companies Act. The consolidated statements of cash fl ows and its related notes, which are not required under Japanese

Companies Act, are prepared and presented in accordance with accounting principles and practices applicable to the consolidated statements of cash fl ows under the

Financial Instruments Exchange Law of Japan.

Convenience Translation

The U.S. dollar amounts in the accompanying consolidated fi nancial statements with respect to the year ended March 31, 2014 are presented solely for convenience.

Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in notes to the

consolidated fi nancial statements.

Other Matter

Our fi rm and engagement partners have no interest in the Company which should be disclosed pursuant to the provisions of the Certifi ed Public Accountants Law of Japan.

June 26, 2014

Tokyo, Japan


(This page intentionally left blank)


Corporate Directory(As of July 1, 2014)

Name: JACCS CO., LTD.

URL: http://www.jaccs.co.jp/

Founded: June 29, 1954

Paid-in Capital:

¥16,138,182,260 (US$158 million)

Registered Head Offi ce:

2-5, Wakamatsu-cho, Hakodate,

Hokkaido 040-0063, Japan

Principal Executive Offi ce:

Ebisu Neonato Bldg.,

1-18, Ebisu 4-chome, Shibuya-ku,

Tokyo 150-8932, Japan

Phone: (03) 5448-1311

Facsimile: (03) 5448-9514

Area Head Offi ces:

Hokkaido Area:

Urbannet Sapporo Bldg., 5th Floor,

1-2, Kita 1-jo Nishi 6-chome,

Chuo-ku, Sapporo 060-8577

Phone: (011) 241-0811

Tohoku Area:

Sendai MT Bldg., 13th Floor,

2-3, Tsutsuji-ga-oka 4-chome,

Miyagino-ku, Sendai 983-8544

Phone: (022) 292-4475

Kita-kanto Area:

Sino Omiya North Wing Bldg.,

18th Floor,

10-16, Sakuragi-cho 1-chome,

Omiya-ku, Saitama 330-9696

Phone: (048) 644-1722

Shutoken Area:

Shin Meguro Tokyu Bldg.,

7th Floor,

25-2, Kami-Osaki 2-chome, Shinagawa-ku,

Tokyo 141-8659

Phone: (03) 5487-4611

Chubu Area:

Nagoya Hirokoji Bldg., 9th Floor,

3-1, Sakae 2-chome, Naka-ku,

Nagoya 460-0008

Phone: (052) 221-7985

Kinki Area:

Meiji Yasuda Seimei Osaka

Midousuji Bldg., 8th Floor,

1-1 Fushimi 4-chome, Chuo-ku,

Osaka 541-0044

Phone: (06) 6201-6350

Chugoku-Shikoku Area:

Asahi Seimei Hiroshima Ebisu-cho Bldg.,

9th Floor,

4-21, Ebisu-cho, Naka-ku,

Hiroshima 730-0021

Phone: (082) 241-9955

Kyushu Area:

Hakata Ekimae Sukuea Bldg., 9th Floor,

21-28, Hakata-Ekimae 1-chome,

Hakata-ku, Fukuoka 812-0011

Phone: (092) 433-1290

Business Volume:

(Year ended March 31, 2014)

¥2,784,532 million (US$27,299 million)

Number of Employees:

(Year ended March 31, 2014)

2,660 (Parent)

3,355 (Consolidated)

Network:

Branches & Sales Offi ces: 65

Associated Companies:

Domestic:

JACCS Total Service Co., Ltd.

JACCS Lease Co., Ltd.

JACCS Loan-Collection Service Co., Ltd.

JACCS Payment Solutions Co., Ltd.

Overseas:


JACCS International Vietnam Finance Co., Ltd.

PT Mitra Pinasthika Mustika Finance

A

B

C

DE

F

G

H

The JACCS Services Network

JACCS divides Japan into 8 sales areas, each overseen by a

branch offi ce. In all, there are 65 JACCS offi ces nationwide.

A Hokkaido Area

B Tohoku Area

C Kita-kanto Area

D Shutoken Area

E Chubu Area

F Kinki Area

G Chugoku-Shikoku Area

H Kyushu Area


Investor Information(As of March 31, 2014)

Number Of Shareholders:

6,983

Shares Outstanding:

175,395,808

Stock Listings:

Tokyo Stock Exchange (First Section)

Sapporo Stock Exchange

Transfer Agent:

Mitsubishi UFJ Trust and Banking Corporation

4-5, Marunouchi 1-chome, Chiyoda-ku,

Tokyo 100-8212, Japan

Principal Shareholders:

The Bank of Tokyo-Mitsubishi UFJ, Ltd. 20.00%

Japan Trustee Services Bank, Ltd. (Trust Accounts) 9.13

The Dai-ichi Mutual Life Insurance Company, Limited 3.87

Meiji Yasuda Life Insurance Company 3.63

The Master Trust Bank of Japan, Ltd. (Trust Accounts) 3.00

Shareholding Association of JACCS 2.52

JACCS Co., Ltd. Employee Stock Ownership Association 1.97

Nippon Life Insurance Company 1.67

Mitsubishi UFJ Trust and Banking Corporation 1.60

Mizuho Bank, Ltd. 1.50

Total 48.89%

Common Stock Price Range: (Tokyo Stock Exchange)

FY2011 FY2012 FY2013

High Low High Low High Low

First Quarter ¥245 ¥188 ¥310 ¥203 ¥707 ¥433

Second Quarter 274 216 313 227 609 425

Third Quarter 279 222 506 277 528 426

Fourth Quarter 306 227 627 392 533 404

Stock Held by Investor Type

Cash Dividends:

FY2011 FY2012 FY2013

Yearly ¥10.00 ¥11.00 ¥14.00

Interim — 5.00 6.00

1,000

800

600

400

200

0

Monthly Range of Stock Price (Left Scale) Nikkei 225 Stock Index (Right Scale)

(Yen)

18,000

16,000

14,000

12,000

10,000

8,000

(Yen)

FY2011 FY2012 FY2013

Financial Institutions

63.7%

Individuals and Others

16.6%

Overseas

Institutions

14.6%

Other Corporations

3.9%

Securities Companies

1.2%


Registered Head Office:

2-5, Wakamatsu-cho, Hakodate,

Hokkaido 040-0063, Japan

Principal Executive Office:

Ebisu Neonato Bldg., 1-18, Ebisu 4-chome,

Shibuya-ku, Tokyo 150-8932, Japan

Printed in Japan

60 years and beyond - クレジットカードのジャッ … lineup. in new businesses, jaccs...

Documents