supplementary document for results for the third quarter...

Supplementary Document forResults for the Third Quarter of the Fiscal Year Ending March 31, 2017 (FY2016)

January 30, 2017

NEC Capital Solutions Limited

CONTENTS1. Financial Results for the Third Quarter of FY2016

1) Highlights of Consolidated Financial Statements

2) Business Environment

3) Consolidated Financial Summary

4) Consolidated Revenues by Business Segment

5) Contracts Executed by Business Segment (Consolidated)

6) Leasing/Installment Sales Business (Consolidated)

7) Finance Business (Consolidated)

8) RISA Business (Operating Income)

9) Operating Asset Balances (Consolidated)

10) Procurement Funds (Consolidated)

11) Credit Costs (Consolidated)

2. Forecasts for March 2017 Term (FY2016)

1) Consolidated Earnings Forecasts

1. Financial Results for the Third Quarter of FY2016

5 © NEC Capital Solutions Limited 2017

【Business Environment】・Total value of leasing contracts declined Y/Y for the quarter・Conditions for procuring funds remained favorable ・Bankruptcy numbers stayed low, total liabilities in bankruptcy grew Y/Y

【Results in Key Business Units】

・In the Leasing/Installment Sales Business, Contracts Executed and New Transactions both decreased Y/Y・Finance Business increased Y/Y＜Leasing/Installment Sales Business＞ * Figures in parentheses are on a non-consolidated basis

Contracts executed： down 22.0% (down 22.9%) New transactions ： down 7.5% (down 8.2%)

＜Finance Business＞Contracts executed： up 16.5% (up 26.5%)New transactions ： up 15.5% (up 25.3%)

【Financial Results】・ Operating income and ordinary income improved due to the growth in gross profit

in the RISA business. ・ Despite gross profit growth, quarterly net income declined on effect of higher

sales/admin expenses, booking exchange rate losses, etc.・ Looking at 3Q on its own, lower profits were caused by the effect of exchange rate

movements


1） Highlights of Consolidated Financial Statements


(Billions of Yen)

(Source: Bankruptcy information on the website of Teikoku Data Bank; liabilities of companies that filed for bankruptcy)(Source: Lease statistics of the Japan Leasing Association)

▌Bankruptcies (total liabilities/number of bankruptcies)


Total Leasing Contracts:- Mainstay Information and Communication Equipment leasing declined by 4.2% Y/Y

- Total leasing contracts declined by 1.6% Y/YBankruptcies:- The number of bankruptcies remained at a low level in 3Q- Total liabilities in bankruptcy grew Y/Y due to a large-scale bankruptcy

2） Business Environment

-40

-30

-20

-10

0

10

20

30

40

50

60

13/1Q 13/2Q 13/3Q 13/4Q 14/1Q 14/2Q 14/3Q 14/4Q 15/1Q 15/2Q 15/3Q 15/4Q 16/1Q 16/2Q 16/3Q

▌Year-on-year change in total leasing contracts

Volume of leasing

contracts

Information and communication equipment

Construction machinery

0

2,000

4,000

0

100

200

300

400

500

600

700

800

900

1000

14/1Q 14/2Q 14/3Q 14/4Q 15/1Q 15/2Q 15/3Q 15/4Q 16/1Q 16/2Q 16/3Q

Total liabilities(Left axis)

（Right axis）

Number of bankruptcies

(Number)

※ By quarter ※ By quarter


(Billions of Yen)

▌Main Reasons for Y/Y Increase/Decrease in Ordinary Income▌Performance measures


Revenues: Fell by 4.4% Y/Y on lower income from RISA business as less real estate held for resale was sold than in 3Q last year

Ordinary Income: Grew by 1.7% Y/Y as gross profits increased in Other Revenues (e.g. solar power generation) and RISA Business

Equity Ratio: 9.6％（Dec. 2015）→ 9.5％（Dec. 2016）

3） Consolidated Financial Summary

FY20153Q

FY20163Q

5.1 5.2

0.50.3 0.2 0.1 0.2 0.3

0.7

Last FY’s impairments, etc.

Non-operating income decreased （Profit and loss on exchange-rate fluctuation,etc.）

Creditcosts

increasedLoans revenuedecreased

GP onRISA businessincreased

SG&A increased

GP on other businessincreased

(Billions of Yen)

FY2015 FY2016

3Q 3Q Y/Y Change

Revenues 153.6 146.9 -4.4%

Operating Income 4.8 5.1 6.5%

Ordinary Income 5.1 5.2 1.7%

Profit attributable to owners of parent 3.5 2.6 -23.7%

Net Income per Share (Yen) 161.06 122.95 －

Operating Asset Balance 720.2 747.5 3.8%

Net Assets 102.3 106.8 4.4%

Shareholders' Equity 76.5 77.9 1.8%

Equity Ratio (%) 9.6 9.5 -0.3

Interim Dividend per Share (Yen) 22 22 －


▌Revenues by Business Segment


4） Consolidated Revenues by Business Segment

<< Leasing/Installment Sales Business >>

・Revenues increased by 1.9% Y/Y

・Operating income fell by 10.8% Y/Y on booking provision of allowance for doubtful accounts

<< Finance Business >>

・Revenues decreased by 2.9% Y/Y

・Operating income increased by 4.2% Y/Y on booking provision of allowance for doubtful accounts

<< RISA Business >>

・Revenues decreased by 41.1% mainly due to larger sales of real estate for resale in 3Q last year

・Operating income grew by 66.3% Y/Y on profits from sales of operational investment securities

<< Other Business >>・Revenues decreased by 26.5% Y/Y on sales of

healthcare-related real estate held for resale in

the same period last fiscal year

・Operating income increased by 32.5% Y/Y as new businesses became profitable

*Excluding adjustment amount

(Billions of Yen)

FY2015 FY2016

3Q 3Q Y/Y Change

Revenues 123.6 125.9 1.9%

Gross Profit 8.4 8.8 4.9%

Operating Income 3.3 2.9 -10.8%

Revenues 3.7 3.6 -2.9%

Gross Profit 2.9 2.8 -5.4%


Revenues 13.2 7.8 -41.1%



Revenues 13.1 9.7 -26.5%



Revenues 153.6 146.9 -4.4%



Total

Leasing/

Installment

Sales

Business

Finance

Business

RISA

Business

Other

Business

▌Revenues by Business Segment


(Billions of Yen)

FY2015 FY2016

3Q 3Q Y/Y Change

125.8 116.3 -7.5%

Leasing Business 121.0 113.4 -6.2%

Installment Sales 4.8 2.9 -40.1%

Finance Business 244.5 282.3 15.5%

Loans 172.3 215.7 25.2%

Bulk Factoring 72.2 66.6 -7.7%

Other Business 3.2 4.0 24.4%

Total 373.5 402.6 7.8%

Leasing/ Installment Sales

Business

(Billions of Yen)

FY2015 FY2016

3Q 3Q Y/Y Change

100.4 78.4 -22.0%

Leasing 94.3 75.5 -20.0%

Installment Sales 6.1 2.9 -52.6%

Finance Business 243.0 283.1 16.5%

Loans 170.8 216.5 26.7%

Bulk Factoring 72.2 66.6 -7.7%

Other Business 3.3 3.3 -1.6%

Total 346.8 364.8 5.2%

Leasing/ Installment Sales

Business

▌Contracts Executed by Business Segment


5） Contracts Executed by Business Segment (Consolidated)

<< Contracts Executed >>・Contracts executed in the Leasing/Installment Sales Business declined Y/Y on start delays by the Public Sector segment and the effect on the Private Sector figures of booking a large project last year. However, contracts executed saw growth of 5.2% overall due to growth in the Finance Business from such things as financing project initiatives and expansion of overseas businesses.

<< New Transactions >>・Although new transactions in the Leasing/Installment Sales Business continued their upswing mainly focused on the Public Sector, overall new transactions were lower due to a change in the Private Sector business environment.

▌New Transactions by Business Segment


(Billions of Yen)

FY2015 FY2016

3Q 3Q Y/Y Change

71.8 54.1 -24.7%

Computer Hardware 32.7 24.0 -26.6%

Computer Software 37.6 28.3 -24.7%

Telecommunications Equipment 1.5 1.8 17.3%

Office Equipment 2.8 3.9 36.7%

Other 25.8 20.4 -20.8%

Total 100.4 78.4 -22.0%

Information and Communication

Equipment

(Billions of Yen)

FY2015 FY2016

3Q 3Q Y/Y Change

75.0 74.6 -0.4%

Private Sector 50.8 41.7 -18.0%

Services 12.3 10.7 -13.2%

Distribution 13.4 12.7 -5.4%

Manufacturing 14.7 10.4 -29.3%

Other 10.4 7.9 -24.0%

Total 125.8 116.3 -7.5%

Public Sector: Government &

Municipal

(Billions of Yen)

FY2015 FY2016

3Q 3Q Y/Y Change

48.9 39.2 -19.9%

Private Sector 51.6 39.2 -24.0%

Services 12.6 10.7 -15.3%

Distribution 13.1 10.5 -19.9%

Manufacturing 18.0 10.5 -41.6%

Other 7.8 7.5 -4.2%

Total 100.4 78.4 -22.0%

Public Sector: Government &

Municipal


6） Leasing/Installment Sales Business (Consolidated)

・By customer sector, contracts executed fell in the Public Sector due to start delays, and fell in the Private Sector partly on the effect of booking a large project last yearOverall, Contracts Executed fell by 22.0% Y/Y・ Public Sector new transactions rebounded to be flat Y/Y, but depressed Private Sector activity led to an overall declineOverall, New Transactions fell by 7.5% Y/Y

▌Contracts Executed by Customer Sector ▌New Transactions by Customer Sector

▌(For ref.) Contracts Executed by Equipment Type


(Billions of Yen)

FY2015 FY2016

3Q 3Q Y/Y Change

0.6 0.1 -77.4%

Private Sector 170.2 216.4 27.1%

Services 12.5 16.2 29.4%

Distribution 9.5 13.1 37.9%

Manufacturing 101.6 139.0 36.9%

Financial 15.2 12.1 -20.6%

Real Estate 8.6 19.2 122.4%

Other 22.8 16.8 -26.3%

Total 170.8 216.5 26.7%

Public Sector:

Government&Municipal

(Billions of Yen)

FY2015 FY2016

3Q 3Q Y/Y Change

7.9 8.1 2.9%

89.5 129.5 44.7%

63.5 73.1 15.1%

9.9 5.8 -41.4%

170.8 216.5 26.7%

Business Loans

Reimbursements,APF, Installment

Sales Transaction-Backed

Individual Factoring

Other

Total

▌Contracts Executed by Customer Sector▌Contracts Executed by Form of Contract


7） Finance Business (Consolidated)

・By form of contract, contracts executed in the Finance Business as a whole increased by 26.7% Y/Y, on growth in Business Loans, Individual Factoring and contributions from overseas businesses

・By customer sector, contracts executed in the Private Sector grew by 27.1% Y/Y on growth in the Manufacturing and Real Estate segments


(Billions of Yen)

FY2015 FY2016

3Q 3Q

Asset Business Revenues 7.1 4.4 -37.6%

Gross profit 2.2 3.6 65.0%

Operating income 1.3 2.5 96.4%

Real Estate Revenues 5.7 2.8 -49.8%

Gross profit 0.8 0.1 -93.6%

Operating income 0.5 -0.2 －

Advisory Revenues 0.4 0.5 14.4%

Services Gross profit 0.4 0.5 16.8%

Business Operating income -0.0 0.1 －

Goodwill Revenues 0.0 -0.0 －

Consolidated Gross profit -0.1 -0.1 －

Adjustment Operating income -0.8 -0.8 －

Total Revenues 13.2 7.8 -41.1%

(Consolidated) Gross profit 3.3 4.1 22.1%

Operating income 0.9 1.5 66.3%

Y/Y Change

Business


8） RISA Business (Operating Income)

Although revenues declined, operating income increased

significantly Y/Y

<< Asset Business >>・Profit grew on revenue from sales of operational investment securities

<< Real Estate Business >>・Income and profit declined on lower sales of real estate held for resale

<<Advisory Services Business>>・Income and profit increased on growth in M&A-related transaction income


424.6 443.7 449.6

157.0 168.2 181.7

30.7 28.7

26.2 62.539.6

37.544.3 40.1

52.5719.1 720.2

747.5

0

200

400

600

800

Dec.2014 Dec.2015 Dec.2016

RISA

Business

Other

Business

Bulk

Factoring

Loans

Leasing /

Installment

Sales

Business


<< Operating Asset Balances >>

・The operating asset balance in the Leasing/Installment Sales Business increased by ¥5.9bn.

・The operating asset balance in Loans increased by ¥13.5bn.

⇒ The Loans balance increased on financing denominated in foreign currencies associated with development of global businesses.

・The operating asset balance in RISABusiness increased by ¥12.4bn.

⇒ Growth was due to progress in the Funds Business

9） Operating Asset Balances (Consolidated)

(Billions of Yen)


(Billions of Yen)

FY2015 FY2016

3QComposition

Ratio3Q

Composition

RatioY/Y Change

Short-term Borrowings 30.2 4.7% 63.3 9.5% 33.1

Long-term Debts 469.7 72.5% 426.8 64.3% -42.8

Commercial Paper 83.0 12.8% 97.0 14.6% 14.0

Bonds 50.0 7.7% 60.0 9.0% 10.0Payable Under

Securitized Lease

Receivables15.2 2.3% 16.4 2.5% 1.1

Total 648.1 100.0% 663.5 100.0% 15.4▌Composition of Interest-bearing Debt

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dec.2014 Dec.2015 Dec.2016

・The funding cost ratio was 0.04 percentage points lower than 1 year ago, at 0.68％⇒ Declined due to factors such as

replacement of long-term debt with commercial paper and lower bank loan procurement spreads, as well as various measures・Direct funding ratio was increasedby 22.9％ (Dec.2015) → 26.1％ (Dec.2016)⇒Rose on higher Commercial Paperbalance


0.82%

0.71%

0.68%

0.6%

0.7%

0.8%

0.9%

1.0%

FY2014 3Q FY2015 3Q FY2016 3Q

資金原価率（%）

＝資金原価÷有利子負債平残

Short-termborrowings

Long-termDebts

Securitized Lease

Receivable

CommercialPaper

Bonds

Direct

funding

Ratio

26.1％

10） Procurement Funds (Consolidated)

Funding cost ratio (%)= Cost of

funding / Average Balance of

Interest-bearing debt

▌Funding Cost Ratio ▌Composition of Interest-bearing Debt



-0.0 -0.0

0.2

-0.1

-0.3

0.2

-0.2 0.1

-0.4

-0.3

-0.2

-0.1

0

0.1

0.2

0.3

0.4

FY2015 3Q FY2016 3Q

Except Loan business

Loan Business

RISA Business

(Billions of Yen)

11） Credit Costs (Consolidated)

・Credit costs increased by ¥0.3billion Y/Y


(Yen）

Interim Year-end Annual

22.0 22.0 44.0

22.0 22.0 44.0 FY2015 Actual

FY2016 Forecast

(Billions of Yen)

Forecast

FY2015 FY2016 FY2016

(3Q)

Revenues 202.6 146.9 205.0

Operating Income 4.9 5.1 6.0

Ordinary Income 6.0 5.2 6.0

Profit attributable to owners of parent 3.3 2.6 3.5　　　　　　　　　　　　　　　　　　　　(Unit: JPY)

Net Income per Share 154.85 122.95 162.54

Actual

▌Dividend per Share

▌Consolidated Forecast


1） Consolidated Earnings Forecasts


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information of NEC Capital Solutions Limited and not for soliciting purchase, sale, or

investment in securities issued by the Company. We ask for the discretion of

investors in making investment decisions.

The presentation materials contain forward-looking statements pertaining to the

Company’s plans, strategies and financial targets, which are created based on

currently available assumptions, data, or methods and contain a certain level of risk

or uncertain factors.

Investors are advised not to place undue reliance on the forward-looking statements

as they only reflect the Company’s analysis and expectations. A number of important

factors that could cause actual results to differ materially from such statements

include (i) change in general economic conditions and laws/regulations in the

Company’s market, (ii) potential legal liabilities relating to the Company’s business

and operations, (iii) fluctuating demand for and competitive pricing pressure on the

Company’s services, (iv) deterioration of the global economic and financial

environment, (v) downturn of domestic and international stock markets, and so

forth. Risks and uncertainties also include any future events with material

unforeseen impacts.

Forward-looking statements contain the most updated information as of the date of

compilation. New risks and uncertainties constantly arise, and it is impossible for the

Company to predict such events or how they may affect the Company.


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