For the year ended September 30,2015

FPG Review 2015 Financial Products Group Co., Ltd.
Tokyo Head Office
JP Tower 29F, 2-7-2, Marunouchi, Chiyoda-ku, Tokyo 100-7029, Japan
Phone: +81-3-5288-5656 Fax: +81-3-5288-9300
http://www.fpg.jp/en/
For the year ended September 30, 2015
PROFILE
We’re True Professionals.
Striving to be true professionals providing client-centric products and services
The highly complex structures of financial products in
recent years have made it difficult to form appropriate
investment decisions. Increasingly specialized and
discerning judgment is now crucial to investing in
such financial products given, for instance, cases of
credit risk and market risk surfacing for financial
products until now thought safe.
FPG was established in November 2001 with the
objective of analyzing the various risks that such
investments entail and offering products that are
optimal from the client’s perspective. Since then, as
an independent financial services company, FPG has
expanded its business activities around its core
business, the Tax Leasing Arrangement Business,
which provides integrated services covering the
structuring, origination, equity placement and
administration of Japanese Operating Leases (JOLs)
for marine containers, ships and aircraft.
Since 2010 FPG has expanded its area of business
and is now engaged in the Insurance Brokerage
Business, M&A Advisory Business, Private Banking
Business, Real Estate-Related Business, Securities
Business, and Asset Management Business. In
October 2014, FPG started the Trust Business. FPG
will continue striving to establish a one-stop financial
service business that satisfies client needs.
Company History
2001.11
2004. 2
8
2005. 1
2008. 5
7
2009. 6
7
10
2010. 9
10
11
2011. 4
7
10
2012. 2
8
10
1
Established as Financial Products Group Co., Ltd.
Name changed to FPG Co., Ltd.
Commenced JOLs for marine containers.
Moved headquarters to Marunouchi district of
Chiyoda-ku, Tokyo.
Established Osaka Branch.
Established Fukuoka Branch.
Commenced JOLs for vessels.
2013. 3
8
11
(currently the Tokyo Stock Exchange).
Commenced M&A Advisory Business.
Commenced Insurance Brokerage Business.
Commenced JOLs for aircraft.
Commenced Private Banking Business as Financial
Products Intermediary Services Business.
Listed on Tokyo Stock Exchange, Second Section.
2014. 4
7
10
12
2015. 4
5
Established FPG Asset & Investment Management
B.V., a joint venture in Europe specializing in
sourcing and arrangement for JOLs.
Established Omiya Branch.
Listed on Tokyo Stock Exchange, First Section.
FPG Review 2015
The JOL business involves operating leases structured
based on the Japanese tax system. JOLs are funded by
debt from financial institutions as well as by equity
contributions to a subsidiary (SPC=Special Purpose
Company) by way of silent partnership (Tokumei
Kumiai) from profitable non-listed small- and
medium-sized enterprises (SMEs). The SPC, as the
lessor, acquires an aircraft or a ship etc. and then leases
it out to a lessee such as an airline or a shipping line.
Under a JOL, the operator tends to show a loss
during the first half of the lease term because
expenses, such as depreciation expenses
(declining-balance method), appear ahead of income.
The loss is usually replaced by profit in the second
Acquired 100% stake in a securities company and
Profits and losses related to a JOL are distributed to
investors commensurate with their relative equity
contributions in accordance with the silent
partnership (Tokumei Kumiai) agreement. By
offsetting losses that arise in the first half of the lease
term against profits in their main businesses,
investors can reduce stated profit and defer their tax
liabilities.
Lessees including airlines and shipping lines etc.,
meanwhile, are able to procure low-cost funds from
investors through a JOL to be used in purchasing
their assets, such as aircraft and ships.
FPG thus matches the needs of investors seeking tax
deferral benefits with the needs of lessees seeking
low-cost funds and, in return, earns fees for arranging
the JOLs. FPG continues to achieve strong growth as
a leading company in the Tax Leasing Arrangement
Business.
8
FPG
changed its name to FPG Securities Co., Ltd.
Commenced Real Estate-Related Business.
Formed a capital and strategic alliance with
Amentum Capital Ltd., an independently managed
leading aircraft lease management company
Established Nagoya Branch.
Listed on JASDAQ, the Osaka Securities Exchange
half of the lease term, however, as expenses decline.
The Tax Leasing Arrangement Business provides
integrated services covering the structuring,
origination, equity placement and administration of
JOLs for large transport equipment, primarily marine
containers, ships and aircraft.
Business model of the Tax Leasing Arrangement Business
Registration for Type II Financial Instruments
Business completed.
Tax Leasing Arrangement Business
JOL arrangement
Arrangement fees and equity
placement commissions
(structuring, origination, equity placement and administration)
headquartered in Ireland.
Acquired 100% stake in Dai-ichi Asset Management
Co., Ltd., and started Asset Management Business.
Changed the corporate name of the Dai-ichi Asset
Management Co., Ltd. to FPG Asset Management
Co., Ltd.
SPC
Lessees
Airlines
fully owned by FPG
Operating
lease
Leased assets
Debt
Acquired 100% stake in Bernina Trust Co., Ltd. and
integrated as subsidiary.
Corporate name of subsidiary Bernina Trust Co.,
Ltd. changed to FPG Trust Co., Ltd.
Established Sendai Branch, Hiroshima Branch, and
Takamatsu Branch.
Acquired additional share capital of consolidated
equity-method affiliate Amentum Capital Ltd. and
integrated as consolidated subsidiary.
Corporate name of consolidated subsidiary
Amentum Capital Ltd. changed to FPG Amentum
Ltd.
Financial
institutions
Aircraft
Shipping
companies
Leasing
companies
Financing
Payment of
rentals
Ships
Equity
Silent partnership
(Tokumei Kumiai)
agreement
SMEs
Containers
Benefits
Low-cost funding
Transfer of depreciation benefit
Advantages
Tax deferral benefit
Low-cost funding
FPG Review 2015
2
FINANCIAL HIGHLIGHTS
Fiscal years ended September 30
Millions of yen
Thousands of
U.S. dollars
2011
2012
2013
2014
2015
2015
¥ 1,992
¥ 2,802
¥ 4,012
¥ 6,257
¥ 15,313
$ 127,780
1,035
1,438
2,084
3,461
10,081
84,128
Ordinary income
967
1,392
1,961
3,263
10,051
83,876
Net income
557
793
1,185
1,988
6,343
52,935
Net assets
1,958
2,551
4,489
10,549
16,176
134,982
Total assets
6,589
5,919
20,240
44,016
69,087
576,494
(1,679)
1,842
(8,952)
(13,024)
(3,250)
(27,121)
Net sales
Operating income
Net cash provided by (used in)
operating activities
(71)
(71)
(426)
(730)
(1,443)
(12,048)
Net cash provided by (used in)
financing activities
3,493
(2,010)
11,230
14,000
7,888
65,821
Book value per share
U.S. dollars
¥ 8.38
¥ 11.88
¥ 15.53
¥ 24.07
¥ 67.52
$ 0.56
29.36
37.78
57.52
112.46
170.65
1.42
Millions of yen
Amount of operating lease
arrangement
¥ 39,138
¥ 47,289
¥ 98,395
¥ 168,613
¥ 297,349
Thousands of
U.S. dollars
$ 2,481,219
Amount of equity placement
13,407
19,785
25,617
37,899
84,178
702,424
Commitment line agreement
and overdraft agreement
3,000
9,850
21,950
45,000
74,450
621,244
Operating income margin (%)
52.0
51.3
52.0
55.3
65.8
—
Net income margin (%)
28.0
28.3
29.5
31.8
41.4
—
ROE (%)
31.7
35.2
33.7
26.4
47.6
—
Equity ratio (%)
29.7
43.1
22.2
24.0
23.3
—
Operating income per
employee (millions of yen)
31
26
26
35
64
—
Number of employees
33
55
81
100
157
—
FPG Review 2015
65.8 (%)
(Millions of yen)
15,313
52.0 51.3 52.0
6,257
1,992
2,802
1,035
2011 2012 2013 2014 2015
Net sales
55.3 10,081
144.7% up (YoY)
Net assets / ROE
41.4 (%)
(Millions of yen)
28.0 28.3 29.5
1,438
2,084
557
2011 2012 2013 2014 2015
(FY 2015)
47.6 (%)
31.8
191.3% up (YoY)
65.8%
Operating
income
Operating
income margin
793
1,185
2011 2012 2013 2014 2015
(FY 2015)
219.0% up (YoY)
Net income
41.4%
margin
Net income
Operating income
per employee
(Yen)
(Millions of yen)
67.52
35.2
31.7
6,343
1,988
Earnings per share
(Millions of yen)
Net income /
Net income margin
3,461
4,012
64
16,176
33.7
26.4
10,549
4,489
1,958
2,551
(FY 2015)
Net assets
8.38
ROE
53.3% up (YoY)
47.6%
35
31
26
24.07
2011 2012 2013 2014 2015
Note: The U.S. dollar amounts represent the translations in Japanese yen at the approximate exchange rate of September 30, 2015, ¥119.84 = $1, solely for
the convenience of readers and are unaudited.
Consolidated values were posted for the term of the fiscal year ended September 2013.
Per share figures were retroactively adjusted to reflect stock splits.
3
(Millions of yen)
(FY 2015)
Yen
Operating income /
Operating income margin
Net sales
Net cash provided by (used in)
investing activities
Earnings per share
Fiscal year ended September 30, 2015
11.88
15.53
2011 2012 2013 2014 2015
(FY 2015)
Earnings
per share
26
180.5% up (YoY)
2011 2012 2013 2014 2015
(FY 2015)
Operating
income
per
employee
85.5% up (YoY)
FPG Review 2015
4
TOPICS
Key Initiatives and News
2014. 10
10
Acquired the entire share capital of Bernina Trust Co., Ltd. and integrated as subsidiary. Entry into the Trust Business.
12
Corporate name of subsidiary Bernina Trust Co., Ltd. changed to FPG Trust Co., Ltd.
Paid a year-end dividend of ¥26.00 per share for the fiscal year to September 2015 (annual dividend of ¥26.00 per
share) corresponding to a consolidated payout ratio of 36.0%.
2015. 1
TOPICS
2
Branch openings and change of organization
April 2015
Newly acquired credit rating from Japan Credit Rating Agency, Ltd. (JCR).
12
Following the rating acquisition from JCR, executed first issuance of commercial paper.
3
Announced stock split and change of shareholder incentive system.
4
Established employee shareholding association.
5
Acquired shares in Amentum Capital Ltd. (integrated as subsidiary).
6
Registered as trust agreement agency.
1
Inception of the Trust Business
In October 2014, the Company acquired the
entire share capital of Bernina Trust Co., Ltd.
and integrated the entity as a subsidiary.
Providing customers with optimal financial
products and services has been a management
principle of the Group. Thus, aiming to be a
one-stop comprehensive financial services firm
providing customers with a diversity of
financial products and services, centered on its
Tax Leasing Arrangement Business, the Group
has made entries into new business fields such
as real estate, securities, and asset management,
and in this way has expanded Group financial
results.
Of late, aiming at yet greater diversity in
financial products and service offerings, the
Company has integrated Bernina Trust as a
subsidiary that serves as a conduit for the
Company’s entry into the Trust Business.
Bernina Trust is licensed under the Trust
Business Act to operate as an investment-based
trust company.
5
TOPICS
FPG Review 2015
Sales branches have been newly opened in Sendai
(Tohoku region), Hiroshima (Chugoku region), and
Takamatsu (Shikoku region) to enable the
Company to step up sales and marketing activities
anchored in local environments.
Sendai
Omiya
Tokyo Sales
Departments
1&2
Nagoya
Hiroshima
Fukuoka
New Branch
Osaka
Existing Branch
Takamatsu
October 2014
Customers of the Group consist
overwhelmingly of financially highly successful
SMEs and wealthy individual investors. The
Group plans to use Bernina Trust’s trust
capabilities to offer financial products and
services tailored to customers’ needs, which will
maximize synergy effects with existing
operations and lead to the improved financial
performance of the Group.
The corporate name of Bernina Trust was
changed in November 2014 to FPG Trust Co.,
Ltd., in order to enable the new entity’s active
use of the Group’s brand power, promote closer
Group internal cooperation, and increase the
enterprise value of the Group.
In June 2015, the Company obtained
registration as a trust agreement agency, paving
the way for the inception of trust agency
operations (the business of serving as an agent
or broker in the conclusion of trust
agreements).
TOPICS
3
Integration of FPG Amentum Limited as subsidiary
May 2015
In November 2013, the Company acquired a 25%
stake in the share capital of Ireland-based aircraft
lease management firm Amentum and formed a
capital and business alliance. Subsequently, through
lease arrangements originated with the support of
Amentum, this capital and business alliance has
been contributing to an increase in origination
within the aircraft leasing business of the Company.
Amentum provides management and advisory
services covering the range from aircraft
management to aircraft sales. The firm has
wide-ranging track records with numerous airlines
and aircraft leasing companies around the world
including Europe, the Middle East, and Asia, and
thus has established a solid grounding in the aircraft
lease market.
Amentum was of late integrated as a Group
subsidiary in order to unify its management
functions with the Group and to proactively apply
its know-how, spanning the width from aircraft
management to aircraft sales, in origination for the
Group’s aircraft leasing business.
FPG Amentum
Company name
Location
FPG Amentum Ltd.
Dublin City, Ireland
Name and title of the
representatives
Executive Chairman, Jan Melgaard
Chief Executive Officer,
Martin Bouzaima
Main business
Amount of stated
capital
Establishment
Number of shares
held by the Company
before transfer
Number of shares
held by the Company
after transfer
Aircraft lease management
€500,000
November 29, 2005
125,000 shares
(Percentage of voting rights held: 25%)
375,000 shares
(Percentage of voting rights held: 75%)
FPG Review 2015
6
MESSAGE FROM THE CEO
Maximizing corporate value
Hisanaga Tanimura
CEO
Q&A
Q1
How do we perceive
FPG’s business environment?
Q2
How is FPG differentiated in the JOL market?
Q3
What is FPG’s rapid growth attributable to?
Q4
How will you generate growth ahead?
Q5
What is the policy for shareholder return?
Relentlessly striving for even greater success
This fiscal year has been a year of momentous
development for FPG.
Specifically, the advances made by FPG have been
driven by a reduced effective corporate tax rate and by
strong demand from SMEs posting improved financial
results. I believe this to be the reward for the efforts
invested in achieving our medium-term management
plan.
The Tax Leasing Arrangement Business, the main
business of the Company, marked robust growth due to
the strengthening of both lease origination and equity
placement.
Lease origination increased significantly thanks to
the intensified cooperation with origination-supporting
overseas subsidiaries. At the same time, efforts to
enhance the diversity and stability of fund procurement
hugely increased the Group’s fund procurement
capability, providing the ability to accommodate the
expansion of lease origination.
Meanwhile, the sales and marketing divisions,
against a background of strong demand from successful
investors, FPG promoted cooperation with accounting
firms and financial institutions, thereby gaining
7
FPG Review 2015
numerous customer referrals. Together with the
strengthening of the distribution network through three
new branch office openings in April, this led to robust
growth in sales of equity.
Additional contributions to revenues came from
the Real Estate-Related Business, Insurance Brokerage
Business, M&A Advisory Business, Securities Business,
Asset Management Business, and Trust Business,
enabling the Company to report consolidated revenue
growth for the sixth consecutive fiscal year.
Since the growth in revenues more than absorbed
the higher costs arising from the Group’s business
expansion including upfront investments, earnings have
increased for the sixth consecutive fiscal year, marking a
new historical high.
In order to achieve double-digit growth, in terms
of both sales and profits every fiscal year, the FPG
Group endeavors to establish a one-stop financial
service business. This service will provide a variety of
financial products and services for profitable SMEs and
wealthy individuals by utilizing the synergy between Tax
Leasing Arrangement and other businesses.
FPG Review 2015
8
Q1
A
How do we perceive
FPG’s business environment?
The reason why foreign lessees award mandates to FPG
Access to low-cost funding by profitable non-listed SMEs
The JOL business is seeing strong demand from investors, yet the
requirement of highly specialized expertise in this market limits the field of
potential entrants, resulting in a favorable business environment for FPG
engaged in the JOL business.
Tax lease in other jurisdictions
(Example: US Tax Lease)
Japanese Operating Lease (JOL)
Investors: profitable non-listed SMEs
Investors: large enterprises including
listed enterprises in the US
Focus on tax deferral benefits
Expected return
Meeting demand for attractive finance method for lessees
The JOL is an attractive finance method as it results in a low financing cost for lessees
such as airlines and shipping lines etc. for their large transport equipment. By procuring
investment funds from profitable non-listed SMEs, JOLs are able to provide lessees with
low-cost funding compared with tax leases in other jurisdictions, which is highly
attractive for lessees.
FPG’s solid track record in structuring and originating transactions and its high
origination capacity for JOLs, acclaimed by third-party observers including specialist
industry publications, have not only enabled it to cultivate new lessees but also prompted
numerous orders for repeat transactions. FPG continues to meet the demands of lessees
and expand its JOL arrangement activities.
Vigorous demand from investors seeking tax deferral products
The JOL business is fielding vigorous investment demand from profitable non-listed
SMEs. The background to this demand is an expensive tax rate for corporations and
inheritance taxes that are high by international standards as well as a strong desire to
stabilize taxable income by utilizing, for example, tax planning when profits arise
unexpectedly.
The requirement for highly specialized expertise in the JOL market, however, means the
field of potential entrants is limited, such that investor demand is not being fully
satisfied. This is not only positive for FPG’s profitability; it also creates an environment
conducive to sustainable strong growth.
Low
Expected return
High
Big gap
in return
We arrange low-cost funding through profitable non-listed SMEs
We are awarded mandates from leading airlines such as
British Airways, Air France and Lufthansa and major shipping companies
FPG is highly evaluated by third parties
We won Leasing Deal of the Year (East) from Marine Money
International for the JOL for Hapag-Lloyd AG for marine
containers. In addition, we won Tax Lease Deal of the Year 2012
from Airfinance Journal for the JOL for CDB Leasing Co., Ltd.,
a leading aircraft leasing company.
JOL market environment
There is vigorous demand, while there are few competitors due to high entry barriers—which provides a
favorable business environment for FPG, as a player in the JOL business
Demand side
Supply side
Vigorous demand for deferral tax benefits
Few competitors due to high entry barriers
– High corporate tax rate
– Succession of a business
(measures against stock price)
– Special procurements
(demand due to earthquake
disaster reconstruction in
Japan, etc.)
– Profit from sales of stocks
and/or real estate
SMEs
Big gap
in supply
and demand
Competitors
in JOL market
About
10
Leasing companies
in Japan: 270 companies
– High entry barriers such as
expertise in originating
JOLs and ability in equity
placement
– Few competitors in JOL
market (only seven
bank-affiliated leasing
companies, and three
companies that focus on
JOLs only)
Maintains high profitability
9
FPG Review 2015
FPG Review 2015
10
Q2
A
How is FPG differentiated
in the JOL market?
FPG’s product market appeal
Product lineup to meet the diverse needs of investors
FPG is differentiated from competitors by client-centric origination
capability that meets investors’ needs, sourcing a broad array of investors
via an efficient, nationwide distribution network.
1 Small lot
Competitors
New investors cultivated by creating
small-lot investment products
FPG
Products flexibly designed to match investors’ needs
The profitable non-listed SMEs that participate in the JOL business exhibit a strong
desire for small-lot/short-term investment products. A desire to recoup funds early also
engenders a preference for arrangements based on short-term leasing. FPG actively
offers small-lot*/short-term JOLs catering to such needs, enabling it to source new
investors and broaden the investment base of its JOL business. Competitors have failed
to provide such products because of the complicated nature and the administrative
burden involved.
FPG also differentiates itself from competitors by fine-tuning its products. For instance,
it can tailor arrangements to investors’ requirements, such as structuring matched to any
fiscal year-end, and covers all applicable assets, such as marine containers, ships and
aircraft, thus facilitating diversified investment opportunities.
FPG’s product-planning process employs a “market-in” rather than a “product-out”
approach, and its advanced financial expertise yields unmatched product marketability
that appeals strongly to investors. This draws in new investors and also translates into a
30-40% repeat-business rate among its existing investors.
*Minimum investment amount starts at ¥10 million. For competitors, the minimum investment amount is ¥30 million.
Efficiently sourcing investors via distribution network
Another distinctive FPG characteristic, and another factor underpinning its strong
growth, is a nationwide network that enables it to efficiently approach investors. FPG is
able to receive client introductions from alliance partners (accounting firms and financial
institutions) that serve profitable non-listed SMEs. This constitutes a win-win model
whereby FPG acquires investors while accounting firms and financial institutions are able
to satisfy their own clients’ financial product needs.
One reason FPG is able to expand its distribution network in this manner is that it is a
company in the JOL market that operates from an independent position, and in contrast
to competitors in major banking groups, it faces no restrictions on partnerships with
financial institutions (regional banks, securities companies). In addition to the high
marketability of products that fulfill investor needs, the enhanced credibility attained
through FPG’s listing has also contributed greatly as we continue to expand our
distribution network.
2
¥
¥
Fiscal year-end
Mar.
million
Other
fiscal year-end
Feb.
Sep.
Competitors:
Limit their arrangement to majority
periods for fiscal year-end
of
3 Lineup
leased assets
Marine containers
FPG is the only provider
of cross-border JOLs
All applicable assets are covered
Diversified investment is facilitated
million
10
Majority periods
for fiscal year-end
Structuring tailored to diverse fiscal year-ends
30
Jun. Dec. etc.
FPG:
Meets investors’
needs flexibly
Ships
Aircraft
FPG’s distribution network
Building a distribution network that can approach investors effectively
SMEs across country
Needs
Needs
Accounting firms nationwide*1
Financial institutions*1
– Partnership agreements with 2,304
firms
– Access to over 8,000 firms
– Business matching agreements with
84 regional banks, etc.
– Business matching agreements with
18 securities companies
Partnerships*2
Introduction
of clients
Incentives
Introduction
of clients
FPG
Rapidly expanded
the number of
partnerships and
business matchings
after listing
Business matchings*2
Incentives
*1 As of end-September 2015.
*2 Agreements that set the conditions such as incentives for successful introductions.
11
FPG Review 2015
FPG Review 2015
12
Q3
A
What is FPG’s rapid growth
attributable to?
The three strengths of FPG
Enhanced credibility and cooperation with affiliates work as strong drivers
of FPG’s growth.
1
Enhanced credibility has further bolstered growth foundations
Equity placement capabilities
Enhanced credibility from investors and partners (accounting firms and financial institutions)
strengthened our distribution network and increased the placement of equity
Number of partnership and business
matching agreements (subtotal)
FPG was first listed on the JASDAQ market operated by the Osaka Securities Exchange
(now operated by the Tokyo Stock Exchange) in September 2010, after which its listing
moved to the Second Section of the Tokyo Stock Exchange (TSE) in October 2011 and
the First Section in October 2012. The enhanced credibility this has provided has further
strengthened our business model. The move to the First Section of the TSE in October
2012, in particular, produced three subsequent listing effects evident in our equity
placement capabilities, fund procurement capacity and origination capacity for JOLs.
The number of banks with which we deal and our fund procurement capacity have grown
dramatically. This has enabled us to structure large assets, such as those involving
wide-body aircraft, and engage in multiple JOLs simultaneously.
Origination capacity for JOLs
The number of transactions has been increasing with new lessees including major foreign
airlines and shipping lines. Additionally, the cooperation with foreign affiliate FPG
Asset & Investment Management B.V. and its subsidiaries in Singapore and the U.A.E.,
has supported our lessee development and overseas lease origination, and enabled the
arrangement of high-value ship JOLs. Moreover, the Group’s origination capability was
further strengthened by the integration of Ireland-based aircraft lease management firm
FPG Amentum Ltd. as a subsidiary of the Company.
382
378
36
134
19
2011
2012
2013
Listed on
Listed on
JASDAQ
2
14
23
96
Listed on
TSE
2nd Sec.
2015
2014
TSE
1st Sec.
Enhanced credibility by expanded fund
procurement capacity from financial institutions
Trends in fund-raising
744.5
Loan facilities under
overdraft agreements
Number of partner banks
219.5
98.5
21.0
30.0 77.5
2011
2012
2013
Listed on
Listed on
JASDAQ
TSE
2nd Sec.
54
46
TSE
1st Sec.
2012
2013
Listed on
Listed on
TSE
2nd Sec.
213
2015
2014
TSE
1st Sec.
Origination capacity
for JOLs
Enhanced trust among lessees has increased
the ability to source new lessees and expanded
lease arrangements
82
1,686
49
634.5
21
403.0
2015
983
26
21
391
110.0
2014
2,973
Arrangement value
Number of arrangements
(number of SPCs)
C Containers
S Ships
A Aircraft
450.0
47.0
180.5
Listed on
2011
Listed on
424
(Unit: ¥100 million)
Loan facilities under
commitment lines
27
147
20
144
Trends in JOL arrangement amounts
(Unit: ¥100 million)
37
3
256
18
90
197
17
58
121
JASDAQ
Stronger fund
procurement capacity
16
FPG Review 2015
Via accounting firms
61
39.0
13
Via financial institutions
(regional banks and securities companies) 35
84
1,440
769
841
Direct contact
102
1,847
Equity placement capabilities
Fund procurement capacity
2,304
Number of partnership agreements
Number of business matching
agreements
1,107
The new branch openings, which have increased nationwide branches to eight locations,
have furthered cooperation with more accounting firms and financial institutions all over
Japan and enlarged the Group’s distribution network. Sales of equity have been rising
strongly, driven by increased demand from investors backed by a favorable business
environment.
Equity placement through accounting firms
and financial institutions (Unit: ¥100 million)
C9 S9 A 3
472
C6 S 4 A11
C10 S2 A14 C23 S10 A16 C13 S30 A 39
2011
2012
2013
Listed on
Listed on
Listed on
JASDAQ
TSE
2nd Sec.
2014
2015
TSE
1st Sec.
FPG Review 2015
14
Q4
A
How will you generate growth ahead?
Strengthen Tax Leasing Arrangement Business
Boosting profits by building arrangements that match investors’ needs
We will pursue further growth by continuing to strengthen our Tax Leasing
Arrangement Business and diversifying our revenue structure.
Responding to continuously strong demand
We expect demand to invest in JOLs to remain high against the backdrop of a corporate
tax rate that is high by international standards and a strong need among profitable
non-listed SMEs to stabilize tax liability management (p. 9).
We also expect tax changes aimed at strengthening the competitiveness of the corporate
sector, namely the reduction of corporate taxes and the expansion of inheritance taxes,
which will provide greater incentives for the use of JOLs. FPG is expanding JOL
activities to capture this demand while also building out its distribution network in the
aim of expanding earnings from the Tax Leasing Arrangement Business.
Enriching product lineup and diversifying revenue structure
Arrangements / Originations
Sales / Placement
– Build arrangement provision structure geared to robust
investment demand
– Cultivate new lessees and improve arrangement capabilities
through enhanced capacity for overseas joint ventures
(Netherlands, Singapore, U.A.E., Ireland)
– Ensure fund procurement capabilities matched to
expanding arrangement activity
– Expand distribution network by encouraging more alliances
with accounting firms and financial institutions, especially
regional banks
Aim for early achievement of total equity sales of ¥100 billion
Diversification of revenue structure (opportunities in other businesses)
The Company aims to establish a one-stop financial service business that provides a variety of financial
products and services towards profitable SMEs and wealthy individuals
FPG’s distribution network provides access not only to profitable non-listed SMEs,
which currently make up the core client segment, but also to company owners and other
wealthy individuals such as doctors and lawyers. As such, a key future growth strategy is
to enhance our lineup of financial products that match the wealth and asset management
needs of such clients.
Under the circumstances of increasing complexity in the structure of financial products
and increasing difficulty for customers in the making of appropriate investment
decisions, FPG offers a range of one-stop financial products and services by taking
advantage of the capabilities of its team of financial professionals and the benefits of
neutrality as an independently-managed firm. The Company has consistently promoted
the diversification of products and services including small-lot real estate products,
insurance brokerage, M&A advisory, private banking, securities, and asset management.
Additionally, in October 2014 the Company entered the Trust Business through FPG
Trust Co., Ltd. after the entity’s acquisition and integration as a consolidated subsidiary.
Registration as a trust agreement agency, acquired in June 2015, has since enabled the
Company to engage in shared operations with FPG Trust Co., Ltd.
The main customers of the FPG Group are high-performing SMEs and wealthy
individual investors. The FPG Group will strive to expand business performance through
its provision of financial products and services, while maximizing synergy with existing
businesses.
(
(
Private
Banking
Financial Products
Intermediary Service
Business
Commenced business
in Jul. 2011
FPG
Trust Co., Ltd.
Tax Leasing
Arrangement
Type II Financial
Instruments Business
Operator
Commenced business
in Aug. 2004
)
(
Real Estate
Real Estate Specified
Joint Enterprise
Accounting firms
throughout the country
Profitable
companies
Company
owners
Wealthy
individuals
Doctors and
lawyers, etc.
Commenced business
in Oct. 2014
)
Commenced business
in Aug. 2013
(Number of partner firms: 2,304)
SMEs
(Trust Business)
)
Insurance
(Insurance Brokerage)
Commenced business
in Nov. 2010
Financial institutions
FPG Asset
Management
(
Investment
Management
& Advisory
(Number of financial institutions: 102)
M&A Advisory
)
Commenced business
in Apr. 2014
(
FPG
Securities
Type I Financial
Instruments Business
Operator
)
Commenced business
in Oct. 2010
Commenced business
in Aug. 2013
15
FPG Review 2015
FPG Review 2015
16
Q5
CORPORATE GOVERNANCE
What is the policy
for shareholder return?
Basic Policy
A
Clear objective for dividend policy to all shareholders
FPG has been working on the improvement of performance
and efficiency in our business based on the concept that our
mission is to conduct the management which respects the
interests of all the stakeholders surrounding us, including
shareholders, customers, employees and business partners.
We have also been working on the thorough assurance of
compliance by employees as well as directors.
FPG attaches great importance to maintaining a good relationship with all shareholders.
It is a top-priority management issue for us to achieve an appropriate policy for dividends
to shareholders. We have a basic policy to implement stable, continuous dividends while
ensuring the internal reserves necessary for strengthening our management structure and
business development in the future.
In addition, based on the recognition that the mechanism
which ensures such effectiveness is the corporate governance,
we have been working on the fulfillment. It is our objective to
achieve sustainable growth by improving and strengthening
the corporate governance in accordance with our growth
process as the critical managerial challenge for the future.
So as to more clearly state our dividend policy to all shareholders, we commit to a
consolidated dividend payout ratio of 30%. The annual dividend of ¥24.50 per share to be
paid for the fiscal year ending September 2015 reflects a consolidated payout ratio of
36.3%.
It is stated in our management philosophies that we must have
a strict sense of ethics in utilizing our expertise; we are aware
that compliance constitutes the core of corporate governance
and we will ensure the thorough implementation.
We commit to a consolidated dividend payout ratio of 30%.
For the fiscal year ending September 2016 a total annual dividend of ¥27.00 is projected
(consolidated payout ratio of 36.0%).
Pursuit of efficient use of shareholders’ equity and enhancement of corporate
value
In order to improve corporate value in the medium to long term, FPG uses ROE as a
key performance indicator (KPI) linked to shareholder value. In the fiscal year ending
September 2015, higher net income for the period (+219.0% year-on-year) raised ROE
to 47.6%. FPG’s ROE is at a significantly higher level than the ROE average of other
TSE-listed companies and US-/UK-listed companies. Along with the efficient use of
shareholders’ equity in the future, we will steadily implement our growth strategy and
work toward the further improvement of the corporate value.
Dividends* / Payout ratio
Dividends (Yen)
Payout ratio (%)
30.9
34.6
ROE
36.0
ROE (%)
36.3
47.6
24.50
35.1
31.7
35.2
Moreover, we are also aware that the fundamental purpose of
corporate governance is to establish the transparent and sound
management by increasing and maximizing the company value
through the improvement in stakeholders’ satisfaction, and we
are aiming to become “the real professional” in the financial
industry and to maintain, construct and operate the right
management organization.
(
System
FPG has introduced the executive officer system. The Board of
Directors concentrates on important management decisions and
the implementation of their oversight functions while executive
officers, selected and appointed by the Board of Directors, are
responsible for business operations in each individual field.
This encourages fast decision-making and efficient operational
implementation by enhancing execution of the operation.
The Board of Directors is composed of four directors. They hold
meetings once a month or on an as-needed basis. In addition, in
order to ensure the transparency and fairness of the
management and achieve growth in the financial industry where
advanced expertise is required, the Company appoints the three
outside directors who are familiar with the financial industry.
Each of the six executive officers appointed by the Board of
Directors, carry out the business operation of responsible
2011
Appointment /
Dismissal
Appointment /
Dismissal
FPG has appointed Ernst & Young ShinNihon LLC as the
accounting auditor.
In addition, the Compliance Committee chaired by the
President and CEO is held on a regular and an as-needed
basis for ensuring thorough compliance
)
Election of Outside Directors
With the aim of establishing a strong corporate governance
system and ensuring fairness and transparency in the system,
we have elected as outside directors Takeshi Kadota, Masashi
Funayama, and Daisuke Toki who are academics with the
plentiful knowledge, experience and broad expertise
concerning international finance and corporate investment, as
well as finance and management. For the brief biographies of
Takeshi Kadota, Masashi Funayama, and Daisuke Toki,
please refer to the next page and after.
We have judged that there are no special interests between
each of the three candidates above and the Company, nor are
there possibilities of conflicts of interest to arise with general
shareholders; and have designated them as independent
executives as stipulated in the provisions of the Tokyo Stock
Exchange (TSE) Inc.
Appointment / Dismissal
Report
Audit & Supervisory Board
Audit
Board of Directors
5.45
2013
2014
2015
2011
2012
2013
2014
Report
Dismissal
Direction
Cooperation
Internal Audit Dept
2015
Cooperation
Internal Audit
Accounting Auditors
Accounting Audit
FPG Review 2015
Appointment /
Dismissal /
Supervision
CEO
* Numbers have been adjusted retrospectively to reflect stock splits.
17
Report
Appointment / Removal / Supervision
Cooperation
2012
The Internal Audit Office is independent from the other
organizations, which the President and CEO controls directly.
One full-time officer is appointed in the Internal Audit Office
and evaluates the effectiveness of internal controls with respect
to the Company’s general business activities and mission.
General Meeting of Shareholders
8.67
4.12
The Board of Auditors is composed of three auditors, among
which there is one full-time auditor. The Board of Auditors
holds meetings once a month and the as-needed basis.
Each auditor spends time auditing and monitors the business
execution of the directors by carrying out specific auditing
procedures delineated in the audit plan adopted by the Board
of Auditors. In addition, in order to further strengthen the
audit function, the Company has appoints three outside
auditors who have abundant knowledge and experience.
Overview of the Corporate Governance System
33.7
26.4
2.59
segment. In addition, the executive officers hold the
Executive Board meetings chaired by a representative executive
officer who concurrently serves as the President and CEO.
The Executive Board meetings are held once a month and on an
as-needed basis, for the purpose of determining and reporting
on business operations and deliberating matters to be submitted
to the Board of Directors.
Board of Executive Officers
Executive Officers
Execution
Divisions, Departments and Branches
FPG Review 2015
18
DIRECTORS, AUDITORS AND OFFICERS
Members of the Board
Hisanaga Tanimura
Mr. Tanimura established Financial Products Group Co., Ltd. (FPG) in Nov. 2001 and has been serving as
the CEO of the Company ever since. Mr. Tanimura has more than 30 years’ experience in the field of
arranging Japanese tax leases. Prior to establishing FPG, Mr. Tanimura was a representative of ING Lease
Japan N.V. (Tokyo Branch), a wholly-owned subsidiary of ING Bank. He also held several positions at
Sumisho Lease Co., Ltd. (currently Sumitomo Mitsui Finance & Leasing Company, Limited). Mr.
Tanimura now concurrently serves as the representative director and chairman of FPG Securities Co., Ltd.,
the representative director and chairman of the Dai-ichi Asset Management Co., Ltd, (current FPG Asset
Management Co., Ltd.). Mr. Tanimura received his bachelor’s degree in economics from Kwansei Gakuin
University in 1983.
CEO
Takeshi Kadota
Member of the board
(Independent)
Audit & Supervisory Board Members
Masatoshi Yasuda
Audit & Supervisory Board
Member
Mr. Kadota, the independent director, joined the Company in 2008 as an auditor. Prior to that, Mr. Kadota
was the president of Mitsubishi Corporation Capital (currently Mitsubishi Corporation Asset Management
Ltd.). Mr. Kadota has been involved in various aspects of capital market and investment banking business
for almost 30 years, including private equity investments, financing, fund operation and M&A advisory,
acting as senior vice president and division chief operating officer at Mitsubishi Corporation.
Mr. Kadota established Kadota & Co., Inc. in April 2007 and has been serving as a representative director
of the Company. Mr. Kadota has also been serving as auditor of Hachijuni (82) Bank Ltd and K.K.
Advantage Advisers, as well as a representative director of the Institute of Corporate Governance, Japan.
Mr. Kadota received his bachelor’s degree in law from the University of Tokyo in 1971 and his master’s
business administration from Stanford University in 1981.
Tomokatsu Yoshitoshi
Audit & Supervisory Board
Member
Mr. Funayama is a CPA and an independent director, and he joined the Company in 2008 as an auditor.
Previously, Mr. Funayama held several positions at Arthur Andersen and Co. (currently Accenture Japan
Ltd.), Citi Bank private banking division, Republic National Bank of NY (currently HSBC Bank), and
Century Audit Corporation (currently Ernst & Young ShinNihon LLC). Mr. Funayama currently serves
as a president of Funayama CPA Office, the Managing Director of Finantec Co., Ltd., and the Director of
Applied Electronics Corp. Mr. Funayama received his bachelor’s degree in commerce from Hitotsubashi
University in 1976.
Masashi Funayama
Member of the board
(Independent)
19
FPG Review 2015
Mr. Yoshitoshi has been working as an auditor after joining the Company in 2012.
Prior to that, Mr. Yoshitoshi worked at the Long-Term Credit Bank of Japan, Ltd. (now Shinsei Bank,
Ltd.) and assigned to merchant banking group, and he served as a Deputy Manager of the London Branch,
followed by his career at Daiichi Hotel Co., Ltd. as a treasurer. In 1999, Mr. Yoshitoshi moved to ING
Group and held several positions there, including a head of the LDA sales and mutual fund department in
ING Life Insurance Co., Ltd. and a president and representative director of ING Mutual Funds
Management Co. (Japan), Ltd., before returning to the position of head of the bank marketing and sales
promotion division at ING Life Insurance Co., Ltd. Mr. Yoshitoshi received his bachelor’s degree in law
from Keio University in 1975 and attended a master's degree program at Indiana University, Graduate
School of Business administration.
Mr. Tsunemine has been working as an auditor after joining the Company in 2013.
Prior to that, Mr. Tsunemine worked at the Long-Term Credit Bank of Japan, Ltd. (now Shinsei Bank,
Ltd.), and he served as a Branch Manager at the Osaka Branch.
In 2004, he moved to SHINKI Co., Ltd. and served as an adviser and then a chairman and chief executive
officer. In June 2005, he assumed a position as a president and chief executive officer. In May 2009, he
moved to APLUS FINANCIAL Co., Ltd. (the former APLUS Co., Ltd.) and served as an adviser and
then a president and chief executive officer. In April 2011, he assumed a position as a chairman and
representative director.
Hitoshi Tsunemine
Member of the board
(Independent)
Daisuke Toki
Mr. Yasuda has been an auditor since he joined the Company in 2012.
Mr. Yasuda held several positions in Hitachi, Ltd., where he was in charge of macro-economic analysis and
forecast, development of long-term business management plans and business strategy consulting for
business units. Before becoming independent in 2001, he served as the Head of derivative department,
Citibank, N.A. Tokyo Branch (since January 1983) and a Manager of Tokyo Branch, CitiCorp Scrimgeour
Vickers Securities Ltd., and the Japan Representative at Cantor Fitzgerald. In 2006, he assumed the
position of vice president at MM Research Institute, Ltd. Mr. Yasuda currently serves as corporate auditor
of Network Value Components Ltd., Kojitsanso Co. Ltd., and Apparel-Web Inc., in addition to being
representative director of the Institute of Corporate Governance, Japan. Mr. Yasuda received his bachelor’s
degree in economics from the University of Tokyo in 1971 and his master’s degree in business
administration from the University of Lausanne in 1978.
Audit & Supervisory Board
Member
Mr. Toki joined the Company as, and has been serving as the director since 2013. Since 2014, Mr. Toki
concurrently holding the position of the director of FPG Asset Management Co., Ltd. (the former the
Dai-ichi Asset Management Co., Ltd.). Prior to that, he worked at NKK Corporation (currently JFE Steel
Corporation) and Nikko Securities (currently SMBC Nikko Securities Inc.). Mr. Toki was the president of
Goldman Sachs Asset Management Co., Ltd., and he served as a branch manager at Goldman Sachs
(Japan) Ltd. (currently Goldman Sachs Japan Co., Ltd.) in Tokyo. Mr. Toki is a visiting professor of
Hitotsubashi University Graduate School of International Corporate Strategy. He currently serves as the
visiting professor at Kanazawa Institute of Technology Laboratories for Intellectual Creation &
Management, the visiting professor for special assistance to the President (in charge of research) at Tohoku
University, and the visiting professor at Tsukuba University. Mr. Toki earned his bachelor’s degree from
Tsukuba University Third Group (Social engineering, majored in Management Engineering), and his
master’s degree of Operations Research from Case Western Reserve University.
FPG Review 2015
20
DIRECTORS, AUDITORS AND OFFICERS
Executive Officers
Mr. Matsushita joined the Company as senior managing executive officer in 2014 and is in charge of the Sales
Support Department and Nagoya Branch. Previously he has accumulated over 35 years of experience,
having worked at nationwide branches of Nomura Securities Co., Ltd., before going on to Nomura
Babcock & Brown Co., Ltd., where he later headed the international investment division for more than a
decade, and more recently fulfilled the role of executive marketing officer. Mr. Matsushita attained his
bachelor’s degree from the Faculty of Economics, Nagasaki University in 1977.
Yasuyuki Matsushita
Kenji Kubode
Senior Managing Executive
Officer
Executive Officer
Mr. Ueda has been a senior executive officer since 2012, and is in charge of Osaka, Hiroshima, Takamatsu
and Fukuoka Branches. Mr. Ueda joined the Company in 2007 as a director and became a managing
director in 2009. Prior to that, Mr. Ueda was engaged mainly in the placement of the equity at Sumisho
Lease Co., Ltd. (currently Sumitomo Mitsui Finance & Leasing Company, Limited).
Mr. Ueda received his bachelor’s degree in commerce from Kwansei Gakuin University in 1984.
Naoyuki Ueda
Mr. Morigaki has been an executive officer since 2012, and is in charge of Administrative Department.
Mr. Morigaki joined the Company in 2010 and has been a Head of Treasury Department ever since. Prior
to that, Mr. Morigaki was engaged in corporate sales at several centrally-located branches including the
Roppongi Branch at Fuji Bank (currently Mizuho Bank). After holding several section chief posts at Fuji
bank, Mr. Morigaki joined FinTech Global Incorporated in 2007 and managed several tasks including
corporate finance, financial strategy and management of subsidiaries as a group head of treasury department.
Mr. Morigaki received his bachelor’s degree in political science and economics from Waseda University in
1989.
Tomoya Morigaki
Senior Executive Officer
Executive Officer
Mr. Takahashi has been a senior executive officer since 2012, and is in charge of Tokyo Headquarters,
Sendai and Omiya Branches and Sales Support Department. Mr. Takahashi joined the Company in 2008
and attained the position as a member of the board in 2009.
Prior to that, Mr. Takahashi was engaged mainly in the arrangement of operating lease at Sumisho Lease
Co., Ltd. (currently Sumitomo Mitsui Finance & Leasing Company, Limited).
Mr. Takahashi received his bachelor’s degree in law from Chuo University in 1988.
Kazuki Takahashi
Senior Executive Officer
21
FPG Review 2015
Mr. Kubode, a CPA, has been an executive officer since 2012, and is in charge of Accounting Department
as a head of the department. Mr. Kubode joined the Company in 2008 and attained the position as a
member of the board in 2009. Prior to that, Mr. Kubode held several positions at Minato Audit
Corporation (currently Azusa Auditing Company), Kokusai Investment Trust Management Co., Ltd.
(currently Mitsubishi UFJ Kokusai Asset Management Co., Ltd.) and JAFCO Co., Ltd. Over 18 years,
Mr. Kubode provided the unlisted companies with support in developing the operation control systems and
preparing for their IPOs. Mr. Kubode now serves as a member of the board of FPG Securities Co., Ltd.
Mr. Kubode received his bachelor’s degree in business administration from Yokohama National University
in 1985.
Mr. Matsumoto has been an executive officer since 2012, is in charge of Structured Finance Department.
Mr. Matsumoto joined the Company in 2009 as a head of Structured Finance Department. After having
joined Showa Leasing Co., Ltd. in 1985, Mr. Matsumoto earned more than 16 years of experience in the
field of arranging structured finance including aircraft leases at Nomura Babcock & Brown and Macquarie
Group Limited. Mr. Matsumoto received his bachelor’s degree in economics from Keio University in 1985
and his master’s degree in business administration from the Graduate School of International Politics,
Economics and Communication, Aoyama Gakuin University in 2000.
Takahiro Matsumoto
Executive Officer
FPG Review 2015
22
DIRECTORS, AUDITORS AND OFFICERS
CEOs of FPG Group Companies
Mr. Fukaya, the CEO of FPG Securities Co., Ltd., joined the company in 2013.
Prior to that, he joined Mitsubishi Bank Ltd. (currently Bank of Mitsubishi Tokyo UFJ, Ltd.) in 1984 and
held positions as a chief analyst and a chief economist there. Mr. Fukaya moved to Deutsche Bank Group,
followed by his career at Credit Suisse Securities Ltd. Also, Mr. Fukaya held prominent positions such as a
Chief Currency Strategist of Foreign Currency Research Department in CREDIT SUISSE. In 2012, Mr.
Fukaya established Office FUKAYA and provided business consulting services in addition to FX Research
Analysis. Mr. Fukaya received his bachelor’s degree in law from the University of Tokyo in 1984.
Koji Fukaya
FPG Securities Co., Ltd.
Dr. Bouzaima has been with FPG Amentum Ltd. since 2010. Dr. Bouzaima joined from HSH Nordbank
where he worked in the Structuring & Analysis Unit of the Aviation Finance Group and also the Corporate
Development Department. Dr. Bouzaima previously was in academic research and teaching, working and
publishing on topics in portfolio theory and microeconomics while at the Chair of Finance of the University
of Koblenz. Dr. Bouzaima has a master’s in economics from the University of Bonn and a Ph.D. in finance
and economics from the University of Koblenz, Germany.
Dr. Martin Bouzaima
Financial Section
FPG Amentum Ltd.
Mr. Sugita joined FPG Asset Management as CEO in 2015 after having served as director at KKR Capital
Markets since 2008. He has a long history of experience in the field, previously holding positions as chief
portfolio advisor at Nissay Asset Management and managing director at UBS Asset Management. Prior to
these corporations, Mr. Sugita spent almost two decades with the Long-Term Credit Bank of Japan (now
Shinsei Bank) in various capacities and departments, including the Securities Business Division and
Pension Management Division.
Masaki Sugita
FPG Asset Management
Co., Ltd.
Mr. Ishiguro joined FPG Trust in 2015 as CEO and president, after serving as senior corporate advisor at
Nomura Trust & Banking and senior advisor at Nomura Holdings. Prior to almost a decade of service at
Nomura, Mr. Ishiguro spent over 25 years with the Long-Term Credit Bank of Japan (now Shinsei Bank).
During his time there, Mr. Ishiguro served concurrently as executive operating officer and as manager for
the Enterprise and Corporate Affairs Divisions.
Analysis of Financial Situation,
Operating Results and Cash Flow
25
Business Risks
30
Consolidated Balance Sheet
37
Consolidated Statements of Income
39
Consolidated Statements of
Comprehensive Income
39
Consolidated Statements of Cash Flows
40
Tadashi Ishiguro
FPG Trust Co., Ltd.
23
FPG Review 2015
FPG Review 2015
24
Financial Section
Financial Section
Analysis of Financial Situation, Operating Results
and Cash Flow
Operating lease arrangement total
(Millions of yen)
297,349
300,000
250,000
200,000
168,613
150,000
100,000
98,395
50,000
The Tax Leasing Arrangement Business posted significant growth in revenues compared with
the previous fiscal year. The higher result reflects ¥297.3 billion in lease arrangements,
achieved through the strengthened cooperation with origination-supporting affiliates, and
¥84.1 billion in equity placement. Strong investor demand for equity placement was driven by
expectations of a future reduction in the corporate income tax rate, among other factors.
Increased origination capability and enhanced selling power in the lease business contributed
to sales performance. Including “Other Businesses,” this resulted in an outsized year-on-year
increase in revenues and earnings. Reflecting the significant earnings growth, consolidated
cash and cash equivalents at the end of the fiscal year rose ¥3,291 million compared with the
previous fiscal year to ¥7,384 million.
1.
0
2013
2015
2014
(FY)
Amount of equity sales
(Millions of yen)
100,000
84,178
60,000
37,899
25,617
20,000
0
2013
2014
2015
(FY)
Net sales
(Millions of yen)
20,000
15,313
15,000
The global economy in the fiscal year under review continued overall on a moderate recovery
path, with concerns over the slowdown in China and Asian emerging economies balanced by
the comparatively favorable US economy. Likewise, the Japanese economy experienced a
moderate upturn with improvements in corporate earnings and employment despite
fundamental worries about overseas economies.
In this environment, the Group continued with the implementation of various measures
under its medium-term management plan incepted in 2013.
In October 2014, Bernina Trust Co., Ltd., which is licensed under the Trust Business Act to
operate as an investment-based trust company, was integrated as a consolidated subsidiary
with a view to expand the scope of financial products offered by the Group, marking entry
into the Trust Business. In December 2014, the corporate name of the entity was changed to
FPG Trust Co., Ltd. in order to fully leverage the brand power of the FPG Group.
80,000
40,000
Analysis of Operating Results
Moreover, with a view to further strengthen the Tax Leasing Arrangement Business, in May
2015 the Company acquired additional shares in equity-method affiliate Amentum Capital
Ltd., and integrated it as a consolidated subsidiary. This step marks the Group’s expansion
into the Aircraft Investment and Management Service Business. The corporate name of the
entity was changed to FPG Amentum Ltd. in August 2015, thus forging closer relations as a
new FPG Group member.
Furthermore, in order to diversify and stabilize the fund procurement channels of the Group,
a credit rating was obtained from Japan Credit Rating Agency, Ltd., followed by the Group’s
first commercial paper issuance. Additionally, loan facilities under commitment line
agreements and overdraft agreements were raised from a total of ¥45 billion at the end of the
previous fiscal year to ¥74.45 billion at the end of the fiscal year under review on a
consolidated basis, leaving the Group with much enhanced fund-raising capabilities.
Net Sales
10,000
[ Tax Leasing Arrangement Business ]
6,257
5,000
0
25
4,012
2013
FPG Review 2015
2014
2015
(FY)
In the operating lease business FPG has been aggressively working on lease originations in
cooperation with supporting overseas affiliate FPG Asset & Investment Management B.V.
and its subsidiary FPG Amentum Ltd., aided by a favorable environment for equity
placement and enhanced fund procurement capability. As a result, leases arranged increased in
total value to ¥297,349 million (+76.3% year-on-year). The amount of equity placement
increased to ¥84,178 million. Driving factors were strong demand from investors with
successful business performances against a backdrop of improving corporate earnings and
prospects for a lower corporate income tax rate, as well as FPG’s enhanced origination
capability and increased selling power in the lease business.
Based on the foregoing developments, revenues within the Tax Leasing Arrangement
Business increased to ¥14,127 million (+159.5% year-on-year).
[ Other Businesses ]
Other Businesses outside the Tax Leasing Arrangement Business saw revenues increase to
¥1,185 million (+45.8% year-on-year). By type of business, Other Businesses generated
revenues as follows.
1. Insurance Brokerage Business: ¥281 million (+16.7% year-on-year)
2. Securities Business: ¥276 million (–12.6% year-on-year)
3. Real Estate-Related Business: ¥167 million (+6.2% year-on-year)
4. Aircraft Investment and Management Service Business (incepted in the third quarter of
the fiscal year under review): ¥245 million
5. Asset Management Business: ¥110 million (+34.3% year-on-year)
6. Trust Business (incepted in the first quarter of the fiscal year under review): ¥26 million
As a result, revenues increased to ¥15,313 million (+144.7% year-on-year).
Operating income
(Millions of yen)
12,000
10,081
10,000
8,000
6,000
4,000
2,000
0
3,461
2,084
2013
2014
Cost of sales increased to ¥1,938 million (+122.1% year-on-year). This was primarily due to the
increase in commission fees paid for client introductions in line with the increase in net sales.
Ordinary income
12,000
10,051
8,000
6,000
4,000
Selling, General and Administrative Expenses
Selling, general and administrative expenses rose to ¥3,292 million (+71.2% year-on-year),
mainly due to business growth, with personnel expenses of ¥1,569 million (+70.8% year-on-year)
and other expenses of ¥1,722 million.
(FY)
(Millions of yen)
10,000
Cost of Sales
2015
2,000
0
3,263
1,961
2013
2014
2015
(FY)
Note: Personnel expenses include salaries, bonuses (including provisioning of reserve), welfare expenses, and recruitment costs.
Operating Income
As a result of the above, operating income totaled ¥10,081 million (+191.3% year-on-year).
Net income
(Millions of yen)
7,000
6,343
6,000
Non-operating Income / Non-operating Expenses
5,000
Non-operating revenues rose to ¥766 million (+124.3% year-on-year). A main factor was
higher interest receipts of ¥369 million (+84.2% year-on-year) reflecting increased interest
received from investors on advances on equity underwritten in line with the growth in equity
placement. Another factor was ¥260 million in investment gains related to equity-method
affiliates (+488.0% year-on-year).
4,000
3,000
1,988
2,000
1,000
0
1,185
2013
2014
2015
(FY)
FPG Review 2015
26
Financial Section
Analysis of Financial Situation, Operating Results and Cash Flow
Non-operating expenses increased to ¥797 million (+47.6% year-on-year). Interest paid was
largely unchanged at ¥222 million (+0.9% year-on-year) reflecting lower cost of financing
despite increased fund procurement. Additionally, commission fees paid on conclusion of
commitment line agreements for increased fund procurement frames rose to ¥533 million
(+100.7% year-on-year).
Net assets
(Millions of yen)
20,000
16,176
15,000
10,549
10,000
5,000
0
Ordinary Income / Net Income
As a result of the above developments, ordinary income increased to ¥10,051 million (+208%
year-on-year) while net income for the period after deduction of corporate income tax, etc.,
increased to ¥6,343 million (+219% year-on-year).
4,489
2013
2015
2014
(FY)
2.
Analysis of Financial Situation
Consolidated assets at the end of the fiscal year under review totaled ¥69,087 million
(+¥25,070 million year-on-year).
Total assets
Out of this total, current assets increased to ¥66,087 million (+¥23,753 million year-on-year).
(Millions of yen)
69,087
70,000
60,000
50,000
44,016
40,000
30,000
20,000
20,240
10,000
0
2013
2015
2014
(FY)
(Millions of yen)
5,000
0
-10,000
-15,000
27
– Cash and deposits increased to ¥7,384 million (+¥3,291 million year-on-year).
– Inventories of equity underwritten rose to ¥46,522 million (+¥17,980 million
year-on-year). This was mainly due to efforts at promoting equity placement and
aggressive origination in the operating lease business.
– Real estate for arrangement decreased to ¥1,574 million (–¥1,829 million year-onyear). This reduction is due to accelerated sales of sub-divided real estate products.
– Current assets other than those listed above increased to ¥10,550 million (+¥4,310
million year-on-year). This was mainly due to ¥4,972 million in guarantee deposits
paid (+¥2,212 million year-on-year) posted with financial institutions for exposures
involving currency related to OTC derivative instruments offered by the Securities
Business of the Company; and ¥2,214 million (+¥631 million year-on-year) in
claims from financial derivatives included in other current assets.
Non-current assets increased to ¥2,993 million (+¥1,255 million year-on-year).
– Property, plant, and equipment rose to ¥341 million (+¥39 million year-on-year).
– Intangible non-current assets increased to ¥1,627 million (+¥1,361 million
year-on-year). Main factors were the accounting recognition of ¥663 million in
goodwill related to FPG Trust Co., Ltd. and ¥801 million in goodwill related to
FPG Amentum Ltd.
– Investments and other assets decreased to ¥1,023 million (–¥146 million
year-on-year).
Cash flows from
operating activities
Non-current liabilities rose to ¥2,880 million (+¥1,382 million year-on-year). The main factor
was debts and bonds increasing to ¥2,664 million (+¥1,363 million year-on-year).
Total net assets totaled ¥16,176 million (+¥5,626 year-on-year), reflecting mainly a year-end
dividend of ¥812 million paid in the previous fiscal year and ¥6,343 million in net income for
the period recognized in the current fiscal year.
The equity ratio at the end of the period under review was 23.3% (compared with 24% at the
end of the previous fiscal year).
3.
Cash Flow
Cash and cash equivalents at the end of the period under review (“funds”) totaled ¥7,384
million, which was ¥3,291 million higher year-on-year. Cash flows and their principal
influencing factors were as follows.
[ Cash Flow from Operating Activities ]
Net funds used in operating activities totaled ¥3,250 million (compared with ¥13,024 million
used in operating activities in the year-earlier period). Main factors were higher pre-tax net
income for the period and an increase in equity underwritten, reflecting proactive origination.
[ Cash Flow from Investing Activities ]
Net funds used in investing activities totaled ¥1,443 million (compared with ¥730 million
used in investing activities in the year-earlier period). Main factors were expenditures for the
acquisition of shares in FPG Amentum Ltd. and FPG Trust Co., Ltd.
[ Cash Flow from Financing Activities ]
Net funds provided by financing activities was ¥7,888 million (compared with ¥14,000
million in the year-earlier period due to income from share issuance and increased debt, etc.).
The main factor was increased debt to finance the underwriting of JOL equity.
Consolidated liabilities at the end of the fiscal year under review totaled ¥52,910 million
(+¥19,444 million year-on-year).
-3,250
-5,000
– Advances received on commission fees related to equity underwritten scheduled to
be sold in the next consolidated fiscal year rose to ¥7,383 million (+¥2,978 million
year-on-year).
– Current liabilities other than those stated above posted ¥13,222 million (+¥7,239
million year-on-year). This was mainly due to higher guarantee deposits of ¥5,453
million (+¥3,523 million year-on-year) received from customers in connection with
currency-related OTC derivative instruments offered by the Securities Business,
and a ¥2,217 million increase (+¥634 million year-on-year) in obligations from
derivatives included in other non-current liabilities, as well as ¥3,407 million in
accrued income taxes (+¥1,946 year-on-year).
Out of this total, current liabilities increased to ¥50,030 million (+¥18,061 million year-on-year).
– Debts and bonds (including commercial paper) rose to ¥29,425 million (+¥7,844
million year-on-year). This was mainly due to an increase in funds procured for the
acquisition of equity underwritten.
-8,952
-13,024
2013
FPG Review 2015
2014
2015
(FY)
FPG Review 2015
28
Financial Section
Business Risks
Analysis of Financial Situation, Operating Results and Cash Flow
4.
Outlook for the Next Fiscal Year
Consolidated financial results projections for the fiscal year ending 30 September, 2016 are as
follows.
Of the business and accounting information listed in this statement, the information
indicated below could have a strong influence on investor decisions.
The FPG Group made the statements in this text regarding the future on the final day of this
consolidated fiscal year.
(Millions of yen)
Fiscal Year 2015
October 1, 2014 –
September 30, 2015
Fiscal Year 2015 (forecast)
October 1, 2015–
September 30, 2016
Year-on-year
15,313
16,957
+10.7%
14,127
14,918
+5.6%
1,185
2,039
+72.1%
Operating income
10,081
11,090
+10.0%
Ordinary income
10,051
11,245
+11.9%
1,988
2,700
+35.8%
297,349
333,396
+12.1%
84,178
95,000
+12.9%
Net sales
Tax Leasing Arrangement Business
Other businesses
Net income
Amount of leasing business structured
Amount of equity placement
Given expectations of continued favorable conditions within the Tax Leasing Arrangement
Business and prospects for contributions from newly integrated subsidiary FPG Amentum
Ltd., projections call for revenue growth to ¥16,957 million and income expansion in step
with the higher revenue, respectively in accordance with the above breakdown of results
projections.
1. Inherent Risks of Operating Lease Business
Since net sales of the FPG Group mostly derive from the Tax Leasing Arrangement Business,
in the event the following risks were to occur, they could have a significant impact on the
results of the FPG Group.
The Tax Leasing Arrangement Business of the FPG Group is carried out under the operating
lease business of subsidiaries (SPCs) of the FPG Group, and the risks related to such business
include those given below.
1 - Risk of Influence from Lessee Bankruptcy
In the case that a lessee cannot pay lease fees to FPG’s subsidiary (SPC) due to starting
bankruptcy proceedings or civil or corporate reorganization, it could lead to a decrease in income
for the operating lease business and losses for those investors financing in such business.
In this case, it is possible that investors would be less willing to invest in operating lease deals
arranged by FPG. This would make it more difficult for FPG to arrange new operating lease
business. As a result, it could lead to a decrease of equity placement and commission fees
received by FPG, influencing the performance of the FPG Group.
To decrease the risk, including lessee bankruptcy, FPG arranges operating lease business
primarily with major international maritime, airline, shipping, and aircraft lease companies.
Even in the unlikely case that a lessee goes bankrupt, FPG’s policy is to avoid decreased
income from operating lease business by selling leased assets and finding new lessees.
If despite the precautions taken, an undesirable situation occurs the income from such
business may decrease, and investors may be less inclined to invest. Equity placement may
decrease, with a reduction in commission fees for FPG and an impact on the FPG Group’s
performance.
2 - Fluctuation Risk for Future Sale Prices of Leased Assets
(Residual Value Risk)
When the lessee does not purchase leased assets at the end of a lease, FPG’s subsidiary (SPC)
sells these assets to a third party through the marketplace. In the case the leased asset can be
sold only for a price less than originally anticipated, it would decrease income from the
operating lease business, and may cause losses for investors financing in such business.
In this case, it is possible that investors would be less willing to invest in operating lease deals
arranged by FPG, making it more difficult for FPG to arrange new operating lease business.
As a result, this may lead to a decrease of equity placement and commission fees received by
FPG, influencing the performance of the FPG Group.
Occasionally, FPG deals with the sale price of leased assets by using residual value guarantees
29
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FPG Review 2015
30
Financial Section
Business Risks
from residual value insurance companies. This is to ensure conversion value above a certain
level for leased assets to decrease risk from price fluctuation.
If despite precautions, an undesirable situation occurs the income from such business may
decrease. Investors may be less inclined to invest, and equity placement may decrease, with a
decrease in commission fees for the FPG Group and an impact on its performance.
3 - Rights Based on Silent Partnership Agreements Booked
for Total Equity Underwritten
In certain cases, FPG will temporarily hold the equity investments in the silent partnerships
concerning FPG’s subsidiaries (SPCs) with the intent of transferring these equity units to
investors. These equity units of the silent partnership are booked as “Total Equity
Underwritten” in the current assets section on balance sheets to differentiate them from
normal “equity.”
Therefore, when FPG holds the underwritten equity, the value of the underwritten equity
could drop below the acquisition value due to a decrease in the value of leased assets. This may
occur if there is a deterioration in the creditworthiness of the lessee or fluctuations in the
exchange rate, which would result in FPG having to book a loss on valuation, or transfer loss
for this equity, influencing the performance of the FPG Group.
In the case that FPG cannot find an investor to transfer the underwritten equity, FPG would
not receive the commission fees anticipated for the transfer. If there should be equity interest
on this underwritten equity, then FPG would be involved in the operating lease business as an
investor. If the value of the leased assets decreased, then some or all of the equity used for the
equity interest could be unrecoverable, and impact the FPG Group’s performance.
4 - Exchange Risk
[ i ] Influence on Conversion Value of Company Commission Fees
The commission fees that FPG receives from FPG’s subsidiaries (SPCs) are mainly foreign
currency dominated. Therefore, if the value of the yen should increase, these commission fees
can become lower than originally estimated due to this fluctuation in the exchange rate, and
affect the performance of the FPG Group.
[ ii ] Influence on New Operating Lease Business
When sales of leased assets are carried out in foreign currency for operating lease deals
arranged by FPG, in cases where the yen becomes higher in value than it was at the time the
deals were completed, such business will become less profitable for investors after conversion
to yen, and investors in such business may see losses.
The equity that investors take on at the end of the lease period is often dominated in foreign
currency, if the value of the yen has increased since the original investment, the value received
may be less than the amount originally invested, making such business less profitable for
investors after conversion to yen, and investors in such business may see losses.
In cases where it is predicted that investors may face decreased profitability or losses in
operating lease deals due to exchange rates, investors may be less inclined to invest in new
operating lease deals arranged by FPG. Equity placement of silent partnerships may decrease,
with a decrease in commission fees for FPG and an impact on the FPG Group’s performance.
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FPG Review 2015
[iii] Influence on Transfer of Underwritten Equity
When FPG transfers underwritten equity acquired on a foreign currency basis to investors on
a yen basis, then the transfer value of this underwritten equity is based on the exchange rate
level from the time such operating lease business was arranged.
Therefore, in cases where the value of the yen suddenly increased after the acquisition of this
underwritten equity, the transfer value in yen that was based on the exchange rate at the time
arrangements were completed, could be relatively expensive compared to the value of the
underwritten equity at the time of the transfer. Thus, it may reduce investor interest and lead
to less investors purchasing this underwritten equity, meaning that sales take longer than
originally planned, and influence the performance of the FPG Group.
2. Business Risk Concerning Business Other than Operating
Lease Business
To provide the sub-divided real estate to investors pursuant to the Real Estate Specified Joint
Enterprise Act in our Real Estate-Related Business, the FPG Group acquires real estate and
records it as “real estate for arrangement” on the balance sheet. We procure real estate for
arrangement based on the expectation it will transfer to investors within a short period after
the acquisition. However, in cases where there is a rapid change in the economic
environment, the transfer of the real estate cannot be executed as initially expected, or
valuation losses may be recorded depending on the fluctuation of real estate value. The
performance of the FPG Group may possibly be affected.
In addition, the FPG Group provides currency-related OTC derivatives utilizing OTC
derivative transactions, such as currency options, in the course of its Securities Business. OTC
derivative transactions contain various risks, including market risk and credit risk stemming
from counterparties.
The FPG Group avoids the burden of market risk by executing derivative transaction
agreements not only with clients, but also with other counterparties to cover the risk. The
FPG Group also strives to avoid the burden of credit risk originating from counterparties by
careful credit management and by receiving cash collateral as necessary. Despite these efforts,
in the event of unforeseen circumstances where the FPG Group must bear the risk of
derivatives, the performance of the FPG Group may possibly be affected.
3. Legal Regulations
1 - Tax Leasing Arrangement Business
[ i ] Financial Instruments and Exchange Act
Investor rights for the silent partnership agreements and voluntary partnership agreements
entered into for operating lease business meet the requirements for securities in Article 2.2.5
of the Financial Instruments and Exchange Act. Therefore, FPG must follow both the
Financial Instruments and Exchange Act and the Financial Instruments Sales Law.
For FPG’s operating lease business, since FPG is handling the private placement of equity
interest from silent partnership investments including those rights based on silent partnership
agreements, FPG is registered as a Type II Financial Instruments Business under Article 29
FPG Review 2015
32
Financial Section
Business Risks
of the Financial Instruments and Exchange Act. In Article 52 of the Financial Instruments
and Exchange Act, conditions are set for cancelling registration and stopping business
activities. If these conditions are fulfilled then FPG may have its registration cancelled and be
ordered to stop business activities.
FPG follows all laws applicable to its business activities. As of the final day of this
consolidated fiscal year, FPG is not aware of any facts that would require the cancellation of
registration. However, if in the future some incident occurred, leading to cancellation of
registration and orders to stop business activities, it could affect the performance of the FPG
Group.
[ ii ] Laws and Regulations on Taxes
When arranging operating lease deals, FPG’s subsidiaries (SPCs) follow all existing laws and
regulations regarding taxes and accounting.
When arranging operating lease deals, FPG acquires individual opinion briefs from
accountants and lawyers to ensure sufficient measures are taken to examine applicable laws.
However, if these laws are reformed in the future, or new laws are put into place that change
how taxes are handled, investors may be less inclined to invest in new operating lease deals
arranged by FPG. Equity placement of silent partnerships may decrease, with a reduction in
commission fees for FPG, and an impact on the FPG Group’s performance.
Previously, the tax reforms in 2005 of the “Act on Special Measures Concerning Taxation
Article 67-12 (Special Provisions for Taxation where There is Any Amount of Loss Incurred
due to Partnership Business, etc.)” set upper limits to the amount of equity that investors
could write off from losses and profits allotted to investors from businesses, showing that the
tax authorities are strengthening regulations.
If accounting standards are reformed in the future and the off-balance effects of operating
lease business decreases for lessees, then the amount of operating lease business arranged
could decrease and have an impact on the performance of the FPG Group.
2 - Business Other than Tax Leasing Arrangement Business
In addition to the Tax Leasing Arrangement Business, the FPG Group operates in other
business areas including the Insurance Brokerage Business, Real Estate-Related Business,
Securities Business, and Asset Management Business, etc. Therefore, the FPG Group has
obtained relevant statutory approvals including registration as an Insurance Broker under the
Insurance Business Act, license as a real estate broker under the Building Lots and Buildings
Transaction Business Act, permission under the Real Estate Specified Joint Enterprise Act, and
registration as a Type I Financial Instruments Business Operator under the Financial
Instruments and Exchange Act, and registration of investment management, investment
advisory and agency business. In order to conduct business in these fields, the FPG Group is
required to comply with the Insurance Business Act, the Building Lots and Buildings
Transaction Business Act, the Real Estate Specified Joint Enterprise Act, the Financial
Instruments and Exchange Act, the Act on the Protection of Personal Information, and other
relevant laws and regulations.
Group receives administrative sanctions such as a business suspension order or cancellation of
registrations for some reason, it would possibly affect the performance of the FPG Group.
Furthermore, FPG Securities Co., Ltd., a consolidated subsidiary, is governed by the
Financial Instruments and Exchange Act as a Type I Financial Instruments Business
Operator and is required to maintain a capital adequacy ratio as defined in the Act of 120% or
more. As of the end of this fiscal year, this capital adequacy ratio requirement is met.
However, in the event where the ratio cannot be maintained for some reason in the future, it
would possibly affect the performance of the FPG Group by resulting in administrative
sanctions such as business suspension orders or cancellation of registration, etc.
4. Reliance on Specific Businesses
Since the target properties of the operating lease business are mainly marine containers, ships,
and aircrafts, capital expenditure trends in the shipping and airplane industries may affect the
demand for operating lease arrangements. Consequently, the performance of the FPG Group
may also be affected.
Depending on the performance of the shipping and airline industries, investor confidence in
lessees could decrease, or the sale value of assets upon lease completion could decrease, leading
investors to be less inclined to invest. Sales of rights from silent partnership agreements may
decrease, with a reduction in commission fees for FPG and an impact on the FPG Group’s
performance.
5. Handling of Personal/Confidential Information
While undertaking the Tax Leasing Arrangement Business or other business, the FPG Group
acquires and maintains personal and confidential information on clients and the companies
that introduced clients.
The FPG Group undertakes countermeasures to prevent outside access or viruses, with strong
internal controls. However, in the unlikely event that personal and confidential information
managed by the FPG Group leaks, the resulting administrative penalties, compensation
payments, and decrease in confidence in the FPG Group could have an impact on
performance.
6. Influence of Unrest on Financial and Capital
Markets or Economies
Previously, the global financial crisis created confusion in worldwide financial systems,
decreasing confidence in the financial industry and systems and negatively affecting the global
economy in various ways. If in the future, in the event where the global economy worsens, or
financial systems become unstable, it would affect the performance of the FPG Group as
these situations could make arrangement or sales of the operating lease business difficult.
The FPG Group ensures full compliance with laws and regulations in conducting business in
these fields. As of the end of this consolidated fiscal year, we are not aware of any facts falling
under grounds for cancellation of these registrations and licenses. However, in cases where the
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FPG Review 2015
34
Financial Section
Business Risks
7. Fund Procurement Risks
10. Major Lawsuit Risks
With respect to financing, the FPG Group utilizes funds on hand, individual loans from
financial institutions, loans pursuant to commitment line agreements and current account
overdrafts to meet the demand for funds for acquisition of equity underwritten in the Tax
Leasing Arrangement Business, for acquisition of real estate for arrangement in the Real
Estate-Related Business, and for daily business operations.
The FPG Group is involved in the Tax Leasing Arrangement Business through the medium
of operating leases and other business. It is possible legal proceedings may be brought about
by investors or by clients who introduce investors.
As of the end of this consolidated fiscal year, the total of commitment line agreements and
overdraft facility agreements is ¥45 billion, with most of these agreements being for a period
of one year.
If individual loans from financial institutions are no longer possible due to reasons such as a
worsening of the global economy, or because commitment line agreements and overdraft
facility agreements cannot be renewed, the FPG Group may not be able to procure the funds
it requires in a timely fashion. That could affect the performance of the FPG Group.
8. Determining Scope of Consolidation
Handling of Special Purpose Companies (SPCs) for Consolidated Accounting
Subsidiaries utilized as operating lease business providers, in relation to the Tax Lease
Arrangement Business, are excluded from the scope of consolidation, since we determined
including them could be significantly misleading for interested parties pursuant to the Article
5.1.2 of “Ordinance on Terminology, Forms, and Preparation Methods of Consolidated
Financial Statements” (Ordinance of the Ministry of Finance No. 28 of October 30, 1976).
In addition, any voluntary partnerships used for the Real Estate-Related Business are
excluded from the scope of consolidation pursuant to “Accounting Standard for Consolidated
Financial Statements” (ASBJ Statement No. 22) Paragraph 7-2.
Although it is difficult to predict lawsuits the FPG Group may become involved in, should
they occur, their results could be undesirable for the FPG Group, as it could affect the
business operations of the FPG Group.
11. Dependence on CEO and Business Structure of Company
The CEO of FPG, Mr. Hisanaga Tanimura is the founder of FPG and has been CEO since
its establishment. As of the final day of this fiscal year he held 2.34% of shares issued by FPG
(a total 33.04% when combined with the 30.70% of shares held by HT Holdings Co., Ltd.,
an asset management company of which Mr. Tanimura is the CEO), making Mr. Tanimura
a major shareholder. Mr. Tanimura has a broad range of experience and knowledge in
arrangement and sales for the operating lease business, and has many connections in different
areas for business partners and investors. At the same time, owing to his involvement in
proposing and determining management policies and business strategies, his work fulfills a
central role in handling business in the FPG Group. These factors demonstrate the significant
degree of dependence the FPG Group has on Mr. Tanimura.
Due to these factors, the FPG Group has been building a management structure to avoid
excessive dependence on Mr. Tanimura. The FPG Group has improved management
organization and information sharing between executives with board of director meetings and
internal company meetings. However, if at this current point in time Mr. Tanimura becomes
unable to manage the FPG Group for any reason, it could influence the performance of the
FPG Group.
In the light of the above accounting standards, we excluded SPCs from the scope of
consolidation after careful examination on the FPG Group’s involvement in the management
of each subsidiary and voluntary partnership, which we utilize as a business operating entity. If
in the future, new standards or guidelines are released on the inclusion of SPCs in
consolidation, and these accounting guidelines are significantly different from those currently
adopted by the FPG Group or the FPG Group’s involvement status has changed, it could
have a significant effect on the scope of consolidation of the FPG Group. Thus, it could have
an impact on the performance of the FPG Group.
9. Financial Covenants
Of the commitment line agreements and loan agreements the FPG Group is party to, some
include financial covenants. Should the performance of the FPG Group worsen and infringe
on the financial covenant, there could be an impact on the tenor of the loan.
Should this occur and the loan is required to be paid back in one lump sum, it could have a
significant impact on the business operations of the FPG Group.
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FPG Review 2015
FPG Review 2015
36
Financial Section
Consolidated Balance Sheet
Fiscal years ended September 30
(Thousands of yen)
(Thousands of yen)
Assets
2015
2014
2013
2015
2014
2013
September 30, 2015
September 30, 2014
September 30, 2013
September 30, 2015
September 30, 2014
September 30, 2013
Cash and deposits
Accounts receivable-trade
Supplies
Equity underwritten
7,384,443
4,092,451
3,840,392
125,222
37,602
35,495
8,316
1,701
1,750
46,522,828
28,542,101
13,436,096
Real estate for arrangement
1,574,318
3,403,621
1,208,886
Deferred tax assets
1,442,511
965,673
353,840
Guarantee deposits
4,972,365
2,759,404
—
Other
4,002,184
2,476,153
309,201
66,032,190
42,278,709
19,185,664
Total current assets
Non-current assets:
Property, plant and equipment
Facilities attached to buildings, net
Vehicles, net
Tools, furniture and fixtures, net
Land
Total property, plant and equipment
Other
Total intangible assets
140,984
148,353
20,602,390
12,086,400
Commercial papers
2,800,000
—
—
Current portion of long-term loans payable
2,208,600
758,600
200,000
310,000
220,000
20,000
Income taxes payable
3,407,197
1,460,861
646,633
Advance received
7,383,052
4,404,818
1,838,292
196,279
97,720
71,142
Asset retirement obligations
—
—
26,081
Guarantee deposits received
5,453,301
1,930,027
—
Other
4,017,812
2,353,548
318,416
50,030,579
31,968,950
15,355,319
Short-term loans payable
Current portion of bonds
Provision for bonuses
Total current liabilities
176,124
44,481
Non-current liabilities:
16,180
6,659
2,501
Corporate bonds
1,150,000
710,000
30,000
107,435
83,137
37,544
Long-term debts
1,514,800
591,400
300,000
Asset retirement obligations
83,029
73,906
17,484
132,328
122,292
48,398
35,927
35,927
35,927
341,797
301,849
120,454
Other fixed liabilities
2,880,157
1,497,598
395,882
52,910,736
33,466,549
15,751,202
Capital stock
3,086,478
3,072,438
851,750
Capital surplus
3,036,478
3,022,438
801,750
Retained earnings
9,955,370
4,441,133
2,833,899
Total non-current liabilities
1,577,356
218,342
48,996
50,056
47,267
3,344
1,627,413
265,610
52,341
Total liabilities
Net Assets
Shareholders’ equity:
Investments and other assets
26,587
—
—
487,737
693,477
207,450
38,747
33,019
33,540
397,277
368,237
572,025
73,583
75,512
69,220
1,023,933
1,170,247
882,236
2,993,144
1,737,706
1,055,032
Business commencement expenses
61,724
—
—
Minority interests
84,941
—
—
Total deferred assets
61,724
—
—
Total net assets
16,176,322
10,549,866
4,489,494
69,087,058
44,016,416
20,240,696
Total liabilities and net assets
69,087,058
44,016,416
20,240,696
Investment securities
Shares of subsidiaries and associates
Deferred tax assets
Lease and guarantee deposits
Other
Total investments and other assets
Total non-current assets
Deferred assets:
Total assets
37
147,936
24,106,400
Accounts payable-trade
182,253
Intangible assets
Goodwill
Liabilities and net assets
Current liabilities:
Current assets:
FPG Review 2015
Treasury shares
Total shareholders’ equity
(643)
(358)
(310)
16,077,682
10,535,650
4,487,089
13,664
14,216
2,404
33
—
—
13,698
14,216
2,404
Accumulated other comprehensive income:
Foreign currency translation adjustment
Valuation difference on available-for-sale securities
Total accumulated other comprehensive income
FPG Review 2015
38
Financial Section
Consolidated Statements of Income
Consolidated Statements of Cash Flows
Fiscal years ended September 30
Fiscal years ended September 30
(Thousands of yen)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income:
Interest income
Foreign exchange gains
Share of profit of entities accounted for using equity method
Rent of real estate
Other
Total non-operating income
Non-operating expenses:
Interest expenses
Share issuance cost
Bond issuance cost
Commission fee
Rent expenses on real estates
Other
Total non-operating expenses
Ordinary income
Extraordinary income:
Gain on sales of non-current assets
Gain on step acquisitions
Total extraordinary income and minority interest
Extraordinary loss:
Loss on retirement of non-current assets
Loss on valuation of shares of subsidiaries and associates
Loss on valuation of investments in capital of subsidiaries and associates
Total extraordinary loss
Income before income taxes
Income taxes-current
Income taxes-deferred
Income taxes
Income before minority interests
Minority interests in income
Net income
2015
2014
2013
2015
2014
2013
From October 1, 2014
to September 30, 2015
From October 1, 2013
to September 30, 2014
From October 1, 2012
to September 30, 2013
From October 1, 2014
to September 30, 2015
From October 1, 2013
to September 30, 2014
From October 1, 2012
to September 30, 2013
15,313,200
1,938,975
13,374,225
3,292,243
10,081,982
6,257,453
873,018
5,384,435
1,922,821
3,461,613
4,012,740
600,833
3,411,906
1,327,269
2,084,637
369,610
—
260,087
132,376
4,793
766,867
200,688
—
44,231
94,988
2,015
341,924
49,422
9,410
12,276
15,331
1,366
87,808
222,686
—
8,683
533,748
29,577
2,338
797,034
10,051,815
220,617
26,324
13,879
265,894
11,805
1,487
540,008
3,263,530
53,129
2,319
—
153,941
1,736
39
211,166
1,961,278
151
31,481
31,632
56
—
56
—
—
—
10,065,752
85,718
77,210
37,516
(31,481)
3,411
11,469
2,815
49,819
(369,610)
222,686
—
8,683
533,748
(98,021)
(260,087)
(19,632)
(17,980,726)
(1,829,303)
(2,212,961)
3,523,273
(15,000)
5,852
2,978,234
145,978
(1,406,045)
673,634
(263,721)
(2,254,104)
(3,250,236)
3,258,104
74,729
18,938
—
—
574
2,401
2,506
26,578
(200,688)
220,617
26,324
13,879
265,894
(6,305)
(44,231)
5,513
(15,106,004)
(2,194,735)
(2,759,404)
1,930,027
131,000
(7,369)
2,566,525
(164,532)
(11,939,655)
200,688
(194,828)
(1,090,359)
(13,024,155)
1,960,514
39,834
6,471
—
—
342
—
422
(3,794)
(49,422)
53,129
2,319
—
153,591
(2,411)
(12,276)
5,618
(10,283,636)
(1,208,886)
—
—
(156,000)
80,775
1,281,186
(40,941)
(8,173,161)
49,422
(52,927)
(776,105)
(8,952,771)
(82,431)
(15,832)
(190,574)
(48,587)
(32,685)
(3,640)
(1,217,570)
(186,220)
(55,017)
(141,571)
(16,617)
20,222
28,826
(18,891)
(1,443,865)
(430,557)
(484)
75,401
84,246
(33,438)
(730,214)
(51,950)
(307,940)
3,722
48,398
(27,301)
(426,415)
3,502,010
2,800,000
4,000,000
(1,626,600)
791,316
(270,000)
28,080
(812,995)
(523,453)
(285)
7,888,072
8,515,990
—
1,300,000
(450,000)
986,120
(120,000)
4,415,051
(381,641)
(265,348)
(48)
14,000,123
10,479,300
—
300,000
(121,174)
—
(20,000)
1,021,544
(283,607)
(145,958)
—
11,230,104
98,021
3,291,992
4,092,451
7,384,443
6,305
252,059
3,840,392
4,092,451
2,411
1,853,328
1,987,063
3,840,392
2,815
3,411
11,469
17,696
10,065,752
4,176,413
(474,647)
3,701,765
6,363,986
20,245
6,343,740
2,506
574
2,401
5,482
3,258,104
1,880,540
(611,311)
1,269,229
1,988,874
—
1,988,874
422
342
—
764
1,960,514
967,895
(193,252)
774,643
1,185,870
—
1,185,870
Consolidated Statements of Comprehensive Income
Fiscal years ended September 30
(Thousands of yen)
2015
Income before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Share of other comprehensive income of entities accounted for
using equity method
Total other comprehensive income
Comprehensive income
Profit attributable to
Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests
39
FPG Review 2015
(Thousands of yen)
2014
From October 1, 2014
to September 30, 2015
From October 1, 2013
to September 30, 2014
6,363,986
1,988,874
33
(10,166)
8,370
—
—
11,811
(1,762)
6,362,223
11,811
2,000,686
6,343,221
19,002
2,000,686
—
Cash flows from operating activities
Income before income taxes and minority interests
Depreciation
Amortization of goodwill
Amortization of business commencement expenses
Loss (gain) on step acquisitions
Loss on valuation of stocks of affiliates
Loss on valuation of investments in capital of subsidiaries and affiliates
Loss on retirement of non-current assets
Increase (decrease) in provision for bonuses
Interest income
Interest expenses
Share issuance cost
Bonds issuance cost
Commission fee
Foreign exchange losses (gains)
Share of (profit) loss of entities accounted for using equity method
Decrease (increase) in notes and accounts receivable-trade
Increase (decrease) in equity underwritten
Increase (decrease) in real estates for arrangement
Decrease (increase) in guarantee deposits
Guarantee deposits received
Decrease (increase) in security deposits and guarantee deposits
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in advances received
Other, net
Sub total
Interest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of shares of subsidiaries resulting in change in scope of
consolidation
Purchase of shares of subsidiaries and associates
Payments for lease and guarantee deposits
Proceeds from collection of lease and guarantee deposits
Other proceeds
Other payments
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Net increase (decrease) in commercial papers
Proceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
Proceeds from issuance of common shares
Cash dividends paid
Commission fees paid
Purchase of treasury shares
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
FPG Review 2015
40
CORPORATE DATA / STOCK INFORMATION
Corporate Data
(As of September 30, 2015)
Company Name: Financial Products Group Co., Ltd.
Date of Establishment: November 2001
Representative: Hisanaga Tanimura, CEO
Main Business:
Head Office:
JP Tower 29F, 2-7-2, Marunouchi, Chiyoda-ku,
Tokyo 100-7029, Japan
Phone: +81-3-5288-5656 Fax: +81-3-5288-9300
Branches: Sendai, Omiya, Osaka, Nagoya, Hiroshima, Takamatsu, Fukuoka
Tax Leasing Arrangement Business, Real Estate-Related Business, Insurance
Brokerage Business, M&A Advisory Business, Private Banking Business,
Securities Business, Asset Management Business and Trust Business
Main Consolidated Subsidiaries: FPG Securities Co., Ltd.
FPG Amentum Ltd.
FPG Asset Management Co., Ltd.
FPG Trust Co., Ltd.
Paid-in Capital: ¥3,086,478,087
Number of Employees (Consolidated): 157
Stock Information
Accounting Auditors: Ernst & Young ShinNihon LLC
(As of September 30, 2015)
Listed Stock Exchanges: Listed on the First Section of the Tokyo Stock Exchange
Securities Code Number: 7148
Number of Shares Authorized: 216,000,000
Number of Shares Issued: 94,299,600
Number of Shareholders: 19,531
Record Date: September 30, March 31
Transfer Agent: Sumitomo Mitsui Trust Bank, Limited
Distribution of Shareholders
The Master Trust Bank of Japan, Ltd. (Trust Account)
12.02%
Shareholding
Ratio
(%)
28,800,000
30.54
3,697,700
3.92
BBH for Matthews Japan Fund
2,725,500
2.89
Hisanaga Tanimura
2,199,600
2.33
Japan Trustee Services Bank, Ltd. (Trust Account)
2,055,700
2.18
HT Holdings Co., Ltd.
Individuals and Other
Shareholders
Financial Institutions
Shares Held
(Shares)
Major Shareholders
38.88%
Securities Companies
5.07%
The Nomura Trust and Banking Co., Ltd.
(Investment Trust Account)
886,400
0.94
Foreign Investors
Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
871,800
0.92
Bank of New York GCM Client Account JPRD AC ISG
(FE-AC)
760,531
0.81
MSCO Customer Securities
754,500
0.80
Naoyuki Ueda
672,000
0.71
10.96%
Other Japanese
Companies
33.06%
Stock Price Trend
Stock Price (Yen)
Trading Volume (Thousand Shares)
1,200
900
600
300
0
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
0
2012
2013
10 11 12 1
41
FPG Review 2015
2014
2
3
4
5
6
7
8
9 10 11 12 1
2015
2
3
4
5
6
7
8
9 10 11 12 1
2
3
4
5
6
7
8
9