Ricoh Leasing : Integreted Report 2023（10.1MB）

Integrated Report

Ricoh Leasing

Ricoh Leasing Company, Ltd.

Corporate Planning Department

New Otani Garden Court 14F,

4-1,Kioi-cho,Chiyoda-ku, Tokyo 102-8563 Tel: [phone]https://www.r-lease.co.jp/en/

2023

CONTENTS

Introduction
Corporate Philosophy /
Basic Stance / Uniqueness	2
Target Vision of Ricoh Leasing	4
Engagement with Society	6
A Look at Ricoh Leasing from the
Perspective of Our Uniqueness	8
Financial Highlights
Non-financialHighlights	10

Driving Force for

Continuous Value Creation

Message from the CEO	12
History	18
Value Creation Process	20
Business Model	22

Introduction	Driving Force for	Key Strategies to	Sustainability	Business Strategies	Corporate	Performance
Continuous Value Creation	Promote Value Creation	Strategies	Governance

Business Strategies

Results by Segment	64
Message from the Officer
in Charge of Sales	66
Business Strategies	68
Strategies by Business Field	70

Corporate Governance

Corporate Governance	72
.......	78
Two Outside Directors in Conversation
Compliance	80
Risk Management	82
List of Officers	84

Performance

Key Strategies to Promote Value Creation

Review of the Mid-term Management Plan	24
Overview of the Mid-term Management Plan	26
Financial Strategy	28
System Strategy	30
Human Resources Strategy	31
Overview of Human Resources Strategy	32

Editorial policy

● Ricoh Leasing Company, Ltd. ("the Company") publishes the Ricoh Leasing

Integrated Report as a means of informing shareholders, investors and all other

stakeholders of the Ricoh Leasing Group's views on and actions for value creation.

The report's purpose is to present the Group's corporate philosophy, medium- to

long-term vision of becoming a Circulation-Creating Company and strategies for

Major Financial Data	86
ESG Data	88
Corporate Information
and Stock Information	93

Note regarding forward-looking statements

In addition to past and present facts about the Group, this report contains forecasts and strategies focused on the future. These are predictions of the future based on the information available at the time of preparation. Due to various factors, these predictions may differ from actual performance and the results of business activities.

Sustainability Strategies

Promotion of Sustainable
Management	34
Non-financialTargets	36
Message from the Officer
in Charge of Sustainability	38
Contribute to a Clean
Global Environment	40

Enhance Quality of Life	48
Develop a Virtuous Cycle for a
Sustainable Economy	51
Create a Happiness Company
and Society	54
Expert Dialogue
Sustainability Management
and the Future	60

achieving that vision, history and corporate story on the path to sustainable growth.

● Integrated Report 2023 has our corporate story at its core and focuses on the newly

formulated new Mid-term Management Plan and our approach to sustainability

management, from the perspectives of both financial and non-financial information.

We have included in this report messages from individual directors, including

President Nakamura, as well as a snapshot of our engagement implementation as

described in conversations between outside directors and discussions with experts.

● In the process of preparing this report, we verified the interests and expectations of

our stakeholders, interviewed people inside and outside Ricoh Leasing, including

top management, and referred to the International Integrated Reporting Council

(IIRC) framework advocated by the IFRS Foundation (former VRF) and the Guidance

for Collaborative Value Creation issued by Japan's Ministry of Economy, Trade and

Industry to select and decide the key subjects to be reported.

● Reporting period: Fiscal 2022 (April 1, 2022 to March 31, 2023; "FY2022")

Note: This report includes some information from outside the reporting period.

● Scope of report: Ricoh Leasing Company, Ltd., Techno Rent Co., Ltd., Enplus Inc.,

Welfare Suzuran Co., Ltd. and Tokyo Business Rent Co., Ltd. ("the Ricoh Leasing Group")

● Publication: November 2023

● For inquiries regarding this report, please contact: Corporate Planning Department,

Ricoh Leasing Company, Ltd.

TEL.[phone]

This report has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated report and the Japanese original, the original shall prevail.

Information disclosure system

The Group discloses financial and non-financial information through the following resources. Please refer to our website for the latest information.

	Financial Information		Non-Financial Information
	Integrated	Report
	Business Report
	Annual Securities Report
	IR Presentations			Corporate Governance
					Report
	Shareholder and Investor
	Information Site				Sustainability Site
	https://www.r-lease.co.jp/en/ir/				https://www.r-lease.
					co.jp/en/sustainability/
					management/

Integrated Report 2023

1

P U R P O S E

Corporate Philosophy

We will be a bridge to an abundant future with our independent financial and services.

Basic Stance

1. We will contribute to the development of a sustainable global society with our integrity and reliable business activities.
2. We will connect our customers to the future and society with services beyond expectations.
3. We will create an enjoyable and active working environment while respecting each other.
4. We will answer stakeholders' expectations by enhancing corporate value.

2

Introduction	Driving Force for	Key Strategies to	Sustainability	Business Strategies	Corporate	Performance
Continuous Value Creation	Promote Value Creation	Strategies	Governance

Uniqueness

Since its establishment in 1976, the Ricoh Leasing Group has provided support for a wide range of capital investments, especially for small and medium-sized business, and has contributed to improving business efficiency and creating new businesses. Here we introduce five elements that characterize the independent financial and services that the Group has cultivated over the years.

Targets

Mainly business

to business

Timeframes	Deal Size
From small-amount,
Mainly 5-year
small-volume
leases	transactions on up

Uniqueness

RegionsStyle

Expanding to new	Continuous business
regions, mostly in	evolution
Japan

Integrated Report 2023

3

Our Future Target Vision of Ricoh Leasing

Ricoh Leasing Group started a new three-yearmedium-term management plan from April 2023. We will aim to realize the abundant future set forth in our corporate philosophy by focusing on strategic planning that combines contributions toward corporate growth opportunities through the utilization of transaction data centered on vendor leasing, which is our Group's DNA, with work on

the four material issues identified for solving social issues through our business activities.

Material Issues

Introduction	Driving Force for	Key Strategies to	Sustainability	Business Strategies	Corporate	Performance
Continuous Value Creation	Promote Value Creation	Strategies	Governance

CorporatePhilosophy

We willbe a bridge to

Social issues

• Response to climate change
• Creating a decarbonized society
• Smaller working-age population
• Aging of social infrastructure
• Digitalization
• Regional inequalities, etc.

Solving social issues

through business

activities

DNA

of Ricoh Leasing

Use of transaction

data, especially vendor leasing

Develop a

Enhance

virtuous cycle

quality of life

for a sustainable

Create

Contribute to

economy

a happiness

a clean global

company and

environment

at

e

society

r m

ria

u

l

i

o

s

f

s

n

u

e

i

s

s

n

o

i

b

u

t

i

s

r

i

t

e

n

t

o

Medium-to-Long-Term Vision

i

C

n

t

u

Become a Circulation

r

p

o

Creating Company

p

o

h

o

w

t

r

C

g

o

e

n

t

t

a

r

r

i

b

u

o

r

t

o

p

i

ng to c

anabundant future with

our independent financial and services.

Support for corporate growth opportunities through business activities

Corporate growth

opportunities

• Starting a business
• Capital investment
• Financing
• General business operations
• Business succession, etc.

4

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5

Introduction	Driving Force for	Key Strategies to	Sustainability	Business Strategies	Corporate	Performance
Continuous Value Creation	Promote Value Creation	Strategies	Governance

Our Business Engagement with

Society

Based on its corporate philosophy, the Ricoh Leasing Group will, in addition to providing financial services to its customers, contribute to the resolution of social issues and the achievement of the SDGs by improving people's quality of life and the economy through the circulation of goods and services.

Renewable energy power

Base station equipment
	generation	equipment

	Solar power	Data centers
Relocation management
generation business
services

		Doctor support	Housingrental and
		loans	real estate business
Support for agriculture		Construction and	Factoring services for healthcare
and livestock	Rental business	earthmoving equipment	& nursing-care facilities
	(vibration measuring instruments)		Nursing-care management
		Medical equipment

	Scale systems
Printing machines and	POS systems
Collection agency
industrial machinery
	services

	Electric cars	Office equipment
Cubicles	Teleconferencing systems	LED lighting

Server equipment

Computers	Telephones	Multifunction
Building leases		copiers
Forklifts

Leases & Finance Business

In addition to finance leases, operating leases, installment sales, and credit for office equipment such as multifunction copiers and PCs, medical equipment, industrial machinery, and measuring instruments, we also provide financing such as corporate loans, industry- specific loans, housing loans, and condominium loans. In addition, our subsidiary Techno Rent Co., Ltd. provides rental services for office equipment, measuring instruments, and other equipment.

• Finance leases	• Operating leases
• Installment sales	• Rental	• Loans

Services Business

We provide agency services such as invoice issuance and accounts receivable collection that contribute to the efficiency of our clients' billing and collection operations. We also provide factoring services for healthcare and nursing-care facilities to support cash flow for medical and nursing care providers. Welfare Suzuran Co., Ltd. operates nursing-care and nursing home facilities. Enplus Inc. operates a relocation management business and a serviced apartment business that provides total support to foreign nationals posted overseas.

• Collection agency services
• Factoring services for healthcare and nursing-care facilities
• Relocation management
• Nursing-caremanagement

Investment Business

As Japan moves toward the realization of the government's goal of a carbon-neutral society by 2050, we are channeling efforts into the solar power generation business, one of the renewable energy sources for which demand is on the increase. And to address the demand for new housing environments to accommodate Japan's declining birthrate, aging population, and changing demographics, we are engaged in the housing rental and real estate business.

• Housing rental and real estate
• Solar power generation

6

Integrated Report 2023

7

Approximately

30%

Ricoh related

At a Glance A Look at Ricoh Leasing

from the Perspective of

Our Uniqueness

Introduction	Driving Force for	Key Strategies to	Sustainability	Business Strategies	Corporate	Performance
Continuous Value Creation	Promote Value Creation	Strategies	Governance

Here are the five indicators that define the uniqueness of the Ricoh Leasing Group.

Regions

Expanding to new regions,

mostly in Japan

Style

Continuous business evolution

Deal Size

From small-amount,small-volume

transactions on up

Total transaction volume / Investment amount

425.4billion yen

Average customer unit price per lease and installment contracts

2.19million yen

Number of contracts per year

Approximately 350,000contracts Approximately 130,000contracts

Targets

Mainly business to business

Number of business partners

Approximately 400,000companies

Number of vendors with transactions

Approximately 6,000companies

Percentage of small and medium-sized enterprises (SMEs)

Approximately

98%

Number of locations

41locations nationwide

Group companies

● Techno Rent Co., Ltd.

● Enplus Inc.

● Welfare Suzuran Co., Ltd.

• Tokyo Business Rent Co., Ltd.

Timeframes

Mainly 5-year leases

Average term of lease and installment contracts

Approximately 5.7years

Ricoh's share* of total transaction volume / business investment

* Total transaction volume through Ricoh agents/dealers as the sales channel

Non-Ricoh related

Approximately

70%

Business derived from vendor leasing

• Annual number of transactions in collection agency services
  28.36 million transactions
• Annual power generation by solar power generation business

112,872MWh

As of March 31, 2023

8

Integrated Report 2023

9

Highlight Financial Highlights Non-financial Highlights

Introduction	Driving Force for	Key Strategies to	Sustainability	Business Strategies	Corporate	Performance
Continuous Value Creation	Promote Value Creation	Strategies	Governance

Non-financial Highlights

CO2 Emissions

Number of Employees (Non-consolidated)

Financial Highlights

(t-CO2)
999	969

(People)

Total Transaction Volume1 /

Investment Amount2

(Billion yen)

	465.8
422.1		379.6	408.0
		367.7
7.2	23.2	16.4	27.9	17.4
2019/ 3	2020/3	2021/3	2022/3	2023/3

Operating Assets3 / Return on Assets (ROA) / Default Rate4

(Billion yen)				(%)
	1,019.1	1,039.4	1,055.01,090.2
921.9				Investment
			Business
1.19	1.08		1.15	1.23
	1.04
				Leases &
				Finance
				Business
0.17	0.16	0.15	0.12	0.14
2019/ 3	2020/3	2021/3	2022/3	2023/3

						876
									764
594		590
						599
									473		465
													189
	405			379
					277			292			276
2019/	3	2020/3	2021/3	2022/3	2023/3
							■ Scope 1	■ Scope 2

									1,025	1,054
						963
845	899							499
			487
		460
	395			426
										538			555
							503
	450			473
2019/	3	2020/3	2021/3	2022/3	2023/3
									■ Male	■ Female

• Leases & Finance Business Total transaction volume
• Investment Business Investment amount

1. Total transaction volume refers to total amount collected during the contract period
2. Investment amount refers to asset purchase amounts

■ ■ Operating assets
Return on assets (ROA)	Default rate

1. The balance of operating assets includes securitized lease receivables
2. Default rate = Credit loss amount ÷ Average balance of operating assets

Percentage of Female Managers	Annual Paid Vacation Days Taken
(Non-consolidated)		(Non-consolidated)
(%)	23.0	(%)
	81.5	79.8
20.4	20.7	84.6	73.9

While the investment amount in the solar power	Operating assets increased due to growth in the Leases
generation and housing rental and real-estate-related	& Finance Business, especially in loans. Highly profitable
businesses declined due to factors such as changing	renewal of leasing and rentals grew, driving profits in the
market conditions, the total transaction volume grew	Leases & Finance Business, thereby improving ROA.
mainly in corporate loans and the leases and installment
sales of office and information-related equipment.

18.5	67.8
15.6

Operating Profit / Profit Attributable to Owners of Parent / Return on Equity (ROE)

(Billion yen)		21.2	(%)
		19.2
17.2	17.0	17.4
		14.8
		13.4
11.9	11.8	12.0

Dividend / Payout Ratio

(yen)		30.1	(%)
25.6	27.4	145
23.5	120
20.9
100
90
80

2019/ 4 2020/4 2021/4 2022/4 2023/4

2018 2019 2020 2021 2022

* Periods run from January 1 to December 31

Number of Officers (Non-consolidated)

Officer Composition Ratio (Non-consolidated)

7.0	6.6	6.4	6.9	7.2

	2019/ 3	2020/3 2021/3 2022/3 2023/3
■ Operating profit	■ Profit attributable to
		Return on equity (ROE)	owners of parent

Our improved ability to generate earnings, derived from our emphasis on profitability, enabled us to absorb increased growth investment costs, such as HR and IT systems, and still deliver record levels of operating profit and profit attributable to owners of parent.

ROE also improved.

	2019/ 3 2020/3 2021/3	2022/3 2023/3
■ Annual dividend per share		Payout ratio

For the fiscal year ended March 31, 2023, we paid an annual dividend of 145 yen per share, marking the 28th consecutive year of dividend growth.5 We will maintain our basic policy of providing steady shareholder returns in the medium- and long-term future.

(People)				(%)
	14	13	13	13
12
	7	7	8	8
6	3
	3
2		4	4
6	7	6	5	5
2019/ 6	2020/6	2021/6	2022/6	2023/6
		■ Independent	Female

61.5 61.5

50.0 50.0 53.8

30.8 30.8

21.4 23.1

16.7

2019/ 6 2020/6 2021/6 2022/6 2023/6

Independent officers

Female officers

10

5. Including a substantial dividend increase following the stock split in the fiscal year ended March 31, 2000

Integrated Report 2023 11

Message from the CEO

Tokuharu Nakamura

Representative Director,

President and

Introduction	Driving Force for	Key Strategies to	Sustainability	Business Strategies	Corporate	Performance
Continuous Value Creation	Promote Value Creation	Strategies	Governance

Under the new Mid-term Management Plan, we will accelerate the move toward an abundant future by creating a new cycle of continuous business evolution

The prior Mid-term Management Plan that we had been promoting during the COVID-19 pandemic finished and was followed by a new Mid-term Management Plan that was launched in fiscal 2023. Having laid the foundation for our medium- to long-term vision of evolving into a Circulation-Creating Company, by tapping into the uniqueness of Ricoh Leasing (i.e., our strengths) we are now embarking on the creation of a new cycle by strengthening our existing businesses and creating new businesses with underlying continuity. It is of critical importance that we improve our organizational strengths in order to realize the management strategies of the New Mid-term Plan. To this end, we are channeling our efforts into the management of human resources that will facilitate evolution.

Though navigation of the uncertain path ahead was sought in management during the prior Mid-term Management Plan, we actually achieved record-high profits for three consecutive years through the improved ability to generate earnings

Chief Executive Officer

In the prior Mid-term Management Plan (hereinafter referred to as "the prior Mid-term Plan"), which began in April 2020, our corporate activities were severely restricted, requiring from the Ricoh Leasing Group a different type of management leadership than the past. The external environment underwent drastic changes due to the simultaneous onset of uncertain situations overseas, inflation, and high oil prices.

While facing a situation that no one could have anticipated, from the outset of the prior Mid-term Plan, we found that by offering at affordable prices the unique services of Ricoh Leasing in which customers find value, we were able to carry on business with a focus on profitability (i.e., the ability to generate earnings). The result was success in achieving our financial targets. Of particular note is the fact that we achieved record profits for three consecutive years in terms of gross profit, operating profit, ordinary profit, and net income.

At the same time, we failed to meet the operating assets balance target set in the prior Mid-term Plan due to supply chain disruptions caused by factors such as the semiconductor shortage, as well as having to carefully scrutinize new projects amid a real estate market that had peaked. This left us with the feeling that there were challenges we still had to overcome. And though there were times during the pandemic when it seemed nearly impossible to conduct sales activities, we were able to establish a sales style focused on efficiency through practices such as online business negotiations and limiting the number of individuals who engage in face-to-face sales activities. There were also positives that came as a result of the pandemic, such

as our success in conducting all operations remote, thereby offering employees a freer style of working.

The new Mid-term Management Plan (FY2023-FY2025) (hereinafter referred to as "the New Mid-term Plan") started in April 2023. This is simultaneously accompanied by a partial revision to our corporate philosophy. Formulation of the New Mid-term Plan was done with backcasting, as we felt it was first necessary to firm up our corporate philosophy, the goal we had been aiming for. Specifically, we tweaked the term "financial services" in the previous corporate philosophy to make it "We will be a bridge to an abundant future with our independent finance and services." The Group will gradually shift our focus by pivoting from being a financial services company to a service- oriented business. And we wanted to instill in all Group employees the common understanding that the Group values not only our shareholders but also all stakeholders as well, and will increase our corporate value to give back to society. Toward that end, we decided to articulate our basic stance as "We will answer stakeholders' expectations by enhancing corporate value." The step taken in preparing for this partial revision during the period of the prior Mid-term Plan was visiting our business locations in Japan. Valuing the opportunities to speak directly with our employees in our own words, we took steps to see that they embraced the corporate philosophy. The process outlined here describes how we steadily laid the foundation for our medium- to long-term vision of evolving into a Circulation- Creating Company during the prior Mid-term Plan.

12	Integrated Report 2023 13

Driving Force for Continuous Value Creation

Leverage transaction data to accelerate business development Promote business growth strategies for each area

Introduction	Driving Force for	Key Strategies to	Sustainability	Business Strategies	Corporate	Performance
Continuous Value Creation	Promote Value Creation	Strategies	Governance

Management that facilitates continuous business evolution

Welfare Suzuran as an example of the aim for steady growth

In going forward to realize the corporate philosophy of the New Mid-term Plan, we will develop our business with an eye toward developing into a Circulation-Creating Company, as articulated in our medium- to long-term vision. We have made contributions to various social issues thus far through our business, and, based on the four material issues we will continue to take on the challenge of further providing solutions to social issues. It is not enough for each department to just create a business plan with numerical targets; it must also be a business plan that serves as the link to our material issues, which embody the issues we must solve, and ultimately realizes our corporate philosophy. Therefore we have accumulated transaction data through vendor leasing-something that resides within our very DNA-that can be reworked into new services. Our hope is that a cycle is created in which our services are used by companies for whom those services resonate, and their resultant growth spawns solutions to social issues. This is more than just transaction data, as it has been accumulated together with credit information and a host of accompanying data. The question posed to us is how to make the best use of it. We feel that the employment of big data by design will lead to the maximization of our strengths.

"as a Service" and BPO1 are identified as areas of focus in the New Mid-term Plan. In the BPO area, we have begun an underwriting business and will accelerate business development by leveraging credit and other transaction data we have accumulated thus far. Our management strategy sets forth the creation of a new cycle by strengthening existing businesses with a focus on efficiency and creating new businesses with underlying continuity. To translate this into action, we have categorized our business growth strategies into

three strategies across eight business areas, and are engaged in specific measures.

Business Growth Strategy

1. Taking on the challenge of a new business models (as a Service, BPO)
2. Diversification through the addition of businesses and services
   (Real estate, The environment, Nursing care)
3. Expansion and improved efficiency

(Office, Medical and Healthcare, Capital investment)

We will intensively invest people, goods, and money into area of focus (1). With (2) as an area for business expansion, we expect favorable performance and the accumulation of assets to be accompanied by growth, making this a big piece of the pie for which there is potential. As the most important foundation for supporting growth of the Group, (3) is an area from which we can expect steady growth to be achieved and further expansion as we improve its efficiency.

We will move forward with the building of a diversified business portfolio based on these eight business areas. Establishing the business portfolio to which we should aspire, we will upgrade business management to determine from the two perspectives of growth and profitability matters such as where to concentrate the investment of people, goods, and money, and where capital can be allocated to yield what kinds of returns. Through this work we intend on growing our net profit2 from 44.7 billion yen in fiscal 2022 to 53 billion yen in fiscal 2025.

The New Mid-term Plan's concept of continuous business evolution is described in the original Japanese with the key terms "continuous" and "evolution." I will proceed to explain, using the example of Welfare Suzuran Co., Ltd. (hereinafter referred to as "Welfare Suzuran").

Made a Group subsidiary in 2022, Welfare Suzuran operates nursing-care facilities to strengthen our business presence in the nursing care sector as part of our investment in the area of ESG. We have been offering factoring services since 2011, and currently have approximately 2,800 nursing care business customers.

It is generally thought that businesses that make use of factoring have a need to improve their cash flow and desire to make their business more efficient. However, when financing services provide a solution to a customer's cash flow problems, that brings an end to their use of our factoring for transactions. Prompted to explore the idea of coming up with even more things we could do, we made it a necessity to learn more about the nursing care industry and operate nursing-care facilities. This is an "evolution" of factoring services for nursing-care facilities. Through managing our own business we can learn from nursing care providers and industry, and expect

to generate business synergy by creating services from issues and business know-how, such as best practices, and providing these to our customers.

It is important for "mutation" of the "underlying continuity" of an existing business to employ transaction data. Factoring of this kind can also involve credit by employing the transaction data of the Group, and is a service that is a continuous business evolution of our Leases & Finance Business.

Our solar power generation business is a similar case in that we initially only provided financing for solar power generation equipment. Once we began our own power generation business, we acquired transaction data and management know-how in that business, such as power generation forecasting. And from branching out even more, we now also provide support services for power generation companies.

The company that attempts to get returns from pursuits not in line with continuous operations inevitably takes on a great risk. We believe that the Group's ability to grow business steadily and with a high degree of certainty is a defining characteristic of Ricoh Leasing.

Strengthening existing businesses

＋

Services Business

Expansion of

investment

and

Collection Agency Services

Factoring Services

diversification

of services

Relocation Management

Investment Business

Extend to periphera services

Housing Rental

Solar Power Generation Business

Real Estate Business

Leases & Finance Business

Office

Rental

Horizontal

Taking on the

Medical and Healthcare

Capital investment

development

of

challenge of new

asset business

business models

Real estate

The environment

know-how

Creating new businesses

Focus areas

as a

ServiceBPO

Enrich services

Expanding businesses

Real estate

The environment

Nursing care

14	Integrated Report 2023 15

Driving Force for Continuous Value Creation

Executing three strategies to enhance organizational strengths

Development of human resources, construction of IT systems, reinforcing of governance

Introduction	Driving Force for	Key Strategies to	Sustainability	Business Strategies	Corporate	Performance
Continuous Value Creation	Promote Value Creation	Strategies	Governance

paramount value-more so than making money, more so than just establishing a position of status or honor.

My belief is that a company expands in tandem with the extent to which employees' imagination and actions are

In the march toward enhancing the organizational strengths that support our business strategies, we are engaged on three fronts: the development of human resources and organization building, the construction of IT systems, and the reinforcing of our governance. As investment in human capital is considered so important to business management in these times, we feel the need to further increase the value of our human resources. Since digital transformation means less hands-on labor, we now face the need to assign our people to tasks of higher value. The more we move to increase the value of the work our people take on, the more we need to shift menial tasks to automated systems.

Regarding our human resources strategies, we find it important to educate and reskill employees as we continue to secure new human resources. The Group provides an extensive array of benefits as well as personnel and education programs, of which a range of educational options, including the human resources development program RL Academy. We have our employees take it upon themselves to utilize these programs to reskill and thereby increase their value and the value of their work. The Company collectively continues to nurture its individuals to develop the desire to be the best employees they can be by taking advantage of these programs. We believe that

consciously to provide solutions to the issues our customers face, hence the importance to us of investing in human resources that contribute in this way.

We are about more than just generating profits. To wit, one value of importance to the Group's business is our commitment to an abundant future based on our corporate philosophy-and that ties in closely to our human resources. There is no point in doing business without giving due consideration to this. Any new project submitted for internal review by a body tasked with that job will always be scrutinized on the basis of how it connects to our corporate philosophy and what sort of value it will provide. Projects with recognized value are subjected to screening.

The leasing industry demands a flexible approach to market changes, thus streamlining and automation of business operations is inevitable. In recent years, with heightened demand from society for improvements such as the establishment of systems and strengthened security, the evolution into systems that are more flexible and stable while providing greater efficiency and higher quality will lead to the expansion of business. We will continue to invest in the development of IT systems to strengthen our IT governance structure as well, including our affiliates in that process,

Studying alone is not enough to equip oneself with the ability to bring about evolution in a company through mutation. The ability to mutate will flower as evolution through a repeated process of practice and experience in an environment conducive to such. This is why it is so important to have the right environment. Even if, say, an employee who would otherwise be highly motivated and capable of acting proactively felt limited by a conformist environment, that employee's behavior will be repressed because of the feeling that limitations are imposed on both the organization and individual. So what can be done to revive that employee?

I would say that they should be provided with more freedom within the organization and stimulation by surrounding them with new employees with potential. This will motivate and enable them to take action, thereby revitalizing the organization. Diversity and inclusion are essential for creating an environment that develops human resources who can bring about evolution, which underscores the importance of constantly and consistently continuing to develop human resources.

allowed to be free. Though there might be those who outgrow the Company and no longer fit inside its framework, the important thing is that the Company not impede their potential. The ability of the Company to avoid this is contingent on how management can go about creating a venue where individuals can freely and openly express their opinions with one another and ensure psychological safety.

One way we create this type of environment is by offering the Mirai Creation program that give employees the opportunity to provide their own ideas about new business. A single idea from an employee can be the catalyst for evolution, which can grow into a service we offer, which can prompt the launch of its own business division and become a full-fledgedbusiness-and through further evolution can go on to constitute a major business within the Company's business portfolio. Should that take place, it seems to me that it would be fascinating to turn over the role of company president to that employee.

by increasing the value of our employees, we also increase the value for our customers. Once employees truly understand our corporate philosophy and other facets that define the Company's direction and material issues we can expect them to act

because it means both the avoidance of future risks and expansion of business.

Set the payout ratio at 35% in the final year of the New Mid-term Plan Improve profitability and capital efficiency through steady business growth

The ability to communicate well is the skill we consider to be of paramount importance to our employees

Develop human resources and provide an environment in which we can facilitate evolution

As a P/B ratio of 1x tends to be seen by the public at large as a benchmark for determining improvement in corporate value, we feel compelled to take specific actions to meet this standard in our effort to increase our corporate value. We have taken direct action in the form of increasing the dividend payout ratio to 30%, as based on the performance of the prior Mid-term Plan, and we aim to further enhance shareholder returns by setting it at 35% in the New Mid-term Plan. However, since this

opportunities and shareholder returns.

With an established reputation for steady growth, though our Group never takes on anything as colossal as large-scale projects, it is more our style to build in small steps. We will continue to promote our business in line with the New Mid- term Plan while steadily growing our business as we improve our profitability and capital efficiency. Expect great things from us as we endeavor to continue to develop and grow.

When people ask me what skill is most sought in employees of our Group, I tell them that it is communication skills. At a company, there is no room for complacency, so it is essential that an individual be adept at working well with people from a broad range of ages and have the capacity to make their own thoughts understood so that others can make informed decisions. Those who give up on that will cease to grow.

We seek in management the ability to develop human resources with the best communication skills and to keep as many of them as possible in our organization. The famous

manager Katsuya Nomura3 once said that those who can make money are third rate and those who can make a name for themselves are second rate, but those who are able to see their legacy live on in others are first rate. Those are words that resonate with me.

It seems to me that those who are new to the workforce are first going to want to strive for financial independence. And in time, they could develop the desire to earn a title. However, I personally believe that the development of the finest human resources who carry on the torch for future generations is of

is not sufficient in terms of increasing our corporate value, discussions continue to take place within the Company. Fundamental to improving corporate value is figuring out how to increase profitability. So we will make a point of ensuring returns to shareholders as well as identify and invest in more profitable business opportunities such as "as a Service" and BPO in the New Mid-term Plan. It is of the utmost importance to strike the right balance between investment in new business

1. Business Process Outsourcing (BPO): Outsourcing a part of the business process to a business that specializes in such operations
2. Net profit: Net sales minus cost of sales (excluding the cost of funds)
3. Former Japanese professional baseball player and manager (who during his lifetime valued the words of physician and politician Shinpei Goto)

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