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Annual Report 2016

For the Fiscal Year Ended March 31, 2016

PROFILE

FINANCIAL AND
NON-FINANCIAL HIGHLIGHTS

JACCS Co., Ltd., is a consumer nance company and a

Total Operating Revenue

member of the Mitsubishi UFJ Financial Group, Inc. (MUFG).


JACCS started out as a provider of monthly installment
credit services for use at department stores in Hakodate,

Increased

Hokkaido, in 1954. Since then, under a founding philosophy

5.0

113.6
billion

that values trust and reliability, JACCS has continued to expand


its business nationwide in Japan and has expanded its business

Ordinary Income

into growth markets in Asia. With a total volume of new contracts


exceeding 3,404 billion, JACCS is one of the leading names
in Japans consumer credit sector.

Increased

JACCS main businesses comprise the credit business,


the credit card business, and the nancing business, which

1.2

12.0
billion

includes credit guarantees and other operations. JACCS


issues standard credit cards under the Visa, MasterCard, and

Net Income Per Share

JCB brands, and has a membership base of approximately


6.8 million cardholders, including those with cards from
afliate partners.

Increased

JACCS launched its overseas operations in 2010 with

6.3

44.02

its entry into the motorcycle sales nance market in Vietnam.


Since then, it has continued to expand its business interests

Energy Consumption

in the Association of Southeast Asian Nations (ASEAN) region.


In 2012, JACCS entered the Indonesian market, and followed
this in May 2016 with its participation in the establishment of
an automobile sales nance joint venture in the Philippines. In
new business, JACCS is aggressively rolling out prepaid card
and deferred-payment settlement services. JACCS operates
in such elds as insurance agency services, leasing services,
and loan servicing.
JACCS continues to grow as it strives to realize its vision
of becoming an innovative consumer nance company with its
roots in Japan, which is articulated in its three-year mediumterm business plan, ACT- .

Reduced

4.7

2,136 kl
crude oil
equivalent

CREATING VALUE
for Our Sustainable Future

Long-Term Vision
Establish JACCS position as a leading brand among
Asian consumer nance companies

Management Principle
JACCS contributes to the realization of a future inspired by dreams and
an afuent society.

JACCS Founding Philosophy


The essence of JACCS founding philosophy is expressed in these Chinese
characters, which may be translated as, Trust is the basis for all. Since JACCS
establishment, we have remained faithful to our founding philosophya strong
belief that trust and reliability form the cornerstone of all our activities, taking
precedence in our relationships with consumers and business partners.

JACCS CO., LTD.

Annual Report 2016

CREATING VALUE for Our Sustainable Future

Becoming a Leading Asian Consumer Finance Brand


Entered
Candidates

Our long-term vision under ACT- , our medium-term business plan, is


to establish JACCS position as a leading brand among Asian consumer
Thailand

finance companies.

Philippines

We accordingly look to expand in markets within the ASEAN region.

Cambodia

Our first move in that regard was in 2010, when we entered Vietnams
sales finance market. We have since steadily expanded our business
in that nation through wholly owned consolidated subsidiary JACCS
International Vietnam Finance Co., Ltd. (JIVF). We began operating in
Indonesia in 2012, solidifying our presence through equity-method affiliate
PT Mitra Pinasthika Mustika Finance (MPMF). In May 2016, we set up
MMPC Auto Financial Services Corporation, an equity-method affiliate that
provides captive finance for Mitsubishi Motors vehicles in the Philippines.
JACCS will continue to expand throughout the ASEAN region, and
has plans to launch operations in another two markets by March 2018.
Thailand and Cambodia are the two current candidates in which we are
conducting market research. We would thereby have a presence in five
countries, which equates to half of the ASEAN region.

JACCS CO., LTD.

Annual Report 2016

Indonesia

Vietnam

Number of transactions handled


by ATODENE and revenues
Millions of Yen
500

Thousands of Contracts
1,500

750

250

0
2015

2016

Contracts (Left scale)

2017
Target
Revenues (Right scale)

Our Deferred-Payment Settlement Service


In its FY2015 E-Commerce Market Survey, the Ministry of Economy,

ATODENE Deferred-Payment Settlement System

Trade and Industry estimated that in 2015 Japans e-commerce market


was worth 13.8 trillion. JACCS was the first in Japans shopping credit

Scheme

and credit card industry to begin offering deferred-payment settlement


services, and aims to build its presence in this huge market.

1. Order
User

temporarily cover payments to mail order and online merchants. Users

Member store
3. Shipment of goods

Through our ATODENE deferred-payment settlement service, we


5. Payment

2. Screening

enjoy peace of mind because they can pay for purchases at convenience
Alliances / tie-ups

4. Settlement of payment

stores, banks, and other locations after receiving goods. Merchants benefit
because JACCS assumes the payment risk. ATODENE will also enable us

Settlement service
providers

Major e-commerce
companies

e-commerce support
companies

to cultivate online shoppers who find it stressful paying for purchases with
their credit cards on the Internet or avoid using credit cards altogether.
We are expanding partnerships with settlement service providers
and major e-commerce merchants and support companies. The number
of transactions handled and revenues for the ATODENE service are set to
surge in the fiscal year ending March 31, 2017.

JACCS CO., LTD.

Annual Report 2016

CREATING VALUE for Our Sustainable Future

Building Better Workplaces for Women


It is vital to foster the talents and personal growth of all employees,

managers. We also maintain programs to assist employees with parenting

regardless of gender, to ensure the Companys ongoing development.

and eldercare.

We have thus undertaken various initiatives in recognition of the

In view of the importance of mental and physical well-being in

importance of better leveraging the capabilities of women in all operations

workplaces, we have taken a broad range of steps to maintain the mental

as we expand and diversify our business. We enhance career prospects

and physical well-being of all employees, notably by preventing overwork

for women through job rotations not only for global employees (employees

and offering stress checks and consultations.

recruited on the basis that they may be transferred to any JACCS Group

We also foster understanding of the diverse contributions of women

office globally) but also for regional employees (employees recruited on

in our corporate culture, such as by showcasing their achievements in our

the basis that they will be assigned to work in a specified region). We

in-house newsletter.

offer training programs for women, including one for prospective regional

Comment from female Osaka Customer Center employee presented in our in-house newsletter
An overhaul of our personnel system provided me and other female regional employees with more opportunities to present our
ideas in the workplace because we are no longer under the overall supervision of career-track colleagues. I hope that we women can
increasingly offer our unique perspectives and suggestions, contributing even more to the Companys progress.

JACCS CO., LTD.

Annual Report 2016

CONTENTS

CREATING VALUE FOR OUR SUSTAINABLE FUTURE

NINE-YEAR FINANCIAL SUMMARY

BUSINESS PLANS OF THE PAST AND PRESENT

OPERATIONAL HIGHLIGHTS

TO OUR STAKEHOLDERS

ESG INITIATIVES:
CORPORATE GOVERNANCE

12

CSR ACTIVITIES

16

JACCS GROUP AT A GLANCE

18

REVIEW OF OPERATIONS

20

FINANCIAL INFORMATION

24

ORGANIZATION

60

HISTORY

61

CORPORATE DIRECTORY

62

INVESTOR INFORMATION

63

FORWARD-LOOKING STATEMENTS
The financial data and other business-related information in this publication has been prepared to inform JACCS
stakeholders about the business. Any forecasts regarding future performance contained in these materials are based
on estimates and the best judgments of the Company, without guarantee or security. Readers are advised not to make
investment decisions based solely on the information contained in these materials. All business and financial data relate
to the consolidated operations of the Company, unless otherwise noted.

JACCS CO., LTD.

Annual Report 2016

NINE-YEAR FINANCIAL SUMMARY


2008

2009

2010

2011

2012

2,448,288
714,783
325,794
562,889
251,888
592,933
139,912
(8,020)
(8,400)
(9,758)
58,022
(5,511)
22,731

2,412,646
723,126
306,343
527,433
211,317
644,425
142,039
5,271
6,278
2,587
94,774
(4,956)
(124,126)

2,316,012
704,064
241,957
515,934
178,181
675,874
127,101
8,845
10,433
3,569
122,877
1,708
(116,864)

2,328,294
738,947
227,300
551,465
118,673
691,907
116,241
3,137
5,479
4,398
104,111
(4,533)
(33,883)

2,387,501
749,720
230,352
603,873
86,418
717,136
107,384
10,972
13,271
6,822
36,236
(4,181)
(61,147)

2,788,607
99,538

3,024,588
97,849

2,827,806
103,273

2,786,288
105,261

2,725,816
111,348

(65.90)
568.30

14.78
558.74
4.00

20.39
589.74
5.00

25.12
601.13
5.00

38.97
636.17
10.00

(0.3)%
(9.5)
3.6

0.2%
2.6
3.2

0.4%
3.6
3.7

0.2%
4.2
3.8

0.5%
6.3
4.1

9,911
175,395,808
2,934

9,714
175,395,808
2,977

9,920
175,395,808
2,714

9,601
175,395,808
2,839

8,419
175,395,808
2,977

Years ended March 31

Summary of operations for the year:


Total volume of new contracts
Volume of new contracts: Credit card
Volume of new contracts: Installment sales nance
Volume of new contracts: Credit guarantee
Volume of new contracts: Financing
Volume of new contracts: Other operations
Total operating revenue
Operating income (loss)
Ordinary income (loss)
Net income (loss) attributable to owners of the parent
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Net cash provided by (used in) nancing activities
At year-end:
Total assets
Total net assets
Per share data:
Net income (loss) basic
Net assets
Cash dividends
Key ratios (%):
ROA
ROE
Equity ratio
Supplementary data:
Number of JACCS cardholders (Thousands)
Number of shares outstanding at year-end
Number of employees

BUSINESS PLANS OF THE PAST AND PRESENT


20092011

2012

10th Medium-Term Business Plan


VIC10
JACCS takes over the shopping credit business
of Mitsubishi UFJ NICOS Co., Ltd.

Reinforcement of Business
Foundations
Measures to minimize the impacts of the

earthquake

Reform of cost structures / enhancement of


business protability

20132015
11th Medium-Term Business Plan
ACT11
Accelerate growth by turning around and expanding operating revenue (top line)
Further strengthen our management structure to
ensure adaptability to environmental change
Continuously enhance our compliance system

Economic and Business Sector Environment


Rapid decline in consumption following the onset of the global nancial crisis

Prolonged appreciation of the yen

Economic slowdown in China and other emerging countries

Deterioration in employment and incomes

Global economic slowdown triggered by the

Underpinned by continued monetary easing, a weakening yen

Tightening of regulation under related laws


June 2010: Full implementation of the Money Lender Business Law
December 2010: Full implementation of the Installment Sales Law

European debt crisis

driven by robust economic conditions in the United States, and


rising stock prices, corporate earnings perform strongly
Following the April 2014 increase in the consumption tax rate,
personal consumption shows weakness

JACCS CO., LTD.

Annual Report 2016

OPERATIONAL
HIGHLIGHTS
Millions of Yen

2013

2014

2015

2016

2,480,470
786,669
211,539
636,770
83,022
762,469
102,950
9,413
11,750
7,642
15,157
(8,934)
(47,933)

2,784,532
899,957
293,029
687,669
79,010
824,866
104,134
12,236
12,238
6,504
(89,429)
(8,355)
72,821

3,061,297
1,026,248
307,767
725,019
79,235
923,028
108,260
11,976
11,951
7,107
(86,682)
(13,943)
115,198

3,404,510
1,127,244
446,153
751,581
77,349
1,002,183
113,673
12,243
12,091
7,569
(144,453)
(8,860)
151,898

2,718,518
117,486

2,896,405
122,712

3,158,045
132,846

3,437,641
133,283

2015
August

* This is a service whereby users can receive benets


simply by paying for goods or services with their credit
card. The credit card company distributes coupons
matching card members tastes based on the members
attributes and their card usage history. Card members
select the coupons they wish to use and activate the
coupons. By doing so, they can use coupons at stores
without actually showing or declaring the coupon at
point of purchase.

September

In an industry rst, JACCS attached Visa


prepaid card functions to the employee
benet and welfare program membership
cards of 3.79 million Benet One Inc.
program members, and redistributed the
cards to members.

2016
February

Entered an agreement with Sojitz Corporation,


Mitsubishi Motors Philippines Corporation,
and BDO Leasing and Finance, Inc., for the
establishment of a joint venture company in
the Philippines. The joint venture will be a
captive nance company specializing in sales
nance for Mitsubishi Motors vehicles.

March

Began issuing dual-interface cards


incorporating JCB Co., Ltd.s J/SpeedyTM
payment service featuring NFC technology
(contactless IC card). It is the rst time this
type of card has been issued to general
cardholders in Japan.

March

In an industry rst, jointly developed with


YAMADA SXL HOME Co., Ltd., a reservefund program for single-dwelling home
repairs. The program utilizes a prepaid card.

March

In cooperation with Don Quijote Co., Ltd.,


began issuing majica donpen card, a credit
card with e-money functions.

March

Produced a television
commercial featuring
professional tennis
player Kei Nishikori.
This marked the fourth
year of JACCS
sponsorship contract
with Nishikori.

Second half
of scal year
ended March
31, 2016

Entered business agreements with FCA


Japan Ltd., Maserati Japan Ltd., McLaren
Automotive, and Volvo Car Japan Ltd. JACCS
will provide a range of loan plans for new
automobile purchases.

Fiscal year
ended March
31, 2016

Cooperation in guarantee operations with


seven regional nancial institutions for
Vacant House Loans. The loans will be
used for demolition and renovation of vacant
houses.

Yen

43.72
678.38
11.00

37.71
715.38
14.00

41.42
772.67
14.00

44.02
772.81
14.00

0.4%
6.7
4.3

0.4%
5.4
4.2

0.4%
5.6
4.2

0.4%
5.7
3.9

7,281
175,395,808
3,096

6,828
175,395,808
3,355

6,726
175,395,808
3,434

6,823
175,395,808
3,710

20162018
12th Medium-Term Business Plan
ACT-

Commenced the Card Linked Offer* service


after introducing the BIG MINING Private
data management platform developed jointly
by Digital Garage, Inc., and BI.Garage, Inc.

Expansion of JACCS earnings base through Group synergies


The pursuit of innovativeness through strategic utilization

of the Groups resources


The practice of advanced corporate social responsibility (CSR)

JACCS CO., LTD.

Annual Report 2016

TO OUR STAKEHOLDERS

CREATING VALUE
by Continuing Growth
Operating Performance: Growth in Operating Revenue

of new contracts. In cash advances, although we implemented a range of

and Profit

promotional campaigns, the volume of new contracts and the cash advance

In fiscal year ended March 31, 2016, the JACCS Group achieved growth

balance both declined.


In the financing business, the volume of new contracts and the balance

in operating revenue and profit.

of loan guarantees both grew. This reflected a robust performance by credit

In the credit business, the volume of new contracts and operating


revenue increased, driven by strong performances in such categories as

guarantees for personal loanson loans on deed and card-based loans

premium wristwatches and jewelry, and kimono. Housing-related fields

extended by financial institutions, including The Bank of Tokyo-Mitsubishi

home renovation in particularsaw a rebound in the second half of the

UFJ, Ltd. (BTMU), and regional banks.


In new business, there was an expansion in the number of alliance

fiscal year. In auto loans, imported vehicles performed well, leading to

partners for the deferred-payment settlement service ATODENE provided by

increases in the volume of new contracts and operating revenue.

consolidated subsidiary JACCS Payment Solutions Co., Ltd. Consequently, the

In the credit card business, to improve the profitability of cards with

number of transactions handled and the volume of new contracts increased.

high loyalty point reward ratios we overhauled reward ratios, which led to

In overseas business, consolidated subsidiary JACCS International

a slackening in growth in the volume of new contracts. However, through


efficient customer data analysis and the ongoing execution of a variety of

Vietnam Finance Co., Ltd. (JIVF), commenced sales finance operations for

promotional programs, card shopping overall saw an increase in the volume

automobiles and household appliances in the fiscal year under review.

Three-Year Medium-Term Business Plan ACT-


Long-Term Vision

Establish JACCS position as a leading brand among Asian consumer finance companies

Three-Year Medium-Term Business Plan ACT-


Vision

An innovative consumer finance company with its roots in Japan


Core Policies

Expansion of JACCS earnings base


through Group synergies

The pursuit of innovativeness through


strategic utilization of the Groups resources

The practice of advanced CSR

Maximize synergies with the MUFG Group


Overhaul existing businesses
Major leap in progress of overseas business
Creation and nurturing of new business

Strengthen marketing capabilities


Structural reform through investment in IT
Pursue low-cost operations
Human resource development and strategic
promotions and assignment of roles

Further reinforcement of compliance systems


Undertake practices that contribute to society
Reinforce risk management systems
Strengthen corporate governance structure

JACCS CO., LTD.

Annual Report 2016

JIVFs volume of new contracts grew, centering on its motorcycle sales

By implementing a management strategy that focuses on the three

finance operations. JIVF launched credit card operations, achieving sound

core policies of generating Group synergies, innovativeness, and CSR, we

progress as it developed infrastructure for its member acquisition base.

aim to realize our medium- to long-term vision of becoming an innovative

Indonesian finance company PT Mitra Pinasthika Mustika Finance

consumer finance company with its roots in Japan. The overview of the

(MPMF)JACCS equity-method affiliatesaw a decline in the volume

plan is shown on page 8.

of new contracts in its motorcycle and auto sales finance operations,

In the plans initial year, although we achieved a solid performance in

reflecting the impact of a macroeconomic slowdown in Indonesia.

terms of operating revenue, the increase in operating expenses was greater

Uncollected receivables increased, and expenses related to doubtful

than anticipated. In addition, in our overseas business, operating performance

accounts rose.

in our business in Indonesia came in below forecast. As a result of such

As a result of the factors summarized above, on a consolidated basis,


the total volume of new contracts increased 11.2% compared with the

factors, results fell short of our initial forecast.


In response to this situation, we identified reining in the increase in

previous fiscal year, to 3,404,510 million. Total operating revenue rose

operating expenses as an urgent task, and set to work on overhauling the

5.0% compared with the previous fiscal year, to 113,673 million, and

Groups cost structure.

operating income increased 2.2%, to 12,243 million. Net income


attributable to owners of the parent increased 6.5%, to 7,569 million.

Progress on Three-Year Medium-Term Business Plan


ACTFiscal year ended March 31, 2016 was the initial year of our three-year
medium-term business plan, ACT , which runs through fiscal year,
ending March 31, 2018.
Yasuyoshi Itagaki
President, CEO, COO and
Representative Director

JACCS CO., LTD.

Annual Report 2016

TO OUR STAKEHOLDERS

Below is a summary of the results achieved in each of the plans three core

the quality of services provided to customers and member stores, thereby

policies.

contributing to an increase in the volume of new contracts.

1. Expansion of JACCS earnings base through Group synergies


Strengthened cooperation within the MUFG Group and the JACCS Group

Outlook for the Fiscal Year Ending March 31, 2017

Entered the auto sales finance market in the Philippines

I would now like to discuss the operating environment and the measures

Established a new alliance with Jibun Bank Corporation in the housing

to be implemented by the Group during the second year of ACT , fiscal

loan guarantee business


2. The pursuit of innovativeness through strategic utilization of the
Groups resources

year ending March 31, 2017.


In the credit business, overall consumption is expected to see a
long-term leveling off in Japan, owing to such factors as population decline

Launched the Cost Restructuring Committee

and aging, as well as lifestyle diversification. In such a market environment,

Achieved sound progress in the development of the next-generation credit

the JACCS Group will aim for top-line growth through the allocation of
resources to growth markets and entry into new fields. In the shopping

screening engine
Increased the ratio of credit applications received via the Web by
upgrading our lineup of Web-based products

credit business, based on such measures as expansion of Web-based


settlement options and development of new products, the Group will strive

3. The practice of advanced CSR

to create credit and increase its market share. These strategies will focus

Established the Groups Fundamental Corporate Governance Philosophy

on such key product and service categories as housing-related fields,

Formulated the Basic Code for Social Contribution Activities, and began

motorcycles, premium wristwatches and jewelry, kimono, and household

developing a corporate culture in which all officers and employees are

appliances. In housing-related fields, we are focusing on the home renovation

motivated to participate by their own volition

fielda market that is expected to grow. In terms of new fields, JACCS is


developing business infrastructure for lease guarantee operations, and is

The objectives of the information technology (IT) investment strategy under

pursuing entry into the BtoB field. In auto loans, we anticipate a continuation

ACT are to establish competitive advantage, strengthen profitability, and

of the rapid growth achieved in fiscal year ended March 31, 2016. In

improve operational efficiency. In fiscal year ended March 31, 2016, we

particular, the market for imported vehicles has significant potential for

accomplished the following progress.

expansion in the volume of new contracts, and we will aim to increase our

Mission-critical system

market share by building strong partnerships with importers.

Released our next-generation credit screening engine in June 2016


Set October 2016 as the planned release for our back-up center

telecommunications-related companies enter the market. The JACCS Group

Strengthening of Web-related products

will strive to build up its customer base. Specifically, we will focus not only

Further diversified the lineup of payment options available through our

on major retailers but also leverage the Groups nationwide sales network

Web-based credit applications


Set fiscal year ending March 31, 2017 as our target for the development
of an automated system for processing sales data

in Japan to acquire card members through retailers that have a strong


presence in local regions and shopping credit affiliate stores. We will also
work to establish alliances in a wide range of other industries and business

Enhanced usability

categories. Utilizing our strength as an independent credit card issuer

Expanding the introduction of tablet devices centering on major alliance

possessing a diverse array of channels, we intend to expand our portfolio

partners

10

In the credit card market, competition is intensifying as Internet and

of co-branded cards in partnership with Internet-related companies,

Accelerated the development of multi-device capabilities

distribution and retail sector companies, and firms with strengths in local

With these measures we will increase operational efficiency through a

regions. In addition to expanding the Groups customer base through

significant reduction in the time required for credit screening, and improve

alliances, we will also focus on targeting promotional programs at existing

JACCS CO., LTD.

Annual Report 2016

cardholders, including JACCS Loyal Members Program members, as we

works to meet the trust and expectations of its stakeholders while placing

work to increase the volume of new contracts. In addition, we will strive to

a high priority on CSR. To this end, JACCS strives to maintain management

expand sales from Gonna international-brand prepaid cards and Tametoku

soundness and transparency, and strengthen its management control

Prepaid, which includes bill collection and prepaid card functions.

system and audit functions. Hence, we pursue corporate activities that

In the financing business, in credit guarantees for personal loans

comply with social justice.

extended by financial institutions we will work to increase the balance of


guarantees by providing new products and services. In housing loan

Delivering Shareholder Value

guarantees for condominiums purchased for investment purposes, we aim to

JACCS recognizes the maintenance of stable shareholder return as an

secure the top market share by increasing the number of new alliance

important management task. Simultaneously, we recognize the need to

partners and strengthening our relationships with existing partners. In bill

provide return that is in line with operating performance. JACCS fundamental

collection services, we intend to further expand alliance partnerships through

policy is to strengthen its financial base and maintain internal reserves while

the development of cooperative relationships with major real estate firms.

taking into account a comprehensive range of factors when making decisions

In new business, we will aim to increase the volume of new contracts


and operating revenue for the ATODENE deferred-payment settlement
service by expanding alliances and cooperation with business partners.
In overseas business, within the Vietnam business, in addition to

on dividend payments. Such factors include net income performance, the


Groups financial position, and the payout ratio.
The cash dividend applicable to fiscal year ended March 31, 2016
totaled 14.00 per share, including an interim dividend of 7.00 per share.

expansion of motorcycle sales finance operations, we are also working


to expand the business through the introduction of new products, such

Working to Realize Our Vision

as automobile and household appliance sales finance. By expanding the

The JACCS Group is achieving steady growth in its existing business despite

business earnings base driven by an increase in credit card members,

uncertainty in the Japanese economy. In the Groups overseas business,

we will aim for further substantial growth. In Indonesia, we anticipate a

following entry into the Vietnam and Indonesian markets, we have entered

continuation of sluggish economic conditions, and are working to reinforce

the Philippines market as our third overseas initiative. Hence, JACCS is

the business structure. In the Philippines, we will launch operations of the

making progress in the expansion of its business and earnings base. By

joint venture and work to build a position in the market.

continuing such growth and building an appropriate cost structure, we

Based on the measures outlined, in fiscal year ending March 31, 2017,

believe that it will be possible to realize the vision set out in the ACT

we forecast total operating revenue of 120,600 million, operating income of

three-year medium-term business plan of becoming an innovative

13,700 million, and net income attributable to owners of the parent of

consumer finance company with its roots in Japan.

9,000 million.

In these endeavors, we look forward to the continued support and


understanding of our shareholders, investors, customers, partner companies,

Corporate Governance Initiatives

and local communities.

The third core policy of the ACT three-year medium-term business plan
is the practice of advanced CSR, and strengthening the Groups corporate

August 2016

governance system is one of its key tasks. To date, JACCS has worked to
maintain appropriate information disclosure and transparency. However,
in response to the establishment of Japans Corporate Governance Code
in 2015, JACCS newly established the Groups Fundamental Corporate
Governance Philosophy based on its compliance with the Code. As

Yasuyoshi Itagaki

articulated in Article 1, Chapter 1, of the philosophy, the JACCS Group

President, CEO, COO and Representative Director

JACCS CO., LTD.

Annual Report 2016

11

ESG Initiatives: Corporate Governance

Board of Directors
(As of June 29, 2016)
A

President, CEO, COO


and Representative Director
Yasuyoshi Itagaki
Deputy President, CFO and
Representative Director
Tsutomu Sugiyama

Director and Senior Managing


Executive Officer
Hidechika Kobayashi

Business Strategy

Directors and Managing


Executive Officers
Noboru Kawakami
Compliance, General Affairs, Personnel,
Credit Management

Minekazu Sugano
Accounting, Finance, Information
Systems

Kojun Sato
International Business, Group Strategic
Business

Senior Adviser
Naoe Sugimoto

12

JACCS CO., LTD. Annual Report 2016

Directors and Senior


Executive Officers
Shigeki Ogata
Credit Screening and Operation

Toru Yamazaki
Corporate Planning

Haruo Kamioka*
Kuniaki Hara*
* Outside Directors

Executive Officers
(As of June 29, 2016)

Audit & Supervisory Board Members


(As of June 29, 2016)

Audit & Supervisory Board Members


Takayuki Hiroi (Full-time)
Atsushi Hazawa (Full-time)
Satoru Fujimura*
Shinji Murakami*
* Outside Audit & Supervisory Board members

Fundamental Corporate Governance Philosophy


The JACCS Group works to meet the trust and expectations of its stakeholders.
Simultaneously, the Group pursues management that has a strong focus
on CSR. To this end, the Company aims to enhance its management
soundness and transparency, and strengthen its management control
systems and audit functions. The Company pursues corporate activities
that comply with social justice.

Based on JACCS founding philosophy of Trust is the basis for all,
the Company believes that the trust and reliability of its stakeholders is
paramount, and strives to grow based on this philosophy. The Company
carries out its business operations with the aim of realizing its management
principle of JACCS contributes to the realization of a future inspired by
dreams and an affluent society. In addition, the Company formulated its
long-term vision and three-year medium-term business plan. As well as
working to ensure that this vision and business plan are assimilated by all

Managing Executive Officer


Hitoshi Chino

Executive Officers
Masayuki Nemoto

Business Strategy

Kyushu Area

Senior Executive Officers


Hideo Yoshino

Shingo Yuzue

International Business Planning

Housing Loan Guarantee, Business


Strategy

Kenichi Oshima

Masatoshi Kishi

Information Systems

Kita-Kanto Area

Takahiro Nagoshi

Kazuo Yamamoto

International Business Planning

Chugoku-Shikoku Area

Akira Kuzukami

Noboru Taniguchi

Kinki Area

Credit Management

Toshio Sotoguchi

Toshiyuki Hijikata

Shutoken Area

Compliance

Masahiro Hasukawa

Hiroki Yoshida

Credit Management

Tohoku Area

Masami Odagiri

Takeshi Yoshikawa

General Affairs, Personnel

Auto Loans, Business Strategy

Ryo Murakami

Keigo Abo

Chubu Area

Credit Card Promotion,


Business Strategy

Takashi Saitou
Audit

Toshiya Kaname
PT Mitra Pinasthika Mustika Finance
(Indonesia)

Terukazu Shimokawa
Credit Screening and Operation

Toshikazu Kondo
Shopping Credit Promotion,
Business Strategy

Takahiro Maeda
Hokkaido Area

Kazuhiko Segawa
Corporate Planning

officers and employees of the JACCS Group, we strive to accomplish the


goals of this vision and business plan.

The JACCS Group has defined its fundamental corporate governance
philosophy, and formulated its basic policy relating to the framework and
operation of corporate governance. The Company has disclosed these policies.

Corporate Governance Structure


The Company has established the Audit & Supervisory Board to ensure that
the Board of Directors carries out appropriate decision-making and supervisory
functions, as well as ensure that Audit & Supervisory Board members, who
are appointed on an individual basis, appropriately carry out their audit
functions. Through the strengthening of the functions of both the Board
of Directors and the Audit & Supervisory Board, the Company is working
to enhance corporate governance. The Company has established a system
of executive officers, thereby clarifying the division of roles in the execution

JACCS CO., LTD. Annual Report 2016

13

of operations, delegating authority, and ensuring expeditious execution of


operations. Furthermore, the Company aims to realize effective and transparent
corporate governance. Specically, it has established the Nominations
Advisory Committee and the Remuneration Advisory Committee as advisory
bodies to the Board of Directors, and the Corporate Governance Committee
as a body reporting directly to the Board of Directors.
Executive ofcers hold responsibility and authority for the execution
of operations. Executive ofcers comprise the CEO, COO, CFO, executive
ofcers responsible for supervising specic functions, and executive ofcers.
Executive ofcers are appointed through resolution of the Board of Directors.

Management Committee
As an advisory body to the COO, the Management Committee comprises
mainly executive ofcers responsible for supervising each function of the
Companys business organization. In principle, the Management Committee
convenes three times per month and broadly considers and debates matters
delegated by the Board of Directors, important operational matters and various
issues, as part of a system designed to facilitate expeditious execution.
Audit Ofce
The Company has established an Audit Ofce, which reports directly to the
CEO, as an independent internal audit unit. The Audit Ofce considers and
evaluates the effectiveness of business risk management control and
governance processes for the overall operations of each JACCS Group
business site. The Audit Ofce carries out internal audit operations based
on the Fundamental Policy relating to the Internal Control System, etc.

Board of Directors
The Board of Directors determines the Companys basic management
policies, and makes decisions regarding important operational matters
and other matters delegated by resolution of the General Meeting of
Shareholders. The Board of Directors also makes decisions on matters
stipulated by law and the Companys Articles of Incorporation, and
receives reports regarding the status of signicant operational matters.
Based on this structure, the Board of Directors oversees the operational
execution of the Companys management.
The Board of Directors shall comprise at least three but no more
than 12 members. Of those, at least two members shall be independent
outside directors.

Accounting Auditor
With regard to accounting auditing, the Company has entered into an audit
contract with KPMG AZSA LLC.
Committees
Nominations Advisory Committee
The Company has voluntarily established the Nominations Advisory Committee
as an advisory body to the Board of Directors. This committee considers and
debates nomination and dismissal proposals for directors and executive
ofcers responsible for supervising specic functions. The committee reports
its ndings to the Board of Directors. The committee also considers and
debates the content of the Standards for the Independence of Outside
Ofcers, and reports its ndings to the Board of Directors. The committee
includes outside directors as members, and ensures objectivity and
transparency are maintained.
Remuneration Advisory Committee
The Company has voluntarily established the Remuneration Advisory
Committee as an advisory body to the Board of Directors. The committee
considers and debates the performance of directors and executive ofcers
responsible for supervising specic functions and the content of their
remuneration, and reports its ndings to the Board of Directors. The

Audit & Supervisory Board Members and the Audit & Supervisory Board
As independent ofcers functioning under a mandate from the General
Meeting of Shareholders, the Audit & Supervisory Board members audit the
directors execution of duties and have the role of carrying out a supervisory
function over the Company in cooperation with the Board of Directors. The
Audit & Supervisory Board is a body that holds discussions and makes
decisions regarding the audits undertaken by the Audit & Supervisory Board
members for the purpose of formulating opinions. Each Audit & Supervisory
Board member utilizes the Audit & Supervisory Board as a means of
ensuring effectiveness. As a body to support the Audit & Supervisory Board
members execution of duties, the Company has established the Audit &
Supervisory Board Members Secretariat and has appointed dedicated staff
to this body.

Corporate Governance Structure


General Meeting of Shareholders
Election / Dismissal

Election / Dismissal

Reporting
Corporate Governance Committee

Compliance Committee
Internal Control Committee
Product & Operational Risk
Committee

Board of Directors
President, CEO and COO

Management
Committee

Reporting
Nominations Advisory
Committee
Remuneration Advisory
Committee

Operational
Audit

Election / Dismissal
Audit & Supervisory Board
Cooperation
Accounting Auditor

Accounting
Audit
Cooperation
Audit Ofce

Personal Information
Protection Committee

14

JACCS CO., LTD.

Annual Report 2016

Individual Departments
Directors, Executive Ofcers, Others

committee includes outside directors as members, and ensures objectivity


and transparency are maintained.
Corporate Governance Committee
The Company has established the Corporate Governance Committee as a
body reporting directly to the Board of Directors. The Committee considers
and debates matters relating to the following, and reports its ndings to the
Board of Directors.
Enterprise risk management (ERM) for the JACCS Group
JACCS Group compliance and the internal control situation
Evaluation of the activities of such committees as the Compliance
Committee, Internal Control Committee, and Personal Information
Protection Committee, as well as review of important matters handled
by these committees
The Corporate Governance Committee includes outside directors as
members, and maintains effectiveness.

Outside Directors and Outside Audit & Supervisory


Board Members
The Company has appointed two outside directors and two outside Audit &
Supervisory Board members.
Based on the Companies Act and stipulations by stock exchanges
regarding the independence of outside directors and outside Audit &
Supervisory Board members, the Company has established the following
as its Standards for the Independence of Outside Ofcers. If none of the
following stipulations apply to an outside ofcer, the ofcer is judged to
have independence.
Standard for Independence of Outside Directors
1. A party with a material trading relationship with the Company, or an
executive for such a party
2. A party that belongs to an organization that receives a large consulting fee
from the Company in relation to accounting or legal consulting services,
excluding ofcer remuneration
3. A major shareholder owning 5% or greater of the voting rights of the
Company, or an executive of such a corporate body
4. A party who is related to a JACCS Group director, Audit & Supervisory Board
member, or executive ofcer, etc., up to the second degree (e.g., spouse,
parent, child, sibling, grandparent, or any such relatives spouse), or related
to the second degree to any party fullling stipulations 13 above
5. A party who has held the appointment of outside ofcer for a long period

Compensation of Officers
Ofcer category

Directors (excluding
outside directors)
Audit & Supervisory
Board members
(excluding outside
Audit & Supervisory
Board members)
Outside ofcers

Total compensation
(millions of
yen)

Total compensation by type (millions of yen) Number of


directors
or Audit &
Basic
Stock
Retirement
SupervicompensaBonuses
options
allowance
sory Board
tion
members

275

231

43

__

__

42

42

__

__

__

22

22

__

__

__

Internal Control and Compliance Structure


In addition to building an expeditious and efcient structure for operational
execution, the Company believes that strengthening the compliance system
of the entire Group and establishing a highly independent internal audit
system is extremely important. Hence, the Company has established

Message from Independent Outside Director


The enactment of Japans Corporate
Governance Code in June 2015 prompted
Japanese corporations to review their
corporate governance systems. JACCS was
no exception, and the Company formulated
its Fundamental Corporate Governance
Philosophy after evaluating its approach.
JACCS previously appointed several
independent outside directors to stimulate Independent Outside
Director
deliberations in Board of Directors and
Haruo Kamioka
other meetings. The independent outside
directors helped to draft and adopt this
fundamental philosophy.
JACCS established the Corporate Governance Committee,
Nominations Advisory Committee, and Remuneration Advisory Committee
as directly controlled or advisory bodies for the Board of Directors. Outside
directors are members of all of these committees to enhance
management soundness and transparency.
I will continue to express my opinions and advise as an independent
outside director in Board of Directors and other meetings to contribute to
the sustainable growth and development of the JACCS Group and to help
enhance its medium- and long-term corporate value. I will also oversee
business implementation by other directors and participate in decisionmaking for important policies.

specialist organizational units responsible for each of these functions.


On March 18, 2016, the Board of Directors passed a resolution
regarding an amendment to its Fundamental Policy relating to the Internal
Control System. This amendment was applied on April 1, 2016.

Information Disclosure System


The Company believes that a proactive stance toward disclosure serves
to increase the trust of stakeholders, and is essential for maintaining
management accountability. To this end, the Company formulated a
Disclosure Policy, and carries out disclosure so that stakeholders can
be cognizant of important information quickly, correctly, and fairly.
Measures to Revitalize the General Meeting of Shareholders and Promote
the Exercise of Voting Rights
The Company works to dispatch notices of General Meeting of Shareholders
as early as possible. Notice of the Ordinary General Meeting of Shareholders
held on June 29, 2016 was dispatched on June 7, 2016. To promote the exercise
of voting rights, the Company participates in an electronic voting platform.
IR Activities
The Company holds briengs for analysts and institutional investors twice
yearly approximately one week after the results announcement. In addition
to the results announcement at the Tokyo Stock Exchange (TSE), the
Company posts its securities ling (Yuka Shoken Hokokusho), brieng
materials for analysts and institutional investors, shareholders newsletters,
English-language annual report, and other materials on its website.
http://www.jaccs.co.jp/corporate/ir/
A dedicated IR manager is appointed within the Public Relations
Section of the Corporate Planning Department.
JACCS CO., LTD.

Annual Report 2016

15

ESG INITIATIVES: CSR ACTIVITIES


Through all of our interactions with society, we aim to
honor the trust placed in us by our stakeholders, and
strive to enhance the level of satisfaction we provide.
This statement conveys JACCS core CSR philosophy.
Below is an introduction to the Groups CSR activities
in and after scal year ended March 31, 2016

Social Contribution Activities


Donations to support those affected by the Kumamoto earthquakes

Social Contribution through the Groups Business


Activities

To support the regions and people affected by the April 2016 Kumamoto

Issuing of credit cards that contribute to society

earthquakes, JACCS made a donation of 3 million to Kumamoto Prefecture.

As part of JACCS efforts to contribute to society through its business

In addition, JACCS made a donation matching the total donations by all

activities, the Company issues credit cards that provide a charitable donation

ofcers and employees of the Group. A total of 1,037 JACCS Group ofcers

based on usage. A certain percentage of the cards total annual purchase

and employees made donations totaling 1,951,226. JACCS matched and

amount is donated to a specied charitable organization or local community

slightly topped up this gure, for a total donation of 4 million, which was

organization. JACCS fully incurs the amount that is donated to charity, and

made to Japan Platform (JPF), a non-prot organization.

no monetary cost is borne by the cardholder. The aim is to support efforts to


revitalize local economies as well as raise awareness of the importance of

Sending wooden building blocks to the children of Hakodate, JACCS

making a social contribution.


In scal year ended March 31, 2016, the Japan Guide Dog

founding city
In scal year ended March 31, 2016, JACCS implemented a volunteer

Association Card issued by JACCS raised approximately 2.27 million

program to make and distribute childrens wooden building blocks. The

through various programs, which was donated to the Japan Guide Dog

blocks are made using lumber sourced from projects to thin forests for the

Association (JGDA).

purpose of forest maintenance and sustainability. Volunteer programs were


run at business sites throughout Japan, with a total of 718 people
participating. The wooden building blocks produced through the program
were donated to 35 preschools in Hakodate. The blocks are being used as toys
by the children who attend these preschools, who can enjoy the uniquely
warm feel of wood.

Programs for Customers


Protecting customers personal data
In scal year ended March 31, 2016, to expand and enhance the content of
personal data protection training programs attended by all JACCS employees,
we produced an original e-learning program adapted to suit the needs of the
Companys operations, and distributed the program materials. This personal
data protection program was implemented vis--vis all employees of the

16

JACCS CO., LTD.

Annual Report 2016

Group. In addition, 137 JACCS employees passed the qualication test for
Managers Handling Personal Information. This qualication is managed by
the Japan Consumer Credit Association, which is an Authorized Personal
Information Protection Organization recognized by Japanese government
agencies. Currently, over 90% of JACCS employees have qualications
relating to personal information management. Furthermore, 79 JACCS
employees passed the qualication test for Information Security (Managers
and Elementary Level), which is run by the Japan Association for Information
Learning. As a result, a total of 281 employees hold qualications relating to

Average monthly overtime in scal year ended March 31, 2016


(time in excess of over 8 hours per day)

information security. The Company implements training programscovering

Global employees

20.2 hours

all employeeson personal information protection on an ongoing basis, and

Regional employees

is committed to further enhancing appropriate protection of customers

Total for regular, full-time employees

7.9 hours
13.1 hours

personal information, credit card numbers, and other data.


3. Ratio of female employees among management-level employees

Environmental Conservation
Reducing energy consumption
As a corporation governed by the revised Act on the Rational Use of Energy,
the Company has set a target of reducing energy consumption by at least 1%
annually, and takes a proactive stance on energy savings. In scal year ended

(section manager level or higher) (regular, full-time employees)


Managers at section manager level or higher: 2.2%
(six employees as of April 1, 2016)
Global employees

Regional employees

March 31, 2016, JACCS energy savings were equivalent to 2,136 kl of crude
oil, and energy consumption was 4.7% lower than scal year ended March 31,
2015. We will continue to pursue our annual target of a reduction in energy
consumption of at least 1%, and are implementing a range of measures to
reduce electricity and other energy usage.

Programs for Employees


Helping female employees reach their potential
For JACCS, assisting female employees to reach their potential is a key task
for management. By supporting employees through a diverse array of working
styles and expanding related programs, JACCS is striving to develop a work
environment that will enable women to play a greater role in the Company
including helping them to achieve a balance between work and home
lifeand is building a human resources system to make this goal a reality.

Child-rearing assistance programs


JACCS promotes the use of programs to support employees who are raising
a family. Specically, we are working to increase understanding and
awareness of maternity and paternity leave programs, and other programs
to assist in child-rearing, and make such programs as user-friendly as

Situation in fiscal year ended March 31, 2016


1. Ratio of female recruits among all regular, full-time employees
recruited

possible. In scal year ended March 31, 2016, to promote the use of
child-rearing leave programs, we set specic targets, and simultaneously
implemented measures aimed at making these programs easier to use.

Female employees accounted for 32.3% of employees recruited on the


basis that they may be transferred to any JACCS Group ofce globally
(global employees; new graduate recruits employed in April 2016).

Targets and results in scal year ended March 31, 2016 for programs to
promote the use of child-rearing leave programs
Targets

Results

At least 95%

100%

At least ve
employees

11 employees

Female employees accounted for 100% of employees recruited on the


basis that they will be assigned to work in a specied region (regional
employees; new graduate recruits employed in April 2016).
2. Status of working hours, including average monthly overtime

Ratio for female employees


Ratio for male employees

(regular, full-time employees)


JACCS CO., LTD.

Annual Report 2016

17

JACCS GROUP
AT A GLANCE

See
Page 20

See
Page 1

Long-Term Vision
See
Page 8

See
Page 1

Three-Year Medium-Term
Business Plan ACT-

Founding
Philosophy

Management
Principle

Credit
Business
Shopping Credits
Auto Loans
Lease Guarantees

Credit Card
Business
Credit Cards
Cash Advances
Revolving Payment Services
Prepaid Cards

Financing
Business
Personal Loan Guarantees
for Financial Institutions
Housing Loan Guarantees
Bill Collection Services

JACCS Co., Ltd.


JACCS Loan-Collection Service Co., Ltd.
JACCS Total Service Co., Ltd.
JACCS Lease Co., Ltd.
JACCS Payment Solutions Co., Ltd.

Overseas
Business
Sales Finance
Unsecured Loans
Credit Cards

JACCS International Vietnam Finance Co., Ltd.

MUFG

See
Page 3

New
Business

The Bank of TokyoMitsubishi UFJ, Ltd.


See
Page 12

ESG
Compliance
Corporate Governance
See
Page 4

Social Contribution
Diversity

18

JACCS CO., LTD.

Annual Report 2016

Deferred-Payment
Settlement Service

Member Stores / Alliances


Retailers

Real Estate Companies

Department Stores

Fitness Clubs

Chain Stores

Settlement Service Providers

Vehicle Dealerships

E-Commerce Companies

House Manufacturers

E-Commerce Support Companies

Universities / Vocational Schools

Regional Financial Institurions

Japan Market

See
Page 2

ASEAN Market

Customers

JACCS International Vietnam


Finance Co., Ltd.
PT Mitra Pinasthika Mustika
Finance
MMPC Auto Financial Services
Corporation

Local Communities
Global Environment

JACCS CO., LTD.

Annual Report 2016

19

Credit Business

REVIEW OF OPERATIONS

Kimono, Premium Wristwatches and Jewelry, Home Renovation,


and Auto Loans Remained Robust
Overview
Major product and service categories for JACCS shopping credit include home renovation and other housing-related
fields, motorcycles, premium wristwatches and jewelry, kimono, and household appliances and electronics. JACCS also

Operating Revenue
in Shopping Credits
(Non-Consolidated)

supports consumers at a variety of life stages, in such areas as education, bridal, and healthcare services. Through

23.5

such innovations as WeBBya suite of Web-based in-store credit application servicesJACCS provides products that

Billions of Yen

respond to changing market needs. In auto loans, by pursuing captive-finance business opportunities and alliances with
auto dealers, JACCS supports a broad range of vehicle purchases, from new domestic-brand vehicles and imported
vehicles to used vehicles.

Operating Performance (Non-Consolidated)

2014

2015

2016

In shopping credits, the volume of new contracts increased, mainly driven by expansion in such business categories as
kimono, premium wristwatches and jewelry, and housing-related fields (home renovation). Operating revenue grew, reflecting
an increase in the volume of new contracts for installment sales finance and a reversal of deferred installment income.
In auto loans, the volume of new contracts grew, reflecting strong contract volume through imported-vehicle dealerships

Operating Revenue
in Auto Loans
(Non-Consolidated)

and dealers specializing in used vehicles. Operating revenue steadily rose, driven by a higher volume of new contracts.

18.6
Strategy under ACT-

Billions of Yen

In shopping credits, in such key categories as kimono, premium wristwatches and jewelry, and housing-related fields, JACCS
is working to realize further growth through the expansion of its Web-based payment menu, the creation of credit driven
by the development of new products, and an increase in market share. In housing-related fields, JACCS is focusing on the
home renovation category, which is expected to see market expansion. JACCS is developing business relationships with

2014

2015

2016

house manufacturers and house builders based on composite proposals involving diverse products.
In auto loans, JACCS is establishing its position in the imported vehicles market by building a captive-finance base
and developing a precise support system for each importer. In relation to specialized used-vehicle dealers, JACCS is

Volume of New Contracts of


Web-Based Products

working to expand its market share through strengthened relationships with major used-vehicle sales networks and by
developing business with used-vehicle dealerships that have close ties to local communities. JACCS is also promoting

(Non-Consolidated)
(Billions of Yen)
60

the use of its WeBBy Auto Web-based loan application service.

Key Initiatives
Expansion and Acceleration of Home Renovation Loans
As the volume of new contracts for housing-related products increased, in the fiscal year ended March 31, 2016,

2014

2015

2016

the volume of new contracts for home renovation loans exceeded that for solar power generation system loans.

Increase in the Volume of New Contracts from Imported-Vehicle Dealerships and Specialized UsedVehicle Dealers
JACCS pursued alliances with imported-vehicle manufacturers, signing

Volume of New Contracts of


WeBBy Auto
(Non-Consolidated)

business agreements with FCA Japan Ltd., Maserati Japan Ltd.,

(Billions of Yen)
120

McLaren Automotive, and Volvo Car Japan Ltd. JACCS also aggressively
implemented a range of measures targeting specialized used-vehicle
dealers. The volume of new contracts grew steadilyimported-vehicle
dealerships saw a 20.8% increase compared with the previous fiscal
year, while used-vehicle dealers recorded a 9.3% increase.

20

JACCS CO., LTD.

Annual Report 2016

2014

2015

2016

Credit Card Business

REVIEW OF OPERATIONS

Rise in Volume of New Contracts Driven by Increase in the Number of


Active Cardholders and Higher Average Usage Amount per Cardholder
Overview
In addition to standard credit cards with attractive add-on services, JACCS also issues cards in partnership with a wide variety of
organizations and companies. Through collaborative partnerships with member storesa key strength that leverages JACCS

Operating Revenue in Credit


Card Business for Shopping
(Non-Consolidated)

status as an independent credit card issuer not affiliated with any particular retail groupwe focus on enhancing the value-

32.1

added of co-branded cards. We are also promoting increased cardholder use of revolving payment services. Furthermore,

Billions of Yen

JACCS is working to increase sales of prepaid cards as a means of expanding the scope of its credit card business.

Operating Performance (Non-Consolidated)


The total number of members increased for the first time in six years, driven by growth in the number of new members.
The number of active cardholders increased, driven by a range of promotional campaigns. The volume of new contracts

2014

2015

2016

grew as the number of active cardholders increased and average usage amount per cardholder rose, underpinned by an
expansion in the variety of card usage scenarios and various promotional programs. Operating revenue increased, driven

Operating Revenue in Credit Card


Business for Cash Advances

by a higher volume of new contracts and a rise in the balance of revolving payments.
In cash advances, although JACCS ran a variety of promotional campaigns, the volume of new contracts from cash
advances decreased. Operating revenue from cash advances also declined, reflecting a lower volume of new contracts

(Non-Consolidated)

and a decrease in the balance of cash advances.

11.2
Billions of Yen

Strategy under ACTWe are pursuing an expansion of our customer base through an increase in new alliance partners and revitalization
of existing partnerships. In co-branded cards, we are promoting alliances with online business-related partners and
2014

companies in the retail sector. We are also emphasizing alliances with strong, regionally based companies. With our

2015

2016

existing alliance partners, we are working to stimulate increases in membership numbers through brand relaunches
and by offering a greater range of add-on services. By executing a range of promotional programs that utilize big data,

Number and Ratio of


Active Cardholders

we aim to expand the volume of new contracts by JACCS Loyal Members Program members, whose average usage
amount is high. We will also work to increase the balance of revolving payments through various promotional programs.
In addition, we are striving to increase sales from Gonna international-brand prepaid cards, and Tametoku Prepaid,

Number of Active Cardholders


Ratio of Active Cardholders

which includes bill collection and prepaid card functions.

346

Tens of Thousands

50.7 %

Key Initiatives
New Co-Branded Cards
2014

majica donpen card

2015

2016

Members earn Don Quijote loyalty points no matter where they shop with this card, which also includes e-money functions.

Revitalization of Existing Partnerships


Joshin Credit & Loyalty Point Card
We promoted new membership by expanding the long-term free-of-charge repair warrantee program with this electronics retailer.

Prepaid Card Initiatives

majica donpen card

Joshin Credit &

Employee benefit and welfare program membership cards that double as Gonna prepaid cards

Loyalty Point Card

Provided cards with Visa prepaid card functions attached as employee identification cards of client companies of Benefit
One Inc., a provider of employee benefit and welfare services.

Employee identification card

Tametoku Prepaid

issued by Benefit One

Adopted as a prepaid card for use by home-buyer customers of YAMADA SXL HOME Co., Ltd., this card is to be used
within a reserve-fund program for home repairs, and includes a service whereby funds are automatically transferred from the

SxL Smiling Club

members bank account to replenish the cards balance.

S-members card

JACCS CO., LTD.

Annual Report 2016

21

Financing Business

REVIEW OF OPERATIONS

Substantially Expanded the Balance of Credit Guarantees


for Personal Loans Extended by Financial Institutions
Overview
The financing business comprises credit guarantees for personal loans extended by financial institutions, credit
guarantees for housing loans, and bill collection services. Housing loan guarantee services specialize in mortgage

Revenue from Guarantees


for Personal Bank Loans
(Non-Consolidated)

guarantees on apartments purchased for investment purposes. JACCS conducts this business specifically in Tokyo,

4.0
Billions of Yen

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

Operating Performance (Non-Consolidated)


In personal loan guarantees for financial institutions, the balance of loan guarantees grew significantly, and operating
revenue increased. In housing loan guarantees, the balance of loan guarantees remained robust and operating revenue
grew. In bill collection services, operating revenue rose, driven by an increase in the volume of new contracts and solid

2014

2015

2016

growth in the number of invoices handled.

Strategy under ACTWe are implementing measures aimed at realizing sustainable growth of the credit guarantee business and further
developing the bill collection services market. In personal loan guarantees for financial institutions, we are working

Revenue from
Guarantees for Housing
Loans

to further expand the balance of loan guarantees by providing new products and services that satisfy the needs of
customers. Simultaneously, JACCS aims to develop new business domains underpinned by the introduction of a Web-

(Non-Consolidated)

15.6

based loan screening system.

Billions of Yen

In housing loan guarantees, JACCS is working to secure the top market share by expanding the number of new
alliance partners, developing new products to meet market needs, and strengthening relationships with alliance partners.
In bill collection services, JACCS is working to further expand alliance partnerships through acceleration of new alliances
with major real estate firms and developing new collaborative partnerships.
2014

2015

2016

Key Initiatives
Cooperation with Regional Banks in Guarantee Operations for Vacant House Loans
We are cooperating with seven regional financial institutions to help broadly address the problem of vacant houses, which
has become a social issue for Japan in recent years. The guarantees will apply to loan products used for demolition and

Revenue from
Bill Collection Services

renovation of vacant houses. The participating institutions are Tomato Bank Ltd., Aomori Bank, Ltd., Fukuoka Chuo Bank,

2.7

Ltd., Mishima Shinkin Bank, Bank of Iwate, Ltd., Mie Bank Ltd., and Enshu Shinkin Bank.

Billions of Yen

Began Provision of a Settlement Package Service


JACCS and PAYGENT Co., Ltd., have formed a business alliance, and have begun providing a settlement package service
under which expenses may be paid by credit card. These include key and deposit money required when entering a
residential lease contract, monthly rent payments, building
management expenses, and expenses incurred when terminating
a residential lease.

22

JACCS CO., LTD.

Annual Report 2016

2014

2015

2016

Overseas Business

REVIEW OF OPERATIONS

Vietnam Business Performing Soundly; Market Entry


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

Operating Revenue
in Vietnam

began by offering motorcycle sales finance services and has steadily expanded operations since then. This includes the provision

(Years ended December 31)

of auto sales finance, unsecured loans, and becoming the first Japanese credit card issuer in Vietnam. In Indonesia, JACCS

1,312

entered the motorcycle sales finance business in 2012, and in 2014, entered the auto sales finance business. We aim to

Millions of Yen

continue expanding operations in the ASEAN region.

Operating Performance (Non-Consolidated)


In Vietnam, consolidated subsidiary JACCS International Vietnam Finance Co., Ltd. (JIVF), steadily grew its business,
achieving an increase in income before income taxes on a consecutive basis.

2013

2014

2015

In Indonesia, equity-method affiliate PT Mitra Pinasthika Mustika Finance (MPMF) worked to expand its operations.
However, owing to the impact of a slowdown in economic growth, expenses related to doubtful accounts rose, and

Number of Member Stores


in Vietnam

income after income taxes fell short of the initial forecast.


In the Philippines, JACCS established joint venture MMPC Auto Financial Services Corporation together with Sojitz
Corporation, Mitsubishi Motors Philippines Corporation, and BDO Leasing and Finance, Inc.

(Years ended December 31)

Strategy under ACT684

JACCS intends to expand its business through the launch of new products, by strengthening support from Japan, and by
entering new markets.
In Vietnam, we are reinforcing the base of motorcycle sales finance operations by expanding the number of member
stores, working to increase the volume of new contracts through such new products as auto sales finance and household
appliance sales finance, and strengthening the earnings base of the credit card business by significantly expanding the

2013

2014

2015

number of cardholders.
In Indonesia, we are focusing on strengthening the management structure and working to reinforce the receivables
management system and corporate governance system through the provision of management know-how from Japan.
In the Philippines, through MMPC Auto Financial Services, we are aiming to launch operations in the first half of

Operating Revenue
in Indonesia

fiscal year ending March 31, 2017 and establish a position in the Philippines auto sales finance market.
(Years ended December 31)

10,272

Key Initiative

Millions of Yen

Expansion of Credit Card Members in Vietnam


Consolidated subsidiary JIVF entered the credit card market in the fiscal year ended December 31, 2014. The company
has steadily expanded its credit card membership, mainly through customers initially acquired in its loan operations. In
the fiscal year ended December 31, 2015, the number of credit card members reached 10,000. Through continued

2014

2015

programs to promote the acquisition of new credit card members, JIVF expects to grow credit card membership to
60,000 by the end of the fiscal year ending December 31, 2016.

JACCS CO., LTD.

Annual Report 2016

23

FINANCIAL INFORMATION

MESSAGE FROM THE CHIEF FINANCIAL OFFICER

25

MANAGEMENTS DISCUSSION AND ANALYSIS

26

BUSINESS RISKS

30

CONSOLIDATED BALANCE SHEETS

32

CONSOLIDATED STATEMENTS OF INCOME

34

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 35

24

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

36

CONSOLIDATED STATEMENTS OF CASH FLOWS

38

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

39

INDEPENDENT AUDITORS REPORT

58

JACCS CO., LTD.

Annual Report 2016

MESSAGE FROM THE CHIEF FINANCIAL OFFICER

Tsutomu Sugiyama
Deputy President, CFO and
Representative Director

Interest-bearing liabilities exceeded 1 trillion, as assets increased with business expansion. We will
strengthen financial management to match stakeholder expectations by building a solid financial position
to support top-line growth and optimize Group synergies.
Fundraising

ROE Improvements

Core policies that we deployed under ACT- , our three-year medium-term

One key policy under ACT- is to engage in advanced CSR practices. We

business plan, are to expand JACCS earnings base through Group synergies

aim to improve ROE, as we consider it important to pursue shareholder- and

and pursue innovativeness through strategic utilization of the Groups resources.

investor-oriented goals to keep meeting the expectations of all stakeholders.

Our basic policy in fundraising is to harness asset liability management


to reinforce our financial structure and manage risks. Under ACT- , we are

We seek to enhance ROE by increasing earnings, and will also reform our
cost structure to elevate the top line and margins.

also reinforcing sales support in this area.


Fundraising is vital to JACCS as a financial institution. As well as

Shareholder Returns

benefiting from shareholders and other investors, we obtain stable funding

Ensuring stable shareholder returns is a top management priority. At the

leveraging relationships that we have built with numerous financial institutions

same time, we need to align these returns with performance. Our basic policy

over more than 60 years and our creditworthiness as part of MUFG to borrow

on profit distribution is thus to strengthen our financial position and maintain

from diverse institutions, issue bonds and commercial paper, and undertake

sufficient internal reserves while paying dividends after comprehensively

affiliated loans.

evaluating net income attributable to owners of the parent, prospects,

In the years ahead, we will endeavor to optimize our funding mix to

financial standing, and payout ratio, and other factors.

reinforce sales support, closely monitoring the risks of interest rate rises
and accommodating a deregulated financial climate.

JACCS CO., LTD.

Annual Report 2016

25

MANAGEMENTS DISCUSSION AND ANALYSIS


Analysis of Operating Performance

Composition of Total Volume


of New Contracts (%)
Other Operations
29.4%

Overview
In fiscal year ended March 31, 2016, JACCS launched its new three-year medium-term business plan,
Credit Card
33.1%

ACT- . The plan continues the medium- to long-term vision set out in the Companys previous mediumterm business plan, ACT11 of becoming an innovative consumer finance company with its roots in
Japan. JACCS worked to realize this six-year vision by implementing management strategies based on

Financing
2.3%
Credit Guarantee
22.1%

the three core policies of generating Group synergies, innovativeness, and CSR.
Installment Sales
Finance
13.1%

As a result, on a consolidated basis, the total volume of new contracts amounted to 3,404,510
million (US$30,397 million), an increase of 343,213 million (US$3,064 million), or 11.2%, compared
with the previous fiscal year. Total operating revenue grew 5,413 million (US$48 million), or 5.0%, to
113,673 million (US$1,014 million).

Results by Business
Credit Card
In card shopping, the Company executed a range of promotional campaigns aimed at increasing card
usage. These included JACCS Loyal Members Program, a service under which users qualify to receive
various rewards depending on the usage volume during the previous year. The volume of new contracts
grew, driven by these promotional campaigns and such factors as the Companys efforts to promote
co-branded cards and an increase in new card members.
As a new product, the Company began issuing JACCS Card J/SpeedyTM, incorporating JCB Co.,
Ltd.s J/SpeedyTM payment service featuring NFC technology (contactless IC card). This card greatly
enhances payment speed and convenience, as payment is conducted swiftly by simply passing the card
close to a dedicated terminal. In addition, it also made possible highly secure IC chip-based payment. In
the future, the Company anticipates that the trend toward a cashless society will further advance in Japan
and in many Asian countries.
As a result, on a consolidated basis, in the credit card business the volume of new contracts
increased 9.8% compared with the previous fiscal year, to 1,127,244 million (US$10,064 million),
and operating revenue increased 2,265 million (US$20 million), or 8.3%, to 29,710 million
(US$265 million).

About Five Key Business Lines


The three core businesses operated by JACCS
that are introduced on pages 2022 are classified
according to the following five business segments
for Japanese accounting and regulatory disclosure
purposes.

26

JACCS CO., LTD.

Annual Report 2016

Credit Card
JACCS issues credit cards to customers who pass
a credit check conducted by JACCS. Customers who
become cardholders receive offers for shopping and
other services by presenting their card and signing at
member stores partnering with JACCS. These include
department stores, specialty stores, dining establishments,
hotels, leisure facilities, and more. JACCS pays member
stores for purchases in a single lump payment, and
collects the money from the cardholder using payment
methods set down in the contract. Aside from the proper
card issued by JACCS, there also exists partner cards,
called house cards.

Installment Sales Finance


When a consumer makes a purchase at a member
store partnering with JACCS, JACCS pays the purchase
amount for customers who pass the credit check
conducted by JACCS. In other words, consumers who
do not have credit cards can also make high-priced
purchases. Consumers have the option of making
several payments, or paying all at once. This is the
business area where JACCS is stronger than other
credit card companies.

Installment Sales Finance

Total Volume of New Contracts


(Billions of Yen)

In shopping credits, the volume of new contracts increased, driven by strong performances in major product

3,500

3,404

and service categories, including kimono, premium wristwatches and jewelry, and telecommunications.

3,061

In Web-related services, which the Company is vigorously promoting based on enhanced customer
convenience, the ratio of credit applications received via the Web saw a robust increase, underpinned by

3,000

2,500

such factors as the addition of new functionality to the WeBBy In-Store Simple Credit service, and a

2,784
2,387

Credit card

2,480

2,000

Installment
sales finance

1,500

Credit
guarantee

1,000

Financing

500

Other
operations

broader rollout of tablet devices used for credit applications.


In auto loans (including auto loan guarantees), despite weak growth in the volume of new contracts
at some domestic-brand new-vehicle dealerships, the overall volume of new contracts for domestic-brand
vehicles grew steadily, driven by such factors as the execution of marketing programs in each sales
channelcentering on used-vehicle dealersand efforts to deepen relationships with business partners.
0

In auto loans for imported vehicles, the volume of new contracts grew significantly compared with

2012

2013

2014

2015

2016

the previous fiscal year. This reflected such factors as an expansion in new partnerships with importers,
a stronger marketing effort for promoting captive finance, and an increase in credit usage accompanying
low-interest programs at dealers.
As a result, on a consolidated basis, the installment sales finance business recorded a 45.0%
increase in the volume of new contracts, to 446,153 million (US$3,983 million). Operating revenue
increased 2,173 million (US$19 million), or 11.2%, to 21,653 million (US$193 million).
Credit Guarantee
Within personal loan guarantees for financial institutions, JACCS expanded business related to BTMUs
Web-based loan products as well as business with regional banks. This helped drive a large increase in
the volume of new contracts compared with the previous fiscal year in both loans on deed and cardbased loans. The Company also released two new products, Inheritance Support Loans and Vacant
House Loans, thereby promoting new business alliances in the credit guarantee field.
Housing loan guarantees on condominiums for investment purposes recorded the highest volume
of new contracts to date. This was driven by stronger marketing programs aimed at expanding business
partnerships within a very active real estate environment, which saw a robust level of sales maintained
throughout the fiscal year.
In housing-related products, the volume of new contracts for solar power generation systems

Credit Guarantee
Member stores such as automobile dealerships or
housing companies who partner with JACCS can have
JACCS run a credit check on those consumers when
they apply to make a purchase. Consumers who pass
the check get financing from a partner financial
institution, and JACCS handles debt guarantees, as well as
collection for installment payments. Most of our guarantee
operations are in auto loans and housing loans.

Financing
Cash advance services are available at cash dispensers
and ATMs for holders of JACCS credit cards or loan
cards. Credit checks are run on consumers who apply
for loans from JACCS, and persons who pass can borrow
money in the form of collateralized or uncollateralized
direct financing and housing loans.

Other Operations
This area is dominated by our bill collection services, in
which JACCS acts as an agent for partner companies in
collecting payments, eliminating the need for the partner
company to allocate its own time, personnel, and money.
The bill collection business is an asset-less, fee-based
business which sees stable income once a contract is
signed.

JACCS CO., LTD.

Annual Report 2016

27

MANAGEMENTS DISCUSSION AND ANALYSIS

declined. In contrast, home renovation loans centering on house manufacturers performed robustly,

Total Operating Revenue


(Billions of Yen)

leading to an overall increase in the volume of new contracts compared with the previous year.

150

As a result, on a consolidated basis, the credit guarantee business recorded a 3.7% increase in the
120
107

102

104

108

113

volume of new contracts, to 751,581 million (US$6,710 million). Operating revenue rose 1,106 million
(US$9 million), or 2.8%, to 40,967 million (US$365 million).

90

Financing
In cash advances, despite the execution of promotional campaigns to stimulate usage among existing

60

cardholders and inactive members, these measure were insufficient to stem the decline in the volume
of new contracts.

30

As a result, on a consolidated basis, the financing business recorded a 2.4% decrease in the
0
2012

2013

2014

2015

2016

volume of new contracts, to 77,349 million (US$690 million). Operating revenue fell 1,080 million
(US$9 million), or 8.5%, to 11,626 million (US$103 million).

Net Income Attributable to Owners


of the Parent
(Billions of Yen)
8

7.6

7.5
7.1

Other Operations
Bill collection services maintained a robust volume of new contracts, driven by such categories as rent
collection and fitness club membership fees. JACCS released its new dedicated bill collection service
Web site, and worked to enhance the level of service offered to bill collection clients.

6.8
6.5

Among consolidated subsidiaries in other operations, JACCS Lease Co., Ltd., achieved steady

expansion in its leasing operations, recording growth in the volume of new contracts.
In other fields, the Group formed an alliance with Benefit One Inc., a major provider of employee
4

benefit and welfare services. As part of a new initiative, JACCS attached Visa prepaid card functions to
the employee benefit and welfare program membership cards issued to Benefit Ones client companies
and organizations.

As a result, on a consolidated basis, other operations posted an 8.6% increase in the volume of
new contracts, to 1,002,183 million (US$8,948 million). Operating revenue* increased 949 million
0
2012

2013

2014

2015

2016

(US$8 million), or 10.8%, to 9,717 million (US$86 million).


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

Operating Expenses and Net Income Attributable to Owners of the Parent

Total Assets
(Billions of Yen)
3,437

3,500

2,896
2,800

2,725

Total operating expenses increased 5,146 million (US$45 million), or 5.3%, compared with the previous
fiscal year, to 101,430 million (US$905 million). This reflected increases in sales promotional expenses,

3,158

such as credit card loyalty point programs, IT system investment, and doubtful accounts-related expenses.

2,718

Operating income increased 267 million (US$2 million), or 2.2%, compared with the previous
fiscal year, to 12,243 million (US$109 million).

2,100

Income before income taxes increased 401 million (US$3 million), or 3.5%, compared with the
previous fiscal year, to 11,978 million (US$106 million).

1,400

Net income attributable to owners of the parent increased 462 million (US$4 million), or 6.5%,
compared with the previous fiscal year, to 7,569 million (US$67 million).

700

Net income per share (basic) amounted to 44.02 (US$0.39), an increase of 6.3% compared with
0
2012

2013

2014

2015

2016

the previous fiscal year. The Company implemented cash dividends totaling 14.00 (US$0.13) per share
applicable to the fiscal year under review, which remained unchanged from the previous fiscal year.

28

JACCS CO., LTD.

Annual Report 2016

Analysis of Financial Position

Credit Rating

Fund Procurement

R&I

JCR

Long term

A-

A-

Short term

a-1

J-1

The Companys basic fund procurement policy is to maintain and strengthen the relationships it has
established to date with financial institutions while diversifying fund procurement, and emphasizing
stability and cost considerations.
Since the Company undertakes direct financing in capital markets, it obtains credit ratings for its bonds.

Financial Position
Total assets at March 31, 2016, amounted to 3,437,641 million (US$30,693 million), an increase of

Total Net Assets


(Billions of Yen)

279,596 million (US$2,496 million), or 8.9%, compared with the previous fiscal year-end.

150

Total current assets increased 284,212 million (US$2,537 million), or 9.2%, to 3,362,172
million (US$30,019 million). This increase mainly reflected increases in accounts receivable-installment,

120

117

132

133

2015

2016

122

111

accounts receivable-installment sales-credit guarantee, and lease investment assets.


Total noncurrent assets decreased 4,616 million (US$41 million), or 5.8%, compared with the

90

previous fiscal year-end, to 75,469 million (US$673 million), reflecting an increase in software, and
declines in investment securities and net defined benefit asset.

60

Total current liabilities at March 31, 2016, amounted to 2,839,280 million (US$25,350 million),
an increase of 273,086 million (US$2,438 million), or 10.6%, compared with the previous fiscal year-

30

end, reflecting increases in accounts payable-credit guarantee, commercial papers, and other interestbearing liabilities.

0
2012

2013

2014

Total noncurrent liabilities at fiscal year-end increased 6,073 million (US$54 million), or 1.3%,
to 465,078 million (US$4,152 million). Although long-term loans payable and deferred tax liabilities
decreased, bonds payable increased.
Total net assets increased 437 million (US$3 million), or 0.3%, to 133,283 million (US$1,190
million). Valuation difference on available-for-sale securities and remeasurements of defined benefit plans

CF from Operating Activities


CF from Investing Activities
CF from Financing Activities

Cash Flows
(Billions of Yen)
300

decreased, while retained earnings increased. The equity ratio decreased 0.3 percentage point, to 3.9%.
Net assets per share amounted to 772.81 (US$6.90) at fiscal year-end, compared with 772.67 at the

200
151.8

previous fiscal year-end.

115.1
100

72.8

Cash Flows
Net cash used in operating activities amounted to 144,453 million (US$1,289 million). Significant items

36.2
15.1
0
-4.1

included increase in notes and accounts payable-trade of 113,834 million (US$1,016 million), income
before income taxes of 11,978 million (US$106 million), and increase in notes and accounts receivable-

-61.1

-8.9

-8.3

-13.9

-100

-89.4

-86.6
-144.4

trade of 280,369 million (US$2,503 million).


Net cash used in investing activities amounted to 8,860 million (US$79 million). Significant items

-8.8

-47.9

-200
2012

2013

2014

2015

2016

included purchase of property, plant and equipment and intangible assets of 8,904 million (US$79 million).
Net cash provided by financing activities amounted to 151,898 million (US$1,356 million).
Significant items included proceeds from long-term loans payable of 142,518 million (US$1,272
million), net increase in commercial papers of 67,500 million (US$602 million), net increase in shortterm loans payable of 44,374 million (US$396 million), and repayment of long-term loans payable of
108,001 million (US$964 million).
As a result, cash and cash equivalents at end of year totaled 84,074 million (US$750 million),
a decrease of 1,418 million (US$12 million) compared with the previous fiscal year-end.

JACCS CO., LTD.

Annual Report 2016

29

BUSINESS RISKS
1. Credit risk
Risk of increase in allowance for doubtful accounts
The incidence of customer arrears is at a stable level, and at present the Company
does not see any factors likely to lead to a large increase in arrears cases. Hence, the
Company expects the quality of its receivables portfolio to remain high. Accompanying
growth in the total amount of receivables, although the Company anticipates that a
certain percentage of receivables will fall into arrears, the impact of such cases on the
Companys operating performance is likely to be minimal.
Claims for the repayment of excess interest are likely to have a minimal impact
on the Companys operating performance since the Company complied with the interest
rate ceilings stipulated in the Interest Limitation Law.

3. Administrative risk
In the operation of its businesses, the Group conducts a wide variety and high volume
of administrative processing. The Group works to ensure that all administrative processing
is carried out correctly and in accordance with fundamental rules, and aims to enhance
the efficiency of these operations, including through the implementation of measures to
improve the accuracy of processing, prevent fraud, and increase the level of processing
systemization. However, in the event that an accident or fraud were to occur stemming
from a failure to carry out correct administrative processing, depending on the nature
and scale of such an occurrence, it may affect the trust of the Groups customers or
member store businesses. In such a case, the Company may face liability for damages
and a loss of public credibility, which may affect the Groups operating performance.

Member store risk


There is the possibility that member stores may fall into bankruptcy owing to deterioration
in financial soundness, and that such stores may cease the provision of services or the
delivery of goods to the Companys customers. In such cases, the Company may suffer
damage, which may affect its operating performance.
Pursuant to a revision of the Installment Sales Law in 2008, if a specified-contract
member store were to engage in inappropriate sales activity (excessive-volume sales,
misrepresentation, etc.), customers subject to such behavior would be able to withdraw
their declaration of intent regarding the application to enter into a contract with the
seller. If inappropriate sales activity were recognized to have occurred, affected
customers could claim refunds from the credit company. If there were an increase in
inappropriate sales activity by member stores, the Company may suffer damage, which
may affect its operating performance.

4. System risk
While the Companys core information system comprises the security management
structures outlined below, in the event of a malfunction or stoppage in the core
information system, the Groups operations may be halted, which may affect the
Companys operating performance.

2. Market-related risk
Risk of increase in funding interest rates
As of March 31, 2016, the Groups overall fund procurement (including straight
corporate bonds and commercial paper) fixed interest rate ratio (including swaps) stood
at 51.3%, and the floating interest rate ratio stood at 48.7%. While funding interest
rates fluctuate according to market trends, interest rates applied to loans extended by
the Company and transaction conditions between the Company and member stores
and customers in its credit card operations and installment sales finance operations
are determined comprehensively through a variety of factors, including competitive
conditions, and furthermore are contingent upon changes in member rules and
contracts. Consequently, since a time lag arises before any increase in interest rates is
reflected in transaction conditions, a change in the financial situation leading to funding
interest rate fluctuations may affect the Groups operating performance. As of March
31, 2016, the Company has received the following credit ratings from Japan Credit
Rating Agency, Ltd. (JCR), and Rating and Investment Information, Inc. (R&I): Long-term
bonds both A-, commercial paper J-1 (JCR) and a-1 (R&I). The Companys commercial
paper issuing limit is set at 350 billion (US$3,125 million), and there are unlikely to
be difficulties in fund procurement in the near term. However, if the Groups operating
performance were to deteriorate, its credit ratings and creditworthiness would be
downgraded and it would be forced to raise funds at higher interest rates than normal.
Consequently, the Company would face higher funding costs from capital markets and
financial institutions, which may affect its operating performance.
Risk of decline in prices of investment securities
As of March 31, 2016, the Group holds investment securities amounting to 21,857
million (US$195 million) (market-listed and unlisted shares, etc.) and property, plant
and equipment amounting to 19,667 million (US$175 million) (land, buildings and
structures, etc.). There is the possibility that the Company may record valuation losses
on such holdings owing to declines in market prices or impairment of investment value.

30

JACCS CO., LTD.

Annual Report 2016

(1) The Companys core computer system, called JANET, comprises three main
systemsprocessing, input/output (I/O), and operational monitoring. All three systems
are installed in an information center managed by a contracted operations company.
This information center has taken earthquake countermeasures and installed multiple
electric power supply lines as well as electrical generator equipment. Hence, even if
outside supply were disrupted, the center could remain operational for several days
using its own supply. The information center makes a backup of data necessary for the
resumption of operations, which is stored at a separate location more than 60 kilometers
away. Furthermore, in case of a contingency affecting I/O center processing, such
critical operations as member store settlement operations can be performed at an
alternate processing center. In such a case, since operations would be carried out
on a temporary basis, customer services may be adversely affected.
(2) The Company uses the JANET system to manage most information relating to its
operations, including customer personal and credit information and member store
transaction conditions. JANET comprises a dedicated network, and although external
access paths are completely blocked, the Company implements a range of other
measures as part of its security management, as summarized below:
(i) JANET terminal functions are set up in such a way that each user is restricted to
an authorized set of functions necessary for business operations, depending on
the terminals location and the users position and job.
(ii) Each set of terminal operations is recorded in a log, which is monitored to ensure
that operations are valid.
(iii) Terminals are all controlled through a system of locks, and the terminal equipment
cannot be removed from its installed location.
(iv) Terminals do not include I/O ports for removable recording media, and the equipment
is configured so that individuals cannot introduce, input, output, or record data.
(v) System access for system developers and operators must be authorized in advance
and requires the application for and approval of a user ID, which must be
surrendered again after use. Monitoring is carried out on a daily basis to ensure that
usage is appropriate.
(vi) Within the scope of Management of the JANET Host System Development,
Maintenance and Operation, the Company has acquired certification under the
international standard relating to information security, ISO/IEC 27001:2013. Based
on this standard, the Company is able to effectively pursue measures relating to
information security.

5. Compliance risk
Within the Group, the Company conducts money lending, credit card, installment sales
finance operations, and fund settlement operations (prepaid card and fund transfer
operations), and the Companys consolidated subsidiaries conduct loan servicing and
other operations. Pursuant to laws and regulations, these businesses require registration
with or permits issued by the relevant authorities. To ensure strict compliance with laws
and regulations, the Group has established compliance systems. However, in the event
that the Group engaged in activity that was in violation of laws or regulations, the Group
may be subject to punishment by relevant authorities pursuant to laws and regulations
(business improvement order, partial or full business suspension order, revocation of
registration, etc.), which may affect the Companys operating performance.

in the event of a crisis whose scale exceeds the Groups assumptions, leading to
decisive damage to the Groups physical and human assets, there is the possibility that
this may result in the suspension of operations or make the continuation of operations
problematic.

Installment Sales Law and Special Transactions Law


The Companys credit card and installment sales finance operations are subject to the
Installment Sales Law. For this reason, the Company must ensure that its business
operations comply with the conduct rules stipulated in this law (examination of amount
of expected ability to pay, delivery of written documents, member store investigation,
and appropriate management of credit card numbers, etc.) as well as civil rules (plea
for suspension of payments, credit contract cooling off, and damages relating to
cancellation of contracts, etc.). The Company must also comply with the voluntary
rules of the Accredited Installment Sales Association.

9. Personnel risk
Since the Group undertakes business operations involving a wide array of fields, it has
an ongoing program for recruiting high-quality personnel, and it is essential for the
Group to develop and train the people it has employed. However, if the Group were
unable to recruit or retain high-quality personnel, or it became unable to adequately
train its employees, this may affect the Groups operating performance.

Money Lender Business Law


The Companys financing business is subject to the Money Lender Business Law. For
this reason, the Company must ensure that its business operations comply with various
regulations stipulated in this law (prohibition of excessive lending, disclosure of lending
conditions and indicators, delivery of written documents, keeping of account ledger,
collection activity regulation, return of claim deed, etc.) and voluntary rules of the Japan
Financial Services Association.
6. Information-related risk
The nature of the Groups business involves the acquisition, retention, and use of a
large volume of personal information, particularly centered on personal credit information
(including credit card numbers and other stand-alone information). Although the Group
has rigorously handled such information since prior to the enactment of the Personal
Information Protection Law, in the event of a leak or loss of personal information from
the Group or its outside contractors, or the fraudulent use of such information, the
Group may face a loss of credibility and liability for damages, which may affect the
Companys operating performance. In addition, if the Company were to commit a legal
violation as a business operator that handles personal information, it may be subject to
administrative measures, including recommendations and orders.
Led by the Compliance Control Department, the Group strives to ensure that
personal information and information related to Japans national identification number
system is handled appropriately and to maintain sound security management. The
Company and four of its consolidated subsidiaries have acquired Privacy Mark
certificationa system to assess measures to protect personal informationfrom
Japan Information Processing Development Corporation (JIPDEC), and are working
to ensure its effectiveness.
7. Disaster risk
In preparation for unexpected situations, including earthquakes, large-scale disasters,
and accidents, the Group has established a safety-confirmation system, prepared a
disaster response manual, formulated operational rules for its Emergency Response
Committee, and established a Business Continuity Plan (BCP). These and other
measures are focused on building the Groups crisis management system. However,

8. Tangible asset risk


There is the possibility that tangible assets owned by the Group may sustain damage
owing to natural disasters, such as earthquakes and typhoons, or man-made disasters,
such as acts of terrorism. The Group regularly ascertains the status of the movable
property and real estate assets that it manages, and implements disaster prevention
and crime prevention measures.

10. Reputation risk


The Groups reputation is extremely important to the maintenance of its relationships
with customers, investors, regulatory agencies, and society in general. Its reputation
may be damaged by any of a diverse range of factors, including compliance violations,
employee fraud, computer system failures, or the behavior of third parties that is
difficult or impossible to control. If the Group were unable to avoid such factors or
respond adequately to such factors, it may lose current or future customers or investors,
and this may affect the Groups operating performance.
11. Related-company risk
The Group comprises the Company and its affiliates (five consolidated subsidiaries and
one equity-method affiliate). The Groups consolidated-to-nonconsolidated ratio stands
at 1.02 on an operating revenue basis, and 0.97 on an ordinary income basis (as of
March 31, 2016). Hence, within the Groups businesses, the proportion accounted for
by the Company is extremely high. Consequently, even in the event that a business risk
relating to an affiliate materialized, it would not immediately have a significant effect on
the Group as a whole.
12. Overseas business risk
The Group is working to expand its business in overseas markets, centering on Southeast
Asia. The Company has operations in Vietnam (consolidated subsidiary) and Indonesia
(equity-method affiliate). Engaging in these overseas business operations carries a
range of inherent risks. For example, unlike in Japan, there may be unforeseen changes
in laws or regulations, there is the risk of political or economic turmoil, and there is
exchange rate fluctuation risk. If such risks were to materialize, it may affect the
Groups operating performance.
The business risks outlined above are based on information available to the Group as
of the filing date of the Companys financial results for the fiscal year ended March 31,
2016, and include information regarding major potential business risks envisaged by
the Group. However, this summary of risks does not cover all possible risks, and there
is the possibility that new risks may occur owing to a variety of contingent factors,
including changes in the future economic situation or the industrys operating
environment.

JACCS CO., LTD.

Annual Report 2016

31

CONSOLIDATED BALANCE SHEETS


JACCS CO., LTD. and Consolidated Subsidiaries

Thousands of
U.S. Dollars

Millions of Yen

As of March 31

2016

2015

2016

ASSETS
Current assets:
Cash and deposits (Notes 15 and 16)

84,074

85,492

750,661

Accounts receivable-installment (Notes 6, 7 and 16)

1,191,816

1,040,954

10,641,214

Accounts receivable-installment sales-credit guarantee

1,986,459

1,876,591

17,736,241

52,417

32,940

468,009

Prepaid expenses

1,578

1,633

14,089

Deferred tax assets (Note 21)

2,705

2,680

24,152

Advances paid

40,201

29,326

358,938

Accounts receivable-other

10,970

18,598

97,946

3,319

1,616

29,634

(11,367)

(11,870)

(101,491)

3,362,172

3,077,960

30,019,393

8,488

8,463

75,786

Land

14,986

14,989

133,803

Other

4,634

4,444

41,375

28,108

27,896

250,964

(8,441)

(7,808)

(75,366)

19,667

20,088

175,598

15,724

18,961

140,393

Investments in unconsolidated subsidiaries and affiliated companies

6,134

6,817

54,768

Bad debts

1,837

1,862

16,402

270

276

2,411

25,442

23,459

227,160

Lease investment assets

Other
Allowance for doubtful accounts
Total current assets

Noncurrent assets:
Property, plant and equipment:
Buildings and structures

Total
Less accumulated depreciation
Total property, plant and equipment

Investments and other assets:


Investment securities (Notes 16 and 17)

Long-term prepaid expenses


Intangible assets
Deferred tax assets (Note 21)

27

Guarantee deposits

1,827

1,836

16,312

Net defined benefit asset (Note 19)

4,054

6,528

36,196

Other

1,754

1,587

15,661

Allowance for doubtful accounts

(1,243)

(1,331)

(11,098)

Total investments and other assets

55,802

59,997

498,232

Total noncurrent assets

75,469

80,085

673,830

3,437,641

3,158,045

$30,693,223

Total assets
The accompanying notes are an integral part of these statements.

32

JACCS CO., LTD.

Annual Report 2016

Thousands of
U.S. Dollars

Millions of Yen

As of March 31

2016

2015

2016

LIABILITIES
Current liabilities:
Notes and accounts payable-trade
Accounts payable-credit guarantee

45,924

41,953

410,035

1,986,459

1,876,591

17,736,241

215,951

171,643

1,928,134

2,300

Current portion of long-term loans payable (Notes 6, 9 and 16)

143,427

106,701

1,280,598

Commercial papers (Notes 9 and 16)

Short-term loans payable (Notes 6, 9 and 16)


Current portion of bonds payable (Notes 9 and 16)

267,000

199,500

2,383,929

Accounts payable-other

3,057

3,241

27,295

Accrued expenses

1,009

1,047

9,009

Income taxes payable


Deposits received
Unearned revenue
Provision for bonuses
Provision for point card certificates
Deferred installment income (Note 8)
Other
Total current liabilities

2,082

3,758

18,589

55,426

49,733

494,875

216

230

1,929

2,567

2,608

22,920

4,103

3,368

36,634

104,253

97,766

930,830

7,806

5,755

69,696

2,839,280

2,566,194

25,350,714

Noncurrent liabilities:
Bonds payable (Notes 9 and 16)

105,000

95,000

937,500

Long-term loans payable (Notes 6, 9 and 16)

353,910

356,118

3,159,910

Provision for directors retirement benefits

11

15

98

Provision for loss on interest repayment

1,256

1,275

11,214

Deferred tax liabilities

1,909

3,704

17,045

Long-term guarantee deposited

2,817

2,778

25,152

175

115

1,563

Other
Total noncurrent liabilities

465,078

459,005

4,152,482

3,304,358

3,025,199

29,503,196

16,138

16,138

144,089

Capital surplus

30,506

30,511

272,375

Retained earnings

84,451

79,288

754,027

Treasury stock

(1,407)

(1,625)

(12,562)

129,688

124,312

1,157,929
38,411

Total liabilities
NET ASSETS
Shareholders equity: (Note 14)
Capital stock
Authorized 394,550,000 shares
Issued 175,395,808 shares

Total shareholders equity


Accumulated other comprehensive income:
Valuation difference on available-for-sale securities

4,302

6,452

Deferred gains or losses on hedges

(25)

(42)

(223)

Foreign currency translation adjustment

159

906

1,420

Remeasurements of defined benefit plans


Total accumulated other comprehensive income
Subscription rights to shares (Note 20)
Total net assets
Total liabilities and net assets

(1,013)

1,081

(9,045)

3,423

8,397

30,563

172

137

1,535

133,283

132,846

1,190,027

3,437,641

3,158,045

$30,693,223

JACCS CO., LTD.

Annual Report 2016

33

CONSOLIDATED STATEMENTS OF INCOME


JACCS CO., LTD. and Consolidated Subsidiaries

Thousands of
U.S. Dollars

Millions of Yen

Years ended March 31

2016
Operating revenue:
Revenue from credit card business
Revenue from installment sales finance business
Revenue from credit guarantee
Financing revenue
Other operating revenue
Financial revenue
Interest income
Dividends income
Other financial revenue
Total financial revenue
Total operating revenue

2015

2016

29,710
21,653
40,967
11,626
9,218

27,445
19,480
39,861
12,706
8,310

$ 265,268
193,330
365,777
103,804
82,304

60
436
3
499
113,673

74
369
15
458
108,260

536
3,892
27
4,455
1,014,938

93,394

87,797

833,876

6,539
327
1,170
8,036
101,430

6,976
238
1,273
8,487
96,284

58,384
2,920
10,446
71,750
905,626

12,243

11,976

109,312

Non-operating income:
Equity in earnings of affiliates
Miscellaneous income
Gain on sales of investment securities
Total non-operating income

133
42
175

38
149
80
267

1,187
375
1,562

Non-operating expenses
Provision for loss on interest repayment
Equity in loss of affiliated companies
Miscellaneous loss
Loss on retirement of non-current assets
Loss on sales of non-current assets
Loss on valuation of investment securities
Loss on sales of investment securities
Expenses related to 60th-anniversary commemorative events
Loss on change in equity
Total non-operating expenses

232
40
12
61
1
94
0

440

205

6
56

280
119
666

2,071
357
107
545
9
839
0

3,928

11,978

11,577

106,946

4,335
74
4,409
7,569
7,569

4,636
(166)
4,470
7,107
7,107

38,705
661
39,366
67,580
67,580

Operating expenses:
Selling, general and administrative expenses
Financial expenses:
Interest on loans
Interest on commercial papers
Other financial expenses
Total financial expenses
Total operating expenses
Operating income

Income before income taxes


Income taxes-current
Income taxes-deferred
Total income taxes
Net income
Net income attributable to owners of the parent

Yen

2016
Per share data (Note 25)
Equity
Net incomebasic
Net incomediluted
Cash dividends
The accompanying notes are an integral part of these statements.

34

JACCS CO., LTD.

Annual Report 2016

772.81
44.02
43.88
14.00

U.S. Dollars

2015
772.67
41.42
41.30
14.00

2016
$6.90
0.39
0.39
0.13

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


JACCS CO., LTD. and Consolidated Subsidiaries

Years ended March 31

Net Income
Other comprehensive income: (Note 13)
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of affiliated company
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of the parent
Non-controlling interests

Thousands of
U.S. Dollars

Millions of Yen

2016
7,569

2015
7,107

2016
$ 67,580

(2,150)
8
(128)
(2,060)
(644)
(4,974)
2,595

3,262
7
339
849
513
4,970
12,077

(19,196)
71
(1,143)
(18,393)
(5,750)
(44,411)
23,169

2,595

12,077

$ 23,169

The accompanying notes are an integral part of these statements.

JACCS CO., LTD.

Annual Report 2016

35

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS


JACCS CO., LTD. and Consolidated Subsidiaries

Millions of Yen

Year ended March 31, 2016


Balance at beginning of year
Cumulative effects of changes in
accounting policies
Restated balance
Changes during the consolidated
fiscal year
Dividends from surplus
Net income attributable to owners of
the parent
Purchase of treasury stock
Disposal of treasury stock
Inserted directly into net assets-foreign
currency translation adjustment
Net changes of items other than
shareholders equity
Total changes during the consolidated
fiscal year
Balance as of March 31, 2016

Capital stock
16,138

Shareholders equity
Capital surplus
Retained earnings
30,511
79,288

Treasury stock
(1,625)

16,138

30,511

79,288

(1,625)

(2,406)

7,569

(5)

(4)
222

(5)

5,163

218

16,138

30,506

84,451

(1,407)

Millions of Yen

Year ended March 31, 2016


Balance at beginning of year
Cumulative effects of changes in
accounting policies
Restated balance
Changes during the consolidated
fiscal year
Dividends from surplus
Net income attributable to owners of
the parent
Purchase of treasury stock
Disposal of treasury stock
Inserted directly into net assets-foreign
currency translation adjustment
Net changes of items other than
shareholders equity
Total changes during the consolidated
fiscal year
Balance as of March 31, 2016

Accumulated other comprehensive income


Valuation difference on
Deferred gains or losses Foreign currency translaavailable-for-sale securities
on hedges
tion adjustment
6,452
(42)
906

Remeasurements of
defined benefit plans
1,081

Subscription rights to
shares
137

6,452

(42)

906

1,081

137

(747)

(2,150)

17

(2,094)

35

(2,150)

17

(747)

(2,094)

35

4,302

(25)

159

(1,013)

172

Millions of Yen

Year ended March 31, 2015


Balance at beginning of year
Cumulative effects of changes in
accounting policies
Restated balance
Changes during the consolidated
fiscal year
Dividends from surplus
Net income attributable to owners of
the parent
Purchase of treasury stock
Disposal of treasury stock
Inserted directly into net assets-foreign
currency translation adjustment
Net changes of items other than
shareholders equity
Total changes during the consolidated
fiscal year
Balance as of March 31, 2015

Capital stock

The accompanying notes are an integral part of these statements.

36

JACCS CO., LTD.

Annual Report 2016

16,138

Shareholders equity
Capital surplus
Retained earnings
30,482
74,359

Treasury stock
(1,769)

394

16,138

30,482

74,753

(1,769)

(2,572)

7,107

29

(4)
148

29

4,535

144

16,138

30,511

79,288

(1,625)

Millions of Yen

Year ended March 31, 2015


Balance at beginning of year
Cumulative effects of changes in
accounting policies
Restated balance
Changes during the consolidated
fiscal year
Dividends from surplus
Net income attributable to owners of
the parent
Purchase of treasury stock
Disposal of treasury stock
Inserted directly into net assets-foreign
currency translation adjustment
Net changes of items other than
shareholders equity
Total changes during the consolidated
fiscal year
Balance as of March 31, 2015

Accumulated other comprehensive income


Valuation difference on
Deferred gains or losses Foreign currency translaavailable-for-sale securities
on hedges
tion adjustment
3,190
(32)
(8)

Remeasurements of
defined benefit plans
277

Subscription rights to
shares
74

3,190

(32)

(8)

277

74

914

3,262

(10)

804

63

3,262

(10)

914

804

63

6,452

(42)

906

1,081

137

Thousands of U.S. Dollars

Year ended March 31, 2016


Balance at beginning of year
Cumulative effects of changes in
accounting policies
Restated balance
Changes during the consolidated
fiscal year
Dividends from surplus
Net income attributable to owners of
the parent
Purchase of treasury stock
Disposal of treasury stock
Inserted directly into net assets-foreign
currency translation adjustment
Net changes of items other than
shareholders equity
Total changes during the consolidated
fiscal year
Balance as of March 31, 2016

Capital stock
$144,089

Shareholders equity
Capital surplus
Retained earnings
$272,420
$707,929

Treasury stock
$(14,508)

144,089

272,420

707,929

(14,508)

(21,482)

67,580

(45)

(36)
1,982

(45)

46,098

1,946

$144,089

$272,375

$754,027

$(12,562)

Thousands of U.S. Dollars

Year ended March 31, 2016


Balance at beginning of year
Cumulative effects of changes in
accounting policies
Restated balance
Changes during the consolidated
fiscal year
Dividends from surplus
Net income attributable to owners of
the parent
Purchase of treasury stock
Disposal of treasury stock
Inserted directly into net assets-foreign
currency translation adjustment
Net changes of items other than
shareholders equity
Total changes during the consolidated
fiscal year
Balance as of March 31, 2016

Accumulated other comprehensive income


Valuation difference on
Deferred gains or losses Foreign currency translaavailable-for-sale securities
on hedges
tion adjustment
$57,607
$(375)
$8,090

Remeasurements of
defined benefit plans
$ 9,652

Subscription rights to
shares
$1,223

57,607

(375)

8,090

9,652

1,223

(6,670)

(19,196)

152

(18,697)

312

(19,196)

152

(6,670)

(18,697)

312

$38,411

$(223)

$1,420

$ (9,045)

$1,535

JACCS CO., LTD.

Annual Report 2016

37

CONSOLIDATED STATEMENTS OF CASH FLOWS


JACCS CO., LTD. and Consolidated Subsidiaries

2016
Cash flows from operating activities:
Income before income taxes
Depreciation and amortization
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for point card certificates
Increase (decrease) in provision for loss on interest repayment
Interest and dividends income
Interest expenses
Foreign exchange losses (gains)
Loss on retirement of property, plant and equipment and intangible assets
Loss on sales of property, plant and equipment and intangible assets
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Equity in earnings (losses) of affiliates
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in accounts receivable-other
Decrease (increase) in net defined benefit asset
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in deferred installment income
Decrease (increase) in other assets
Increase (decrease) in other liabilities
Subtotal
Interest and dividends 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 and intangible assets
Proceeds from sales of property, plant and equipment and intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Payments of loans receivable
Collection of loans receivable
Net decrease (increase) in short-term loans receivable
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 sales of treasury stock
Purchase of treasury stock
Cash dividends paid
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 year
Cash and cash equivalents at end of year
The accompanying notes are an integral part of these statements.

38

JACCS CO., LTD.

Thousands of
U.S. Dollars

Millions of Yen

Years ended March 31

Annual Report 2016

2015

2016

11,978
7,891
(589)
(39)
735
(19)
(496)
7,548
(3)
61
1
(42)
94
40
(280,369)
7,627
(535)
113,834
6,487
(13,228)
7,797
(131,227)
497
(7,607)
(6,116)
(144,453)

11,577
6,176
(2,374)
(61)
833
(44)
(443)
7,752
(15)
56

(80)
0
(38)
(228,807)
(2,162)
(518)
116,217
4,763
1,605
7,327
(78,236)
443
(7,764)
(1,125)
(86,682)

$ 106,946
70,455
(5,258)
(348)
6,563
(170)
(4,429)
67,393
(27)
545
9
(375)
839
357
(2,503,295)
68,098
(4,777)
1,016,375
57,920
(118,107)
69,616
(1,171,670)
4,438
(67,920)
(54,607)
(1,289,759)

(8,904)
8
(45)
127
(103)
48
(14)
27
(4)
(8,860)

(9,425)

(4,699)
172
(50)
44
(13)
28

(13,943)

(79,500)
71
(402)
1,134
(919)
429
(125)
241
(36)
(79,107)

44,374
67,500
142,518
(108,001)
10,000
(2,300)
217
(4)
(2,406)
151,898

20,914
50,800
82,326
(86,442)
50,000

177
(4)
(2,573)
115,198

396,196
602,679
1,272,482
(964,295)
89,286
(20,536)
1,938
(36)
(21,482)
1,356,232

(3)
(1,418)
85,492
84,074

35
14,608
70,884
85,492

(27)
(12,661)
763,322
$ 750,661

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


JACCS CO., LTD. and Consolidated Subsidiaries

1. Basis of Presenting the Consolidated Financial Statements


The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and
Exchange Law and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan (Japanese GAAP), which are
different in certain respects as to application and disclosure requirements from International Financial Reporting Standards.
The accompanying consolidated financial statements have been restructured and translated into English from the consolidated financial statements of
JACCS Co., Ltd. and subsidiaries (the Company) prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the
Ministry of Finance as required in the Japanese Financial Instruments and Exchange Law. Certain supplementary information included in the statutory Japanese
language consolidated financial statements is not presented in the accompanying consolidated financial statements. Figures in these consolidated financial
statements are rounded off to the nearest million of yen.
The translation of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using the prevailing exchange
rate at March 31, 2016, which was 112 to U.S.$1. The convenience translations should not be construed as representations that the Japanese yen amounts
have been, could have been, or could in the future be, converted into U.S. dollars at this or any other rate of exchange.

2. Summary of Significant Accounting Policies


(a) Scope of Consolidation
The accompanying consolidated financial statements include the accounts of JACCS Co., Ltd. and its significant subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation. The consolidated financial statements include the accounts of JACCS Co., Ltd. and 5
subsidiaries in the year ended March 31, 2016 and 5 subsidiaries in the year ended March 31, 2015.
Investments in a significant affiliate are accounted for by the equity method. Investments in an insignificant non-consolidated subsidiary not accounted for
by the equity method are carried at cost.
1. Number of consolidated subsidiaries: 5
JACCS Loan-Collection Service Co., Ltd.
JACCS Total Service Co., Ltd.
JACCS Lease Co., Ltd.
JACCS Payment Solutions Co., Ltd.
JACCS International Vietnam Finance Co., Ltd.
2. Name of non-consolidated subsidiary
JACCS INTERNATIONAL (Hong Kong) Co., Ltd.
(Reason for excluding from the scope of consolidation)
This non-consolidated subsidiary is small in size and its total assets, operating revenue, net income/loss for the Companys equity interest and retained
earnings for the Companys equity interest do not have a significant impact on the consolidated financial statements.
(b) Application of the Equity Method
1. Number of equity-method affiliates: 1
PT Mitra Pinasthika Mustika Finance
2. Name of non-consolidated subsidiary not accounted for by the equity method
JACCS INTERNATIONAL (Hong Kong) Co., Ltd.
(Reason for excluding from application of the equity method)
The equity method does not apply to the above subsidiary because its net income/loss and retained earnings for the Companys equity interest do not have a
significant impact on the consolidated financial statements on an individual basis, nor on an aggregate basis.
3. Matters of particular importance related to procedures for the application of the equity method
Owing to the difference in fiscal year-end date of PT Mitra Pinasthika Mustika Finance from the consolidated fiscal year-end, the financial statements of PT
Mitra Pinasthika Mustika Finance with its individual balance sheet date is used in preparing the consolidated financial statements.
(C) Fiscal Years of Consolidated Subsidiaries
The fiscal year-end date of JACCS International Vietnam Finance Co., Ltd. is December 31. The financial statements of JACCS International Vietnam Finance Co.,
Ltd. as of and for the year ended December 31 is used in preparing the consolidated financial statements of the Company. All material transactions that occur
during the period from January 1 to March 31 are adjusted for in the consolidation process.
(d) Financial Instruments
1. Securities
Available-for-sale securities with fair market value readily available are stated at fair value as of the balance sheet date. The related valuation differences are
directly included in net assets and the cost of available-for-sale securities sold is determined by the moving-average method. Available-for-sale securities
without fair market value readily available are stated at the moving-average cost.
JACCS CO., LTD.

Annual Report 2016

39

2. Derivatives
Derivatives are stated at fair value.
(e) Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation of property and equipment is computed using the declining-balance method based on the
estimated useful lives of assets as prescribed by income tax laws, however, the straight-line method is used for buildings (excluding building fixtures) acquired
on or after April 1, 1998.
(f) Intangible Assets (except for leased assets)
Software for internal use is amortized over the estimated useful lives using the straight-line method (the maximum period being 5 years).
(g) Leased Assets
Leased assets related to finance leases without transferring ownership are depreciated over the lease period as useful life using the straight-line method with no
residual value.
(h) Allowance for Doubtful Accounts
Allowance for doubtful accounts is provided for possible losses on the collection of receivables. The amount of the allowance for general receivables is based
on the past write-off ratio. For certain receivables, such as the ones from debtors whose solvency is in doubt, the recoverability of each receivable is examined
individually and the estimated unrecoverable amounts are recognized as the allowance.
(i) Provision for Bonuses
For payment of bonuses to employees and executive officers having employee positions, provision for bonuses is provided for in the amount that is expected to
be paid.
(j) Provision for Point Card Certificates
For covering the cost of future card-point redemption when credit card members use their card-points given by the Company, the provision for point card
certificates is provided for in the amount that is expected to be used as of the balance sheet date.
(k) Provision for Directors Retirement Benefits
For payment of retirement benefits to directors and corporate auditors, provision for directors retirement benefits is provided for in the amount required to be
accrued at year-end in accordance with internal rules. Provided amounts on the consolidated balance sheets are solely for consolidated subsidiaries.
(l) Provision for Loss on Interest Repayment
Provision for loss on interest repayment is provided in order to prepare for requests for the repayment of interest on loans exceeding the Interest Rate Restriction Act
in the future, in the amount deemed necessary based on an estimate of the future repayment amount in consideration of the actual past results.
(m) Employee Retirement Benefits
1. Method of period attribution for estimated retirement benefits
To calculate the employee retirement benefit obligations, a benefit formula basis is applied in attributing the estimated retirement benefits up to the end of this
consolidated fiscal year.
2. Methods for amortizing actuarial differences and past service costs
Past service costs are amortized using the straight-line method over a certain number of years (5 years) within the average remaining service period of the
employees as of the time such costs are incurred. With respect to actuarial differences for each consolidated fiscal year, the amount divided proportionally
using the straight-line method over a certain number of years (5 years) within the average remaining service period of employees as of the arising of such
differences is amortized from the immediately following consolidated fiscal year.
(n) Recognition of Operating Revenues
1. Revenue from individual customers
Revenue from individual customers is recognized at the time of payment due date by the following method:
Revenue from credit card business:
remaining debt balance method
Revenue from installment sales finance business: remaining debt balance method
Revenue from credit guarantee:
remaining debt balance method
(partially at time of concluding
the guarantee contract)
Financing revenue:
remaining debt balance method
2. Commission from member stores
Commission from member stores is recognized at the time of computing volume of new contracts.
(O) Translation of Significant Assets and Liabilities Denominated in Foreign Currencies into Yen
Monetary assets and liabilities denominated in foreign currencies have been translated into yen at the exchange rates in effect at the fiscal year-end. The
resulting exchange gain or loss is charged or credited to income. Assets and liabilities of the overseas subsidiary have been translated into yen at the exchange
rates in effect as of the settlement date of them, and revenues and expenses of the overseas subsidiary have been translated into yen at the average rates
prevailing during the period. The resulting translation differences are included in foreign currency translation adjustment in net assets.
(p) Significant Hedging Activities
1. Accounting for hedging activities
When derivative financial instruments are used as hedges and meet certain hedging criteria, gains or losses resulting from changes in the fair values of the
derivative financial instruments are deferred until the corresponding losses or gains on the hedged items are recognized.
Interest rate swaps which qualify for exceptional treatments are accounted for according to the exceptional treatments.

40

JACCS CO., LTD.

Annual Report 2016

2. Hedging instruments and hedged items


Hedging instruments...........Derivatives transactions (interest rate swap)
Hedged items......................Loans payable
3. Hedging policy
Derivatives transactions are utilized to reduce risks arising from interest rate and foreign exchange fluctuations in the future.
4. Assessment of the efficacy of hedging activities
The aggregate of changes in cash flows from the hedging instruments and the hedged items is compared to every quarterly account, and evaluation of the
effectiveness of hedging activities is made. With regard to interest rate swaps accounted for according to the exceptional treatments, assessment of the
effectiveness is omitted.
(q) Cash Equivalents
All highly liquid investments with a maturity of three months or less when purchased are considered cash equivalents.
(r) Consumption Taxes
Consumption taxes are excluded from each transaction amount. Consumption taxes paid at acquisition of noncurrent assets, which are not deducted on the
consumption taxes calculation, are recorded as Other in investments and other assets and amortized equally over five years.

3. Changes in Accounting Policies


Application of Accounting Standard for Business Combinations
From the fiscal year ended March 31, 2016, the Company has applied the Revised Accounting Standard for Business Combinations (ASBJ Statement No.
21, September 13, 2013), Revised Accounting Standard for Consolidated Financial Statements (ASBJ Statement No. 22, September 13, 2013), and Revised
Accounting Standard for Business Divestitures (ASBJ Statement No. 7, September 13, 2013). Consequently, the accounting method was changed so that any
differences arising from changes in the equity stake in subsidiaries under ongoing control of the Company are recorded as capital surplus, and acquisitionrelated costs are recorded as expenses for the fiscal year in which they are incurred. In addition, with respect to any business combination entered into at the
commencement of the fiscal year ended March 31, 2016 or later, the accounting method was changed to reflect adjustments to the allocation of acquisition cost
on the consolidated financial statements of the fiscal year in which the relevant business combinations became or will become effective. This was done through
the confirmation of previously applied provisional accounting treatment. Furthermore, the presentation of net income was changed and the minority interests
are now presented as non-controlling interests. In order to reflect the changes in the presentation, certain reclassifications have been made to the consolidated
financial statements for the previous fiscal year.
The Company has applied these revised accounting standards in accordance with transitional provisions in paragraph 58-2(4) of the Accounting Standard for
Business Combinations, paragraph 44-5(4) of the Accounting Standard for Consolidated Financial Statements and paragraph 57-4(4) of the Accounting Standard for
Business Divestitures, as of April 1, 2015.
There is no impact on the consolidated financial statements as a result of the application of these revised accounting standards.

4. Accounting Standards Yet to Be Applied


Revised Implementation Guidance on Recoverability of Deferred Tax Assets (ASBJ Guidance No. 26, March 28, 2016)
(a) Overview
Following the framework in Audit Committee Report No. 66 Audit Treatment regarding the Judgments of Recoverability of Deferred Tax Assets, which prescribes
estimation of deferred tax assets according to the classification of the entity by one of five types, the following treatments were changed as necessary:
1. Treatment for an entity that does not meet any of the criteria in types 1 to 5
2. Criteria for types 2 and 3
3. Treatment for deductible temporary differences which an entity classified as type 2 is unable to schedule
4. Treatment for the period which an entity classified as type 3 is able to reasonably estimate with respect to future taxable income before consideration of
taxable or deductible temporary differences that exist at the end of the current fiscal year
5. Treatment when an entity classified as type 4 also meets the criteria for type 2 or 3
(b) Effective date
Effective from the beginning of the fiscal year ending March 31, 2017
(c) Effects of application of the Guidance
The Company is currently assessing the impact of the application of the Revised Implementation Guidance on Recoverability of Deferred Tax Assets on the
consolidated financial statements.

JACCS CO., LTD.

Annual Report 2016

41

5. Employee Stock Ownership Plan Trust Account


(a) Transactions of Delivering the Companys Own Stock to Employees etc. through Trusts
At a meeting convened on November 5, 2012, the Board of Directors passed a resolution for the adoption of an employees incentive plan, which has the objective of
raising the Companys medium- to long-term corporate value. This plan is called the Employee Stock Ownership Plan (ESOP) Trust Account.
Under this plan, the Company established a trust, which has as its beneficiaries members of the JACCS Co., Ltd. Employee Stock Ownership Association (JESOA)
who satisfy a set of specific conditions. This trust made a block purchase in advance of issuance of shares by the Company, with the number of shares acquired
based on the estimated number of shares to be purchased by JESOA over the ensuing five-year period. Subsequently, the trust carries out sales of shares of the
Company to JESOA on a predetermined date each month. The method used for accounting for these transactions remains the method previously adopted.
(b) Residual Treasury Stock Held by the Trust
Shares residually held by the trust are recognized as treasury stock under net assets in the consolidated balance sheets. The book value of this treasury stock
was 550 million and the number of shares was 1,233 thousand as of March 31, 2015, and the corresponding figures as of March 31, 2016, were 377
million (US$3,364 thousand) and 844 thousand shares, respectively. The average number of shares of treasury stock held during the year ended March 31,
2015, was 1,389 thousand, and the corresponding figure for the year ended March 31, 2016, was 1,054 thousand shares. The year-end number of shares held
and average number of shares held during the fiscal year are included within treasury stock and thus excluded from the calculation of per share information.
Previous years figures are presented solely for the convenience of readers.

6. Pledged Assets
Pledged assets as of March 31, 2016 and 2015 are as follows:

Thousands of
U.S. Dollars

Millions of Yen

2016
Assets pledged as collateral:
Accounts receivable-installment
Debt secured by the above collateral:
Short-term loans payable
Current portion of long-term loans payable
Long-term loans payable
Total

2015

2016

84,817

288,503

$757,295

36,265
6,145
44,960
87,370

75,125
45,827
168,305
289,257

$323,795
54,866
401,428
$780,089

7. Accounts Receivable-Installment
Accounts receivable-installment as of March 31, 2016 and 2015 are as follows:

Credit card business


Installment sales finance business
Financing
Other
Total

Thousands of
U.S. Dollars

Millions of Yen

2016
170,043
768,142
250,223
3,408
1,191,816

2015
160,884
624,947
252,289
2,834
1,040,954

2016
$ 1,518,241
6,858,410
2,234,134
30,429
$10,641,214

8. Deferred Installment Income


Deferred installment income as of March 31, 2016 and 2015 are as follows:

Credit card business


Installment sales finance business
Credit guarantee
Financing
Other
Total

42

JACCS CO., LTD.

Annual Report 2016

Thousands of
U.S. Dollars

Millions of Yen

2016

747
44,698
58,798
9
1
104,253

2015
771
34,416
62,560
19
0
97,766

2016
$ 6,670
399,089
524,982
80
9
$930,830

9. Short-Term Loans and Long-Term Debt


Short-term loans as of March 31, 2016 and 2015, consist of the following:

Thousands of
U.S. Dollars

Millions of Yen

2016
Short-term loans principally from banks at weighted average rate of:
0.4% as of March 31, 2016, and 0.5% as of March 31, 2015
Commercial papers at weighted average rate of:
0.1% as of March 31, 2016, and 0.1% as of March 31, 2015

2015

2016

215,951

171,643

$1,928,134

267,000

199,500

2,383,929

Long-term debt as of March 31, 2016 and 2015, consist of the following:

Thousands of
U.S. Dollars

Millions of Yen

2016

2015

2016

Bonds and notes issued by the Company


1.820% bonds due in 2016
0.770% bonds due in 2018
1.130% bonds due in 2020
0.790% bonds due in 2021
0.252% bonds due in 2017
0.342% bonds due in 2019
0.545% bonds due in 2021
0.644% bonds due in 2022
0.752% bonds due in 2022
Loans, principally from banks and other financial institutions at weighted average rate of:
0.9% as of March 31, 2016, and 1.2% as of March 31, 2015

Less current portion


Long-term debt, less current portion

15,000
15,000
15,000
20,000
10,000
10,000
10,000
10,000

2,300
15,000
15,000
15,000
20,000
10,000
10,000
10,000

133,930
133,930
133,930
178,570
89,285
89,285
89,285
89,285

497,336

462,819

4,440,500

602,336
(143,427)
458,909

560,119
(109,001)
451,118

5,378,000
(1,280,598)
$4,097,402

The aggregate annual maturities of long-term debt as of March 31, 2016 are summarized as follows:
Years ended March 31

Millions of Yen

2017
2018
2019
2020
2021 and thereafter
Total

Thousands of
U.S. Dollars

143,427
93,515
95,850
96,226
173,318
602,336

$1,280,598
834,955
855,804
859,161
1,547,482
$5,378,000

10. Guarantee Obligations


The Company has a guarantee obligation in relation to the borrowings from financial institutions of a company outside the scope of consolidation.
Thousands of
U.S. Dollars

Millions of Yen

2016

PT Mitra Pinasthika Mustika Finance

2015
1,701
3,671
(200,000 million
(400,000 million
Indonesian rupiahs)
Indonesian rupiahs)
1,071
1,784
(9,508 thousand U.S. dollars) (14,842 thousand U.S. dollars)

2016
$15,188

9,508

Note: Foreign currency-denominated guarantee obligations are translated into yen at the exchange rate prevailing on the account closing date.

JACCS CO., LTD.

Annual Report 2016

43

11. Loan Commitments


The Company carries out cash advance operations, which are ancillary to loan card and credit card operations. The balance of unexecuted lending related to
loan commitments within cash advance operations is as shown below. Under loan commitment contracts, since lending terms include screening relating to the
borrowers use of loan funds and credit standing, the loans are not necessarily executed up to the full amount.
Thousands of
U.S. Dollars

Millions of Yen

Total loan commitments


Executed loans
Balance

2016
1,194,643
61,413
1,133,230

2015
1,206,354
70,216
1,136,138

2016
$10,666,455
548,330
$10,118,125

12. New Contracts


Volume of new contracts for the years ended March 31, 2016 and 2015 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Credit card business


Installment sales finance
Credit guarantee
Financing
Other
Total
Note: Balance at end of period for credit guarantee maximum lending:

2016
1,127,244
446,153
751,581
77,349
1,002,183
3,404,510
30,380

2015
1,026,248
307,767
725,019
79,235
923,028
3,061,297
24,758

2016
$10,064,679
3,983,508
6,710,545
690,616
8,948,063
$30,397,411
$ 271,250

13. Comprehensive Income


The components of other comprehensive income for the years ended March 31, 2016 and 2015 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2016
Valuation difference on available-for-sale securities
Gains (losses) arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Losses arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total deferred gains or losses on hedges
Foreign currency translation adjustment
Adjustment arising during the year
Remeasurements of defined benefit plans, net of tax
Gains (losses) arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of affiliated companies accounted for using equity method
Gains (losses) arising during the year
Reclassification adjustments to profit or loss
Total share of other comprehensive income of entities accounted for using equity method
Total other comprehensive income

44

JACCS CO., LTD.

Annual Report 2016

2015

2016

(3,106)
4
(3,102)
952
(2,150)

4,597
(81)
4,516
(1,254)
3,262

$(27,732)
36
(27,696)
8,500
(19,196)

(7)
20
13
(5)
8

(5)
18
13
(6)
7

(63)
179
116
(45)
71

(128)

339

(1,143)

(2,758)
(251)
(3,009)
949
(2,060)

1,439
(205)
1,234
(385)
849

(24,625)
(2,241)
(26,866)
8,473
(18,393)

(652)
8
(644)
(4,974)

514
(1)
513
4,970

(5,821)
71
(5,750)
$(44,411)

14. Net Asset


Equity
Japanese companies are subject to the Companies Act of Japan (the Companies Act).
The significant provisions in the Companies Act that affect financial and accounting matters are summarized below:
1. Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the
shareholders meeting. For companies that meet certain criteria, the Board of Directors may declare dividends (except for dividends in kind) at any time during
the fiscal year if the company has prescribed so in its articles of incorporation.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of the company so
stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as
the amount available for distribution to the shareholders, but the amount of net assets after dividends must be maintained at no less than 3 million.
2. Increases/decreases and transfer of common stock, reserve, and surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained earnings) or as
additional paid-in capital (a component of capital surplus) depending on the equity account that was charged upon the payment of such dividends until the
total of the aggregate amount of the legal reserve and additional paid-in capital equals 25% of common stock. Under the Companies Act, the total amount
of additional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also provides that common stock, legal reserve,
additional paid-in capital, other capital surplus, and retained earnings can be transferred among the accounts under certain conditions upon resolution of the
shareholders.
3. Treasury stock and treasury stock acquisition rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of Directors.
The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders, which is determined by a specific formula.
Under the Companies Act, stock acquisition rights are presented as a separate component of equity. The Companies Act also provides that companies can
purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or
deducted directly from stock acquisition rights.

15. Cash Flows Information


Reconciliation of cash and cash equivalents in the consolidated statements of cash flows and the consolidated balance sheets as of March 31, 2016 and 2015
are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Cash and deposits


Less: Time deposits with deposit term of over 3 months
Cash and cash equivalents

2016
84,074

84,074

2015
85,492

85,492

2016
$750,661

$750,661

16. Financial Instrument


(a) Outline of Utilization of Financial Instruments
1. Management policies
The Group operates consumer credit services including installment sales, credit card, credit guarantee and financing. To do such business, the Group borrows
money from financial institutions as indirect finance, and raises money by issuing bonds and commercial papers in consideration of market conditions and
length of finance. Thereby, the Group holds financial assets and liabilities having interest rate fluctuation risks. To avoid its unfavorable effect, the Company
applies asset liability management (ALM) using derivatives transactions as a measure. In addition, a consolidated subsidiary operates leasing business.
2. Contents of financial instruments and their risks
Financial assets held by the Group, which are mainly installment receivables on domestic installment sales finance and credit card business, are exposed to
the credit risks of the corresponding customers default of payments.
In terms of investment securities, which are mainly composed of equity stocks related to business or capital tie-ups and the like with business partners,
these assets are exposed to the credit risk of the issuer and the risk of market value fluctuations.
Loans payable, bonds payable and commercial papers are exposed to liquidity risk. There exists the possibility that the Group may have difficulty making
payment on a due date, such as the Company may not be able to raise funds in the markets under certain circumstances. Loans payable with variable interest
rates expose the Company to the risk of interest rate fluctuation. To avoid such risks, a part of loans payable is hedged by interest swap transactions.
Deposits at banks in foreign currencies are exposed to fluctuation of foreign exchanges.

JACCS CO., LTD.

Annual Report 2016

45

Derivatives transactions include interest swap transactions which are carried as a measure of ALM. Interest fluctuation risks on loans payable hedged
by such hedging instruments are accounted for by the hedge accounting method. The effectiveness of hedging is assessed by comparing and evaluating
accumulated cash flow change of hedged items and that of hedging instruments during the period from the start of hedging and assessment time. In addition,
the Company uses exceptional treatments permitted for interest rate swaps hedging long-term loans payable.
3. Risk management system of financial instruments
(1) Control of credit risk
The Group establishes and operates credit control systems which practice credit assessment, establishment of credit limit, credit information control,
internal rating, setting of guarantee and mortgage and response to loans in trouble in conformity with the rules of credit control for each installment
loan. These credit controls are carried out by each credit investigation section and each area control division. In addition, conditions of credit control are
reviewed by the Credit Supervision & Operation Department, the Credit Administration Department and the Inspection Department.
(2) Control of market risk
a. Control of interest risk
The Group controls interest fluctuation risk by means of ALM. Regulations and internal rules of ALM specify risk control measures and procedures and
the results of control are confirmed by the Board of Directors in conformity with ALM policies decided by the ALM Committee. The Finance Department
analyzes daily interest rate sensitivity based on estimated interest rates and makes a report every three months to the ALM Committee. Interest fluctuation
risks are hedged by interest rate swaps as a part of ALM.
b. Control of foreign exchange risk
The Group utilizes partially forward contracts, as for each matter, to cope with foreign exchange fluctuation risks, and there is not the handling now, but
may use part forward exchange contracts in future.
c. Control of market fluctuation risk
As investment securities are mainly composed of equity shares issued by companies which have relations with the Company in transactions or in capital
coalition, market environment and financial conditions of the issuing companies are monitored periodically. The Company carries out ongoing monitoring
of prices of investment securities. By considering the circumstances comprehensively and reporting these to senior management, the Company aims to
reduce the price fluctuation risk of its equity securities holdings.
d. Derivatives transactions
Each section of execution of derivatives transactions, assessment of hedge effectiveness and operation control is separated to enhance internal checks.
Operations are carried out in conformity with regulations and internal rules.
e. Quantitative information relating to market risk
Financial instruments for trading purposes
The Company does not hold any financial instruments for trading purposes.
Financial instruments for other than trading purposes
The financial instruments most affected by the interest rate risk that is a main risk variable are mainly short-term loans payable, long-term loans
payable, bonds payable and interest swap transactions.
As for these financial instruments, the Company calculates the amount of influence that gives profit and loss of six months for the time being, using the
rational expected band of the interest rate of around six months after the term end. The Company uses the calculated amount of influence in a quantitative
analysis on managing the change risk of the interest rate. In calculations of the amount of influence concerned, the Company separates the financial
instruments concerned into the fixed interest rate group and the floating interest rate group. The Company then calculates the amount of influence that
gives profit and loss using the interest rate band during each appropriate period depending on an interest rate date. The Company assumes the risk
variable except for the interest rate is constant. That is, the Company does not consider correlation between interest rate and other risk variables.
As of March 31, 2016, the Company calculates that if the index interest rate had been higher by 10 basis point (0.1%), financial expenses would
increase 273 million (US$2,438 thousand).
However, influence exceeding the amount of calculation may occur if a fluctuation occurs beyond the rational expected band of the interest rate.
(3) Control of liquidity risk on fundraising
The Group controls timely fund operations of the total group by ALM and manages liquidity risk by diversification of fundraising measures, acquisition of
commitment lines from multiple financial institutions and adjustment of length of fundraising in consideration of the market environment.
4. Supplementary explanation to fair values of financial instruments
Fair values of financial instruments are composed of market prices and rationally computed prices in case market prices are not available. As the computation of
prices is subject to certain presumptions, prices may change under different presumptions. Contractual values of derivatives transactions in (b) Fair values of
Financial Instruments do not represent the market risks on derivatives themselves.

46

JACCS CO., LTD.

Annual Report 2016

(b) Fair Values of Financial Instruments


The tables below show the amounts of financial instruments recorded in the consolidated balance sheets and their fair values as of March 31, 2016 and 2015,
as well as their differences. Financial instruments of which fair values were hardly available are not represented herein (See Note 2).
Millions of Yen

Thousands of U.S. Dollars

2016
Consolidated
balance sheet
amount
Cash and deposits
Accounts receivableinstallment:
Allowance for doubtful
accounts
Deferred installment
income

84,074

2015

Fair value
84,074

Differences

Consolidated
balance sheet
amount

85,492

2016

Fair value

85,492

Differences

Consolidated
balance sheet
amount

Fair value

$ 750,661

750,661

1,191,816

1,040,954

10,641,214

(11,367)

(11,870)

(101,491)

(45,455)

(34,665)

(405,848)

1,134,994

1,202,902

15,143

15,143

Total assets

1,234,211

1,302,119

Short-term loans payable

215,951

215,951

Commercial papers

267,000

267,000

Bonds payable*1

105,000

106,544

Long-term loans payable*2

497,336

67,908

Differences
$

994,419

1,038,869

44,450

10,133,875

10,740,197

606,322

18,351

18,351

135,205

135,205

67,908

1,098,262

1,142,712

44,450

$11,019,741 $11,626,063

$606,322

171,643

171,643

$ 1,928,134 $ 1,928,134

199,500

199,500

2,383,929

2,383,929

1,544

97,300

98,236

936

937,500

951,285

13,785

503,495

6,159

462,819

466,929

4,110

4,440,500

4,495,491

54,991

1,085,287

1,092,990

7,703

931,262

936,308

5,046

$9,690,063 $ 9,758,839

$ 68,776

(24)

(24)

(37)

(37)

(214) $

(214)

(24)

(24)

(37)

(37)

(214) $

(214)

Investment securities:
Available-for-sale
securities

Total liabilities

Derivatives transactions*3:
Hedge accounting applied
Total derivatives
transactions
Other:
Loan guarantee contracts

209,731

209,622

$1,872,598

*1 Current portion of bonds payable is included in bonds payable.


*2 Current portion of long-term loans payable is included in long-term loans payable.
*3 Figures presented are net receivable or payable totals resulting from derivatives transactions. If the total is a payable amount, the figure is shown in ( ).
Note 1: Measurement of fair value of financial instruments and matters on securities and derivatives transactions
Assets:
(1) Cash and deposits
The book values are used as the fair values since all the deposits are short-term and the fair values approximate their book values.
(2) Accounts receivable-installment
Fair values of accounts receivable-installment are computed by discounting probable collection amounts of principals and interest by secure interest rates corresponding to the
remaining period.
(3) Investment securities
Fair market values readily available are used as the fair values of available-for-sale securities.

JACCS CO., LTD.

Annual Report 2016

47

Liabilities:
(1) Short-term loans payable
These instruments are settled in a short time and fair value is closely equal to book value. The fair value is, therefore, stated at book value.
(2) Commercial papers
These instruments are settled in a short time and fair value is closely equal to book value. The fair value is, therefore, stated at book value.
(3) Bonds payable
Fair values of bonds payable are measured at market prices.
(4) Long-term loans payable
Book values of long-term loans payable with variable interest rate are deemed fair values as the prices reflect market timely and credit conditions of the Company have not
changed significantly after time of borrowing. Book values of long-term loans payable with fixed interest are computed by discounting probable payment amounts of principals
and interest by expected interest rate of similar borrowing, by group of length of borrowing.
Derivatives transactions: see Note 18 Derivatives
Other:
(Credit guarantee contracts)
Market values of credit guarantee contracts are measured by discounting collectible amounts of guarantee commissions, less uncollectible portion by subrogation estimated by
possibility of guarantee fulfillment and mortgage value, at the secure interest rate corresponding to length of remaining periods.
Note 2: Financial instruments of which fair market values are hardly available are as follows.
Thousands of
U.S. Dollars

Millions of Yen

2016
Book value
6,715

Description
Unlisted shares

2015
Book value
7,428

2016
Book value
$59,955

Fair values of the above shares without market prices are not represented herein as calculation of their fair values are hardly available. The Company carried out impairment of
unlisted shares amounting to 49 million (US$438 thousand) in the fiscal year under review.
Note 3: Maturity of monetary assets after the balance sheet date
March 31, 2016

Millions of Yen

Cash and deposits


Accounts receivable-installment
Total

Within one year


84,074
375,916
459,990

1 to 2 years

193,491
193,491

2 to 3 years

143,291
143,291

Within one year


85,492
339,666
425,158

1 to 2 years

168,895
168,895

2 to 3 years

119,515
119,515

Within one year


$ 750,661
3,356,393
$4,107,054

1 to 2 years
$

1,727,598
$1,727,598

2 to 3 years
$

1,279,384
$1,279,384

March 31, 2015

3 to 4 years

102,022
102,022

4 to 5 years

69,338
69,338

Over 5 years

307,757
307,757

4 to 5 years

53,111
53,111

Over 5 years

275,043
275,043

4 to 5 years
$

619,089
$619,089

Over 5 years
$

2,747,830
$2,747,830

4 to 5 years

30,000
65,818
95,818

Over 5 years

30,000
47,500
77,500

4 to 5 years

10,000
82,826
92,826

Over 5 years

50,000
19,500
69,500

Millions of Yen

Cash and deposits


Accounts receivable-installment
Total
March 31, 2016

3 to 4 years

84,723
84,723

Thousands of U.S. Dollars

Cash and deposits


Accounts receivable installment
Total

3 to 4 years
$

910,911
$910,911

Note 4: Repayment schedule of bonds payable, long-term loans payable and other interest-bearing liabilities after the balance sheet date
March 31, 2016

Millions of Yen

Short-term loans payable


Commercial papers
Bonds payable
Long-term loans payable
Total

Within one year


215,951
267,000

143,427
626,378

1 to 2 years

20,000
73,516
93,516

2 to 3 years

15,000
80,850
95,850

Within one year


171,643
199,500
2,300
106,701
480,144

1 to 2 years

143,427
143,427

2 to 3 years

20,000
73,516
93,516

March 31, 2015

Millions of Yen

Short-term loans payable


Commercial papers
Bonds payable
Long-term loans payable
Total

48

JACCS CO., LTD.

3 to 4 years

10,000
86,226
96,226

Annual Report 2016

3 to 4 years

15,000
36,850
51,850

March 31, 2016

Thousands of U.S. Dollars

Within one year


$1,928,134
2,383,929

1,280,598
$5,592,661

Short-term loans payable


Commercial papers
Bonds payable
Long-term loans payable
Total

1 to 2 years
$

178,571
656,393
$ 834,964

2 to 3 years
$

133,929
721,875
$855,804

3 to 4 years
$

89,286
769,875
$859,161

4 to 5 years
$

267,857
587,661
$855,518

Over 5 years
$

267,857
424,107
$691,964

17. Securities
(a) Available-for-Sale Securities
Millions of Yen

Thousands of U.S. Dollars

2016
Category
Balance sheet amount
exceeding acquisition cost:
Equity shares
Balance sheet amount not
exceeding acquisition cost:
Equity shares
Total

Consolidated
balance sheet
amount

Acquisition
cost

2015
Consolidated
Unrealized
balance sheet
gains (losses)
amount

Acquisition
cost

2016
Unrealized
gains (losses)

Consolidated
balance sheet
amount

Acquisition
cost

Unrealized
gains (losses)

13,381

7,101

6,280

18,125

8,910

9,215

$119,473

$63,402

$56,071

1,762
15,143

1,995
9,096

(233)
6,047

226
18,351

291
9,201

(65)
9,150

15,732
$135,205

17,812
$81,214

(2,080)
$53,991

Notes: 1. Acquisition cost refers to the book value after impairment.


2. With regard to impairment, in the case where fair value at end of period has fallen 50% or more compared with the acquisition cost, such items are fully impaired. In the
case where fair value has fallen 30%50% compared with the acquisition cost, such items are impaired to an extent recognized as necessary after considering such
factors as recoverability in fair value. In the fiscal year under review, valuation loss stemming from impairment of investment securities amounted to 45 million (US$401
thousand) .

(b) Available-for-Sale Securities Sold


Millions of Yen

Category
Equity shares

Securities sold
102

2016
Total gain on
sales
41

Total loss on
sales
0

Thousands of U.S. Dollars

Securities sold
172

2015
Total gain on
sales
80

Total loss on
sales

Securities sold
$911

2016
Total gain on
sales
$366

Total loss on
sales
0

18. Derivatives
Contractual values or principal equivalents under the contracts of derivatives transactions as of March 31, 2016 and 2015, accounted for by hedge accounting,
are shown below, by each accounting for hedging activity.
March 31, 2016

Millions of Yen

Accounting for hedging activities

Type of derivatives transactions

Hedged items

Principle

Interest rate swap


Payment fixed/Receipt variable

Short-term loans payable

Contractual value
Total
Over 1 year
4,000

Fair value

2,000

March 31, 2015

(24)*1

Millions of Yen

Accounting for hedging activities

Type of derivatives transactions

Hedged items

Principle

Interest rate swap


Payment fixed/Receipt variable

Short-term loans payable

Contractual value
Total
Over 1 year
4,000

Fair value

4,000

March 31, 2016

(37)*1

Thousands of U.S. Dollars

Accounting for hedging activities

Type of derivatives transactions

Hedged items

Principle

Interest rate swap


Payment fixed/Receipt variable

Short-term loans payable

Contractual value
Total
Over 1 year
$35,714

$17,857

Fair value
$(214)*1

*1 Fair value is based on the price presented by the related financial institutions.

JACCS CO., LTD.

Annual Report 2016

49

19. Retirement Benefits


(a) Overview of the Retirement Benefit Plans Adopted
To provide for employee retirement benefits, the Company and its consolidated subsidiaries operate a funded defined-benefit plan and a defined contribution
plan. Under the defined benefit corporate pension plan (fully funded plan), a lump sum or pension are paid in accordance with the employees salary and the
length of service.
(b) Defined Benefit Plans
1. Movement in retirement benefit obligations, except plan applied simplified method
Millions of Yen

Balance at beginning of fiscal years


Cumulative effects of changes in accounting policies
Restated balance at beginning of fiscal years
Current service cost
Interest cost
Actuarial loss
Benefits paid
Balance at end of fiscal years

2016
19,942

19,942
1,020
239
2,187
(772)
22,616

Thousand of U.S. Dollars

2015
19,834
(611)
19,223
1,010
154
173
(618)
19,942

2016
$178,054

178,054
9,107
2,134
19,527
(6,893)
$201,929

2. Movement in plan assets, except plan applied simplified method


Millions of Yen

Balance at beginning of fiscal years


Expected return on plan assets
Actuarial gain
Contributions paid by the employer
Benefits paid
Balance at end of fiscal years

2016
26,470
529
(571)
1,014
(772)
26,670

Thousand of U.S. Dollars

2015
24,000
480
1,612
996
(618)
26,470

2016
$236,339
4,723
(5,098)
9,054
(6,893)
$238,125

3. Reconciliation from retirement benefit obligations and net defined benefit liability (asset)
Millions of Yen

Funded retirement benefit obligations


Pension assets
Unfunded retirement benefit obligations
Net defined benefit liability (asset) at end of fiscal years
Liabilities for retirement benefits
Assets for retirement benefits
Net defined benefit liability (asset) at end of fiscal years

2016
22,616
(26,670)
(4,054)

(4,054)

(4,054)
(4,054)

Thousand of U.S. Dollars

2015
19,942
(26,470)
(6,528)

(6,528)

(6,528)
(6,528)

2016
$ 201,929
(238,125)
(36,196)

(36,196)

(36,196)
$ (36,196)

4. Retirement benefit costs


Millions of Yen

2016
Current service cost
Interest cost
Expected return on plan assets
Net actuarial loss amortization
Past service costs amortization
Other
Total retirement benefit costs

50

JACCS CO., LTD.

Annual Report 2016

Thousand of U.S. Dollars

2015
1,020
239
(529)
(251)

80
559

2016
1,010
154
(480)
(206)

43
521

$ 9,107
2,133
(4,723)
(2,241)

714
$ 4,990

5. Remeasurements of defined benefit plans


The breakdown of items included in remeasurements of defined benefit plans (before tax) is as follows.
Millions of Yen

2016
Past service costs
Actuarial gains and losses
Total balance at end of fiscal years

Thousand of U.S. Dollars

2015

3,010
3,010

2016
$

(1,234)
(1,234)

26,875
$26,875

6. Accumulated adjustments of defined benefit plans


The breakdown of items included in accumulated adjustments of defined benefit plans (before tax) is as follows.
Millions of Yen

2016
Past service costs that are yet to be recognized
Actuarial gains and losses that are yet to be recognized
Total balance at end of fiscal years

Thousand of U.S. Dollars

2015

1,350
1,350

2016

(1,660)
(1,660)

$
12,053
$12,053

7. Plan assets
(1) Plan assets comprise:
2016
Bonds
Equity securities
General account
Cash and deposits
Total

2015
42%
18%
38%
2%
100%

42%
21%
32%
5%
100%

(2) Long-term expected rate of return


Current and target asset allocations, historical and expected returns on various categories of plan assets have been considered in determining the long-term
expected rate of return.
8. Actuarial assumptions
The principal actuarial assumptions (presented as weighted averages)
2016
Discount rate
Long-term expected rate of return
Assumed rate of increase in salaries

2015
0.3%
2.0%
3.0%

1.2%
2.0%
3.0%

(C) Defined Contribution Plan


The required contribution amount for the Company and its consolidated subsidiaries to the defined contribution plan are 460 million (U.S.$4,107 thousand)
and 459 million for the years ended March 31, 2016 and 2015, respectively.

20. Stock Options


(a) Stock Option Program Content, Scale and Fluctuations
1. Stock option program content
Date of resolution
Grantees
Type of stock
Number of shares granted*1
Date of grant
Vesting conditions for rights
Qualifying period of service
Exercisable period

August 5, 2015
7 directors of JACCS
(excluding outside director)
10 senior executive officers of JACCS
Common stock
163,000
August 20, 2015

August 5, 2014
7 directors of JACCS
(excluding outside director)
10 senior executive officers of JACCS
Common stock
181,000
August 20, 2014

August 2, 2013
7 directors of JACCS
(excluding outside director)
9 senior executive officers of JACCS
Common stock
96,000
August 19, 2013

August 3, 2012
7 directors of JACCS
(excluding outside director)
11 senior executive officers of JACCS
Common stock
322,000
August 20, 2012

*2
*2
*2
*2
from June 26, 2015 to June 29, 2016
from June 26, 2014 to June 26, 2015
from June 27, 2013 to June 26, 2014
from June 28, 2012 to June 27, 2013
from August 21, 2015 to August 20, 2045 from August 21, 2014 to August 20, 2044 from August 20, 2013 to August 19, 2043 from August 21, 2012 to August 20, 2042

Notes: 1. Figures shown have been converted to number of shares.


2. Holders of subscription rights to shares may exercise subscription rights to shares on or after the day following the loss of their position in the Company. Specifically, this refers
to the position of either director (excluding outside director), Audit & Supervisory Board member, or senior executive officer.

JACCS CO., LTD.

Annual Report 2016

51

2. Stock option program scale and fluctuations


With regard to the number of stock options, the figures presented have been converted to number of shares. The figures presented apply to stock options
outstanding during the fiscal year under review.
(1) Number of stock options
Date of resolution
Before vesting
Outstanding as of March 31, 2015
Granted
Expired
Vested
Outstanding as of March 31, 2016
After vesting
Outstanding as of March 31, 2015
Vested
Rights exercised
Expired
Outstanding as of March 31, 2016

August 5, 2015

August 5, 2014

August 2, 2013

August 3, 2012

163,000

163,000

181,000

181,000

181,000
16,000

165,000

96,000

13,000

83,000

289,000

79,000

210,000

(2) Price information


Date of resolution
Exercise price
Average share price on exercising
options
Fair valuation on grant date

Yen

U.S. Dollars

August 5, 2015 August 5, 2014 August 2, 2013 August 3, 2012


1
1
1
1

August 5, 2015 August 5, 2014 August 2, 2013 August 3, 2012


$0.009
$0.009
$0.009
$0.009

452

428

429

4.036

3.821

3.830

338

399

356

170

3.018

3.563

3.179

1.518

(b) Method of Estimating the Fair Unit Value of Stock Options Granted during the Fiscal Year under Review
1. Option pricing model used: Black-Scholes model
2. Main basic factors and estimation method
Date of resolution
August 5, 2015
47.001%
Share price volatility*1
2
15 years
Expected term*
14 per share
Expected dividends*3
0.760%
Risk-free interest rate*4
Notes: 1. The value was estimated based on the daily closing price of the Companys common stock over a 15-year period (August 20, 2000August 20, 2015).
2. Owing to difficulty in making rational estimates due to a lack of sufficient data, estimates were made based on the assumption that rights would be exercised at the mid-point of
the exercise period.
3. Calculations are based on actual dividends paid for the fiscal year ended March 31, 2015.
4. Yield presented is that for Japanese Government Bonds (15 years remaining to maturity) on August 20, 2015.

(c) Method of Estimating the Number of Vested Stock Options


Since it is fundamentally difficult to reasonably estimate the number of options that will expire in the future, the Company uses a method that only reflects actual
expiration numbers.

52

JACCS CO., LTD.

Annual Report 2016

21. Income Taxes


The Company is subject to a number of income taxes, which, in aggregate, indicate a statutory tax rate in Japan of approximately 33.1% and 35.5% for the
years ended March 31, 2016 and 2015.
(a) Deferred Tax Assets
Significant components of deferred tax assets and liabilities as of March 31, 2016 and 2015 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2016

2015

2016

Deferred tax assets:


Operating loss carryforwards
Provision for bonuses
Provision for point card certificates
Allowance for doubtful accounts
Provision for loss on interest repayment
Investment securities
Depreciation
Other
Less amounts offset against deferred tax liabilities
Subtotal
Valuation allowance
Total deferred tax assets

685
783
1,268
194
388
402
670
614
(1,089)
3,915
(1,206)
2,709

648
855
1,114
37
422
432
662
818
(1,117)
3,871
(1,189)
2,682

$ 6,116
6,991
11,321
1,732
3,464
3,589
5,983
5,482
(9,723)
34,955
(10,767)
$ 24,188

Deferred tax liabilities:


Net defined benefit asset
Valuation difference on available-for-sale securities
Other
Less amounts offset against deferred tax assets
Total deferred tax liabilities
Net deferred tax assets

(1,245)
(1,745)
(8)
1,089
(1,909)
800

(2,115)
(2,697)
(9)
1,117
(3,704)
(1,022)

$(11,116)
(15,580)
(72)
9,723
$(17,045)
$ 7,143

(b) Effective Tax Rates


A reconciliation of the statutory tax rates to the effective tax rates for the years ended March 31, 2016 and 2015 are as follows:
2016
Statutory tax rate
Reconciliation:
Expenses not deductible for tax purposes
Nontaxable dividend income
Consolidation eliminations for dividends received
Inhabitants taxes per capita
Increase/decrease in valuation allowance
Difference in tax rate between subsidiaries and parent company
Decrease in deferred tax assets due to tax rate changes
Other
Effective tax rate

2015
33.1%

35.5%

0.7%
(2.4)
2.2
0.8
1.2
(0.1)
1.2
0.1
36.8%

0.7%
(0.6)
0.2
0.9
0.8
0.0
1.2
(0.1)
38.6%

(c) Tax Law Revisions


On March 29, 2016, the Act to Partially Revise the Income Tax Act and Others (Act No. 15 of 2016) and Act to Partially Revise the Local Tax Act and Others
(Act No. 13 of 2016) were enacted by the National Diet. Under these acts, effective from the fiscal year beginning on or after April 1, 2016, a reduction in the
corporate tax rate and other measures were implemented. Accompanying these changes, the effective statutory tax rate used to calculate deferred tax assets
and liabilities was reduced from the previously used 32.3% to 30.9% for temporary differences expected to be reversed in the fiscal year beginning on April 1,
2016 and 2017, and to 30.6% for temporary differences expected to be reversed in the fiscal years beginning on or after April 1, 2018.
Due to these changes in taxation rates, deferred tax assets (after deduction of deferred tax liabilities) decreased by 14 million (US$125 thousand), deferred
gains or losses on hedges decreased by 0 million (US$0 thousand), accumulated adjustments for defined benefit plans decreased by 23 million (US$205
thousand), income taxes-deferred increased by 87 million (US$777 thousand), and valuation difference on available-for-sale securities increased by97 million
(US$866 thousand).

JACCS CO., LTD.

Annual Report 2016

53

22. Segment Information


Since the Group has only a single reportable segment, segment information is not presented. Operating revenue to third parties are presented as follows for the
convenience of readers.
Millions of Yen

Year ended March 31, 2016


Credit card business
Operating revenue to third parties

29,710

Installment sales
finance business
21,653

Credit guarantee

Financing

40,967

11,626

Other
Operations
9,717

Total
113,673

Millions of Yen

Year ended March 31, 2015


Credit card business
Operating revenue to third parties

27,445

Installment sales
finance business
19,480

Credit guarantee

Financing

39,861

12,706

Other
Operations
8,768

Total
108,260

Thousands of U.S. Dollars

Year ended March 31, 2016


Credit card business
Operating revenue to third parties

$265,268

Installment sales
finance business
$193,330

Credit guarantee

Financing

$365,777

$103,804

Other
Operations
$86,759

Total
$1,014,938

23. Related Party Transactions


Transactions with a major shareholder of the Company are as follows:
Year ended March 31, 2016
Transaction amount
Name of company

Transactions

Balance at end of fiscal year


Accounts

Millions of yen
(Thousands of U.S. Dollars)

Short-term and long-term


borrowing via loans

The Bank of Tokyo-Mitsubishi


UFJ, Ltd.

Borrowing via commercial


paper

Payment of interest

Loan guarantees (net)


Receipt of guarantee fee

130,530
($1,165,446)

130,000
(1,160,714)
1,700
(15,179)
9,440
(84,286)
273
(2,438)

Millions of yen
(Thousands of U.S. Dollars)
Short-term loans payable

16,236
($144,964)

Current portion of long-term


loans payable

38,500
(343,750)

Long-term loans payable

73,700
(658,036)

Commercial papers

70,000
(625,000)

Prepaid expenses
Accrued expenses
Accounts payablecredit guarantee

31
(277)
9
(80)
36,390
(324,911)

Notes: 1. Transaction terms and method of determining transaction terms


Interest rates on borrowings from The Bank of Tokyo-Mitsubishi UFJ, Ltd. are general money market rates. Borrowings from The Bank of Tokyo-Mitsubishi UFJ, Ltd. these are
determined by resolutions of the Board of Directors and the Companys rules in the same manner as fundraising carried out from other banks.
Loan guarantee fee rates are part of general terms of business.
2. Only material transactions are presented.

54

JACCS CO., LTD.

Annual Report 2016

Year ended March 31, 2015


Transaction amount
Name of company

Balance at end of fiscal year

Transactions

Accounts
Millions of yen

Short-term and longterm borrowing via loans


The bank of TokyoMitsubishi UFJ, Ltd.

Millions of yen

39,986

Borrowing via
commercial paper

147,000

Payment of interest

1,639

Short-term loans payable

6,463

Current portion of long-term


loans payable

20,777

Long-term loans payable

84,200

Commercial papers

45,000

Prepaid expenses

15

Accrued expenses

20

Notes: 1. Transaction terms and method of determining transaction terms


Interest rates on borrowings from The Bank of Tokyo-Mitsubishi UFJ, Ltd. are general money market rates. Borrowings from The Bank of Tokyo-Mitsubishi UFJ, Ltd. these are
determined by resolutions of the Board of Directors and the Companys rules in the same manner as fundraising carried out from other banks.
2. Only material transactions are presented.

Transaction with a subsidiary of the Companys major shareholder are as follows:


Year ended March 31, 2016
Transaction amount
Name of company

Transactions

Balance at end of fiscal year


Accounts

Millions of yen
(Thousands of U.S. Dollars)

Millions of yen
(Thousands of U.S. Dollars)
29,300
($261,607)

Short-term loans payable


Short-term and long-term
borrowing via loans

424,200
($3,787,500)

Current portion of long-term


loans payable

29,700
(265,179)
12,000
(107,143)
4
(36)

Long-term loans payable


Mitsubishi UFJ Trust and
Banking Corporation

Borrowing via commercial


paper

Payment of interest

Loan guarantees (net)


Receipt of guarantee fee

37,000
(330,357)
463
(4,134)
562
(5,018)
3,690
(32,946)

4,900
(43,750)

Commercial papers
Prepaid expenses
Accrued expenses
Accounts payablecredit guarantee

3
(27)
125,253
(1,118,330)

Notes: 1. Transaction terms and method of determining transaction terms


Interest rates on borrowings from Mitsubishi UFJ Trust and Banking Corporation are general money market rates. Borrowings from Mitsubishi UFJ Trust and Banking Corporation,
these are determined by resolutions of the Board of Directors and the Companys rules in the same manner as fundraising carried out from other banks.
Loan guarantee fee rates are part of general terms of business.
2. Only material transactions are presented.

JACCS CO., LTD.

Annual Report 2016

55

Year ended March 31, 2015


Transaction amount
Name of company

Balance at end of fiscal year

Transactions

Accounts
Millions of yen

Millions of yen
Short-term loans payable

Short-term and longterm borrowing via loans

Mitsubishi UFJ
Trust and Banking
Corporation

192,000

Borrowing via
commercial paper

26,000

Payment of interest

480

24,800

Current portion of long-term


loans payable

5,400

Long-term loans payable

26,600

Commercial papers

7,000

Prepaid expenses

Accrued expenses

Loan guarantees (net)

8,898

Accounts payablecredit guarantee

Receipt of guarantee fee

3,423

133,670

Notes: 1. Transaction terms and method of determining transaction terms


Interest rates on borrowings from Mitsubishi UFJ Trust and Banking Corporation are general money market rates. Borrowings from Mitsubishi UFJ Trust and Banking Corporation,
these are determined by resolutions of the Board of Directors and the Companys rules in the same manner as fundraising carried out from other banks.
Loan guarantee fee rates are part of general terms of business.
2. Only material transactions are presented.

Transactions with an Audit & Supervisory Board Member (only in the case of individuals) of the Company are as follows:
Year ended March 31, 2016
Transaction amount
Name of individual

Transactions

Balance at end of fiscal year


Accounts

Millions of yen
(Thousands of U.S. Dollars)

Trading relationship with Fujisaki Co., Ltd.


Saburosuke Fujisaki
Commissions received in accordance with the
member-store contract between JACCS and
Fujisaki Co., Ltd.

Millions of yen
(Thousands of U.S. Dollars)
Notes payable
trade

489
($4,366)

Accounts payable
trade

188
(1,679)

66
($589)

Notes: 1. Transaction terms and method of determining transaction terms


Same as for general business partners
2. Trading with the Company stipulated above is conducted on a third-party (arms length) basis.
3. Although the Company applies the net-of-tax method to accounting treatment of consumption tax, balances at the end of the period include consumption tax.

56

JACCS CO., LTD.

Annual Report 2016

Year ended March 31, 2015


Transaction amount
Name of individual

Balance at end of fiscal year

Transactions

Accounts
Millions of yen

Millions of yen

Trading relationship with Fujisaki Co., Ltd.


Saburosuke Fujisaki

Notes payable
trade

507

Accounts payable
trade

207

67
Commissions received in accordance with the
member-store contract between JACCS and
Fujisaki Co., Ltd.

Notes: 1. Transaction terms and method of determining transaction terms


Same as for general business partners
2. Trading with the Company stipulated above is conducted on a third-party (arms length) basis.
3. Although the Company applies the net-of-tax method to accounting treatment of consumption tax, balances at the end of the period include consumption tax.

24. Investment and Rental Properties


Disclosure has been omitted since this is considered immaterial.

25. Per Share Information


Yen

2016
Net assets per share
Net income per shareBasic
Net income per shareDiluted

U.S. Dollars

2015
772.81
44.02
43.88

2016
772.67
41.42
41.30

The basis for calculating net income per share and net assets per share for the years ended March 31, 2016 and 2015 are as follows:
Net income per share
Millions of yen
2016
2015
Net income attributable to owners of the parent
7,569
7,107
Net income applicable to common shares
7,569
7,107
Average number of common shares during period (thousands of shares)
171,969
171,600
Increase in number of common shares: (thousands of shares)
538
476
Subscription rights to shares: (thousands of shares)
(538)
(476)

$6.90
0.39
0.39

Thousands of U.S. Dollars

2016
$67,580
67,580

Net assets per share


Millions of yen

2016
Total net assets
Amounts deducted from total net assets:
Subscription rights to shares
Net assets applicable to common shares
Number of common shares at the end of the fiscal year used in calculation of net
assets per share (thousands of shares)

Thousands of U.S. Dollars

2015
133,283
172
(172)
133,111

132,846
137
(137)
132,709

2016
$1,190,026
1,535
(1,535)
1,188,491

172,242

171,753

26. Significant Subsequent Events


Not applicable

JACCS CO., LTD.

Annual Report 2016

57

INDEPENDENT AUDITORS REPORT

58

JACCS CO., LTD.

Annual Report 2016

(This page intentionally left blank)

JACCS CO., LTD.

Annual Report 2016

59

ORGANIZATION
(As of July 1, 2016)

General Meeting of Shareholders


Audit & Supervisory Board

Shopping Credit Promotion Department


West Japan Shopping Credit Promotion Department
Shopping Credit Planning Department
Auto Loans Business Department

Board of Directors

President, CEO and COO

Audit Office

Credit Card Promotion Department


Credit Card Planning Department

Deputy President, CFO


Management Committee
Payments Business Department
Business Strategy Department
Housing Loan Guarantee Business Department
Business Supervisory Office
Guarantee Business Department

Web Solutions Department


Customer Service Department

Credit Screening and Operation Department

Credit Management Department

Corporate Planning Department


Group Strategic Business Department

International Business Planning Department


General Affairs Department
Personnel Department
Finance Department
Accounting Department

Systems Planning Department

Systems Development Department

Systems Management Department


Compliance Supervisory Department

Customer Support Office

60

JACCS CO., LTD.

Annual Report 2016

First Shopping Credit Promotion Section


Second Shopping Credit Promotion Section
West Japan Shopping Credit Promotion Section
West Japan Credit Card Promotion Section
Shopping Credit Planning Section
Auto Loans Promotion Section
Auto Loans Planning Section
First Credit Card Promotion Section
Second Credit Card Promotion Section
Credit Card Planning Section
Credit Card Promotion Section
Credit Card Network Section
Member Store Management Group
Payments Promotion Section
Payments Planning Section
Housing Loan Guarantee Planning and Promotion Section
Housing Loan Guarantee Management Operations Section
Guarantee Business Section
Finance Operations Center
Tokyo Guarantee Center
Web Solutions Planning Section
Customer Service Section
Credit Card Security Center
Tokyo Customer Center
Osaka Customer Center
Credit Screening Planning Section
Operation Training Section
Operation Supervisory Section
Central Credit Screening Center
Osaka Credit Screening Center
Tokyo Credit Center
Osaka Credit Center
Mercedes-Benz JACCS Loan Center
VFJ Support Center
DAIHATSU Credit Center
Harley-Davidson Credit Center
Credit Planning Section
Claims Management Section
Contact Center
Counseling Center
Legal Center
Compliance Management and Credit Center
Corporate Planning Section
Public Relations Section
New Business Development Section
Group Business Planning Section
MUFG Alliance Promotion Office
International Business Planning Section
General Affairs Section
General Affairs Document Section
Personnel Section
Human Resources Development Section
Finance Section
Account Settlement Center
Accounting Section
Budget Strategy Section
Accounting Operations Center
Planning Supervisory Section
Systems Promotion Section
Information Processing Center
First Development Section
Second Development Section
Third Development Section
Common Development Section
Platform Management Section
Systems Operation Section
Compliance Supervisory Section
Information Management Section
Risk Supervisory Section
Legal Section

Housing Loans Center

HISTORY
(As of July 1, 2016)

June 2014
Celebrated the 60th anniversary
of JACCS establishment

May 2014
Newly merged PT Mitra Pinasthika
Mustika Finance (MPMF) commenced

Signing ceremony for the MPMF


merger agreement

operations

Apr. 2014
Renewal of the corporate logo

Dec. 2012
Acquired a 40% equity stake in Indonesian

June 2010

company PT Sasana Artha Finance

Established overseas subsidiary JACCS


International Vietnam Finance Co., Ltd.

Apr. 2008
Took over the shopping credit business of

Mar. 2008

Mitsubishi UFJ NICOS Co., Ltd.

JACCS became an equity-method affiliate of The Bank of


Tokyo-Mitsubishi UFJ, Ltd., through a third-party allocation

June 2004
Current Tokyo head office, Ebisu Neonato

of new shares

Celebrated the 50th anniversary


of JACCS establishment

2000

Nov. 1994

May 2001
Began operating a state-of-the-art core
computer system called JANET, the first

Head office transferred to the Companys new main

such online system in the industry to run

building, Ebisu Neonato, in Shibuya-ku, Tokyo

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

Apr. 1989

1990

Jan. 1991

JANET

Began issuing JACCS JCB Card

Began issuing internationally accepted credit


cards, JACCS Visa Card and JACCS
MasterCard

Apr. 1983

JACCS first internationally


accepted credit cards

1980

Established the Housing Loan Center


(currently the Tokyo Housing Loan Center)

Sept. 1978
Listed on the First Section of the Tokyo
Stock Exchange

Apr. 1976
Company name was changed to JACCS Co., Ltd.

Apr. 1973
Shares listed on the

Aug. 1975

Sapporo Securities

Head office functions transferred to Tokyo

Exchange

1970

Tokyo head office

July 1972
Established the Tokyo Office (currently the Tokyo Branch)
as the Companys first presence in the Kanto region

Sapporo Securities Exchange

1960

Dec. 1959

Mar. 1969
In collaboration with large manufacturers, began
providing a full-fledged shopping credit service

Began a credit guarantee service


for financial institutions, the first
service of its type in Japan

July 1959
To coincide with the 5th anniversary of
establishment, the Companys name was
changed to Kitanihon Sinyohanbai Co., Ltd.

1950

Corporate brochures

June 1954

Founders

Depart Sinyohanbai Co., Ltd., established in Hakodate, Hokkaido, with paid-in capital of 3.3

Masajiro Ibe

million. Began monthly installment credit service for use at department stores based on the

Tatsuya Watanabe

issuance of installment-shopping coupons to members who have joined through their workplace

Kaname Yamane

JACCS CO., LTD.

Annual Report 2016

61

CORPORATE DIRECTORY
(As of July 1, 2016)

Name: JACCS CO., LTD.

The JACCS Services Network


JACCS divides Japan into 8 sales areas, each overseen by a

URL: http://www.jaccs.co.jp/
Founded: June 29, 1954

branch office. In all, there are 65 JACCS offices nationwide.


A

Hokkaido Area

Tohoku Area

Paid-in Capital:

Kita-Kanto Area

16,138,182,260 (US$144 million)

Shutoken Area

Chubu Area

Registered Head Office:

Kinki Area

2-5, Wakamatsu-cho, Hakodate,

Chugoku-Shikoku Area

Hokkaido 040-0063, Japan

Kyushu Area

C
E

Principal Executive Office:

Ebisu Neonato Bldg.,


H

1-18, Ebisu 4-chome, Shibuya-ku,


Tokyo 150-8932, Japan
Phone: (03) 5448-1311
Facsimile: (03) 5448-9514
Area Head Offices:
Hokkaido Area:
Urbannet Sapporo Bldg., 5th Floor,
1-2, Kita 1-jo Nishi 6-chome,
Chuo-ku, Sapporo 060-8577
Phone: (011) 241-0811
Tohoku Area:

Chubu Area:

Business Volume:

Nagoya Hirokoji Bldg., 9th Floor,

(Year ended March 31, 2016)

3-1, Sakae 2-chome, Naka-ku,

3,404,510 million (US$30,397 million)

Nagoya 460-0008

Sendai First Tower, 17th Floor,

Phone: (052) 221-7985

1-1, Ichiban-cho 3-chome,


Aoba-ku, Sendai 980-0811
Phone: (022) 706-1191

Number of Employees:
(Year ended March 31, 2016)

Kinki Area:

2,712 (Parent)

Meiji Yasuda Seimei Osaka

3,710 (Consolidated)

Midousuji Bldg., 8th Floor,


Kita-Kanto Area:
Sino Omiya North Wing Bldg.,
18th Floor,

1-1 Fushimi 4-chome, Chuo-ku,

Network:

Osaka 541-0044

Branches & Sales Offices: 65

Phone: (06) 6201-6350

10-16, Sakuragi-cho 1-chome,


Omiya-ku, Saitama 330-9696
Phone: (048) 644-1722
Shutoken Area:
Shin Meguro Tokyu Bldg.,
7th Floor,

Associated Companies:
Chugoku-Shikoku Area:

Domestic:

Asahi Seimei Hiroshima Ebisu-cho Bldg.,

JACCS Total Service Co., Ltd.

9th Floor,

JACCS Lease Co., Ltd.

4-21, Ebisu-cho, Naka-ku,

JACCS Loan-Collection Service Co., Ltd.

Hiroshima 730-0021

JACCS Payment Solutions Co., Ltd.

Phone: (082) 241-9955

25-2, Kami-Osaki 2-chome, Shinagawa-ku,


Tokyo 141-8659
Phone: (03) 5487-4611

Overseas:
Kyushu Area:

JACCS INTERNATIONAL (Hong Kong) Co., Ltd.

Hakata Ekimae Sukuea Bldg., 9th Floor,

JACCS International Vietnam Finance Co., Ltd.

21-28, Hakata-Ekimae 1-chome,

PT Mitra Pinasthika Mustika Finance

Hakata-ku, Fukuoka 812-0011

MMPC Auto Financial Services Corporation

Phone: (092) 433-1290

62

JACCS CO., LTD.

Annual Report 2016

INVESTOR INFORMATION
(As of March 31, 2016)

Number Of Shareholders:
6,507
Shares Outstanding:
175,395,808
Stock Listings:
Tokyo Stock Exchange (First Section)
Transfer Agent:
Mitsubishi UFJ Trust and Banking Corporation
4-5, Marunouchi 1-chome, Chiyoda-ku,
Tokyo 100-8212, Japan

Principal Shareholders:
The Bank of Tokyo-Mitsubishi UFJ, Ltd.

20.00%

Japan Trustee Services Bank, Ltd. (Trust Account)

10.02

The Dai-ichi Mutual Life Insurance Company, Limited

3.87

Meiji Yasuda Life Insurance Company

3.63

The Master Trust Bank of Japan, Ltd. (Trust Account)

3.51

Shareholding Association of JACCS

2.84

JACCS Co., Ltd. Employee Stock Ownership Association

2.07

Nippon Life Insurance Company

1.67

Mitsubishi UFJ Trust and Banking Corporation

1.60

Mizuho Bank, Ltd

1.50

Total

50.77%

Common Stock Price Range:

(Tokyo Stock Exchange)

Stock Held by Investor Type

(Years ended March 31)

2014
High
707
609
528
533

First Quarter
Second Quarter
Third Quarter
Fourth Quarter

2015
Low
433
425
426
404

High
525
661
697
666

Other Corporations
3.6%

2016
Low
401
483
506
534

High
647
613
524
487

Low
571
433
413
347

(Yen)

(Yen)

1,000

23,000
Monthly Range of Stock Price (Left Scale)

Securities Companies
1.0%

Overseas
Institutions
11.2%

Individuals and Others


17.7%

Financial Institutions
66.5%

Nikkei 225 Stock Index (Right Scale)

800

20,000

600

17,000

400

14,000

200

11,000

8,000
2014

2015

2016

Cash Dividends:
(Years ended March 31)

Yearly
Interim

2014
14.00
6.00

2015
14.00
7.00

2016
14.00
7.00

JACCS CO., LTD.

Annual Report 2016

63

Registered Head Office:


2-5, Wakamatsu-cho, Hakodate,
Hokkaido 040-0063, Japan
Principal Executive Office:
Ebisu Neonato Bldg., 1-18, Ebisu 4-chome,
Shibuya-ku, Tokyo 150-8932, Japan

Printend in Japan