FY3-2013 2 nd Quarter Results Tokyo Stock Exchange / Nagoya Stock Exchange8593 Results announcement date :November 5, 2012 Inquiries: Corporate Communications Department Tel81+3-6865-3002, Fax: 81+3-6895-5306
Visit us at http://www.lf.mufg.jp/ (Japanese) http://www.lf.mufg.jp/english/english) Mitsubishi UFJ Lease & Finance s statements contained in this material of their current expectations are forward-looking statements subject to significant risks and uncertainties, and actual results any differ materially. Factors that could cause actual results to differ materially include, but are not limited to, changes in overall economic conditions, changes in market rates of interest and the effect of new legislation or government directives. 2 MUL FY03/2013-2Q Results
Index 1. Trend of Financial Performance (Consolidated) 4 (1) Profit and Loss Statement 4 (2) Balance Sheet 5 2. Funding 6 3. Net Credit Cost 7 4. Overview of Principal Consolidated Companies 8 5. New Transactions 10 6. Business Performance 1) Operating Lease 2) Trading Used Equipment 3) e-leasing Direct (Asset Management Service) 4) Auto Lease 5) ECO related Service 6) Real Estate Finance 7) Symphony (Real Estate Lease) 8) PFI (Private Finance Initiative) 9) Factoring 12 12 12 13 13 14 15 15 16 16 7. Forecast for FY3/2013 17 8. Medium-Term Management Plan Vision 2013 18 3 MUL FY03/2013-2Q Results
1.Trend of Financial Performance (Consolidated) (1) Profit & Loss Statement million yen FY3/09-2Q FY3/10-2Q FY3/11-2Q FY3/12-2Q FY3/13-2Q 08/4~08/9 09/4~09/9 10/4~10/9 11/4~11/9 12/4~12/9 1 Operating Revenues 425,565 372,573 365,481 361,248 352,889 Changes -14.4% -12.5% -1.9% -1.2% -2.3% 2 Leases 319,156 279,495 281,303 280,055 273,854 Changes -16.9% -12.4% +0.6% -0.4% -2.2% 3 Installment Sales 73,464 61,491 51,339 46,633 42,704 Changes -12.4% -16.3% -16.5% -9.2% -8.4% 4 Loans 18,735 19,386 18,665 17,682 17,278 Changes +5.9% +3.5% -3.7% -5.3% -2.3% 5 Others 14,208 12,201 14,172 16,876 19,052 Changes +24.9% -14.1% +16.2% +19.1% +12.9% 6 Cost of Revenues 371,155 319,024 305,813 302,900 288,195 Changes -16.4% -14.0% -4.1% -1.0% -4.9% 7 COR / Revenues 87.2% 85.6% 83.7% 83.8% 81.7% Changes -2.1P -1.6P -1.9P +0.1P -2.1P 8 Leases, COR 281,203 242,847 240,267 239,893 233,437 Changes -17.9% -13.6% -1.1% -0.2% -2.7% 9 Installment Sales, COR 68,264 56,229 46,691 42,356 38,694 Changes -12.3% -17.6% -17.0% -9.3% -8.6% 10 Financial expenses 16,558 14,545 10,915 9,183 8,706 Changes -1.5% -12.2% -25.0% -15.9% -5.2% 11 Others, COR 5,128 5,401 7,939 11,466 7,357 Changes -24.8% +5.3% +47.0% +44.4% -35.8% 12 Gross Profit 54,410 53,549 59,667 58,348 64,693 Changes +2.6% -1.6% +11.4% -2.2% +10.9% 13 Gross Profit / Revenues 12.8% 14.4% 16.3% 16.2% 18.3% Changes +2.1P +1.6P +1.9P -0.1P +2.1P 14 Employees 2,330 2,256 2,268 2,288 2,386 15 GP per employee 46.7 47.5 52.6 51.0 54.2 (Annualized 2) Changes -1.0% +1.6% +10.8% -3.1% +6.3% 16 SG&A Expenses 33,240 40,095 31,960 27,560 31,537 Changes +24.1% +20.6% -20.3% -13.8% +14.4% 17 Personnel Expenses 10,701 10,582 10,996 11,332 11,596 Changes -0.8% -1.1% +3.9% +3.1% +2.3% 18 Non-Personnel Expenses 12,046 11,588 11,945 12,356 12,837 Changes -14.3% -3.8% +3.1% +3.4% +3.9% 19 Expenses for Non-performing assets 10,493 17,925 9,019 3,871 7,103 Changes +439.5% +70.8% -49.7% -57.1% +83.5% 20 Overhead Ratio 41.8% 41.4% 38.4% 40.6% 37.8% (Overhead expenses divided by GP) Changes -5.0P -0.4P -3.0P +2.1P -2.8P 21 Operating Profit 21,170 13,453 27,707 30,787 33,156 Changes -19.3% -36.5% +105.9% +11.1% +7.7% 22 OP / Revenues 5.0% 3.6% 7.6% 8.5% 9.4% Changes -0.3P -1.4P +4.0P +0.9P +0.9P 23 Recurring Profit 21,268 14,200 28,626 33,332 36,720 Changes -19.8% -33.2% +101.6% +16.4% +10.2% 24 Extraordinary Profit 926 7,934 925 60 234 Changes -50.6% +756.5% -88.3% -93.4% +284.3% 25 Extraordinary Cost 5,591 1,484 3,799 305 382 Changes +454.4% -73.5% +155.9% -92.0% +25.0% 26 Net Profit 9,114 10,567 13,496 18,443 21,198 Changes -40.5% +15.9% +27.7% +36.7% +14.9% 4 MUL FY03/2013-2Q Results
(2) Balance Sheet million yen FY3/2009 FY3/2010 FY3/2011 FY3/2012 FY3/2013 2Q 1 Net Assets 342,633 366,891 389,802 420,864 437,904 Changes +9.7% +7.1% +6.2% +8.0% +4.0% 2 Total Assets 3,909,077 3,885,161 3,721,136 3,682,299 3,677,446 Changes -1.4% -0.6% -4.2% -1.0% -0.1% 3 Operating Assets 3,497,071 3,517,982 3,393,547 3,335,620 3,326,873 Changes -3.7% +0.6% -3.5% -1.7% -0.3% 4 Lease 1,565,325 1,677,155 1,673,572 1,667,454 1,680,325 Changes -12.8% +7.1% -0.2% -0.4% +0.8% 5 Installment Sales 368,467 297,051 242,147 222,433 218,962 Changes -14.5% -19.4% -18.5% -8.1% -1.6% 6 Loans 1,227,716 1,222,770 1,174,661 1,193,607 1,211,725 Changes +7.1% -0.4% -3.9% +1.6% +1.5% 7 Others 335,562 321,005 303,167 252,124 215,860 Changes +29.7% -4.3% -5.6% -16.8% -14.4% 8 Impaired Assets 47,983 46,351 40,921 49,451 51,140 Changes +651.8% -3.4% -11.7% +20.8% +3.4% 9 Allowance 3,694 8,487 9,335 15,533 17,134 10 Net Balance of Impaired Assets 44,288 37,863 31,586 33,918 34,006 Changes +913.9% -14.5% -16.6% +7.4% +0.3% 11 Equity Ratio 8.4% 9.1% 10.0% 10.9% 11.4% Changes +0.9P +0.7P +0.9P +0.9P +0.5P 12 ROE 2.3% 6.1% 7.1% 8.9% 10.3% (Annualized) Changes -11.3P +3.8P +1.0P +1.8P +1.4P 13 ROA 0.2% 0.5% 0.7% 0.9% 1.2% (Annualized) Changes -0.8P +0.3P +0.2P +0.2P +0.3P 14 Total Funding 3,190,431 3,148,926 2,961,470 2,893,504 2,883,009 Changes -3.7% -1.3% -6.0% -2.3% -0.4% 15 Indirect Funding 1,842,291 1,740,993 1,614,526 1,631,959 1,652,315 Changes +4.3% -5.5% -7.3% +1.1% +1.2% 16 Direct Funding 1,348,139 1,407,932 1,346,944 1,261,545 1,230,694 Changes -13.0% +4.4% -4.3% -6.3% -2.4% 17 CP 892,900 872,400 866,000 719,300 738,400 Changes -0.9% -2.3% -0.7% -16.9% +2.7% 18 Securitization 162,959 152,256 101,944 104,215 121,829 (Lease Receivables) Changes -43.4% -6.6% -33.0% +2.2% +16.9% 19 Corporate Bond 292,280 383,276 379,000 438,030 370,465 Changes -18.8% +31.1% -1.1% +15.6% -15.4% 20 Direct Funding Ratio 42.3% 44.7% 45.5% 43.6% 42.7% Changes -4.4P +2.4P +0.8P -1.9P -0.9P 5 MUL FY03/2013-2Q Results
2. Funding Funding Structure Issued Straight Bonds (SB) Historical Chart * Swap plus represents a difference between SB interest rate and SWAP rate which is corresponded to SB term. * JGB plus represents a difference between SB interest rate and Japanese Government Bond. Ratings (as of November 5, 2012) Rating Agency Long-Term Short-Term JCR AA- J-1+ R&I A+ a-1 Moody's A3 S&P A JCR = Japan Credit Rating Agency R&I = Rating and Investment Information Recent Issued Straight Bonds 6 MUL FY03/2013-2Q Results
3. Net Credit Cost Net Credit Cost Historical Chart The above figures represent consolidated net credit cost, which includes all related credit cost of Cost of Revenue, SG&A expenses, Other income and Extraordinary items. Breakdown of Delinquency and Net Credit Cost Specific Provision General Provision Total (bil. Yen) FY3/12 2Q FY3/13 2Q 8.4 8.9-3.3-2.5 5.1 6.3 Internal Capital Adequacy Assessment Processes MUL uses Internal Capital Adequacy Assessment Processes ( ICAAP ) which approaches to quantify various risks and enables to reinforce performance assessment by allocating risk-capital to strategic segments. Operational Risk 1% 7 MUL FY03/2013-2Q Results
4. Overview of Principal Consolidated Companies 8 MUL FY03/2013-2Q Results
9 MUL FY03/2013-2Q Results
5.New Transactions New transactions volume (consolidated) entered in FY3/2013-2Q increased by 3.1% (year-on-year) to 613.9 billion Yen. By segment, lease volume increased by 8.3%, installment sales increased by 48.3%, and loans and other business decreased by 3.7%. Composition of transaction type: Lease 40%, Installment sales 4%, Loan and Others 56%. Trends of New Transactions Volume by Type 2,000 (bil. yen) 1,705.1 Leases Installment sales Loans Others 148.7 1,500 1,301.5 1,276.4 85.1 1,169.5 41.6 910.6 47.0 1,000 649.3 634.3 694.6 6 months 500 84.0 50.6 49.4 67.2 613.9 320.3 8.5 561.7 516.4 438.7 472.8 246.1 38.9 0 FY3/09 FY3/10 FY3/11 FY3/12 FY3/13 2Q Trends of New Transactions Component by Type Trends of New Transactions by Domestic / Overseas 100% 80% 60% Leases Installment sales Loans Others 9% 6% 4% 4% 2% 50% 54% 54% 52% 53% 650.0 600.0 550.0 (bil. yen) 595.2 59.4 Domestic Overseas 613.9 57.9 40% 5% 4% 4% 5% 6% 500.0 20% 33% 40% 38% 37% 40% 450.0 535.8 556.0 0% FY3/09 FY3/10 FY3/11 FY3/12 FY3/13 2Q 400.0 FY3/12 2Q FY3/13 2Q 10 MUL FY03/2013-2Q Results
Leases (bil.yen) FY3/12 2Q FY3/13 2Q yoy change IT / Office Equip. 63.7 66.6 +4.5% Industrial Machinery 53.7 57.9 +7.7% Civil Eng. & Construction Machinery 6.4 13.9 +116.2% Transport Equip. 17.6 11.5-34.7% Medical Equip. 21.7 22.8 +5.2% Commercial & Service Equip. 28.1 35.1 +25.0% Others 35.7 38.0 +6.4% Total 227.3 246.1 +8.3% Installment Sales (bil.yen) FY3/12 2Q FY3/13 2Q yoy change IT / Office Equip. 1.1 1.4 +30.4% Industrial Machinery 3.6 3.6-1.3% Civil Eng. & Construction Machinery 4.7 8.1 +70.1% Transport Equip. 1.2 1.9 +54.8% Medical Equip. 3.1 3.5 +10.6% Commercial & Service Equip. 6.4 11.1 +72.2% Others 5.7 9.0 +58.0% Total 26.2 38.9 +48.3% Loan and other business (bil.yen) FY3/12 2Q FY3/13 2Q yoy change Factoring 137.7 123.7-10.2% Real estate financing 31.0 65.6 +111.6% Others 172.9 139.6-19.3% Total 341.7 328.9-3.7% All New Transactions (bil.yen) FY3/12 2Q FY3/13 2Q yoy change Total 595.2 613.9 +3.1% 11 MUL FY03/2013-2Q Results
6. Business Performance 1Operating Lease Operating Lease involves industrial machinery, machine tools and other equipments over periods corresponding to customer s production schedules. By reflecting the projected asset value remaining (residual value) at the end of lease period to the rent, Operating Lease enables customers to reduce their total rent. Operating Lease Outstanding 2Trading Used Equipment MUL Group is trading broad range of used machinery and equipments which are supported by extensive track record for operating lease and machinery market. MUL Group can meet various customers needs through offering used equipments. MUL Group Network U-Machine M-Cast U-Machine is a major used industrial machinery trading company which owns 3 warehouses and trades more than 5,000 used machineries in Japan. Also, U-Machine established the business office in Thailand in 2012. M-Cast, a major used medical equipment trading company, deals with various medical products. M-Cast takes ISO 9001 (Quality Management Standard) and provides high-quality products and services to customers. Diamond Equipment Diamond Equipment ( DE ) trades used semiconductor production equipments. DE has worldwide network and provides equipments trade information to global customers. MUL Eco-Business MUL Eco-Business deals lease-up PCs with approx.220 thousands p.a.. MUL Eco-Business promotes PC re-use and recycle after the date eraser. Global Asset Solution Global Asset Solution (GAS) buys and sells a used equipment globally. GAS is specialized in the large-scale, customized equipments. 12 MUL FY03/2013-2Q Results
3e-Leasing Direct - Asset Management service - e-leasing Direct enables customers to perform an entire range of leasing procedures via internet, including requesting and viewing estimates as well as completing lease contracts and certificates of completion of lease inspections. Customers can also verify transaction details online during lease periods. e-leasing Direct Outstanding Principal Transactions POS register Store/Office Furniture Photo Machine Vending Machine Mold Automatic Ticket Gate From October 2012, e-leasing Direct Platinum was released. e-leasing Direct Platinum is the platform for asset management and customers can manage the variety of information about their all assets from introduction to disposal ( Asset Life Log ). 4Auto Lease Our auto lease and finance business are mainly operating through two affiliates, Mitsubishi Auto Leasing and MMC Diamond Finance. MUL Group deals with various types of vehicles and rationalizes vehicle management operations by constructing optimal vehicle management systems that reduce costs, clarify cost structures, save labor and achieve other goals. As of September 2012, MUL group operates 282 thousands vehicles in Japanese market. Auto Finance Service Network Number of Vehicles Mitsubishi UFJ Lease & Finance Company Ltd. Mitsubishi Auto Leasing Corporation MMC Diamond Finance Corporation Number of Electric Vehicles 13 MUL FY03/2013-2Q Results
5ECO related Service i ) ESCO (Energy Service Company) Business ESCO business is an energy-saving contractual activity. We are offering comprehensive energy-related services (consultation, design, maintenance, lease, inspection, etc.). ESCO enables customers to achieve low-cost and high efficient operation. We have remarkable track records (total 407transactions). Our ESCO business is expanding its field not only in Japan but also overseas. ESCO Outstanding ESCO Structure (Image) Client Profit Project Cost Client Profit Maintenance Cost Energy Cost Energy Cost Energy Cost BEFORE TOPICS ESCO implementation AFTER The ESCO project that we undertook for Nagoya University Hospital won an award called Energy Conservation Grand Prix in the form of the Prize of the Chairman of the Energy Conservation Center, Japan. ii ) Carbon Offset Business Our main products in this area are Carbon Natural Lease ( CNL ) and Offset Partner Service ( OPS ). CNL is lease transaction allotted carbon emission credit. Therefore, customer (lessee) can use carbonfree lease equipments. OPS is carbon trade support service. We are offering wide-range carbon trade related services. Additionally, we offer carbon credit production service which is originated by energy saving equipment. As of September 2012, our Carbon Offset Business has been entered into 2,331 transactions with 33,240 tons since 2008. () by way of offset all or part of carbon emission brought by lease equipment Trend of Carbon Offset Transaction and Carbon Emission Credit Amount Principal Transactions iii ) ECO related Finance MUL provides the various finance methods, such as small, medium-size project finance, for constructing the waste treatment facilities, wind farms and megasolar plants etc.. 14 Forklift Sports Event Catalog TOPICS Project Finance type Finance Lease for Mega Solar Project MUL made a contract of project finance-type finance lease for Mega-Solar project in Thailand. The construction was started in October, and the plant operation will start in 2013. Construction site of mega-solar plant Khon Kaen Province, Thailand MUL FY03/2013-2Q Results
6Real Estate Finance - Real Estate related service - We go beyond leasing operations to provide various types of structured finance to meet market needs related to the opening and relocation of stores, office buildings, logistic centers, residences, and other facilities. Particularly, we enlarge non-recourse loan under strict risk control. Additionally, Diamond Asset Finance (DAF), our group company, deals with the project finance and the owner loan. We offer valuable services to meet various customers needs in real estate related field. Real Estate Finance Outstanding Property Breakdown and Distribution of LTV (MUL Portion) as of September 2012 17% 8% 6% 69% 70% 80% 90% 90% 7Symphony - Real Estate related service - Symphony (Real estate lease) involves an arrangement where (i) we lease land from landowners through commercial leaseholds, (ii) construct buildings and facilities with specifications designed by tenants, and (iii) sublease the property to the tenant (e.g. chain-store). This arrangement enables tenants to open stores with small initial investment. Our Symphony is providing optimal solution for tenants, constructors and landowners. Symphony (Real Estate Lease) Outstanding Symphony Transaction Structure Land Owners Term Leasehold Interest MUL Tenancy Agreement Tenant Rent / Deposit Rent / Deposit Construction Order Delivery Construction Company ConstructionMeeting Principal Merit Reduction of Initial Cost Visible Cashflow Relief Ownership Administration No need to negotiate Land Owners Principal Transactions 15 MUL FY03/2013-2Q Results
8PFI (Private Finance Initiative) The PFI business makes use of private-sector funds and management expertise to develop and operate public infrastructure. We are acting as not only debt provider but also representative company of consortiums. We have entered into 48 transactions (including 15 transactions acting as representative company). Operating Asset of PFI related Type of Public Sector Nation 6 National University Corporation 3 Local Government 39 Type of Facility (number) Others 15 Education Facility 13 Government Office 5 Water/Envir onmental Plant 6 School Meal Housing of Center 6 Public officers 3 (number) 9Factoring Main target of Factoring is for Sales Receivables and Medical Receivables. Customers can capitalize such receivables before settlement date by assigning to MUL and utilize for financial strategy. Receivable Factoring Average Outstanding Medical Receivable (Image) Cashflow Improvement (Image) Medical Receivable Factoring (40days) Settlement Date (National Health Insurance, Social Health Insurance) Submission Medical Recept 5 business days after submission Medical Recept Principal Merits - Convert into cash before settlement date - Diversification Funding Method - Improvement Balance Sheet 16 MUL FY03/2013-2Q Results
7. Forecast for FY3/2013 Forecast for FY3/2013 Consolidated Amount (bil. yen) Year on Year Change Revenues 700.0 3.4% Gross Profit 118.0 2.5% Operating Profit 59.0 11.0% Recurring Profit 61.0 9.2% Net Profit 36.0 3.9% Dividend per Share 62yen 2yen Consolidated Forecast for FY3/2013 as of November 5, 2012 Consolidated Financial Performance Dividend 65 60 60 62 55 50 45 46 48 50 40 35 30 FY3/09 FY3/10 FY3/11 FY3/12 FY3/13(E) DPS (yen) 46 48 50 60 62 EPS (yen) 80 231 287 387 405 17 MUL FY03/2013-2Q Results
Medium Term Management Plan Vision 2013 Outline of Vision 2013 Growth Strategy Offering unique MUL services for expanding value chain Core BusinessLease Energy Saving, ECO-related Business International Business Global Asset Used Equipment Trade, Appraisal Asset Management Medical/ Nursing Care Accelerating global business expansion Strengthening contact with customers Promoting external growth strategy Enhancing the management infrastructure Capture Asian Growth - Promotion ECO-related Business - Vendor Finance - Development Used Equipment Trade Value Added Service - Improved Asset Management Services - Expansion ECO-related products/services Re-Strengthening Core Business (Lease) Aiming for a Leading Comprehensive Financial Company in Asia Strengthening sales methods Diversification of Services and Functions Strategy to Strengthen Management Base Improving efficiency Strengthening IT strategy Fostering a new corporate culture Reforming human resources management Establish credibility Re-Strengthening Business Infrastructure - Global IT System Introduction Sophisticated Risk Management - Exit Strategy for Tangible Asset Reinforcement Human Resources The Progress of Vision 2013 1) Strategy to Strengthen Management Base Achievement of the Strengthening Sales Method ex. set up Strategic Solution Department Reviewing the main System in Overseas Subsidiaries Reinforcement of the human resources in Overseas Subsidiariesex. National Staff Meeting Promotion of Diversity: Awarded the Fiscal Year 2012 Incentive Award from the Chief officer of Tokyo Labour Bureau in the Family-friendly Enterprises Category of the Equal Opportunity Employment & Work-Life Balance Awards. 2) Growth Strategy ECO-Related Business Asset Management Services MUL Group are aggressively expanding the ECO-related business which is one of MUL s strategic business. Recently, MUL accelerates the ECO-related business overseas, for instance by entering into the Project Finance-type Leasing contract for Mega-solar Project in Thailand. MUL upgrades the asset management service e-leasing Direct, customers can input the asset information not only in Japanese Yen but also in major foreign currencies. And from October 2012, MUL started the new service e- Leasing Direct Platinum, which customers can manage the information related to all assets during whole asset life cycle. 18 MUL FY03/2013-2Q Results
Europe North America [Asia] Asia [North America] [Europe] Expanding Construction Machinery Finance In Indonesia, a country with a wealth natural resources, MUL is rapidly expanding construction machinery finance and other services. In China, which is with continuously economic growth, MUL is providing the vendor finance program to the local companies. MUL is seeking to expand its business involving global assets, their value may be found and recognized in global markets due to high marketability. In particular, with respect to the aircraft business, MUL s reinforcement are as follows; - Developing personnel familiar with the aviation industry - Reinforcing the subsidiary (MUL Aviation Capital Limited MULAC ) in Ireland for aviation business - To acquire the all outstanding equity interest of JSA International Holdings L.P. a leading aircraft company. MUL is expanding the used machinery trading business globally, utilizing its network and knowledge. - U-Machine, a used industrial machinery trading company, established the business office in Thailand. - M-Cast, a used medical equipment trading company, reinforces the alliance with manufacturers and trading companies. - Global Asset Solution, a trading company specialized in the used large-scale, customized equipments expands the business overseas. 19 MULFY03/20132QResults