Accounting Auditor’s Audit Report on Consolidated Financial Statements (Copy)

Independent Auditors’ Audit Report

March 18, 2015

To: The Board of Directors

JPN Holdings Co., Ltd.

Deloitte Touche Tohmatsu LLC

Tetsuya Ishii [Seal]

Designated Limited Liability Partner and

Engagement Partner

Certified Public Accountant

Emiko Minowa [Seal]

Designated Limited Liability Partner and

Engagement Partner

Certified Public Accountant

We have audited the consolidated financial statements of JPN Holdings Co., Ltd. (the “Company”) for the consolidated fiscal year (February 1, 2014 through January 31, 2015), which included the consolidated balance sheet, consolidated statements of income, consolidated statement of changes in net assets and consolidated notes for the purpose of reporting under the provisions of Article 444, paragraph (4) of the Companies Act of Japan.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and method of application thereof by management and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of JPN Holdings Co., Ltd. and its consolidated subsidiaries as of January 31, 2015, and the consolidated results of their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted in Japan.

Additional Information

As described in the “Notes to Significant Subsequent Events,” the Company resolved, at the meeting of the Board of Directors held on March 16, 2015, to conduct a share exchange through which Credit Saison Co., Ltd. (“Credit Saison”) would become the parent company owning 100% of the shares of the Company and the Company would become a wholly-owned subsidiary of Credit Saison.

It has no effect on our opinion.

Conflicts of Interest

We have no interest in the Company which should be disclosed in compliance with the Certified Public Accountants Act.

End of Document

Accounting Auditor’s Audit Report on Non-consolidated Financial Statements (Copy)

Independent Auditors’ Audit Report

March 18, 2015

To: The Board of Directors

JPN Holdings Co., Ltd.

Deloitte Touche Tohmatsu LLC

Tetsuya Ishii [Seal]

Designated Limited Liability Partner and

Engagement Partner

Certified Public Accountant

Emiko Minowa [Seal]

Designated Limited Liability Partner and

Engagement Partner

Certified Public Accountant

We have audited the non-consolidated financial statements of JPN Holdings Co., Ltd. (the “Company”) for the 6th fiscal year (February 1, 2014 through January 31, 2015), which included the non-consolidated balance sheet, non-consolidated statements of income, non-consolidated statement of changes in net assets, notes and detailed statements thereof for the purpose of reporting under the provisions of Article 436, paragraph (2), item (i) of the Companies Act of Japan.

Management’s Responsibility for the Non-consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these non-consolidated financial statements and detailed statements thereof in accordance with accounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation and fair presentation of the non-consolidated financial statements and detailed statements thereof that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these non-consolidated financial statements and detailed statements thereof based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the non-consolidated financial statements and detailed statements thereof are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the non-consolidated financial statements and detailed statements thereof. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the non-consolidated financial statements and detailed statements thereof, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the non-consolidated financial statements and detailed statements thereof in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and method of application thereof by management and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the non-consolidated financial statements and detailed statements thereof.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the non-consolidated financial statements and detailed statements thereof referred to above present fairly, in all material respects, the non-consolidated financial position of JPN Holdings Co., Ltd. as of January 31, 2015, and the results of their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted in Japan.

Additional Information

It has no effect on our opinion.

Conflicts of Interest

We have no interest in the Company which should be disclosed in compliance with the Certified Public Accountants Act.

End of Document

Board of Statutory Auditors’ Audit Report (Copy)

		Audit Report This audit report was prepared by the Board of Statutory Auditors of JPN Holdings Co., Ltd. (the “Company”) after deliberation, based on audit reports prepared by each statutory auditor, concerning the performance of duties by each director during the 6th fiscal year (February 1, 2014 through January 31, 2015). We hereby report as follows.
1.		Methods and Contents of Audit by Statutory Auditors and the Board of Statutory Auditors
		In addition to establishing audit policies and audit plans, and receiving reports from each statutory auditor on the status and results of the audit, the Board of Statutory Auditors received reports from directors and the accounting auditor on the status of performance of their duties and requested further explanations as deemed necessary. In compliance with the standards for audit by statutory auditors established by the Board of Statutory Auditors, pursuant to the audit policies and audit plans, each statutory auditor communicated with directors, the internal audit division and employees, collected information and worked to improve the audit environment, attended meetings of the Board of Directors and other important meetings, received reports from directors and employees on the status of performance of their duties, requested further explanations as deemed necessary, reviewed important approval documents, and inspected the state of business operations and assets at the head office and other important branch offices. In addition, we received reports on the system to ensure compliance with applicable laws and regulations and the Articles of Incorporation by directors in performing their duties set forth in the business report, as well as the contents of resolutions of the meetings of the Board of Directors with respect to the development of a system as defined in Article 100, paragraphs (1) and (3) of the Ordinance for Enforcement of the Companies Act of Japan (internal control system) that has been developed based on such resolutions, which are necessary to ensure proper operation of the Company, and we requested further explanations as deemed necessary and expressed an opinion. With respect to subsidiaries, we communicated with and exchanged information with directors and employees of the subsidiaries, received business reports from subsidiaries as deemed necessary, and inspected the state of business operations and assets for the fiscal year. Based on the above methods, we reviewed the business report and its supporting schedules for the fiscal year. In addition, we monitored and reviewed whether the accounting auditor maintained its independence and conducted the audit properly, received reports from the accounting auditor on the status of performance of its duties, and requested further explanations as deemed necessary. Furthermore, we were informed by the accounting auditor that it has established a “system to ensure the appropriate execution of duties” (Shokumu no Suikou ga Tekisetsu ni Okonawareru Koto wo Kakuho Suru Tameno Taisei) (Matters as defined in each item of Article 131 of the Company Accounting Regulations) pursuant to the “Quality Control Standards for Audits” (Kansa ni Kansuru Hinshitsu Kanri Kijun) (Business Accounting Council, October 28, 2005), and requested explanations as deemed necessary. Based on the above methods, we reviewed the financial statements for the fiscal year (the balance sheet, statements of income, statement of changes in net assets and non-consolidated notes) as well as detailed statements thereof, and the consolidated financial statements (the consolidated balance sheet, consolidated statements of income, consolidated statement of changes in net assets and consolidated notes).
2.		Results of Audit

(1)		Results of audit of the business report

	(i)	The business report and its supporting schedules of the Company fairly present the financial conditions of the Company in conformity with applicable laws and regulations and the Articles of Incorporation of the Company.
	(ii)	No misconduct or violation of applicable laws or regulations or the Articles of Incorporation of the Company was found with respect to the directors’ performance of their duties.
	(iii)	Resolutions of the meetings of the Board of Directors with respect to the internal control system are appropriate. In addition, there are no matters to be noted regarding the execution of duties by directors with respect to the internal control system.


(2)		Results of audit of the financial statements and detailed statements thereof The methods and results of audit performed by Deloitte Touche Tohmatsu LLC, the accounting auditor of the Company, are appropriate.
(3)		Results of audit of the consolidated financial statements The methods and results of audit performed by Deloitte Touche Tohmatsu LLC, the accounting auditor of the Company, are appropriate.
March 23, 2015
		Board of Statutory Auditors of JPN Holdings Co., Ltd. Isamu Mori [Seal] Standing Statutory Auditor Tadashi Urabe [Seal] Statutory Auditor (Outside Auditor) Masaru Sakurai [Seal] Statutory Auditor (Outside Auditor) End of Document

Reference Materials for the Ordinary General Meeting of Shareholders

Agenda and Reference Matters:

1st Agenda: Approval for Execution of Share Exchange Agreement between the Company and Credit Saison Co., Ltd.

The Company and Credit Saison Co., Ltd. (“Credit Saison”) entered into a share exchange agreement (the “Share Exchange Agreement”) after the boards of directors of the Company and Credit Saison each passed resolutions approving the Company to become a wholly-owned subsidiary of Credit Saison on March 16, 2015.

If the agenda is approved, Credit Saison will become the parent company owning 100% of the shares of the Company on June 1, 2015, which is the effective date of the share exchange (the “Share Exchange”). The Company plans to delist its common shares that are currently listed in the Tokyo Stock Exchange, Inc. (“TSE”) JASDAQ on May 27, 2015.

1. Purpose of the Share Exchange

The Company, a consolidated subsidiary of Credit Saison, consists of three operating subsidiaries: JPN COLLECTION SERVICE CO., LTD. (“JPN Collection Service”), which is involved in the servicing business, HUMANPLUS CO., LTD., which provides outsourcing services, and KINDER NURSERY Co., Ltd., which operates a childcare service.

JPN Collection Service, which is one of those operating subsidiaries, obtained a servicing business license (License No. 34) from the Minister of Justice in 2000. JPN Collection Service utilized its skills and knowhow in management and collection of small-amount unsecured loans, which it had developed through the services contracted by Credit Saison, under the system which was capable of handling loans coherently from early-stage uncollected receivables to long-term written-off loans and its low-cost operation scheme. With those systems as its advantage, JPN Collection Service pursued to raise its social visibility as a servicer. However, the operating environment surrounding the contract-based servicing business, which is the main business of the servicing business, continues to be extremely severe. The business of small amount unsecured loans, which is the area at which JPN Collection Service excels, has faced a continuous decrease in the number of servicing contracts from existing customers partly because non-banks, the major customers, strengthened their loan management and the quality of their receivables improved due to the impact of various other laws and regulations, including the revision of the Money Lending Business Act, and additionally because the major customers started to handle loan management internally. The non-performing loan liquidation market has continued to shrink due to the SME Financing Facilitation Act even after the effective period terminated. The sale of small amount unsecured loans by financial institutions and other customers has also been sluggish.

Given those changes in the operating environment, JPN Collection Service established the Company through a share transfer as its parent company owning 100% of the shares of JPN Collection Services, and under the umbrella of the pure holding company, JPN Collection Service had made efforts to restructure its business portfolio by, among other things, strengthening its loan purchasing business, expanding business with government ministries and agencies and acquiring a childcare service and an auto loan business.

However, these efforts turned out to be insufficient to compensate for the decrease in sales of the contract-based servicing business, which was the main business. Given this continuous severe operating environment, it had been an urgent issue to shift to a business structure that would ensure profits even in such a severe environment.

Because it would be extremely difficult to commit growth to the market along with advancing fundamental organizational restructuring of the Company in such a severe operating environment as mentioned above, making the Company a wholly-owned subsidiary of Credit Saison and fully consolidating the Company in the Credit Saison group will allow the Company to proactively and boldly carry out organizational restructuring that may have great impact on its business performance, regardless of short-term performance fluctuations. Going forward, Credit Saison and the Company will, with the aim of flexibly in responding to changes in operational environment, work to improve operational efficiency. From the perspective of optimization for the whole group, both companies will make efforts such as review of the holdings structure, reorganization of operating subsidiaries, optimization of allocation of management resources, and implementation of servicing strategies under strengthened collaboration of the two companies. Through such efforts, the two companies will aim to enhance their corporate value.

2. Contents of the Share Exchange Agreement

The contents of the Share Exchange Agreement entered into by the Company and Credit Saison on March 16, 2015 are as below.

SHARE EXCHANGE AGREEMENT (Copy)

This Share Exchange Agreement (this “Agreement”) regarding the share exchange between Credit Saison Co., Ltd. (“Credit Saison”) and JPN Holdings Co., Ltd. (“JPN Holdings”) will be entered into by Credit Saison and JPN Holdings on March 16, 2015 (the “Effective Date”).

Article 1

(Share Exchange)

Pursuant to the provisions of this Agreement, Credit Saison and JPN Holdings shall conduct a share exchange by which Credit Saison will become the parent company of JPN Holdings and JPN Holdings will become a wholly-owned subsidiary of Credit Saison (the “Share Exchange”), and Credit Saison shall acquire all issued and outstanding shares of JPN Holdings (excluding the shares already possessed by Credit Saison).

Article 2

(Trade Names and Addresses of the Parties)

The trade names and addresses of the parent company and wholly-owned subsidiary after the Share Exchange shall be as follows:

(1)	Parent Company after the Share Exchange
	Trade Name:	Credit Saison Co., Ltd.
	Address:	1-1, Higashi-Ikebukuro 3-chome, Toshima-ku, Tokyo
(2)	Wholly-Owned Subsidiary after the Share Exchange
	Trade Name:	JPN Holdings Co., Ltd.
	Address:	60-3, Higashi-Ikebukuro 2-chome, Toshima-ku, Tokyo

Article 3

(Shares to be Delivered in the Share Exchange and Allocation Thereof)

In the Share Exchange, Credit Saison will allocate shares of its common stock to the shareholders of JPN Holdings (excluding Credit Saison, the “Shareholders Subject to Allocation”) in exchange for their shares of common stock of JPN Holdings at the time immediately before the Share Exchange takes effect (the “Record Date”). The total amount of shares of common stock to be allocated by Credit Saison through the Share Exchange shall be calculated by multiplying the total number of shares of common stock of JPN Holdings that are held by JPN Holdings’ shareholders by 0.26.

2.	In the Share Exchange, Credit Saison shall allocate 0.26 shares of its common stock per one share of common stock of JPN Holdings held by the Shareholders Subject to Allocation as of the Record Date.

3.	Despite the above two provisions, Credit Saison will process fractional shares of Credit Saison common stock to be allocated by Credit Saison through the Shares Exchange pursuant to Article 234 of the Companies Act and other related laws and regulations

If any material change influencing the Share Exchange Ratio occurs or becomes known from the date of entering into the Share Exchange Agreement to the date on which this Share Exchange Agreement becomes effective, Credit Saison and JPN Holdings can request each other to reconsider the Share Exchange Ratio. The new Share Exchange Ratio will be decided upon discussion and agreement between Credit Saison and JPN Holdings.

Article 4

(Paid-in Capital and Capital Reserve of Credit Saison)

The amount of paid-in capital and capital reserve of Credit Saison which will increase through the Share Exchange shall be determined by Credit Saison pursuant to Article 39 of the Company Accounting Regulations.

Article 5

(Effective Date)

The Share Exchange shall become effective on June 1, 2015 (the “Effective Date”). Provided, however, that the Effective Date may be changed upon discussion and agreement between Credit Saison and JPN Holdings, if such change becomes necessary in order to proceed with the Share Exchange, or for any other reason (including the circumstance where resolution at a general meeting of shareholders becomes necessary as described in the proviso of paragraph (1) of Article 6 in this Agreement).

Article 6

(General Meeting of Shareholders to Approve the Share Exchange)

Pursuant to the provisions of Article 796, paragraph (3) of the Companies Act of Japan (the “Companies Act”), Credit Saison shall conduct the Share Exchange, in connection with this Agreement, without obtaining the approval at its general meeting of shareholders set forth in Article 795, paragraph (1) of the Companies Act; provided, however, that if the approval at Credit Saison’s general meeting of shareholders becomes necessary pursuant to Article 796, paragraph (4) of the Companies Act and Article 197 of the Enforcement Regulations of the Companies Act, Credit Saison will hold its general meeting of shareholders by the day before the Effective Date and will obtain the approval for the Agreement and resolutions for other matters necessary to execute the Share Exchange.

2.	Pursuant to the provisions of Article 783, paragraph (1) of the Companies Act, JPN Holdings shall obtain approval at its general meeting of shareholders by the day before the Effective Date.

3.	With regards to the procedures described in the above two provisions, they may be changed upon discussion and agreement between Credit Saison and JPN Holdings, if such change becomes necessary in order to proceed with the Share Exchange, or for any other reason.

Article 7

(Disposition of Treasury Stock)

JPN Holdings plans to cancel, as of the Record Date, all of its treasury stock (including shares repurchased from JPN Holdings’ dissenting shareholders who exercised the appraisal rights in accordance with the provisions of Article 785, paragraph (1) of the Companies Act) that it owns as of the Record Date, pursuant to a resolution by a meeting of its board of directors to be held by the day before the Effective Date.

Article 8

(Distribution of Surplus)

Credit Saison may pay no more than 30 yen per share as distribution of surplus to the shareholders or registered pledgees of shares appearing or recorded on the final shareholder registry as of March 31, 2015.

Article 9

(Management of Company Assets and Related Matters)

Following the conclusion of this Agreement and until the Effective Date, Credit Saison and JPN Holdings shall each pursue their respective businesses and conduct the management and operation of their respective assets with due care required of a prudent manager. Any action that either Credit Saison or JPN Holdings desires to take that would have a material effect on the assets or rights and obligations of either party shall be taken by such party after consulting with the other party.

Article 10

(Change of Conditions to the Share Exchange and Termination of this Agreement)

Credit Saison and JPN Holdings may agree to change the conditions of this Agreement or terminate this Agreement upon discussion and agreeing with the other party, if, following the conclusion of this Agreement and until the Effective Date (i) a material change in the financial or management condition of either Credit Saison or JPN Holdings occurs due to natural disaster or other reasons, (ii) circumstances constituting a material impediment to the implementation of the Share Exchange occur (including the case where it has become certain to fulfill any of the conditions set forth in the next article), or (iii) the objective of this Agreement becomes difficult to attain.

Article 11

(Expiration of this Agreement)

This Agreement shall become invalid if (i) Credit Saison is unable to obtain a resolution approving the Agreement at its general meeting of shareholders by the date defined in the proviso of Article 6, paragraph (1) of this Agreement in the event the approval becomes necessary as set forth in Article 796, paragraph (4) of the Companies Act and Article 197 of the Enforcement Regulations of the Companies Act, (ii) JPN Holdings is unable to obtain a resolution approving the Agreement or other matters necessary to execute the Share Exchange as set forth in Article 6, paragraph (2) of this Agreement at its general meeting of shareholders, or (iii) permissions and authorizations, etc. of the relevant authorities necessary to execute the Share Exchange are not obtained by the Effective Date.

Article 12

(Matters to be Discussed)

In addition to matters provided for in this Agreement, any other matters necessary to execute the Share Exchange shall be discussed and agreed by Credit Saison and JPN Holdings, in accordance with this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in duplicate by their duly authorized representatives, and each party shall keep one copy of the originals.

Date: March 16, 2015

	Credit Saison Co., Ltd.

	By:
	Name:	Hiroshi Rinno

	Title:	President and CEO

	Address:	1-1, Higashi-Ikebukuro 3-chome, Toshima-ku, Tokyo

	JPN Holdings Co., Ltd.

	By:
	Name:	Ryosaku Minato

	Title:	President and CEO

	Address:	60-3, Higashi-Ikebukuro 2-chome, Toshima-ku, Tokyo

3. Outline of matters set forth in each item of Article 184, paragraph (1) of the Ordinance for Enforcement of the Companies Act (excluding item (v) and item (vi))

(1)	Appropriateness of the Exchange Consideration

(a)	Appropriateness of the total number or amount of exchange consideration

(i)

Total number of exchange consideration and the allocation

Company name	Credit Saison (100% Parent Company)	JPN Holdings (Wholly-owned Subsidiary)
Share exchange ratio	1	0.26

(Note 1)	Share Exchange Ratio The Company shareholders will receive 0.26 shares of Credit Saison common stock for each share of the Company’s common stock exchanged under the Share Exchange. However, the 3,524,800 shares of the Company’s common stock held by Credit Saison (as of March 16, 2015) will not be exchanged for shares of Credit Saison common stock in connection with the Share Exchange.
(Note 2)	Number of shares of Credit Saison to be delivered in the Share Exchange Upon the Share Exchange, Credit Saison will deliver 366,999 shares (expected) of common stock of Credit Saison to the shareholders of the Company (excluding Credit Saison) at the time immediately before the Share Exchange takes effect (the “Record Date”). The Credit Saison shares delivered in the Share Exchange will be treasury stock, and Credit Saison does not expect to issue new shares in connection with the Share Exchange. The Company plans to cancel, as of the Record Date, all of its treasury stock (including shares repurchased from JPN Holdings’ dissenting shareholders who exercised the appraisal rights in accordance with the provisions of Article 785, paragraph (1) of the Companies Act) that it owns as of the Record Date, pursuant to a resolution by a meeting of its board of directors to be held by the day before the Effective Date. The number of shares to be delivered in the Share Exchange may be adjusted for reasons, including the Company’s cancellation of its treasury stock.
(Note 3)	Treatment of shares of less than one unit The Share Exchange is expected to result in a significant number of the Company’s new shareholders who are holders of less than one unit (i.e., less than 100 shares) of Credit Saison common stock. The Company shareholders will not be able to sell such stock on the financial instruments exchanges. The Company shareholders who receive less than one unit of Credit Saison common stock may take part in the following programs on or after the Effective Date of the Share Exchange.

(1)

Program for the purchase of additional shares of less than one unit (purchase of extra shares to total 100 shares)

		In accordance with Article 194, paragraph (1) of the Companies Act and pursuant to the Company’s Articles of Incorporation, shareholders holding shares of less than one unit of Credit Saison may request Credit Saison to sell them additional shares in a quantity that, when taken together with the shares of less than one unit, equals one unit (i.e., 100 shares).
	(2)	Repurchase program for shares less than one unit In accordance with Article 192, paragraph (1) of the Companies Act, shareholders who are holders of less than one unit of Credit Saison may request Credit Saison to repurchase their shares of less than one unit.

(Note 4)

Treatment of fractional shares

With respect to the Company shareholders who will receive fractional shares less than one share of Credit Saison common stock through the Share Exchange, in accordance with Article 234 of the Companies Act and other relevant laws and regulations, Credit Saison will distribute a cash amount corresponding to such fractional shares to such JPN Holdings shareholders.

(b)	Grounds for the Calculation for the details of the share exchange ratio

(i)

Grounds and reasons for the details of the share exchange ratio

As described below in (3) (i) “Measures to ensure fairness,” Credit Saison and the Company retained Mizuho Securities Co., Ltd. (“Mizuho Securities”) and Joji Uchida Certified Public Accountant Office respectively as the third-party calculation institution regarding the share exchange ratio. Credit Saison and the Company conducted a series of careful consultation and examination based on the statement of calculation of the share exchange ratio received from each company’s calculation institution. As a result, both companies determined that the share exchange ratio for the Share Exchange stated in above 3.(1)(a)(i) was appropriate. This share exchange ratio may be changed through consultation between both companies if material changes occurred in the conditions that served as a basis for the calculation.

(ii)

Items related to the calculation

(a)

Names of the calculation institutions and their relations with the companies

Mizuho Securities and Joji Uchida Certified Public Accountant Office are calculation institutions independent from Credit Saison and the Company. Neither of the calculation institutions is a related party to Credit Saison or the Company, nor have a material interest to be stated in relation to the Share Exchange.

(b)

Summary of the calculations

Mizuho Securities calculated the share exchange ratios for Credit Saison’s common stock based on the average market price method (with March 13, 2015 set as the record date for calculation, the closing price of the company’s common stock on the TSE on the record date for calculation, the simple average of the closing price for the month preceding the record date, the simple average of the closing price for the three months preceding the record date, and the simple average of the closing price for the six months preceding the record date have been used), given that Credit Saison is listed on a financial instruments exchange and its market share price is available. Mizuho Securities also used the discounted cash flow method (the “DCF method”) in its calculation, to reflect the status of future business activities. In Credit Saison’s future financial forecast, on which the calculation applying the DCF method is based, there is no fiscal year in which a significant increase or decrease in profits is expected.

The results under each calculation method are summarized below. Note that the calculated range of the share exchange ratio below indicates the number of shares of Credit Saison’s common stock to be allotted to one share of the Company’s common stock.

Method used	Calculated range of the share exchange ratio
Average market price method	0.18 ～ 0.19
DCF method	0.22 ～ 0.31

In calculating the share exchange ratio, Mizuho Securities, in principle, used the information provided to it by the two companies and their publicly available information and performed the calculation on assumptions that such information was accurate and complete in all respects, and did not perform an independent examination to verify their accuracy or completeness. Mizuho Securities did not perform an independent appraisal, evaluation or assessment on the individual assets or liabilities (including off-balance sheet assets and liabilities, and other contingent liabilities) of the two companies and their respective related companies, or retained a third party institution to conduct such appraisal, evaluation or assessment. It is also assumed that the financial forecasts provided by each company (including profit plans and other relevant information) had been reasonably prepared and presented based on the best presently-available projections and judgments of both companies.

Joji Uchida Certified Public Accountant Office, which is the third-party institution to the Company, used the average market price method, given that the Company and Credit Saison are listed on a financial instruments exchange and their market share prices are available, and also used the DCF method to reflect the status of their future business activities.

For the average market price method, with March 13, 2015 set as the record date for calculation, the closing prices of the two companies on the TSE on the record date for calculation, and simple averages of the closing prices for one month, three months and six months preceding the record date for calculation, have been used for calculation.

With respect to the DCF method, as for the Company, the cash flows that the company is expected to generate in the future, based on financial forecasts prepared by the Company for three fiscal years from the fiscal year ending January 2016 to the fiscal year ending January 2018, using the enterprise cash flow method, have been discounted to present value using certain discount rates in order to calculate valuations of enterprise value and equity value. Discount rates used range from 4.9% to 6.9%. In calculating terminal value, the constant growth rate model and a permanent growth rate of 0% have been used. Furthermore, in the Company’s future financial forecast, based on which Joji Uchida Certified Public Accountant Office did its calculations applying the DCF method, the Company expects a significant increase in profits in each year from the fiscal year ending January 2016 through the fiscal year ending January 2018 due to improved profitability as a result of implementing organizational restructuring. These financial forecasts reflect descriptions of information, such as the latest financial data and the forecast of the most recent business plan, but are not based on the premise of the Share Exchange being implemented.

Method used	Calculated range of the share exchange ratio
Average market price method	0.18 ～ 0.19
DCF method	0.20 ～ 0.32

In calculating the share exchange ratio described above, Joji Uchida Certified Public Accountant Office, in principle, used the information provided to it by the two companies and their publicly available information as is, and performed the calculation on assumptions that such information was accurate and complete in all respects, and did not perform an independent examination on their accuracy or completeness. Joji Uchida Certified Public Accountant Office did not perform an independent appraisal, evaluation or assessment on the assets or liabilities (including off-balance sheet assets and liabilities and other contingent liabilities) of the two companies and their respective subsidiaries and related companies, including the analysis and appraisal of individual assets and liabilities, or retained a third -party institution to conduct such evaluation or assessment. It is also assumed that the business forecasts and the financial forecasts of the two companies had been reasonably and appropriately (in terms of method) prepared and presented, based on the best presently available projections and judgments of the management of both companies.

(2)	Reasons for selection of the consideration for the share exchange

The Company and Credit Saison selected common stock of Credit Saison, which will be the share exchange wholly-owning parent company, as the exchange consideration for the Company’s common stock in relation to the Share Exchange.

The Company determined that the common stock of Credit Saison is appropriate as the consideration for the Share Exchange because the common stock of Credit Saison is listed on the First Section of the TSE and has liquidity, affording trading opportunities, and because shareholders of the Company would be able to enjoy the benefits generated by the Share Exchange, which would make the Company the wholly-owned subsidiary.

(3)	Matters relating to protection of the interests of minority shareholders of the Company

(i)

Measures to ensure fairness

Given that Credit Saison already holds 71.41% of all shareholders’ voting rights of the Company, and therefore the Share Exchange constitutes for the Company a transaction with its controlling shareholder, Credit Saison and the Company have determined that it would be necessary to ensure fairness of the share exchange ratio and other aspects of the Share Exchange, and accordingly, they have taken the following measures to ensure fairness of the Share Exchange:

(a)

Obtaining a statement of calculation of the share exchange ratio for the Share Exchange from an independent third party calculation institution

In order to ensure fairness of the share exchange ratio for the Share Exchange, as described above in 3.(1)(b) “Items related to the calculation,” Credit Saison and the Company respectively requested an independent financial advisor to calculate the share exchange ratio. Credit Saison received the statement of calculation of share exchange ratio from Mizuho Securities and the Company from Joji Uchida Certified Public Accountant Office. Credit Saison and the Company, upon conducting a series of careful consultation and negotiation using the results of the above-said calculations as reference, determined at their respective meetings of the board of directors on March 16, 2015 to execute the Share Exchange using the share exchange ratio set forth above.

(b)

Advice from an independent law firm

Credit Saison appointed Mori Hamada & Matsumoto as its legal advisor and received legal advice regarding the methods and process of Credit Saison’s decision-making and other procedures of the Share Exchange. Mori Hamada & Matsumoto has no material interest in Credit Saison or the Company.

The Company appointed Kajitani Law Offices as its legal advisor and received legal advice regarding the methods and processes of the Company’s decision-making and other procedures of the Share Exchange. Kajitani Law Offices has no material interest in Credit Saison or the Company.

(ii)

Measures to avoid conflict of interest

As the Share Exchange is a transaction in which Credit Saison, which holds 71.41% of the voting rights of all shareholders of the Company, will make the Company its wholly-owned subsidiary, there exists a conflict of interest structure. Accordingly, Credit Saison and the Company have taken the following measures to avoid a conflict of interest with regard to the Share Exchange:

(a)

Obtaining an opinion from a third party committee comprised of independent outside experts with no interest

In order to resolve conflict of interest in the Share Exchange and ensure fairness and transparency in assessing the Share Exchange, the Company established a third-party committee comprised of three independent outside experts with no interest in the Company and its controlling shareholder Credit Saison, namely, Mr. Kenichi Sekiguchi (Senior Advisor of Meiji Yasuda Life Insurance Company), Ms. Kumiko Jinnouchi (attorney of Jinnouchi Law Offices) and Mr. Minoru Hirooka (Certified Public Accountant of Hirooka Certified Public Accountant Office) and the committee conducted a deliberation on the following items: (i) whether the Share Exchange has legitimate purposes that would contribute to the enhancement of the Company’s corporate value, (ii) whether the fairness of the Share Exchange procedure and the appropriateness of the terms of the Share Exchange are ensured and (iii) whether the Share Exchange is not disadvantageous to minority shareholders of the Company.

As a result, the third-party committee submitted a report, stating that no circumstances can be found that the implementation of the Share Exchange is disadvantageous to the Company’s minority shareholders.

(b)

Approval by all directors and statutory auditors of the Company, except directors and auditors with interest

At the meeting of the board of directors of the Company, which resolved the execution of the Share Exchange Agreement, Mr. Kazuyuki Takami, a director of the Company who also serves as the General Manager of the Credit Management of Credit Saison, did not participate in the deliberations and voting for the proposal for the purpose of avoiding conflicts of interest. Mr. Masaru Sakurai, a part-time audit and supervisory board member of the Company who also serves as a Standing Audit & Supervisory Board Member of Credit Saison, did not participate in the deliberations with respect to the proposal at the same meeting of the board of directors, in order to ensure fairness of the resolution pertaining to such proposal and because of the possibility that he could have a conflict of interest with the Company. All of the five directors, except the one above, present at such meeting of the board of directors, unanimously resolved to enter into the Share Exchange Agreement. Of three audit and supervisory board members of the Company, the two, except the one above, opined that they had no objections with respect to the implementation of the Share Exchange.

(4)	Appropriateness of the provisions concerning paid-in capital and capital reserve of Credit Saison

The amount of paid-in capital and capital reserve of Credit Saison which will increase as a result of the Share Exchange is as follows:

(i)

Paid-in Capital:

0 yen

(ii)

Capital Reserve:

Such amount of shareholders’ equity as determined pursuant to Article 39, paragraph (1) of the Company Accounting Regulations

(iii)

Earned Reserve:

0 yen

The above provisions concerning items relating to paid-in capital and capital reserve are decided within the range of the Company Accounting Regulations and other fair accounting standards after considering the financial status of Credit Saison comprehensively and are regarded as appropriate.

(5)	Reference information concerning the exchange consideration

(i)

The provisions of Credit Saison’s Articles of Incorporation

The provisions of Credit Saison’s Articles of Incorporation are as set forth in Attachment: Articles of Incorporation of Credit Saison Co., Ltd.

(ii)

Matters relating to the method of realization of the exchange consideration

(a)

Markets trading the exchange consideration

Credit Saison’s common stock is traded on the First Section of the TSE.

(b)

Parties performing brokering, intermediation, and agency services for transactions of the exchange consideration

Credit Saison’s common stock is brokered and intermediated by financial instruments business operators (securities companies, etc.) nationwide.

(c)

Particulars of restrictions on transfer and other disposition of the exchange consideration

Not applicable.

(iii)

Matters relating to the market value of the exchange consideration

The averages of the closing prices of Credit Saison’s common stock on the First Section of the TSE for the month preceding the record date, for the three months preceding the record date and for the six months preceding the record date, with the record date, being March 13, 2015, are as below:

One month	Three months	Six months
2,236 yen	2,143 yen	2,150 yen

Information concerning the latest market price of Credit Saison’s common stock on the TSE can be obtained at the website of the TSE (http://www.tse.or.jp/), etc.

(iv)

Particulars of Credit Saison’s balance sheet for the fiscal years ended within the past five years

Particulars have been omitted as Credit Saison has filed securities reports in accordance with Article 24, paragraph (1) of the Financial Instruments and Exchange Act.

(6)	Matters relating to the appropriateness of the provisions concerning stock acquisition rights in relation to the Share Exchange

Not applicable.

(7)	Matters relating to financial statements of the parent company

(i)

Particulars of Credit Saison’s financial statements for the most recent fiscal year (the year ended March 31, 2014)

Please see the appendix.

(ii)

Particulars of Credit Saison’s provisional financial statements with the day after the last day of the most recent fiscal year being the temporary closing day

Not applicable.

(iii)

Event that has a significant influence on the status of corporate assets of Credit Saison such as the disposition of important property and the share of significant liabilities after the last day of the most recent financial year

Not applicable.

(8)	Financial statements of the wholly-owned company

Not applicable.

Attachment

ARTICLES OF INCORPORATION OF CREDIT SAISON CO., LTD.

CHAPTER I

GENERAL PROVISIONS

Article 1. (Trade Name)

The name of the Company shall be Kabushiki Kaisha Credit Saison. It shall be written in English Credit Saison Co., Ltd.

Article 2. (Objects)

The objects of the Company shall be to carry on the following businesses:

Sales and mediation of various products such as apparel and accessories, sundry articles, food, wining and dining and accommodations, etc. using credit cards

Installment sales business, credit purchase intermediary business and installments receivable factoring business

Financial business, debt collection business, purchase of debts, management collection business set forth in the Act on Special Measures Concerning the Claims Management and Collection Businesses, guarantee business, credit research business and calculation outsourcing business

General leasing business

Money changing business and sales and purchase, mediation and management of mortgage securities

Purchase and discount of notes, sales and purchase, intermediary and investment of securities, golf membership, tennis membership, hotel membership and gym membership

Issuance, sales and purchase and management of information magnetic recording print card, prepaid payment instrument and various discount coupons

Insurance agent and business related to life insurance sales

Sales and purchase, management, leasing, brokerage, intermediary and appraisal of land and building

10.

Design and supervision, construction and contracting of land formation and building work

11.

Management of culture center, sports facility, hotel, wedding center, general photo business, barber business, beauty salon business, publishing business, hospital and amusement arcade and tourism business

12.

Travel agent business based on the Travel Agency Act

13.

Sales and repair of automobiles and other carrying instrument and management, operation and administration of gas station, parking lots, storage and other various service facilities related to these businesses

14.

Development, manufacturing, operation and sales of computer and its information processing system software

15.

Investment management, business management and general consulting business and marketing business related to investment management and business management

16.

Retail of department store, planning and development of products handled at the department store, wholesale and export/import of these products

17.

Sales of documentary stamps, salt, tobacco and measuring apparatus and antique business

18.

Sales, cooking and processing of alcohol, drinks and food and operation of restaurants

19.

Sales and dispensing of drug, quasi-drug, medical device, chemical industrial drug and cosmetics and medical act

20.

Agency business of internal/external transactions

21.

Dispatching business set forth in the Act for Securing the Proper Operation of Worker Dispatching Undertakings and Improved Working Conditions for Dispatched Workers

22.

Education and training to develop occupational aptitude of human resources

23.

Wedding information business

24.

Trust agency business

25.

Financial instruments intermediary service provider business

26.

Banking agency business

27.

Rental business

28.

Business related to operation of point services

29.

Fund transfer business

30.

All businesses contingent or related to each of above

Article 3. (Location of the principal office)

The Company shall have its principal office in Toshima-ku, Tokyo.

Article 4. (Organization)

The Company will have the following organizations, besides a general meeting of shareholders and Directors:

(1)

Board of Directors

(2)

Members of Audit & Supervisory Board

(3)

Audit & Supervisory Board

(4)

Independent Auditor

Article 5. (Public notice)

Public notices of the Company shall be given on the website. However, in cases where accidents or other unavoidable circumstances prevent the use of the website, they shall be given by inserting them in the Nihon Keizai Shimbun.

CHAPTER II

Article 6. (Total number of authorized shares)

The total number of shares which the Company has authority to issue shall be 300,000,000.

Article 7. (Share unit number)

One hundred (100) shares of the Company shall constitute one (1) unit.

Article 8. (Rights of less than one (1) unit of shares)

A holder of shares constituting less than one (1) unit of shares of the Company may not exercise any rights other than those listed below with respect to such shares:

(1)

the rights listed in Article 189, paragraph (2) of the Companies Act;

(2)

the right to request as set forth in Article 166, paragraph (1) of the Companies Act;

(3)

the right to be allotted shares and/or stock acquisition right which is offered by the Company to each shareholder in proportion to the number of shares held by such shareholder; and

(4)

the right set forth in the immediately subsequent Article.

Article 9. (Rights to request sales of shares for less than one (1) unit of shares)

A holder of less than one (1) unit of shares of the Company may require the Company to sell such number of shares that, combined with the less than one (1) unit of shares held by such shareholder, constitutes one (1) unit of shares of the Company.

Article 10. (Acquisitions of its own shares)

In accordance with Article 165, paragraph (2) of the Companies Act, the Company may, by resolution of the Board of Directors, acquire its own shares through market transaction, etc.

Article 11. (Regulations Relating to Shares)

Matters and charges relating to shares of the Company not provided for in the law and regulations and the Articles of Incorporation shall be governed by the Regulations Relating to Shares prescribed by the Board of Directors.

Article 12. (Registration agent)

1.	The Company shall appoint a registration agent with respect to its shares.

2.	The Company shall have its registration agent prepare, maintain, and administer the affairs related to, and the Company shall not itself prepare, maintain, and administer the affairs related to, the Register of Shareholders and the Register of Stock Acquisition Rights.

CHAPTER III

GENERAL MEETING OF SHAREHOLDERS

Article 13. (Convention)

The ordinary general meeting of shareholders of the Company shall be convened in June of each year, and an extraordinary general meeting of shareholders shall be convened as the need arises.

Article 14. (Record date of the ordinary general meeting of shareholders)

The record date of the ordinary general meeting of shareholders of the Company is March 31 of each year.

Article 15. (Convener and president)

1.	The general meeting of shareholders shall be convened and presided over by the President of the Company.

2.	In the case where the President of the Company is unable to act as such, one of the other Directors shall act in his or her place in the order in accordance with a resolution by the Board of Directors.

Article 16. (Providing reference materials for the general meeting of shareholders, etc. by making information available on the internet)

In accordance with the ordinance of the Ministry of Justice, the Company may, in convening a general meeting of shareholders, regard information required to be included or indicated in the reference materials for the general meeting of shareholders, the business report, the financial statements and consolidated financial statements as provided to its shareholders by making such information available to shareholders electronically on the Internet.

Article 17. (Resolution)

1.	Resolution of the general meeting of shareholders shall be adopted by a majority vote of the shareholders who are entitled to exercise their voting rights present, unless otherwise provided for in the laws and regulations or the Articles of Incorporation.

Special resolution provided for in Article 309, paragraph (2) of the Companies Act shall require the presence of the shareholders holding in the aggregate one-third or more of the votes of the shareholders who are entitled to exercise their voting rights and the affirmative vote of two-thirds or more of the votes of the shareholders present.

Article 18. (Voting by proxy)

1.	Shareholders may exercise their rights to vote by appointing as proxy another shareholder of the Company who is entitled to exercise his or her voting rights.

2.	Any shareholder or proxy must notify the Company in writing to verify the proxy at each general meeting of shareholders.

CHAPTER IV

DIRECTORS AND BOARD OF DIRECTORS

Article 19. (Number of directors)

The Company shall have not more than twenty-five (25) Directors.

Article 20. (Election)

1.	Directors are elected by resolution of a general meeting of shareholders.

Resolution of a general meeting of shareholders electing Directors shall require the presence of the shareholders holding in the aggregate one-third or more of the votes of the shareholders who are entitled to exercise their voting rights and the affirmative vote of a majority of the votes of the shareholders present.

3.	Cumulative voting shall not be adopted for the election of Directors.

Article 21. (Term of office)

The term of office of a Director shall expire upon the conclusion of the ordinary general meeting of shareholders pertaining to the last business year which ends within one (1) year following the assumption of office of such Director.

Article 22. (Representative Director and Executive Directors)

1.	The Board of Directors appoints, by resolution, one (1) Representative Director from among the Directors.

2.	The Board of Directors may appoint, by resolution, one (1) Chairman of the Board, Vice Chairman of the Board and President and a few Vice Presidents, Senior Managing Directors and Managing Directors.

Article 23. (Convener and president of the meeting of the Board of Directors)

1.	The meeting of the Board of Directors shall be convened and presided over by the President of the Company, unless otherwise set forth in the laws and regulations.

2.	In the case where the President of the Company is unable to act as such, one of the other Directors shall act in his or her place in the order set by a resolution of the Board of Directors.

Article 24. (Notice convening a meeting of the Board of Directors)

In convening a meeting of the Board of Directors, the notice to that effect shall be sent to each Director and each Member of Audit & Supervisory Board at least three (3) days in advance of the date of such meeting. However, under unavoidable circumstances, the duration may be shortened.

Article 25. (Omission of a resolution)

The Board of Directors shall be deemed to have resolved a proposal if conditions set forth in Article 370 of the Companies Act are fulfilled.

Article 26. (Regulations of the Board of Directors)

Any matters relating to the Board of Directors not provided for in the laws and regulations or the Articles of Incorporation shall be governed by the Regulations of the Board of Directors prescribed by the Board of Directors.

Article 27. (Advisor and counselor)

The Company may, where necessary, appoint advisors and counselors.

Article 28. (Compensation)

Any compensation, bonuses or any other financial benefits (collectively, the “Compensation”) payable to Directors by the Company in consideration for their performance of duties shall be determined by resolution of a general meeting of shareholders.

Article 29. (Limitation of the liabilities of the external Directors)

The Company may, in accordance with Article 427, paragraph (1) of the Companies Act, enter into an agreement with its external Director which limits the liability for compensation of damages incurred due to negligence of such external Director. However, the maximum on the amount of liability under the said agreement is the amount as provided in laws and regulations.

CHAPTER V

MEMBERS OF AUDIT & SUPERVISORY BOARD AND AUDIT & SUPERVISORY BOARD

Article 30. (Number of members of Audit & Supervisory Board)

The Company shall have not more than five (5) members of Audit & Supervisory Board.

Article 31. (Election)

1.	Members of Audit & Supervisory Board are elected by resolution of a general meeting of shareholders.

Resolution of a general meeting of shareholders electing members of Audit & Supervisory Board shall require the presence of the shareholders holding in the aggregate one-third or more of the votes of the shareholders who are entitled to exercise their voting rights and the affirmative vote of a majority of the votes of the shareholders present.

Article 32. (Term of office)

1.	The term of office of a member of Audit & Supervisory Board shall expire upon the conclusion of the ordinary general meeting of shareholders pertaining to the last business year which ends within four (4) years following the assumption of office of such member of Audit & Supervisory Board.

2.	The term of office of a member of Audit & Supervisory Board appointed to fill a vacancy left by a member of Audit & Supervisory Board retiring before the end of his/her term shall be concurrent with the term of office of his/her predecessor.

Article 33. (Standing member of Audit & Supervisory Board)

The Audit & Supervisory Board may, by resolution, elect standing members of Audit & Supervisory Board.

Article 34. (Notice of a meeting of the Audit & Supervisory Board)

In convening a meeting of the Audit & Supervisory Board, the notice to that effect shall be sent to each member of Audit & Supervisory Board at least three (3) days in advance of the date of such meeting. However, under unavoidable circumstances, the duration may be shortened.

Article 35. (Regulations of the Audit & Supervisory Board)

Any matters relating to the Audit & Supervisory Board not provided for in the laws and regulations or Articles of Incorporation shall be governed by the Regulations of the Audit & Supervisory Board prescribed by the Audit & Supervisory Board.

Article 36. (Compensation)

Any Compensation payable to members of Audit & Supervisory Board by the Company shall be determined by resolution of a general meeting of shareholders.

Article 37. (Limitation of liability of external member of Audit & Supervisory Board)

The Company may, in accordance with Article 427, paragraph (1) of the Companies Act, enter into an agreement with its external member of Audit & Supervisory Board which limits the liability for compensation of damages incurred due to negligence of such external member. However, the maximum on the amount of liability under the said agreement is the amount as provided in laws and regulations.

CHAPTER VI

ACCOUNTING

Article 38. (Business year)

The business year of the Company shall be from April 1 of each year to March 31 of the following year.

Article 39 (Record date of the dividend of surplus)

1.	The Company’s record date for the year-end dividend is March 31 of each year.

2.	In addition to the above paragraph, the Company may provide the dividend of surplus by setting a record date.

Article 40. (Interim dividend)

The Company may, by resolution of the Board of Directors, provide interim dividend with September 30 of each year set as the record date.

Article 41. (Statute of limitation of dividend)

1.	If the dividend property is cash, the Company shall be relieved of its liability to pay the money to be distributed upon expiration of three (3) years after the tender of such payments.

2.	The dividend payable will bear no interest.

Revised on June 21, 2011.

2nd Agenda: Election of Six (6) Directors

Upon the closing of the Ordinary General Meeting of Shareholders, all six (6) directors will complete the term of their offices as directors. Accordingly, we request that you elect six (6) directors.

The profiles of the candidates for directors are set forth below.

Candidate Number	Name (Date of Birth)	Brief Personal History; Position and Assignment in the Company; and Important Concurrent Duties (if any)		Number of the Company’s Shares Owned (shares)
1	Ryosaku Minato (September 23, 1947)	Apr. 1970	Joined Yasuda Fire and Marine Insurance Co., Ltd. (current Sompo Japan Nipponkoa Insurance Inc.)	800
		Apr. 1994	Branch Manager, Aomori Branch, Yasuda Fire and Marine Insurance Co., Ltd.
		Jun. 1999	Manager, Sales Planning Office, Yasuda Fire and Marine Insurance Co., Ltd.
		Apr. 2004	Representative Director and Vice President, Yasuda Fire and Marine Insurance Co., Ltd.
		Sept. 2006	Vice Manager, Alliance Headquarters, Credit Saison Co., Ltd.
		Apr. 2008	President, Environmental Restoration and Conservation Agency
		Nov. 2013	Advisor, the Company
		Apr. 2014	President, the Company (current)
2	Yukio Watanabe (September 17, 1958)	Apr. 1981	Joined Seibu Credit Co., Ltd. (current Credit Saison Co., Ltd.)	300
		Apr. 2007	Manager, Management Planning Dept., JPN COLLECTION SERVICE CO., LTD.
		Feb. 2009	Manager, Business Management Dept., the Company
		Dec. 2011	Director, JPN COLLECTION SERVICE CO., LTD.
		Nov. 2012	Executive Officer, Manager, Sales Management Dept., the Company
		Apr. 2013	Director, Manager, Sales Management Dept., the Company
		Apr. 2014	Representative Senior Managing Director, Business Management Dept., the Company (current)
3	Toshiyasu Suganuma (January 23, 1951)	Apr. 1973	Joined Midoriya (current Credit Saison Co., Ltd.)	12,300
		Jun. 2001	Director, Midoriya
		Apr. 2005	Managing Director, JPN COLLECTION SERVICE CO., LTD.
		Feb. 2009	Managing Director, the Company
		Apr. 2009	Representative Senior Managing Director, the Company
		Jul. 2011	Representative Senior Managing Director, in charge of Business Management Dept. the Company
		Dec. 2011	Director, KINDER NURSERY Co., Ltd.
		Apr. 2014	Representative President, KINDER NURSERY Co., Ltd. (current)
		Apr. 2014	Director, the Company (current)
		(Important concurrent duties) KINDER NURSERY Co., Ltd., Representative President
4	Nobuo Miyatake (June 24, 1963)	Apr. 1986	Joined Seibu Credit Co., Ltd. (current Credit Saison Co., Ltd.)	2,100
		Mar. 2001	Branch Manager, Tohoku Branch, Seibu Credit Co., Ltd.
		Mar. 2003	Manager, Corporate Sales Dept., Seibu Credit Co., Ltd.
		Oct. 2005	Manager, Sales Development Dept., JPN COLLECTION SERVICE CO., LTD.
		Feb. 2007	Manager, Sales Promotion Dept. (concurrent), Human Resource Business Dept., JPN COLLECTION SERVICE CO., LTD.
		Apr. 2008	Director, Manager, Sales Promotion Dept., JPN COLLECTION SERVICE CO., LTD.
		Feb. 2011	Representative President, JPN COLLECTION SERVICE CO., LTD. (current)
		Apr. 2011	Director, the Company (current)
		(Important concurrent duties) JPN COLLECTION SERVICE CO., LTD., Representative President

5	Masahiro Senba (March 21, 1961)	Apr. 1984	Joined Seibu Credit Co., Ltd. (current Credit Saison Co., Ltd.)	3,400
		Sept. 1990	Full-time staff, Labor Union, Seibu Credit Co., Ltd.
		Oct. 2002	Branch Manager, Hokkaido Branch, Seibu Credit Co., Ltd.
		Apr. 2007	Director, JPN COLLECTION SERVICE CO., LTD.
		Feb. 2009	Director, the Company
		Feb. 2010	Director, Cosmo Support (current Humanplus Company Limited)
		Nov. 2012	Representative President, Humanplus Company Limited (current)
		Apr. 2013	Director, the Company (current)
		(Important concurrent duties) Humanplus Company Limited, Representative President
6	Kazuyuki Takami (August 10, 1966)	Apr. 1990	Joined Credit Saison Co., Ltd.	0
		Mar. 2006	Head, Credit Control Center, Credit Saison Co., Ltd.
		Mar. 2010	Head, Credit Management Center, Credit Saison Co., Ltd.
		Mar. 2011	Manager, Credit Management Dept., Credit Saison Co., Ltd.
		Apr. 2012	Director, the Company (current)
		Mar. 2015	Manager, Credit Business Dept. (concurrent) Credit Management Dept., Credit Saison Co., Ltd. (current)

There are no special vested interests between the candidates for directors and the Company.

3rd Agenda: Election of One (1) Substitute Auditor

To prepare for a contingency in which the Company does not have the number of auditors required by laws and regulations, the Company proposes to elect one (1) substitute auditor.

The Audit & Supervisory Board has consented to this agenda.

The profile of the candidate for substitute auditor is set forth below.

Name (Date of Birth)	Brief Personal History; Position and Assignment in the Company; and Important Concurrent Duties (if any)		Number of the Company’s Shares Owned (shares)
Yoichi Takei (June 10, 1961)	Apr. 1993	Registered as attorney at law (Daiichi Tokyo Bar Association )	0
	Apr. 1993	Joined Iwata Godo Law Office
	Apr. 2000	Partner, Meitetsu Sogo Law Office
	Mar. 2008	Partner, Seiwa Meitetsu Law Office (current)
	Jun. 2013	External Director, NIPPON THOMPSON CO., LTD. (current)
	(Important concurrent duties) NIPPON THOMPSON CO., LTD. External Director

(Note)

1. There are no special vested interests between the candidate and the Company.

2. Mr. Yoichi Takei is a candidate for external auditor. The Company and its parent Company, Credit Saison Co., Ltd., have received legal services from him and paid him legal fees.

3. The Company nominated Mr. Yoichi Takei as a candidate because the Company expects that he can provide adequate advice on the maintenance of compliance system structure of the Company based on his specialized knowledge as an attorney at law.

4. The Company intends to enter into an agreement, pursuant to Article 423, paragraph (1) of the Companies Act, which limits his liabilities, with Mr. Yoichi Takei when his nomination is approved. The agreement will limit his liabilities to the minimum amount provided for under Article 425, paragraph (1), item (i)(c) of the Companies Act.

General Meeting of Shareholders

Reference Materials (Attached Materials)

Financial Statements, etc. of Credit Saison Co., Ltd. for the Most Recent Business Year

JPN Holdings Co., Ltd.

(Attachment)

BUSINESS REPORT

(From April 1, 2013 through March 31, 2014)

I. Current Status of the Group

1. Current Status of Business

(1) Business Progress and Results

In fiscal 2013, the modest recovery in the Japanese economy continued, with high share prices and a weak yen driven by expectations around a more proactive monetary policy and economic measures, and corporate performance and individual consumption remaining solid. In the non-bank industry, the principal business sector for CREDIT SAISON Co., Ltd (the “Company”), credit card-based shopping has been growing in step with the expansion of the areas in which credit cards can be used. However, while the contraction in the market for cash advances brought about by the revision of the Money Lending Business Act is slowing, it has not experienced a full-scale recovery. As such, the non-bank industry continued to face a challenging business environment.

In this environment, the Company has responded by working to lay the foundations for new growth: we have been expanding cashless settlement services centered on credit cards, enhancing fee-based business centering on our Internet business, and promoting non-bank financial functions, such as our lease and finance businesses. We have also embarked upon full-scale entry into retail finance businesses in Asia.

Results for the Consolidated Fiscal Year

							(Millions of yen)		(Yen)
	Operating Revenues		Operating Income		Ordinary Income		Net Income			Net Income per Share
FY2013		247,577		36,336		44,426		25,569			139.24
FY2012		244,405		42,312		53,214		32,770			178.45
% Change		1.3%		-14.1%		-16.5%		-22.0%			-22.0%

In the mainstay Credit Service Business, the Company sought to expand its customer base with a view to future earnings, by continuing to bolster efforts to acquire new members for Saison American Express® Card, which is expected to generate high utilization and high spending per transaction and efforts to attract new members using the Internet. In addition, the Company worked closely with partner merchants to increase card member enrolment in affinity cards, upgrading Mitsui Shopping Park Card Saison, which is issued in partnership with Mitsui Fudosan Co., Ltd. and Mitsui Fudosan Retail Management Co., Ltd., and establishing a single points program and integrated services at 32 facilities operated by the Mitsui Fudosan Group nationwide. As a result, the number of new card members reached 2.53 million (up 0.7% on the previous fiscal year).

As an initiative to expand card shopping transaction volumes, we implemented joint projects in which the Company and a diverse array of companies in the travel, services, and other sectors encourage customers to use each other’s services by providing special benefits when customers use credit cards.

In addition, we conducted the Regional Revitalization Campaign in collaboration with merchants and other partners in cities and districts including Yaesu/Nihonbashi, Kyoto, and Sapporo, with the aim of creating new sources of consumption through credit card use. We also increased the number of affiliated merchants through the introduction of the Coiney smartphone settlement service. Through these and other measures, the card shopping transaction volume increased steadily to 3.8529 trillion yen, up 8.6% year-on-year. The card shopping revolving credit balance also grew steadily to 267.8 billion yen, a year-on-year increase of 2.9%.

With a view to expanding the areas in which credit card settlement is used, the Company has partnered with the major drugstore chain cocokara fine Inc. to issue the COCOKARA CLUB CARD, a prepaid Visa card that can be used at Visa-affiliated merchants within Japan and overseas. As a result of both companies having stepped up card member enrollment, the total number of cards issued since enrollment commenced in April 2013 reached 3.07 million.

Furthermore, in order to bolster the Company’s earning capacity via the Internet, we increased the number of Internet members to 9.95 million (up 16.3% from the end of the previous fiscal year). In addition, the Company sought to develop new forms of business via the Internet, boosting the volume of transactions by increasing the convenience of the Eikyufumetsu.com online shopping mall, which enables card members to accrue up to 30 times as many Eikyufumetsu Points as if they had used an on-line shopping site directly. The Company also launched Saison CLO, Japan’s first coupon service linked to card settlement.

However, as a result of the cash advance balance falling to 245.0 billion yen (down 8.4% from the end of the previous fiscal year), due to factors including the impact of the revised Money Lending Business Act, overall operating revenue across the Company’s credit service business declined to 189.679 billion yen (down 0.4% year-on-year).

In the Lease Business, joint campaigns with existing lease business partners and an increase in the number of new partner merchants resulted in an expansion in transaction volume to 114.6 billion yen (up 8.9% year-on-year).

Earnings increased in the Finance Business due to close collaboration with partner financial institutions in terms of both sales and management in the credit guarantee sector, where the balance of credit guarantees rose steadily to 230.0 billion yen (up 16.6% from the end of the previous fiscal year). In addition, the expansion in the number of Flat 35 mortgage loan transactions implemented and the Saison Asset Formation Loan program also contributed to increased earnings.

In the Real Estate-related Business, earnings increased as a result of a rise in real estate turnover on the back of a recovery in the real estate market and greater sales activity.

Earnings in the Entertainment Business were down due to a fall in sales amount.

Consequently, operating revenues reached 247.577 billion yen (up 1.3% year-on-year).

During fiscal 2013, the Company saw operating expenses rise to 211.241 billion yen (up 4.5% year-on-year), as a result of an increase in upfront investment costs arising from active promotion of new card issuance, coupled with a rise in the allowance for losses on interest repayment. Consequently, operating income fell to 36.336 billion yen (down 14.1% year-on-year).

Ordinary income declined 16.5% year-on-year to 44.426 billion yen and net income dropped 22.0% from the previous year to 25.569 billion yen.

Net income per share was 139.24 yen.

Results by Business Segment for the Consolidated Fiscal Year

							(Unit: Millions of yen)
	Operating Revenues						Operating Income
	Consolidated FY2012		Consolidated FY2013		% Change		Consolidated FY2012		Consolidated FY2013		% Change
Credit service		190,483		189,679		-0.4%		24,192		14,723		-39.1%
Lease		14,434		14,272		-1.1%		6,147		6,025		-2.0%
Finance		17,327		19,113		10.3%		8,985		10,071		12.1%
Real estate-related		9,807		12,674		29.2%		954		3,898		308.3%
Entertainment		13,597		13,018		-4.3%		2,103		1,612		-23.4%
Total		245,649		248,758		1.3%		42,382		36,330		-14.3%
Adjustment		(1,244)		(1,180)	－			(70)		5	－
Consolidated		244,405		247,577		1.3%		42,312		36,336		-14.1%

*The operating revenues and operating income for each business segment are the figures before adjustment for inter-segment transactions.

Credit Service Business Segment

The businesses in this segment include the Company’s credit card shopping business and servicing (loan collection agency) business. In the credit card sector, the areas in which people use credit cards are expanding year by year, and the shift away from cash in favor of credit card settlement is continuing, with cards increasingly being used for settlement of small amounts, as well as for online shopping. On the other hand, it is anticipated that the business environment will continue to be difficult, given that the contraction in the scale of the cash advance market due to revision of the Money Lending Business Act is compelling companies to transform their business models.

Amid this situation, the Company sought to reinforce its revenue base by expanding cashless settlement services centered on credit cards, as well as enhancing its fee-based business centering on its Internet business, and embarking upon full-scale entry into the retail finance business in Asia. In addition, the Company has sought to improve operational efficiency by such means as strengthening initiatives to deal with credit risk and revising the cost structure to take account of cost-effectiveness.

However, as a result of earnings from cash advances falling in the wake of the revision of the Money Lending Business Act, among other factors, operating revenues declined to 189.679 billion yen (down 0.4% year-on-year) in fiscal 2013, while operating income fell to 14.723 billion yen (down 39.1% year-on-year).

The statuses of the main businesses in this segment are as follows.

(i) Credit Card Shopping Business

In fiscal 2013, the number of new card members rose to 2.53 million (up 0.7% year-on-year), while the total number of card members stood at 24.75 million (down 0.3% from the end of the previous fiscal year) at the end of fiscal 2013. The number of active card members for the year was 14.2 million (up 4.3% year-on-year).

The card shopping transaction volume was 3.8529 trillion yen (up 8.6% year-on-year), while the shopping-related revolving credit balance reached 267.8 billion yen (up 2.9% from the end of the previous fiscal year). On the other hand, the cash advance balance fell to 245.0 billion yen (down 8.4% from the end of the previous fiscal year).

Key Initiatives in the Credit Card Shopping Business During Fiscal 2013

a. Enhancing Cashless Settlement Services Through Credit Cards

The Company seeks to realize a cashless society through initiatives to break the dominance of the cash market, which represents the dominant transaction settlement method for consumer spending in Japan. To this end, the Company is working to develop and provide a variety of cashless settlement methods centered on credit cards.

One of the Company’s priority strategies is to enhance premium cards offering prospects for high utilization and high spending per transaction. Accordingly, we continued to strengthen card member enrollment activities for the Saison American Express® Card series, which features a lineup of four high-status premium cards that can be chosen according to customer lifestyles. One of these enrollment activities involves forming alliances with various kinds of companies that meet the needs of American Express card members. By offering card members service-based perks, the Company and its alliance partners can effectively encourage our respective customers to use each other’s services. Through this approach, the Company strove to expand the number of new card members.

To upgrade the Mitsui Shopping Park Card Saison, which is issued in partnership with Mitsui Fudosan Co., Ltd. and Mitsui Fudosan Retail Management Co., Ltd., the Company established a single points program and integrated services at 32 facilities operated by the Mitsui Fudosan Group nationwide. The Company has stepped up efforts to encourage mutual referral of customers and card use at the Mitsui Fudosan Group’s commercial facilities by extending the scope of the points program and special offers for members to encompass the COREDO Nihonbashi and COREDO Muromachi commercial facilities in central Tokyo, in addition to the LaLaport and Mitsui Outlet Park suburban shopping malls covered by these programs hitherto. At the same time, with a view to bringing in business in the corporate settlement market, the Company has formed an alliance with Concur Japan, Ltd., provider of the Concur cloud-based expense management solution. The Company has sought to promote a shift to cashless settlement in a range of corporate transactions by supporting a substantial decrease in the work involved in expense management, in combination with the introduction of the Company’s own corporate cards.

As well as using web-based channels to step up the enrollment of card members with a high card utilization rate, the Company worked with partner companies to enroll card members and expand sales at partner companies. Initiatives in this area included offering discounts and double points at affiliated retailers, and allowing card members to exchange Eikyufumetsu Points for gift certificates that can be used at affiliated merchants.

The Regional Revitalization Campaign was another initiative to encourage greater card use, in which the Company partnered with department stores, specialty stores, and other retail outlets in such areas as Shibuya, Sendai, Ikebukuro, Yaesu/Nihonbashi, Kyoto, Sapporo, and Tenjin, as well as with other card companies. This campaign featured measures aimed at revitalizing consumption and increasing customer and merchant satisfaction, with the objective of promoting card use and increasing sales for retailers, thereby contributing to the revitalization of the districts concerned.

At the same time, with a view to expanding the areas in which credit card settlement is used, the Company has partnered with the major drugstore chain cocokara fine Inc. to issue the COCOKARA CLUB CARD, Japan’s first prepaid Visa card that can be used at Visa-affiliated merchants within Japan and overseas. As a result of both companies having stepped up card member enrollment, the total number of cards issued since enrollment commenced in April 2013 reached 3.07 million. As well as functioning as a loyalty card that allows card members to accumulate bonus points at the company’s stores, it can be used for shopping at Visa-affiliated merchants worldwide, up to the amount loaded onto the card in advance. This offers a new, more convenient means of shopping at drugstores, where cash has tended to be the main form of payment until now.

The Company has also introduced the Coiney smartphone settlement service offered by Coiney, Inc. The Company began soliciting affiliated merchants in April 2013 and acquired a stake in Coiney, Inc. that August, thereby strengthening joint business development by the two companies. The Company is striving to speed up efforts to diversify card usage situations that make effective use of the unique functionality of smartphones, as well as aiming to further expand the credit card settlement market.

Going forward, in addition to the Company’s existing range of credit cards, the Company will aim to establish other sources of earnings in the cashless settlement market by enhancing prepaid services and other new settlement services.

b. Enhancing Fee-based Business via the Internet

In order to revitalize consumer spending through the provision of online shopping and other user-friendly Internet services, the Company is seeking to increase the number of Internet members, who form the basis of the Company’s Internet business. The total number of Internet members stood at 9.95 million at the end of fiscal 2013 (up 16.3% from the end of the previous fiscal year).

The Eikyufumetsu.com online shopping mall enables card members to accrue up to 30 times as many Eikyufumetsu Points as if they had used an online shopping site directly. With the service entering its 7th year of operation, the Company positioned fiscal 2013 as the second establishment period of Eikyufumetsu.com. As well as increasing convenience by augmenting the product search function and releasing the Eikyufumetsu.com Points Declaration, which freed card members from the requirement to use Eikyufumetsu.com to access online shopping sites, the Company strove to increase transaction volumes by bolstering communications with customers, including sending e-mails to users of the site.

With a view to developing an Internet business following on from Eikyufumetsu.com, the Company is steadily increasing its range of services through such initiatives as the launch of Saison CLO, Japan’s first coupon service linked to card settlement. In addition, the Company has worked with VALUES, Inc. on the joint development of eMark+Lite, a research tool that analyzes the online activity history of Internet users. The goal of this is to provide a solution that will enable companies to identify ways of increasing traffic to their sites.

In the rapidly changing Internet business sector, the Company will continue to move nimbly to form partnerships with both major Internet companies that have outstanding content and platforms, and start-ups that have new technologies. Through these partnerships, the Company will build a business model that will generate earnings from a range of online services.

c. Credit Risk Management

The Company continues to accumulate healthy receivables by taking steps to recover overdue receivables swiftly and continuing to ensure payment of receivables through credit counseling. Another approach the Company employs is to encourage customers to make advance deposits into their remitting accounts by no later than the payment deadline, in order to prevent receivables from becoming overdue. The Company carries out a range of measures during initial and intermediate credit checks, with the goal of providing appropriate credit that takes various environments into account. Through these measures, the Company aims to achieve further growth in high-quality receivables.

Consequently, the Company is making steady progress in improving the state of its receivables. It will continue to implement thorough credit control that achieves a balance between revenue and risk, by strengthening its credit and debt recovery systems to take account of various changes in the environment.

d. Full-scale Entry into Retail Finance in Asia

In April 2013, the Company established a consulting company in Hanoi, Vietnam. In doing so, it aims to support local companies in developing the retail finance business, by offering them the know-how that it has cultivated within Japan in such fields as credit cards, installment purchases, and loans. The Company’s ultimate objective is to embark upon full-scale entry into the retail finance business in the fast-growing Asian region. As well as seeking to commercialize its support services for the retail finance business, the Company will cultivate its expertise to ensure that it meets market needs in the Asian region.

In December 2013, the Company began participating in the Global Payment Fund. This investment fund is the first of its kind in Japan and is dedicated to payment ventures. It was established jointly by online payment processing company GMO Payment Gateway, Inc. and venture capital/incubation company GMO VenturePartners, Inc., which are both part of the GMO Internet Group. The Company is seeking to expand its local network by gaining a toehold in the payments field, which is developing rapidly amid the remarkable growth being seen in fast-growing Southeast Asia.

Going forward, the Company will continue to lay the foundations of its medium- to long-term overseas strategy, with a view to expanding into non-bank fields in Indonesia and Singapore, among other countries.

e. New Developments and Future Initiatives

In December 2013, the Company began field trials of an O2O (Online to Offline) platform linked to an NTT DoCoMo, Inc. app that offers points for visiting shops. After downloading the app onto their smartphones, users earn points just by visiting participating stores. The points accumulated can then be exchanged for gift vouchers and other special offers. At the same time, participating stores can identify the attributes of those visiting the store and send out store information and coupons tailored to customer attributes.

In this O2O field trial, the Company is examining purchasing trends among users after they visit each store, and will use this information in the full-scale development of an O2O customer referral service aimed at card members.

(ii) Servicing (Loan Collection Agency) Business

The Company’s subsidiary JPN Holdings Co., Ltd. is mainly involved in contract-based servicing of small, unsecured loans. New sales contracts rose, after it sought to expand its business in the fields of factoring, agency services concerning auto loan receivables, and services for government ministries and agencies. However, with non-bank companies – its main clientele – improving the soundness of their receivables and bringing receivables management in-house, the number of contracts from existing clients fell, resulting in reduced earnings throughout this business.

Lease Business Segment

According to statistics released by the Japan Leasing Association, the total value of contracts for the leasing industry as a whole in fiscal 2013 was 5.2971 trillion yen (up 8.3% year-on-year).

During the same period, the Company’s contracts totaled 114.6 billion yen (up 8.9% year-on-year). The main factors behind this were joint campaigns with existing lease business partners and an increase in the number of new partner merchants, coupled with efforts to expand marketing channels for LED lighting and other energy-saving products in the rental business. Operating revenues declined to 14.272 billion yen (down 1.1% year-on-year) and operating income fell to 6.025 billion yen (down 2.0% year-on-year).

Finance Business Segment

This segment is composed of the Company’s credit guarantee business and its finance-related business. On the credit guarantee business side, both the value of guarantees executed and the guarantee balance increased, due to strengthened collaboration with partner financial institutions. In the finance-related business side, the Company’s Flat 35 long-term fixed-rate mortgage loans (the receivables of which are acquired and securitized by the Japan Housing Finance Agency) contributed to earnings. As a result, operating revenues for fiscal 2013 increased to 19.113 billion yen (up 10.3% year-on-year), while operating income rose to 10.071 billion yen (up 12.1% year-on-year).

The statuses of the main businesses in this segment are as follows.

(i) Credit Guarantee Business

The Company focused on securing high-quality transactions through close collaboration with partner financial institutions in terms of both sales and management, particularly in the area of guarantee business for unsecured free loans on deed approach to individual customers.

The Company sought to build a finely-tuned partnership framework with regional financial institutions through free-loan guaranteed products for which the loan purposes were expanded to include business finance. As a result, the Company formed new partnerships with 26 regional financial institutions in fiscal 2013, bringing the total number of partner institutions to 368 (up 20 from the end of the previous fiscal year), and the guarantee balance (before deduction of the allowance for loss on guarantees) rose to 230.0 billion yen (up 16.6% from the end of the previous fiscal year).

(ii) Other Finance Related Business

The Company has been handling Flat 35 loans since March 2009. The market has reacted favorably to the Company’s continuing provision of 100% financing for the purchase price of a house via the combined use of the Flat 35 Plus scheme (a combined loan product for the 10% of customers not covered by the Flat 35 loan system), its perks for card members, and the trust and sense of security toward the Company that have developed through its credit card business. As a result, the number of transactions reached 2,692 (up 52.6% year-on-year), with a value totaling 75.9 billion yen (up 57.6% year-on-year), while the loan balance (balance after transfer of receivables to the Japan Housing Finance Agency) rose to 218.6 billion yen (up 42.5% from the end of the previous fiscal year).

In January 2013, the Company began offering the Saison Asset Formation Loan. Through collaboration with the Company’s business partners, the number of transactions during fiscal 2013 reached 1,214, with a value totaling 27.8 billion yen, while the loan balance stood at 31.9 billion yen.

The balance of receivables in the Company’s other finance-related business reached 105.4 billion yen (up 48.8% from the end of the previous fiscal year) at the end of consolidated fiscal 2013.

Real Estate-related Business Segment

This segment consists of the real estate business, the real estate leasing business and other businesses. Due to the recovery in the real estate market and greater sales activity, operating revenues for consolidated fiscal 2013 increased to 12.674 billion yen (up 29.2% year-on-year), while operating income rose to 3.898 billion yen (up 308.3% year-on-year).

Entertainment Business Segment

This segment consists of the amusement business and other operations. The Company is striving to create sound, safe and comfortable amusement facilities that have the backing of their communities. Operating revenues for fiscal 2013 fell to 13.018 billion yen (down 4.3% year-on-year), while operating income declined to 1.612 billion yen (down 23.4% year-on-year).

(2) Capital Expenditure

The Company made capital expenditure on the development of shared core systems, as well as investments in systems for the expansion of Internet service functions for card members.

(3) Fund Procurement

The Bank of Japan’s aggressive fiscal easing measures increased the loan capacity of financial institutions. The fund procurement environment for companies continued to be favorable, and market interest rates remained low.

Under these conditions, in order to prepare for fluctuations in financial markets, the Company drew down loans and issued bonds with even longer repayment and redemption terms and continued its commitment lines with financial institutions. The Company will continue to procure funds with an emphasis on stability.

(4) Issues to be Addressed

Economic conditions facing the group continue to be challenging, including changes in the Company’s earnings structure in the card business from the effects of legal regulation such as the revised Money Lending Business Act, as well as the intensification of competition in the settlement business due to new entry by entrants from outside their industries into fields for credit cards and electronic money, prepaid cards, and joint point services.

Under these conditions the Company aims to become a non-bank company that can adapt to changes, through activities that will lay the foundations for sustainable growth, such as providing a wide variety of settlement services including credit card settlement, strengthening non-bank businesses such as leasing and financing, expanding fee-based business through our Internet business, and embarking upon full-scale entry into Asia.

We will work to secure new sources of revenue by promoting initiatives targeting all types of settlement services to enhance our sales to corporate customers, while maintaining our business model taking advantage of our traditional ability to expand our customer base of individual card members through our superior expertise in acquiring new card members.

The Company will work to maximize our corporate value through the pursuit of collaborative management that serves to grow sales for our partner-companies through multifaceted business fields for a wide range of customers comprising companies and individuals, both in and out of Japan.

As of the end of fiscal 2013, the Group’s issues to be addressed and various initiatives are as follows.

(i) Expanding cashless settlement services centered on credit cards

The Company and the Credit Saison Group, including joint ventures, will expand their customer base by exercising their respective strengths in such areas as the acquisition of new members, processing services, and credit and collection operations. To enhance card perks, create services popular with customers, and increase our market share we are also forming service alliances with successful companies, irrespective of capital affiliation and company scale.

In order to increase our share in the market for the settlement of corporate business transactions, we are promoting a shift toward cashless settlement in various corporate business transactions, by supporting a drastic reduction in the workload of expense management for companies and individual business owners through settlement with our corporate and other cards, in partnership with companies that provide solution tools for corporations.

At the same time, we will continue to undertake initiatives aiming to become the number one company in the cashless settlement market by introducing measures to realize a cashless society via multifaceted initiatives such as encouraging the use of credit cards, issuing prepaid cards, providing smartphone settlement services, settlement agency functions, and points business.

(ii) Enhancing fee-based business centering on Internet business

As initiatives for the Internet market, that is expected to continue to grow significantly, we will work to increase usage of the points site Eikyufumetsu.com and develop new Internet services such as the coupon service Saison Clo by further growing our Internet members and forming flexible partnerships with both major Internet companies and start-ups that have new technologies. In this way, the Company will build a fee business that will generate earnings from a range of online services.

Additionally, by using our customer base comprising 25 million card members and 10 million Internet members, we will work to build new advertising and marketing business taking advantage of various data such as customer attributes, card use history, and online activity history.

(iii) Promoting non-bank business, including the lease and finance businesses

In addition to credit card business, we will also promote a broad range of non-bank business, such as lease and rental providing office automation equipment and LED lighting matching the capital expenditure plans of business operators, partnering with local financial institutions for guarantee business for unsecured free loans on deed approach to individual customers, Flat 35 loans with special benefits for card members, and Saison Asset Formation Loans to support the purchase of condominiums for investment purposes, to realize diversity in our revenue sources, and undertake initiatives to structure the Company’s business so that it is resilient to changes in legal regulations and market conditions.

(iv) Full-scale entry into retail finance in Asia

In Vietnam and other fast growing countries in Asia we are implementing business plans taking advantage of our know-how that we have built up in Japan in such fields as credit card business, installment purchases, and loan business, tailored to the needs of markets in Asia, and we will aim to commercialize our retail finance business as soon as possible.

We will also expand our local networks and business fields through partnerships with leading Japanese companies and local companies, and lay the foundations of our medium- to long-term overseas strategy with a view to expanding into non-bank fields in Indonesia and Singapore, among other countries.

(v) Strengthening the credit risk management system and developing leaner business operations

While on the one hand appropriating resources to measures to prevent persons from accumulating too many debts, we will improve our operation structure from the initial screening through collection on an ongoing basis, target enhancement of an effective and efficient credit and recovery system, and flexibly revise our credit check standards in response to changes in the market environment. Through these measures, the Company will continuously strive to ensure the soundness of its receivables.

Additionally, by improving the efficiency of services through the use of IT and implementing measures taking into account the balance between cost and effectiveness, we will aim to develop a leaner business structure.

(vi) Enhancing and bolstering corporate governance

We recognize that, along with the achievement of business objectives, the reinforcement of corporate governance is vital for obtaining the understanding and support of all our stakeholders - our customers, business partners, employees, as well as shareholders. The Company is developing internal control systems and compliance systems to increase management transparency and strengthen management supervisory functions.

The Company will continue to undertake initiatives for compliance and implementation of all laws, regulations, and rules, including those laws and regulations directly connected to the group’s business, company-wide measures for the appropriate management of personal information, and measures to ensure the security and stability, as well as efficiency, of systems enabling customers to use credit cards with peace of mind.

Going forward we will continue to expand information sharing among group companies and strengthen our group management systems, and progress with enhancement of a governance system that aims to contribute to the improvement of consolidated corporate value.

2. Assets and Liabilities

Category	61st Term (April 2010- March 2011)		62nd Term (April 2011- March 2012)		63rd Term (April 2012- March 2013)		64th Term (Fiscal 2013) (April 2013- March 2014)
Operating revenues (millions of yen)		285,712		244,009		244,405		247,577
Ordinary income (millions of yen)		33,762		38,590		53,214		44,426
Net income (millions of yen)		12,829		9,453		32,770		25,569
Net income per share (yen)		69.86		51.48		178.45		139.24
Total assets (millions of yen)		2,231,246		2,155,906		2,141,802		2,286,099
Net assets (millions of yen)		347,915		355,727		394,868		422,986

3. Major Subsidiaries

Company Name	Capital (millions of yen)		Voting Rights Ratio (%)		Main Business
Tokutei Mokuteki Kaisha MAPJ		4,680		* 100.0	Real estate business
SAISON FUNDEX CORPORATION		4,500		100.0	Money lending business
Concerto Inc.		2,216		* 100.0	Amusement business management, membership club management, and real estate lease business
JPN COLLECTION SERVICE CO., LTD.		1,053		* 100.0	Servicing (receivables collection agency)
JPN Holdings Co., Ltd.		1,000		71.4	Pure holding company
Atrium Servicing Co., Ltd.		500		* 100.0	Real estate business
Qubitous Co., Ltd.		100		51.0	Credit card business
Humanplus Company Limited		82		* 100.0	Personnel dispatch business
Atrium Co., Ltd.		50		* 100.0	Real estate business and real estate lease business
Atrium Realty Co., Ltd.		25		100.0	Real estate business and real estate lease business
Hayabusa Trust Co., Ltd.		10		* 100.0	Real estate business
K.K. Kindernursery		10		* 100.0	Childcare business
AIC Co., Ltd.		3		* 100.0	Real estate business and real estate lease business
Y.K. Grande Trust Nine		3		* 100.0	Real estate business
Y.K. AW3		3		* 100.0	Real estate business
Y.K. PAMJ		3		* 100.0	Real estate business
G.K. ARS		0		* 100.0	Real estate business
T.K. partnership in which Y.K. Value Balance is the proprietor	－			* 100.0	Real estate business and real estate lease business

(Notes)

The asterisk symbol (*) in the voting rights ratio column includes voting rights indirectly held by subsidiaries.

At the meeting of the Board of Directors held on February 29, 2012, the Company further divided the businesses of Atrium Co., Ltd. that would be continued and those that would be withdrawn from. On that basis, the Company passed a resolution with respect to the real estate held by Atrium Co., Ltd. for commercial purposes to carry out broad revision of the real estate redevelopment policy and reclassify the real estate portfolio through the company split.

Pursuant to the aforementioned policy, the Company newly established a preparatory company as a wholly owned subsidiary in April 2012 and we succeeded to the short-term turnover type real estate liquidation business for the small and medium size properties and businesses centering on the special servicing business from Atrium Co., Ltd as of September 1, 2012 by means of an absorption-type merger.

Please note that the trade name of the preparatory company was changed to Atrium Co., Ltd. as of the same date.

At the same time, the real estate business classified as being withdrawn from, which mainly consisted of offices, commercial properties, or large-sized development projects, were left where they were, and the company which had the trade name Atrium Co., Ltd. until that point changed its trade name to Atrium Realty Co., Ltd. as of September 1, 2012. Atrium Realty Co., Ltd. will redevelop and sell, etc. such real estate with the investment and cooperation of major real estate companies, and Atrium Realty Co., Ltd. will ultimately be wound up.

4. Content of Main Business (as of March 31, 2014)

(1)	Credit service business:	Including credit card shopping business and servicing (loan collection agency) business
(2)	Lease business:	Lease business
(3)	Finance business:	Credit guarantee business and other finance-related business
(4)	Real estate-related business:	Including real estate business and real estate lease business
(5)	Entertainment business:	Amusement business and other businesses

5. Main Offices (as of March 31, 2014)

(1) The Company’s main offices

	Name	Location		Name	Location
1	Hokkaido Branch	Chuo-ku, Sapporo City	8	Kansai Branch	Chuo-ku, Osaka City
2	Tohoku Branch	Aoba-ku, Sendai City	9	Chushikoku Branch	Chuo-ku, Hiroshima City
3	Kitakanto Branch	Omiya-ku, Saitama City	10	Kyushu Branch	Hakata-ku, Fukuoka
4	Higashikanto Branch	Funabashi City	11	Receivables Management Center	Bunkyo-ku, Tokyo
5	Tokyo Branch	Bunkyo-ku, Tokyo	12	Credit Management Center	Toshima-ku, Tokyo
6	Kanagawa Branch	Nishi-ku, Yokohama City	13	Consulting Center	Chuo-ku, Osaka City
7	Tokai Branch	Nakamura-ku, Nagoya City	13	Consulting Center	Chuo-ku, Osaka City

(2) Offices of subsidiaries

	Name	Head Office	Main Offices and Shops, etc.
1	Tokutei Mokuteki Kaisha MAPJ	Minato-ku, Tokyo	－
2	SAISON FUNDEX CORPORATION	Toshima-ku, Tokyo	Sales Department (Osaka)
3	Concerto Inc.	Toshima-ku, Tokyo	Amusement facilities (Aomori: 1; Miyagi: 1; Tochigi: 3; Saitama: 5; Chiba: 2; Tokyo: 6; Niigata: 4) Membership clubs (Tokyo: 1) Lease properties (Chiba: 2; Tokyo: 3; Kanagawa: 3; Niigata: 1)
4	JPN COLLECTION SERVICE CO., LTD.	Toshima-ku, Tokyo	Centers (Hokkaido, Tokyo, Niigata, and Osaka)
5	JPN Holdings Co., Ltd.	Toshima-ku, Tokyo	－
6	Atrium Servicing Co., Ltd.	Chiyoda-ku, Tokyo	－
7	Qubitous Co., Ltd.	Toshima-ku, Tokyo	Credit centers (Tokyo and Osaka)
8	Humanplus Company Limited	Toshima-ku, Tokyo	Centers (Tokyo, Niigata, and Osaka)
9	Atrium Co., Ltd.	Chiyoda-ku, Tokyo	Branches and offices (Miyagi, Aichi, Osaka, and Fukuoka)
10	Atrium Realty Co., Ltd.	Chiyoda-ku, Tokyo	Branches and offices (Fukuoka)

11	Hayabusa Trust Co., Ltd.	Chiyoda-ku, Tokyo	－
12	K.K. Kindernursery	Toshima-ku, Tokyo	Childcare facilities (Chiba: 2; Tokyo: 2; Kanagawa: 8)
13	AIC Co., Ltd.	Chiyoda-ku, Tokyo	－
14	Y.K. Grande Trust Nine	Chiyoda-ku, Tokyo	－
15	Y.K. AW3	Chiyoda-ku, Tokyo	－
16	Y.K. PAMJ	Machida City, Tokyo	－
17	G.K. ARS	Chiyoda-ku, Tokyo	－
18	T.K. partnership in which Y.K. Value Balance is the proprietor	Chiyoda-ku, Tokyo	－

6. Employees (as of March 31, 2014)

(1)

Credit Saison Group employees

Segment	Number of Employees		Change Since End of Fiscal 2012
Credit service business		2,669		(8)
Lease business		167		15
Finance business		158		19
Real estate-related business		259		(11)
Entertainment business		290		(17)
For the whole company (common)		146		2
Total		3,689	－

(Note)

The group employs contract employees, part-time employees, and casual employees in addition to the above employees. The average number of such employees during the term was 5,210 (calculated at a rate of 7.75 hours per day).

(2)

The Company’s employees

Gender	Number of Employees		Change Since the End of Fiscal 2012		Average Age (years)		Average Continuous Years of Employment (years)
Male		612		32		38.6		12.2
Female		1,395		37		35.1		10.1
Total or average		2,007		69		36.1		10.7

(Note)

The group employs contract employees, part-time employees, and casual employees in addition to the above employees. The average number of such employees during the term was 1,457 (calculated at a rate of 7.75 hours per day).

7. The Company’s Principal Lenders (as of March 31, 2014)

Lender	Balance of Borrowing (million yen)
Mizuho Bank, Ltd.		141,009
The Bank of Tokyo-Mitsubishi UFJ, Ltd.		84,170
Sumitomo Mitsui Banking Corporation		74,280
Sumitomo Mitsui Trust Bank, Limited		51,970
Mitsubishi UFJ Trust and Banking Corporation		47,100

II. Current Status of the Company

1. Shares (as of March 31, 2014)

(1)	Total number of authorized shares	300,000,000

(2)	Total number of issued and outstanding shares	185,444,772

(3)	Number of shareholders	13,150

(4)	Major shareholders (top 10)

Name	Number of Shares (thousand)		Ownership Percentage (%)
Mizuho Bank Ltd.		24,768		13.49
The Master Trust Bank of Japan Ltd. (trust account)		20,598		11.22
Japan Trustee Service Bank Ltd. (trust account)		11,307		6.16
STATE STREET BANK AND TRUST COMPANY		8,162		4.45
BNP Paribas Securities (Japan) Limited		3,500		1.91
THE CHASE MANHATTAN BANK 385036		3,078		1.68
THE BANK OF NEW YORK MELLON SA/NV 10		2,976		1.62
STATE STREET BANK AND TRUST COMPANY 505017		2,630		1.43
Trust & Custody Services Bank, Ltd. (Security Invest Trust Account)		2,596		1.41
THE CHASE MANHATTAN BANK, N.A. LONDON SECS LENDING OMNIBUS ACCOUNT		2,242		1.22

(Note) The ownership percentage is calculated based on the number of shares outstanding excluding treasury shares (1,735,974 shares)

2. The Company’s Officers

(1) Directors and statutory auditors (as of March 31, 2014)

Position	Name	Area of Responsibility	Principal Concurrent Duties
President and CEO	Hiroshi Rinno	Head of Audit Office and Credit Card Division	－
Representative, Executive Vice President	Teruyuki Maekawa	Head of Public Relations Office, General Affairs Dept., Strategic Human Resources Dept., and System Planning Dept.	Director, Chairman of Atrium Co., Ltd. Director, Chairman of Atrium Realty Co., Ltd. Director of Qubitous Co., Ltd. Director of Shizugin Saison Card Co., Ltd.
Representative, Senior Managing Director	Naoki Takahashi	Head of Corporate Planning Dept., Internet Business Division and Overseas Business Division	－
Managing Director	Haruhisa Kaneko	Head of Compliance Dept. and Credit Division. General Manager, Credit Division	－
Managing Director	Hiroshi Yamamoto	Head of Customer Satisfaction Promotion Office, Finance Division. Responsible for the Commercial Payment Promotion Dept. and Mizuho-Alliance Development Dept.	Director of Atrium Co., Ltd. Director of Atrium Realty Co., Ltd.
Managing Director	Masahiro Yamashita	Head of Sales Development Division. Responsible for the Amex Promotion Dept. Alliance Development Dept.	Director of IDEMITSU CREDIT CO., Ltd. Director of UC Card Co., Ltd.
Managing Director	Junji Kakusho	General Manager, Credit Card Division. Responsible for the Internet Business Division	－
Director	Kazuhiro Hirase	General Manager, Sales Development Division	－
Director	Sadamu Shimizu	General Manager, Finance Division. Responsible for the Processing Business Dept. and Retail Business Dept.	Vice President and Representative Director of Daiwa House Financial Co., Ltd.
Director	Akihiro Matsuda	Responsible for the Overseas Management Dept.	－
Director	Teruhisa Aoyama	Head of Treasury & Account Dept. Responsible for the Corporate Planning Dept.	Audit & Supervisory Board Member of Atrium Co., Ltd. Audit & Supervisory Board Member of Atrium Realty Co., Ltd. Audit & Supervisory Board Member of Shizugin Saison Card Co., Ltd. Audit & Supervisory Board Member of Seven CS Card Service Co., Ltd.
Director	Yoshihisa Yamamoto	Responsible for the System Planning Dept.	－

Director	Tatsunari Okamoto	Responsible for the Affinity Business Dept., Web Branch, Card Finance Dept.	－
Director	Katsumi Mizuno	Responsible for the Business Planning Dept. General Manager, Overseas Business Division	－

Position	Name	Area of Responsibility	Principal Concurrent Duties
Director	Yasuhisa Ueno	－	Adviser of Takashimaya Company, Limited Director and Chairman, Takashimaya Singapore Ltd. Chairman, Shanghai Takashimaya Co., Ltd.
Standing Audit & Supervisory Board Member	Yoshitaka Murakami	－	Audit & Supervisory Board Member of Qubitous Co., Ltd. Audit & Supervisory Board Member of SAISON FUNDEX CORPORATION
Standing Audit & Supervisory Board Member	Masaru Sakurai	－	Audit & Supervisory Board Member of Concerto Inc. Audit & Supervisory Board Member of JPN Holdings Co., Ltd. Audit & Supervisory Board Member of JPN COLLECTION SERVICE CO., LTD.
Audit & Supervisory Board Member	Yoshirou Yamamoto	－	Director of Yasuda Real Estate Co., Ltd. Audit & Supervisory Board Member of SEIKO EPSON CORPORATION
Audit & Supervisory Board Member	Atsushi Toki	－	Audit & Supervisory Board Member of Maruyama Mfg. Co., Inc. Audit & Supervisory Board Member of MIDORI ANZEN CO., LTD. Audit & Supervisory Board Member of NIPPON STEEL & SUMIKIN TEXENG. CO., LTD.

(Notes)

Changes in directors in fiscal 2013

(1)

Takayoshi Yamaji, Managing Director, resigned as of May 29, 2013.

(2)

Katsumi Mizuno was newly appointed and assumed office at the 63rd Ordinary General Meeting of Shareholders on June 26, 2013.

Changes in directors after the end of fiscal 2013 (position, area of responsibility, and concurrent duties)

Position	Name	Area of Responsibility and Concurrent Duties	As of
Managing Director	Masahiro Yamashita	Assumed office as Director of Takashimaya Credit Co., Ltd.	May 27, 2014
Director	Teruhisa Aoyama	Assumed office as Audit & Supervisory Board Member of Takashimaya Credit Co., Ltd.	May 27, 2014

Yasuhisa Ueno, Director, is an outside director as provided in Article 2, item (xv) of the Companies Act.

Audit & Supervisory Board Members Yoshitaka Murakami, Masaru Sakurai, and Atsushi Toki are outside statutory auditors provided in Article 2, item (xvi) and Article 335, paragraph (3) of the Companies Act.

A notice has been filed with the Tokyo Stock Exchange for Audit & Supervisory Board Members Yoshitaka Murakami, Masaru Sakurai, and Atsushi Toki designating them as independent officers who do not pose a risk of a conflict of interest with ordinary shareholders, as required by the Tokyo Stock Exchange.

(2) Remuneration for directors and Audit & Supervisory Board members in fiscal 2013

Position	Number of People			Amount of Remuneration, etc. (million yen)
Directors		16			502
(number of outside directors included)		(1	)		(8	)
Statutory auditors		4			42
(number of outside statutory auditors included)		(3	)		(34	)
Total		20			544

(Notes)

Remuneration paid to employees who hold concurrent positions as directors is not included in the above figures.

Officer bonuses of 120 million yen (directors: 120 million yen) are not included in the above figures.

At the 57th Ordinary General Meeting of Shareholders held on June 23, 2007, it was resolved that the maximum annual remuneration for directors shall not exceed 750 million yen (with the amount for outside directors not to exceed 50 million yen) and the maximum annual remuneration for statutory auditors shall not exceed 150 million yen (however, remuneration paid to employees who hold concurrent positions as directors is not included in such amounts).

In addition to the foregoing, outside officers serving concurrently as officers at subsidiaries receive a total of 1 million yen in remuneration from those subsidiaries.

There were 15 directors and 4 Audit & Supervisory Board members as of the end of fiscal 2013.

(3) Outside directors and outside statutory auditors

(i) Material concurrent positions held by outside directors and outside statutory auditors

Position	Name	Company, etc. Where Concurrent Position is Held	Details of Position	Relationship with the Company
Outside Director	Yasuhisa Ueno	Takashimaya Company, Limited	Adviser	The Company issues credit cards for customers of Takashimaya Company, Limited and holds a stake in its subsidiary, Takashimaya Credit Co., Ltd., with 33.4% of the voting rights.
		Takashimaya Singapore Ltd.	Chairman and Director	There is no relationship in particular between Takashimaya Singapore Ltd. and the Company.
		Shanghai Takashimaya Co., Ltd.	Chairman	There is no relationship in particular between Shanghai Takashimaya Co., Ltd. and the Company.
Outside Statutory Auditor	Yoshitaka Murakami	Qubitous Co., Ltd.	Outside Statutory Auditor	Qubitous Co., Ltd. is a subsidiary of the Company and carries out business in the same category as the Company.
Outside Statutory Auditor	Yoshitaka Murakami	SAISON FUNDEX CORPORATION	Outside Statutory Auditor	SAISON FUNDEX CORPORATION is a subsidiary of the Company and carries out business in the same category as the Company.
Outside Statutory Auditor	Masaru Sakurai	Concerto Inc.	Outside Statutory Auditor	Concerto Inc. is a subsidiary of the Company.
		JPN Holdings Co., Ltd.	Outside Statutory Auditor	JPN Holdings Co., Ltd. is a subsidiary of the Company and carries out business in the same category as the Company.
		JPN COLLECTION SERVICE CO., LTD.	Outside Statutory Auditor	JPN COLLECTION SERVICE CO., LTD. is a subsidiary of the Company and carries out business in the same category as the Company.
Outside Statutory Auditor	Atsushi Toki	Maruyama Mfg. Co., Inc.	Outside Statutory Auditor	There is no relationship in particular between Maruyama Mfg. Co., Inc. and the Company.
		MIDORI ANZEN CO., LTD.	Outside Statutory Auditor	There is no relationship in particular between MIDORI ANZEN CO., LTD. and the Company.
		NIPPON STEEL & SUMIKIN TEXENG. CO., LTD.	Outside Statutory Auditor	There is no relationship in particular between NIPPON STEEL & SUMIKIN TEXENG. CO., LTD. and the Company.

(ii) Principal activities of outside directors and outside statutory auditors

Position	Name	Principal Activities
Outside Director	Yasuhisa Ueno	Attended 16 out of 18 meetings of the Board of Directors in fiscal 2013. Mr. Ueno has been successful as manager in the retail industry for many years, is highly experienced and very knowledgeable, and has provided timely and appropriate advice and proposals with respect to management of the Company from the perspective of the retail industry.
Outside Statutory Auditor	Yoshitaka Murakami	Attended all 18 meetings of the Board of Directors and all 14 meetings of the Audit & Supervisory Board in fiscal 2013. Mr. Murakami gave his opinion based on his great experience and deep knowledge of accounting and finance, and gave advice and made proposals to ensure the appropriateness and suitability of all decisions.
Outside Statutory Auditor	Masaru Sakurai	Attended all 18 meetings of the Board of Directors and all 14 meetings of the Audit & Supervisory Board in fiscal 2013. Mr. Sakurai gave his opinion based on his great experience and deep knowledge of government administration, and gave advice and made proposals to ensure the appropriateness and suitability of all decisions.
Outside Statutory Auditor	Atsushi Toki	Attended 13 of the 18 meetings of the Board of Directors and 11 of the 14 meetings of the Audit & Supervisory Board in fiscal 2013. Mr. Toki principally gave his opinion from the perspective of his legal expertise, and gave advice and made proposals to ensure the appropriateness and suitability of all decisions.

(iii) Outline of limitation of liability agreements

The Company’s current Articles of Incorporation provide that, under Article 427 of the Companies Act, the Company can enter into an agreement limiting the liability to the Company for damages with its outside directors. On this basis, the Company has entered into limitation of liability agreements with its outside director Yasuhisa Ueno, and its outside statutory auditors Yoshitaka Murakami, Masaru Sakurai, Yoshirou Yamamoto, and Atsushi Toki, pursuant to Article 29 and Article 37 of the Company’s Articles of Incorporation.

The outline of the content thereof is as follows.

・

The amount of liability for damage to the Company due to an act provided in Article 423, paragraph (1) of the Companies Act will be limited to the statutory maximum, as long as the act was without knowledge and there was no gross negligence on the part of the director, with respect to his duties.

3. Independent Auditor

(1)

Name of independent auditor

Deloitte Touche Tohmatsu LLC

(2)

Amount of Remuneration, etc.

		Amount of Remuneration, etc.
(i)	Amount of remuneration, etc. for services provided in Article 2, paragraph (1) of the Certified Public Accountants Act (auditing and attesting services)	103 million yen
(ii)	Total amount of money and other financial benefits payable by the Company and its subsidiaries	228 million yen

(Notes)

Since no distinction is made between remuneration for audit services rendered pursuant to the Companies Act and for audit services rendered pursuant to the Financial Instruments and Exchange Act under the audit agreement between the Company and the independent auditor, the amount in (i) above also includes remuneration, etc. for audit services under the Financial Instruments and Exchange Act.

Of the Company’s major subsidiaries, Tokutei Mokuteki Kaisha MAPJ is audited by a different independent auditor.

(3)

Description of Non-auditing Services

In addition to services under Article 2, paragraph (1) of the Certified Public Accountants Act, the Company paid the independent auditor consideration for the preparation of comfort letters in connection with the issuance of corporate bonds.

(4)

Policy on Dismissal and Non-reappointment of Independent Auditor

The Audit and Supervisory Board will dismiss the independent auditor if it determines the independent auditor to have fallen under each item of Article 340, paragraph (1) of the Companies Act. When the Board of Directors determines it necessary, the Board of Directors may, upon obtaining the consent of the Audit and Supervisory Board or pursuant to a request by the Audit and Supervisory Board, make the dismissal or non-reappointment of the independent auditor an agenda item at a general meeting of shareholders.

4. System to Ensure the Appropriateness of Business Activities

The following resolutions have been passed with respect to systems to ensure that directors execute their duties in compliance with laws, regulations, and the Articles of Incorporation, and to ensure other business operations of the Company as a stock company are performed appropriately.

Purpose

The basic policy of the company is to create an internal control system to be implemented by the directors that explicitly sets forth the basic policies to be followed by directors, pursuant to Article 362, paragraph (5) of the Companies Act, and provide the general principles with respect to each of the terms and conditions required to maintain such system, provided in Article 100 of the Ordinance for Enforcement of the Companies Act.

The creation of an internal control system pursuant to the basic policy should be carried out as soon as possible and the Company shall aim to improve such internal control system through constant revision. In this way we will aim to maintain a corporate structure that is efficient and complies with the law.

(1)

System to ensure that directors execute their duties in accordance with laws, regulations, and the Articles of Incorporation

(Article 362, paragraph (4), item (vi) of the Companies Act)

In order for the overall business operations of the Company to be performed appropriately and soundly, with the goal of further enhancing corporate governance, the Board of Directors shall strive to create a viable internal control system and establish a compliance system to ensure company-wide compliance with laws, regulations, and the Articles of Incorporation. The Audit and Supervisory Board shall audit the effectiveness and functioning of such internal control system, and strive to ensure the early detection of problems and the improvement of accuracy.

(2)

System for the retention and management of information regarding performance of the duties of directors

(Article 100, paragraph (1), item (i) of the Ordinance for Enforcement of the Companies Act)

(i)

Information with respect to the performance of directors’ duties (such as minutes of meetings of the Board of Directors, documents requesting approval, and documents granting approval) shall be set forth in documents, and retained and managed pursuant to the Company’s Document Management Regulations and other internal regulations.

(ii)

The Company shall implement a system to ensure that any director or statutory auditor may promptly view the aforementioned information if they ask to do so.

(3)

Regulations or other systems concerning the management of risk of loss

(Article 100, paragraph (1), item (ii) of the Ordinance for Enforcement of the Companies Act)

(i)

The Company shall manage risk by setting forth Risk Management Regulations and Regulations Concerning Management of Risk of Loss. The Company shall also perform comprehensive management of risks through the Risk Management Committee and the Corporate Risk Management Office of the Corporate Planning Department, and work to prevent risks from materializing and minimize the effect on the Company when risks become apparent. Moreover, when it is clear that risks requiring action have materialized or are likely to materialize, the Company shall work to respond rapidly and restore corporate functions as soon as possible, pursuant to the Risk Management Regulations.

(ii)

To this end, the Company shall conduct periodic internal education and training for people working with the Risk Management Regulations, Regulations Concerning Management of Risk of Loss and Crisis Management Regulations, and the Board of Directors shall periodically examine the regulations and issue revisions and improvements. In this way, the Company shall strive to maintain its risk management systems.

(iii)

We shall strive to ensure the stability of our management base in the event of a large-scale disaster or other emergency. To this end, we have prepared countermeasures to ensure the continuity of critical operations and reduce the risk of operational interruption as much as possible.

(4)

System to ensure that directors’ duties will be performed in an efficient manner

(Article 100, paragraph (1), item (iii) of the Ordinance for Enforcement of the Companies Act)

(i)

To ensure that directors perform their duties appropriately, the Board of Directors shall operate in accordance with the Board of Directors Regulations.

(ii)

To ensure that business activities of the divisions under his or her control or responsibility are performed efficiently, each director shall carry out appropriate management and supervision thereof in accordance with the Organizational and Segregation of Duties Regulations.

(5)

System for ensuring that employees will execute their duties in compliance with laws and regulations as well as the Articles of Incorporation

(Article 100, paragraph (1), item (iv) of the Ordinance for Enforcement of the Companies Act)

(i)

The Compliance Committee and Compliance Department shall take the lead in conducting periodical internal training to ensure employees have thorough knowledge of various regulations and compliance systems of the Company so that employees perform their duties in accordance with laws, regulations, the Articles of Incorporation, and internal regulations such as the Compliance Regulations.

(ii)

If a violation of any law, regulation, or company regulation, etc. is discovered, a report shall be made to the compliance consultation desk. When a report is made, the Compliance Committee shall make a report to the Board of Directors and the Audit and Supervisory Board without delay, and aim to resolve the issue as quickly as possible.

(iii)

To prevent damage by antisocial forces that threaten public order and safety, the Company declares in its Action Guidelines that it will not be daunted by the antisocial force, that it will stand up for what is just, and that it shall take thorough steps to ensure that all employees comply with these Action Guidelines. Led by the General Affairs Department, the Company will stand firm against improper demands, etc. by antisocial forces through participation in the Tokubouren (an association set up within the Tokyo Metropolitan Police Department to prevent violence) and cooperation with related agencies such as the police.

(6)

Systems to ensure the appropriateness of business operations in the corporate group comprising the Company, its parent company, and the subsidiaries thereof

(Article 100, paragraph (1), item (v) of the Ordinance for Enforcement of the Companies Act)

(i)

For various internal issues and internal control matters associated with material risks, we shall strive to ensure that business operations are carried out appropriately by monitoring the operations of group companies under the Affiliated Company Regulations, which are administered primarily by the Group Strategy Office of the Corporate Planning Department, and by information-sharing with the management divisions of Group companies. The Company’s Internal Audit Office also coordinates with the audit divisions of each group company, and as necessary performs audits and monitors whether business operations are being conducted appropriately.

(ii)

We shall set-up an Internal Group Hotline to receive reports in the event that a violation of any law, regulation, the Articles of Incorporation, or an internal regulation is discovered. The hotline aims to play a useful role in the fast resolution of such violations and to ensure the appropriateness of business operations in the Credit Saison Group.

(7)

Matters related to employees in cases where a statutory auditor requests that an employee should be assigned to assist his/her duties

(Article 100, paragraph (3), item (i) of the Ordinance for Enforcement of the Companies Act)

(i)

The Audit and Supervisory Board Members’ Secretariat shall assist statutory auditors in their duties.

(ii)

The specific personnel and duties of the Audit and Supervisory Board Members’ Secretariat shall be determined through consultation with the Audit and Supervisory Board.

(8)

Matters related to independence from directors of the employee set forth in the preceding item

(Article 100, paragraph (3), item (ii) of the Ordinance for Enforcement of the Companies Act)

(i)

Personnel of the Audit and Supervisory Board Members’ Secretariat shall require the consent of the Audit and Supervisory Board.

(ii)

The personnel of the Audit and Supervisory Board Members’ Secretariat shall not concurrently engage in duties pertaining to the performance of business operations of the Company other than internal audit duties.

(9)

System of reporting from directors and employees to statutory auditors, and any other system for reporting to statutory auditors

(Article 100, paragraph (3), item (iii) of the Ordinance for Enforcement of the Companies Act)

(i)

Directors and employees shall report to the Audit and Supervisory Board without delay if, with respect to the performance of their duties, they come to know of any material violation of a law, regulation, or the Articles of Incorporation, or an improper act, or facts that could cause significant damage to the Company.

(ii)

Directors and employees must report through the office organization to the Audit and Supervisory Committee without delay in the event of any decision, incident, accident, or business trouble, etc. that could have a material impact on the Company’s business or organization, as well as the results of internal audits that have been conducted.

(10)

Other systems to ensure that auditing by statutory auditors will be conducted in an efficient manner

(Article 100, paragraph (3), item (iv) of the Ordinance for Enforcement of the Companies Act)

(i)

Statutory auditors shall attend meetings of significant boards and committees to ensure that they understand what material decisions are being made and the status of the execution of business, and as necessary may request investigations and reports.

(ii)

As necessary, the Audit and Supervisory Committee shall exchange opinions with the President and CEO and hold periodic opinion exchange sessions with the independent auditor.

(iii)

In order to facilitate the thorough sharing of information with the Audit and Supervisory Committee, statutory auditors shall work to coordinate with the Corporate Planning Department, the Corporate Risk Management Office of the Corporate Planning Department, the Compliance Department, and the Internal Audit Office.

(Note)

Amounts of less than one million yen or numbers of shares less than one thousand shares listed in this Business Report are rounded down.

Consolidated Balance Sheet

(As of March 31, 2014)

(Millions of yen)

Assets				Liabilities
Account item	Amount			Account item	Amount
Current assets		1,775,699		Current liabilities		885,228
Cash and deposits		52,742		Notes and accounts payable – trade		273,444
Account receivable – installment		1,396,495		Short-term loans payable		199,160
Lease investment assets		225,333		Current portion of long-term loans payable		160,010
Other trade receivables		570		Current portion of bonds		60,225
Operational investment securities		18,979		Commercial papers		115,000
Real estate for sale		83,212		Current portion of long-term loans payable under credit fluidity		7,493
Purchased receivables		9,818		Lease obligations		1,270
Other inventories		1,403		Income taxes payable		11,756
Deferred tax assets		10,753		Provision for bonuses		2,062
Short-term loans receivable		6,480		Provision for directors’ bonuses		147
Other		21,588		Provision for loss on interest repayment		10,436
Allowance for doubtful accounts		(51,677	)	Allowance for losses on collecting gift tickets		167
				Deferred installment income		6,835
Non-current assets		509,800		Other		37,217
Property, plant and equipment		62,833		Non-current liabilities		977,885
Buildings, net		21,926		Bonds payable		215,212
Land		30,507		Long-term loans payable		660,164
Leased assets, net		3,789		Lease obligations		2,204
Construction in progress		1,096		Provision for directors’ retirement benefits		82
Other, net		5,513		Provision for loss on guarantees		4,296
Intangible assets		138,941		Allowance for losses on warranty of defects		18
Leasehold right		970		Provision for point card certificates		77,390
Software		9,260		Provision for loss on interest repayment		9,263
Leased assets		537		Asset retirement obligations		821
Software in progress		127,880		Other		8,430
Other		291		Total liabilities		1,863,113
Investments and other assets		308,025		Net assets
Investment securities		130,401		Shareholders’ equity		392,585
Long-term loans receivable		11,206		Capital stock		75,929
Guarantee deposits		4,966		Capital surplus		84,838
Liquidation business assets		104,078		Retained earnings		237,941
Deferred tax assets		64,721		Treasury shares		(6,123	)
Other		3,354		Accumulated other comprehensive income		26,852
Allowance for doubtful accounts		(10,704	)	Valuation difference on available-for-sale securities		28,054
				Deferred gains or losses on hedges		(1,201	)
Deferred assets		599		Subscription rights to shares		0
Bond issuance cost		599		Minority interests		3,548
				Total net assets		422,986
Total assets		2,286,099		Total liabilities and net assets		2,286,099

Note: Amounts of less than one million yen are omitted.

Consolidated Statement of Income

(From April 1, 2013 to March 31, 2014)

(Millions of yen)

Account item	Amount
Operating revenue
Income from the credit service business			188,251
Income from the lease business			14,241
Income from the finance business			19,113
Income from the real estate-related business
Revenue from the real estate-related business		43,625
Cost of the real estate-related business		31,020	12,605
Income from the entertainment business
Revenue from the entertainment business		71,343
Cost of the entertainment business		58,337	13,005
Financial revenue			360
Total operating revenue			247,577
Operating expenses
Selling, general and administrative expenses			197,852
Financial expenses			13,388
Total operating expenses			211,241
Operating income			36,336
Non-operating income			10,138
Non-operating expenses			2,048
Ordinary income			44,426
Extraordinary income
Compensation income for expropriation		564
Gain on sales of shares of subsidiaries and associates		91
Gain on sales of non-current assets		2
Gain on sales of investment securities		0
Other		11	669
Extraordinary losses
Impairment loss		500
Loss on disposal of non-current assets		393
Loss on closing of stores		148
Loss on valuation of investments in capital of subsidiaries and associates		11
Loss on valuation of investment securities		2
Other		36	1,092
Income before income taxes and minority interests			44,003
Income taxes – current		18,094
Income taxes – deferred		226	18,320
Income before minority interests			25,683
Minority interests in income			113
Net income			25,569

Note: Amounts of less than one million yen are omitted.

Consolidated Statement of Changes in Net Assets

(From April 1, 2013 to March 31, 2014)

(Millions of yen)

	Shareholders’ equity
	Capital stock		Capital surplus			Retained earnings			Treasury shares			Total shareholders’ equity
Balance at beginning of current period		75,929		84,838			217,882			(6,118	)		372,531
Changes of items during period
Dividends of surplus							(5,511	)					(5,511	)
Net income							25,569						25,569
Purchase of treasury shares										(5	)		(5	)
Disposal of treasury shares				(0	)					0			0
Net changes of items other than shareholders’ equity
Total changes of items during period	－			(0	)		20,058			(4	)		20,053
Balance at end of current period		75,929		84,838			237,941			(6,123	)		392,585

	Accumulated other comprehensive income
	Valuation difference on available-for-sale securities		Deferred gains or losses on hedges			Total accumulated other comprehensive income		Subscription rights to shares		Minority interests		Total net assets
Balance at beginning of current period		20,391		(1,496	)		18,894		0		3,442		394,868
Changes of items during period
Dividends of surplus													(5,511	)
Net income													25,569
Purchase of treasury shares													(5	)
Disposal of treasury shares													0
Net changes of items other than shareholders’ equity		7,662		295			7,957	－			106		8,064
Total changes of items during period		7,662		295			7,957	－			106		28,117
Balance at end of current period		28,054		(1,201	)		26,852		0		3,548		422,986

Note: Amounts of less than one million yen are omitted.

Non-consolidated Balance Sheet

(As of March 31, 2014)

(Millions of yen)

Assets				Liabilities
Account item	Amount			Account item	Amount
Current assets		1,805,055		Current liabilities		868,502
Cash and deposits		39,844		Notes payable – trade		1
Account receivable – installment		1,308,516		Accounts payable – trade		273,093
Lease investment assets		225,448		Short-term loans payable		198,960
Operational investment securities		18,979		Current portion of long-term loans payable		155,520
Merchandise		113		Current portion of bonds		60,000
Supplies		1,199		Commercial papers		115,000
Prepaid expenses		785		Current portion of long-term loans payable under credit fluidity		7,493
Deferred tax assets		9,146		Lease obligations		892
Short-term loans receivable from subsidiaries and associates		220,831		Accounts payable – other		4,426
Account receivable – other		13,911		Accrued expenses		16,282
Other		4,750		Income taxes payable		11,045
Allowance for doubtful accounts		(38,471	)	Deposits received		5,561
				Unearned revenue		507

Non-current assets		394,804		Provision for bonuses		1,348
Property, plant and equipment		17,413		Provision for directors’ bonuses		120
Buildings, net		6,211		Provision for loss on interest repayment		9,823
Vehicles, net		0		Allowance for losses on collecting gift tickets		167
Equipment, net		1,677		Deferred installment income		6,835
Land		6,904		Other		1,421
Leased assets, net		2,476		Non-current liabilities		964,148
Construction in progress		143		Bonds payable		215,000
Intangible assets		71,727		Long-term loans payable		654,359
Leasehold right		14		Lease obligations		1,775
Software		4,901		Provision for loss on guarantees		4,198
Leased assets		537		Provision for point card certificates		77,390
Software in progress		66,029		Provision for loss on interest repayment		8,267
Other		244		Guarantee deposits received		637
				Other		2,520
				Total liabilities		1,832,651
Investments and other assets		305,663		Net assets
Investment securities		68,757		Shareholders’ equity		349,883
Shares of subsidiaries and associates		51,557		Capital stock		75,929
Investments in capital		0		Capital surplus		84,386
Investments in capital of subsidiaries and associates		65		Legal capital surplus		82,497
Long-term loans receivable		10,000		Other capital surplus		1,889
Long-term loans receivable from subsidiaries and associates		176,906		Retained earnings		195,406
Long-term prepaid expenses		2,003		Legal retained earnings		3,020
Guarantee deposits		1,617		Other retained earnings		192,386
Deferred tax assets		61,506		General reserve		143,455
Other		1,085		Retained earnings brought forward		48,931
Allowance for doubtful accounts		(67,837	)	Treasury shares		(5,838	)
				Valuation and translation adjustments		17,924
Deferred assets		599		Valuation difference on available-for-sale securities		19,125
Bond issuance cost		599		Deferred gains or losses on hedges		(1,201	)
				Total net assets		367,808
Total assets		2,200,459		Total liabilities and net assets		2,200,459

(Note) Amounts of less than one million yen are omitted.

Non-consolidated Statement of Income

(From April 1, 2013 to March 31, 2014)

(Millions of yen)

Account item	Amount
Operating revenue
Income from the credit service business
Revenue from credit card business		104,915
Credit card cashing revenue		33,803
Loan certificates revenue		1,697
Business agency revenue		21,643
Income from the credit-related revenue		7,879		169,938
Income from the lease business revenue				14,271
Income from the finance business
Revenue from credit guarantee		12,309
Finance related revenue		3,097		15,407
Income from the real estate related business
Revenue from the real estate related business		19
Cost of the real estate related business		4		14
Financial revenue				6,241
Total operating revenue				205,873
Operating expenses
Selling, general and administrative expenses				160,927
Financial expenses
Interest expenses		13,998
Other		1,121		15,119
Total operating expenses				176,046
Operating income				29,826
Non-operating income				5,133
Non-operating expenses				87
Ordinary income				34,872
Extraordinary income
Gain on sales of shares of subsidiaries and associates		91
Gain on sales of investment securities		0		91
Extraordinary losses
Loss on disposal of non-current assets		40
Loss on valuation of investments in capital of subsidiaries and associates		11
Loss on valuation of investment securities		2		54
Income before income taxes				34,909
Income taxes – current		16,752
Income taxes – deferred		(480	)	16,271
Net income				18,637

Note: Amounts of less than one million yen are omitted.

Non-consolidated Statement of Changes in Net Assets

(From April 1, 2013 to March 31, 2014)

(Millions of yen)

	Shareholders’ equity
		Capital stock		Capital surplus									Retained earnings
					Legal capital surplus		Other capital surplus			Total capital surplus				Legal retained earnings		Other retained earnings						Total retained earnings			Treasury shares			Total shareholders’ equity
					Legal capital surplus		Other capital surplus			Total capital surplus				Legal retained earnings			General reserve		Retained earnings brought forward			Total retained earnings			Treasury shares			Total shareholders’ equity
Balance at beginning of current period			75,929			82,497		1,889			84,386				3,020			143,455		35,804			182,279			(5,833	)		336,762
Changes of items during period
Dividends of surplus																				(5,511	)		(5,511	)	－				(5,511	)
Net income																				18,637			18,637		－				18,637
Purchase of treasury shares																										(5	)		(5	)
Disposal of treasury shares								(0	)		(0	)														0			0
Net changes of items other than shareholders’ equity
Total changes of items during period		－			－			(0	)		(0	)		－			－			13,126			13,126			(4	)		13,121
Balance at end of current period			75,929			82,497		1,889			84,386				3,020			143,455		48,931			195,406			(5,838	)		349,883

	Valuation and translation adjustments							Total net assets
	Valuation difference on available-for-sale securities		Deferred gains or losses on hedges			Total valuation and translation adjustments		Total net assets
Balance at beginning of current period		13,936		(1,496	)		12,439		349,202
Changes of items during period
Dividends of surplus									(5,511	)
Net income									18,637
Purchase of treasury shares									(5	)
Disposal of treasury shares									0
Net changes of items other than shareholders’ equity		5,189		295			5,484		5,484
Total changes of items during period		5,189		295			5,484		18,606
Balance at end of current period		19,125		(1,201	)		17,924		367,808

Note: Amounts of less than one million yen are omitted.

Accounting Auditor’s Audit Report on Consolidated Financial Statements

Independent Auditors’ Audit Report

May 12, 2014

To: The Board of Directors of Credit Saison Co., Ltd.

Deloitte Touche Tohmatsu LLC

Masahiko Inoue [Seal]

Designated Limited Liability Partner and

Engagement Partner

Certified Public Accountant

Tetsuya Ishii [Seal]

Designated Limited Liability Partner and

Engagement Partner

Certified Public Accountant

Dai Yamamoto [Seal]

Designated Limited Liability Partner and

Engagement Partner

Certified Public Accountant

We have audited the consolidated financial statements of Credit Saison Co., Ltd. for the consolidated fiscal year (April 1, 2013 through March 31, 2014), which included the consolidated balance sheet, consolidated statements of income, consolidated statement of changes in net assets and consolidated notes for the purpose of reporting under the provisions of Article 444, paragraph (4) of the Companies Act of Japan.

Management’s Responsibility for the Consolidated Financial Statements

Auditor’s Responsibility

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Credit Saison Co., Ltd. and its consolidated subsidiaries as of March 31, 2014, and the consolidated results of their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted in Japan.

Conflicts of Interest

We have no interest in the Company which should be disclosed in compliance with the Certified Public Accountants Act.

End of Document

Accounting Auditor’s Audit Report on Non-consolidated Financial Statements

Independent Auditors’ Audit Report

May 12, 2014

To: The Board of Directors of Credit Saison Co., Ltd.

Deloitte Touche Tohmatsu LLC

Masahiko Inoue [Seal]

Designated Limited Liability Partner and

Engagement Partner

Certified Public Accountant

Tetsuya Ishii [Seal]

Designated Limited Liability Partner and

Engagement Partner

Certified Public Accountant

Dai Yamamoto [Seal]

Designated Limited Liability Partner and

Engagement Partner

Certified Public Accountant

We have audited the non-consolidated financial statements of Credit Saison Co., Ltd. for the 64th fiscal year (April 1, 2013 through March 31, 2014), which included the non-consolidated balance sheet, non-consolidated statements of income, non-consolidated statement of changes in net assets, notes and detailed statements thereof for the purpose of reporting under the provisions of Article 436, paragraph (2), item (i) of the Companies Act of Japan.

Management’s Responsibility for the Non-consolidated Financial Statements

Auditor’s Responsibility

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the non-consolidated financial statements and detailed statements thereof referred to above present fairly, in all material respects, the non-consolidated financial position of Credit Saison Co., Ltd. as of March 31, 2014, and the results of their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted in Japan.

Conflicts of Interest

We have no interest in the Company which should be disclosed in compliance with the Certified Public Accountants Act.

End of Document

Audit & Supervisory Board’s Audit Report

Audit Report

This audit report was prepared by the Audit & Supervisory Board of Credit Saison Co., Ltd. (the “Company”) after deliberation, based on audit reports prepared by each audit & supervisory board member, concerning the performance of duties by each director during the 64th fiscal year (April 1, 2013 through March 31, 2014). We hereby report as follows.

1. Methods and Contents of Audit by Audit & Supervisory Board Members and the Audit & Supervisory Board

In addition to establishing audit policies and audit plans, and receiving reports from each audit & supervisory board member on the status and results of the audit, the Audit & Supervisory Board received reports from directors and the accounting auditor on the status of performance of their duties and requested further explanations as deemed necessary.

In compliance with the standards for audit by audit & supervisory board members established by the Audit & Supervisory Board, pursuant to the audit policies and audit plans, each audit & supervisory board member worked to collect information and improve the audit environment while communicating with directors, the internal audit division and employees. Each audit & supervisory board member also attended meetings of the Board of Directors and other important meetings, received reports from directors and employees on the status of performance of their duties, requested further explanations as deemed necessary, reviewed important approval documents, and inspected the state of business operations and assets at the head office and other important branch offices.

In addition, we received reports on the system to ensure compliance with applicable laws and regulations and the Articles of Incorporation by directors in performing their duties, as well as the contents of resolutions of the meetings of the Board of Directors with respect to the system as defined in Article 100, paragraphs (1) and (3) of the Ordinance for Enforcement of the Companies Act of Japan (internal control system) that has been developed based on such resolutions, which are necessary to ensure proper operation of the Company, and we requested further explanations as deemed necessary and expressed an opinion.

With respect to subsidiaries, we communicated with and exchanged information with directors and statutory auditors of the subsidiaries, received business reports from subsidiaries as deemed necessary.

Based on the above methods, we reviewed the business report and its supporting schedules for the fiscal year.

In addition, we monitored and reviewed whether the accounting auditor maintained its independence and conducted the audit properly, received reports from the accounting auditor on the status of performance of its duties, and requested further explanations as deemed necessary. Furthermore, we were informed by the accounting auditor that it has established a “system to ensure the appropriate execution of duties” (Shokumu no Suikou ga Tekisetsu ni Okonawareru Koto wo Kakuho Suru Tameno Taisei) (Matters as defined in each item of Article 131 of the Company Accounting Regulations) pursuant to the “Quality Control Standards for Audits” (Kansa ni Kansuru Hinshitsu Kanri Kijun) (Business Accounting Council, October 28, 2005), and requested explanations as deemed necessary.

Based on the above methods, we reviewed the financial statements for the fiscal year (the balance sheet, statements of income, statement of changes in net assets and non-consolidated notes) as well as detailed statements thereof, and the consolidated financial statements (the consolidated balance sheet, consolidated statements of income, consolidated statement of changes in net assets and consolidated notes).

2.	Results of Audit
(1)	Results of audit of the business report
	(i)	The business report and its supporting schedules of the Company fairly present the financial conditions of the Company in conformity with applicable laws and regulations and the Articles of Incorporation of the Company.
	(ii)	No misconduct or violation of applicable laws or regulations or the Articles of Incorporation of the Company was found with respect to the directors’ performance of their duties.
	(iii)	Resolutions of the meetings of the Board of Directors with respect to the internal control system are appropriate. In addition, there are no matters to be noted regarding the execution of duties by directors with respect to the internal control system.
(2)	Results of audit of the financial statements and detailed statements thereof
		The methods and results of audit performed by Deloitte Touche Tohmatsu LLC, the accounting auditor of the Company, are appropriate.
(3)	Results of audit of the consolidated financial statements
		The methods and results of audit performed by Deloitte Touche Tohmatsu LLC, the accounting auditor of the Company, are appropriate.
May 13, 2014 Audit & Supervisory Board of Credit Saison Co., Ltd. Yoshitaka Murakami [Seal] Standing Audit & Supervisory Board Member (External) Masaru Sakurai Standing Audit & Supervisory Board Member (External) Yoshirou Yamamoto Audit & Supervisory Board Member Atsushi Toki Audit & Supervisory Board Member (External) End of Document

Results by Business Segment				(Unit: Millions of yen)
Business divisions		Sales		Percentage (%)
	Contract-based servicing business		1,920		30.3
	Loan purchasing business		462		7.3
	Research business		407		6.4
Servicing business			2,790		44.0
Outsourcing business			3,142		49.5
Childcare business			409		6.5
Total			6,342		100.0

(Unit: Millions of yen)
Category	(3rd Term) Fiscal year ended January 31, 2012		(4th Term) Fiscal year ended January 31, 2013		(5th Term) Fiscal year ended January 31, 2014			(6th Term) Fiscal year ended January 31, 2015
Net sales		7,141		7,099		6,629			6,342
Ordinary profit (loss)		184		143		(79	)		157
Net income (loss)		67		5		(152	)		(171	)
Net income (loss) per share	13.72 yen		1.15 yen		(30.92) yen			(34.76) yen
Total assets		5,692		5,537		5,336			5,177
Equity		4,649		4,630		4,453			4,281
Equity per share	941.93 yen		938.08 yen		902.16 yen			867.40 yen

Name of company	Category		Voting rights held by the parent company (%)			Security exchange, etc. on which shares of the parent company is listed
Credit Saison Co., Ltd.	Parent company			71.41		First Section, The Tokyo Stock Exchange

Name of company	Paid in capital (millions of yen)		Voting rights ratio (%)		Principal business
JPN Collection Service Co., Ltd.		1,053		100	Credit management and collection business
Humanplus Co., Ltd.		82		100	Temporary staffing business
Kinder Nursery Co., Ltd.		50		100	Childcare business

Business divisions			Principal businesses
	Contract-based servicing business	•	Receivables management and collection; money collection etc. agency
	Loan purchasing business	•	Management and collection of the Company’s receivables
	Research business	•	On-site investigation and other services in connection with receivables management and collection
Servicing business
Outsourcing business		•	Temporary staffing business • Telemarketing business
Childcare business		•	Childcare business and operation of culture centers

Category	Number of employees (persons)		Increase/decrease compared to the end of the previous fiscal year (persons)		Average age (years old)
Male		76		(20)		43.0
Female		48		(40)		38.0
Total or average		124		(60)		41.1

(Note)	1.	In addition to the above, the Company employs 525 temporary employees.
	2.	The main reason for the decrease of employees is the closure, transfer or other disposition of operating facilities in the childcare business.

Name of Shareholder	Number of Shares Held (shares)		Ownership (%)
Credit Saison Co., Ltd.		3,524,800		71.40
Eruza Co., Ltd.		142,000		2.87
Japan Trustee Service Bank, Ltd. (Trust Account)		115,600		2.34
Hirotsugu Tojo		75,200		1.52
Fumio Ikeda		35,000		0.70
Daiwa Securities Co. Ltd.		31,800		0.64
SBI Securities Co., Ltd.		29,900		0.60
JPN Employee Shareholding Association		27,600		0.55
Naoki Yoshikawa		23,800		0.48
Matsui Securities Co., Ltd.		20,800		0.42

Title	Name	Responsibilities and important concurrent occupations or positions at other organizations
President and CEO	Ryosaku Minato
Senior Managing Director	Yukio Watanabe	Responsible for Operation Management Department and Business Management Department (concurrent)
Director	Toshiyasu Suganuma	President and CEO of Kinder Nursery Co., Ltd.
Director	Nobuo Miyatake	President and CEO of JPN Collection Service Co., Ltd.
Director	Masahiro Senba	President and CEO of Humanplus Co., Ltd.
Director	Kazuyuki Takami
Standing statutory auditor	Isamu Mori	Statutory auditor of JPN Collection Service Co., Ltd.; Statutory auditor of Humanplus Co., Ltd.; Statutory auditor of Kinder Nursery Co., Ltd.
Statutory auditor	Tadashi Urabe	Attorney-at-law; Outside statutory auditor of JPN Collection Service Co., Ltd.; Outside statutory auditor of Ebara Corporation
Statutory auditor	Masaru Sakurai	Outside statutory auditor of JPN Collection Service Co., Ltd.; Outside statutory auditor of Credit Saison Co., Ltd. Outside statutory auditor of Concert Inc.

(Note)	1.	Messrs. Tadashi Urabe and Masaru Sakurai are outside statutory auditors as defined in Article 2, item (xvi) of the Companies Act.
	2.	Statutory Auditor Masaru Sakurai has been notified as an independent officer as stipulated by the regulations of the Tokyo Stock Exchange, Inc.
	3.	Appoint and retirement during the fiscal year ended January 31, 2015
		•	Mr. Ryosaku Minato was newly appointed as a director at the fifth ordinary general meeting of shareholders held on April 25, 2014, and assumed the post. Mr. Ryosaku Minato assumed the post of the president and CEO and Mr. Yukio Watanabe assumed the post of senior managing director at the meeting of board of directors held on the same day.
		•	Messrs. Terutaka Hasuda and Keiichi Iwasaki retired as directors due to the expiration of their term as of the closing of the fifth ordinary general meeting of shareholders held on April 25, 2014.

Position	Number of recipients		Total amount of remuneration (yen)
Directors (of whom outside directors)		4(0)	37 million ( – million)
Statutory auditors (of whom outside statutory auditors)		3(2)	12 million (3 million)
Total (of whom outside officers)		7(2)	50 million (3 million)

Position	Name	Organization where concurrent position is held	Concurrent position	Relationship with the company where concurrent position is held
Statutory auditor	Tadashi Urabe	JPN Collection Service Co., Ltd.	Outside statutory auditor	JPN Collection Service is a consolidated subsidiary of the Company.
Statutory auditor	Tadashi Urabe	Ebara Corporation	Outside statutory auditor	The Company has no special relationship with Ebara Corporation.
Statutory auditor	Masaru Sakurai	JPN Collection Service Co., Ltd.	Outside statutory auditor	JPN Collection Service is a consolidated subsidiary of the Company.
		Credit Saison Co., Ltd.	Outside statutory auditor	Credit Saison is the parent company owning 71.41% shares of the Company. The Company leases information systems, equipment and other items from Credit Saison.
		Concert Inc.	Outside statutory auditor	The Company has no special relationship with Concert.

Position	Name	Meeting of board of directors (19 meeting)				Meeting of board of statutory auditors (15 meetings)
		Number of attendance		Attendance rate		Number of attendance		Attendance rate
Statutory Auditor	Tadashi Urabe		18		95%		15		100%
Statutory Auditor	Masaru Sakurai		19		100%		15		100%

		Amount paid (yen)
(i)	Fee for services provided for under Article 2, paragraph (1) of the Certified Public Accountants Act	19 million
(ii)	Total amount of money and other financial gain that is required to be paid by the Company and its subsidiaries	29 million

		Shareholders’ equity
	Common stock			Capital surplus			Retained earnings			Treasury stock			Total shareholders’ equity			Total net assets
Balance at beginning of current period			1,000		509			2,943			−			4,453			4,453
Changes during the term
Net loss			−		−			(171	)		−			(171	)		(171	)
Acquisition of treasury stock			−		−			−			(0	)		(0	)		(0	)
Cancellation of treasury stock			−		(0	)		−			0			−			−
Total changes during the term			−		(0	)		(171	)		−			(171	)		(171	)
Balance at end of current period			1,000		509			2,771			−			4,281			4,281

(i)	Number of consolidated subsidiaries	3
(ii)	Names of consolidated subsidiaries	JPN COLLECTION SERVICE CO., LTD. HUMANPLUS CO., LTD. KINDER NURSERY Co., Ltd.

1)	Tangible fixed assets	The declining balance method is used. However, the straight line method is used for buildings (excluding buildings and accompanying facilities).
2)	Intangible fixed assets	The straight line method is used. Software for internal use is depreciated by the straight line method based on the length of time it can be used within the Company (less than five years).

1)	Allowance for doubtful accounts	To provide for losses from doubtful loan receivables, the amount expected to be irrecoverable is set aside based on the default rate for general loan receivables, and by individually considering the recoverability of loans for specific loan receivables at risk of default.
2)	Allowance for bonuses	To provide for the payment of bonuses to employees, an amount is set aside based on the amount expected to be paid in the fiscal year under review.
3)	Allowance for business structure improvement	To provide for expected costs and losses stemming from the organizational restructuring at the Company, an appropriate amount is set aside.

Usage	Type	Location	Impairment loss (millions of yen)	Relevant account item of the Consolidated Statements of Income
Claims collection-related core systems and others	Software, tools, appliances and fixtures, and others	Toshima-ku, Tokyo and others	141	Business structure improvement expenses
Investment in the migration of the purchased receivables system	Software in progress	Toshima-ku, Tokyo and others	74	Business structure improvement expenses
Assets relating to the auto loan business	Goodwill and others	Sapporo, Hokkaido and others	17	Impairment loss
Nursery schools	Buildings and others	Yokohama, Kanagawa	20	Impairment loss

(i)	Impairment loss	215 million yen
(ii)	Extra retirement payments	8 million yen
(iii)	Business center closing expenses	2 million yen

	Amount on the Consolidated Balance Sheet (*2)			Fair value (*2)			Difference
(1) Cash and deposits		3,566			3,566			−
(2) Accounts receivable		726			726			−
(3) Purchased receivables		548
Allowance for doubtful accounts (*1)		-280
		267			267			−
(4) Accounts receivables-other		15			15			−
(5) Guarantee deposits		144			140			-4
Total assets		4,721			4,716			-4
(6) Accounts payable		(339	)		(339	)		−
(7) Income taxes payable		(58	)		(58	)		−

(8) Consumption tax payable	(138	)	(138	)	−
(9) Deposits received	(117	)	(117	)	−
Total liabilities	(654	)	(654	)	−

(1)	Shareholders’ equity per share	867.40 yen
(2)	Net loss per share	-34.76 yen

Record date for the ordinary general shareholders meeting (The Company)	January 31, 2015 (Saturday)
Resolution by the board of directors for signing of the Share Exchange Agreement (both companies)	March 16, 2015 (Monday)
Execution of the Share Exchange Agreement (both companies)	March 16, 2015 (Monday)
Ordinary general shareholders meeting to approve the Share Exchange (The Company)	April 28, 2015 (Tuesday) (expected)
Last trading date (The Company)	May 26, 2015 (Tuesday) (expected)
Delisting date (The Company)	May 27, 2015 (Wednesday) (expected)
Effective date of the Share Exchange	June 1, 2015 (Monday) (expected)

Company name	Credit Saison (100% Parent Company)				The Company (Wholly-owned Subsidiary)
Share exchange ratio			1				0.26

4.	Notes to the Non-consolidated Balance Sheet
(1)	Accumulated depreciation of tangible fixed assets	752 million yen
(2)	Monetary claims and obligations with respect to affiliated companies
(i)	Short-term monetary claims	135 million yen
(ii)	Long-term monetary claims	2 million yen
(iii)	Short-term monetary obligations	7 million yen

5.	Notes to the Non-consolidated Statements of Income
(1)	Amount of transactions with affiliated companies
(i)	Operating revenues	1,183 million yen
(ii)	Operating expenses	64 million yen
(iii)	Other income	1 million yen
(2)	Impairment loss

	(i)	Impairment loss	204 million yen
	(ii)	Business center closing expenses	2 million yen

	(Unit: Millions of yen)
Deferred tax assets (current)
Allowance for bonuses		6
Lump-sum depreciable assets		1
Other		2
Subtotal		9
Valuation allowance		(9)
Total		−
Deferred tax assets (fixed)
Shares of affiliated companies		993
Loss on valuation of shares of affiliated companies		124
Business structure improvement expenses		49
Asset retirement obligation		9
Impairment loss		6
Loss carried forward		41
Other		1
Subtotal		1,227
Valuation allowance		(1,227)
Total		−

Type	Company name	Voting interest (%)	Nature of relationship		Nature of transaction	Transaction amount (millions of yen)	Accounting classification	Year-end balance (millions of yen)
			Interlocking officers	Business relationship
Parent company	Credit Saison Co., Ltd.	Directly held by the related party: 71.41	2	Lease of information system, equipment and others	Lease of information system, equipment and others	61	Accounts payable	5

(1)	Shareholders’ equity per share	854.22 yen
(2)	Net loss per share	-42.08 yen