ANNUAL REPORT 2013 for the year ended March 31, 2013

※JavaScriptを有効にしてください。※
tools_title

MANAGEMENT'S DISCUSSION AND ANALYSIS

I. THE CREDIT SAISON GROUP

The Credit Saison Group has five business segments: Credit Service Business, Lease Business, Finance Business, Real Estate-related Business and Entertainment Business. The Credit Service Business segment is the Credit Saison Group's most important segment, and generated approximately 78% of total consolidated operating revenues in fiscal 2012.

The Credit Saison Group's operating revenues are generated primarily in the mainstay Credit Service Business. These consist of fees from affiliated stores generated via credit cards and interest and fees from customers generated via revolving credit, cash advances, specialty loans and other transactions.

Operating expenses mainly comprise advertising expenses, point redemption costs, credit cost, personnel expenses, fees and financial costs.

II. ANALYSIS OF INCOME STATEMENTS

1. Market Environment

In fiscal 2012, the Japanese economy remained on a gradual recovery path, underpinned chiefly by demand related to the recovery from the Great East Japan Earthquake. Following the change in Japan’s government at the end of 2012, anticipation for the new administration’s economic policies, most notably the Bank of Japan’s dramatic monetary easing policy, has fueled higher expectations for an economic recovery, as evidenced by a correction to the yen’s excessive appreciation and rising stock prices.

In the non-bank industry, the Company’s principal business sector, credit card-based shopping has been growing in step with expansion of the areas in which credit cards can be used. However, revisions to the Money Lending Business Act caused a contraction in the market for cash advances on credit cards. As a result, the non-bank industry continued to face a challenging business environment.

2. Operating Revenues

In fiscal 2012, operating revenues increased by 0.2% year on year to ¥244,405 million. In the mainstay Credit Service Business, the Company worked to expand its customer base by stepping up efforts to acquire new members for Saison American Express® Card, which is expected to have a high active ratio and high spending per transaction. The Company also stepped up cardmember enrollment activities using the Internet, while working closely with partner merchants to increase cardmember enrollment in affinity cards.

In measures to expand card shopping transaction volume, the Company worked to build a business model where Credit Saison 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, the Company cooperated with merchants and other partners in various areas, such as Ikebukuro and Sapporo, to conduct the Regional Revitalization Campaign aimed at creating new sources of consumption through credit card use. Another measure was to encourage consumers to choose credit cards as a means of settling recurring payments such as mobile phone charges. Through these and other measures, card shopping transaction volume increased steadily by 4.2% year on year to ¥3,547.0 billion.

Furthermore, in initiatives to strengthen earnings power using the Internet, the Company increased the number of Internet members by 23.0% year on year to 8.56 million. At the same time, the Company worked to enhance the appeal of Eikyufumetsu.com, a shopping points website where consumers can accumulate Eikyufumetsu Points (“Saison Permanent Points” in English) through Internet shopping and other means. Efforts were also focused on expanding the number of users of this site. Through these and other measures, the Company focused on expanding fee-based businesses.

However, cash advance revenues declined as the balance of cash advances on cards decreased by 16.9% year on year to ¥267.5 billion mainly due to effects of revisions to the Money Lending Business Act. As a result, overall segment operating revenues for the Credit Service Business in fiscal 2012 declined from the previous fiscal year.

In the Lease Business, transaction volume rose 8.8% year on year to ¥105.3 billion as a result of efforts to strengthen trusting relationships with existing lease customers and to acquire new partner merchants.

In the Finance Business, operating revenues increased, mainly on the back of steady year-on-year growth of 17.0% in the balance of credit guarantees to ¥197.3 billion in the credit guarantee business. This growth was supported by close cooperation with partner financial institutions on both the sales and management fronts.

In the Real Estate-related Business, operating revenues increased, mainly reflecting the recording of a loss on reappraisal of assets by the consolidated subsidiary Atrium in the previous fiscal year. In line with the restructuring of the Real Estate-related Business, we have separated this business into retained business and withdrawn business. Revenues and expenses related to withdrawn business have been recorded under non-operating revenues and expenses from the fiscal year under review.

In the Entertainment Business, sales increased compared with the previous fiscal year, when sales were impacted by the suspension of operations and reduced operating hours at stores due to the Great East Japan Earthquake. As a result, the Entertainment Business recorded higher operating revenues year on year.

3. Operating Expenses and Operating Income

During fiscal 2012, the Credit Saison Group saw operating expenses decline 4.7% year on year to ¥202,093 million. This was mainly the result of a 24.6% year-on-year decline in the credit cost to ¥23,130 million as the Group continued to improve the quality of its receivables by strengthening the management of receivables, and the number of receivables handled by third parties such as attorneys and certified judicial scriveners continued to fall. Consequently, operating income rose 32.8% year on year to ¥42,312 million.

4. Non-operating Revenues and Expenses

Total non-operating revenues decreased 44.6% year on year to ¥11,196 million.

Total non-operating expenses decreased 98.9% from the previous fiscal year to ¥695 million.


BREAKDOWN OF SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES

  (Millions of yen)
2013 2012 % change
Cost of uncollectible receivables 23,130 30,672 (24.6)
Included in the above:      
Allowance for losses on accounts receivable 14,235 20,736 (31.4)
Losses on accounts receivable 2 2 9.6
Provision for losses on interest repayment 5,729 6,974 (17.9)
Allowance for losses on guarantees 3,162 2,958 6.9
SG&A expenses excluding cost of uncollectible receivables 164,040 161,512 1.6
Included in the above:      
Advertising expenses 17,263 13,580 27.1
Provision for point program 7,908 11,719 (32.5)
Personnel expenses 42,354 40,686 4.1
Fees paid 52,441 49,197 6.6
Total SG&A expenses 187,171 192,184 (2.6)
(Years ended March 31)
back to pagetop