XML 26 R16.htm IDEA: XBRL DOCUMENT

Leases

12 Months Ended

Mar. 31, 2025

6. Leases

(1) Lessor

Some of the contracts include options to extend or to terminate the lease. The Company and its subsidiaries determine the lease term while taking such periods covered by options into account when determined the lease term when it is reasonably certain that it will exercise these options. The majority of the lease contracts do not contain bargain purchase options for customers.

The estimated unguaranteed residual value represents estimated proceeds from the disposition of equipment at the time the lease is terminated. The estimated unguaranteed residual value is determined based on market value of used equipment, estimates of when and how much equipment will become obsolete, and actual recovery being experienced for similar used equipment. The Company and its subsidiaries may incur losses if the estimated residual amounts are unable to collect or need to recognize valuation losses when the estimates differ from actual trends in equipment valuation and the secondhand market. The risk of loss on leased assets relating to the estimated unguaranteed residual value of the leased assets is monitored through projections of the estimated unguaranteed residual value at lease origination and periodic review of estimated unguaranteed residual value.

When auto leases are bundled with maintenance contracts, considerations on contracts are allocated based upon the estimated standalone selling prices of the lease and

non-lease

components. Lease components generally include product and financing cost, and

non-lease

components generally consist of maintenance contracts.

A certain subsidiary is providing automobile related services, and applying practical expedients, to not separate

non-lease

components from the associated lease components. In this service, ASC 606 is applied to the entire contract because the consideration related to

non-lease

components accounts for the majority of contract consideration. Revenues from these operations are recognized over the customers’ usage period of the services, since customers simultaneously receive and consume the benefits when the performance obligations are satisfied. The value transferred to customers is directly measured based on the usage

period.

Lease income for fiscal 2023, 2024 and 2025 are as follows:


	Millions of yen
	Fiscal Year ended March 31, 2023		Fiscal Year ended March 31, 2024		Fiscal Year ended March 31, 2025
Lease income – net investment in leases
Interest income	¥	80,810	¥	87,189	¥	92,327
Other		2,568		2,500		3,849
Lease income – operating leases*		499,541		535,490		624,444

Total lease income	¥	582,919	¥	625,179	¥	720,620

Gains from the disposition of real estate under operating leases included in operating lease revenues were ¥25,699 million, ¥20,960 million and ¥31,965 million, and gains from the disposition of operating lease assets other than real estate included in operating lease revenues were ¥31,233 million, ¥32,481 million and ¥44,668 million for fiscal 2023, 2024 and 2025, respectively.

Lease income from net investment in leases is included in finance revenues in the consolidated statements of income. Gains and losses from the disposition of net investment in leases were not material for fiscal 2023, 2024 and 2025.

Net investment in leases at March 31, 2024 and 2025 consists of the following:


	Millions of yen
	March 31, 2024		March 31, 2025
Lease receivables*	¥	1,124,232	¥	1,132,186
Unguaranteed residual value		29,555		33,908
Initial direct costs		1,236		1,286

Total	¥	1,155,023	¥	1,167,380

Some lease contracts are subject to government assistance for the customers’ acquisition of leased assets, mainly for the purpose of environmental measures. This government assistance is accounted for as a reduction of lease receivables of lease contracts when the Company and its subsidiaries confirm receipt of cash. The amount of a reduction of lease receivables were ¥31,108 million and ¥32,357 million as of March 31, 2024 and 2025, respectively. Benefits of the government assistance are attributed to the customers by the reduced lease payments. Furthermore, remaining term of government assistance contracts ranges up to 14 years and 13 years as of March 31, 2024 and 2025, respectively. And when receiving the government assistance, restrictions mainly on disposal of property and duty of keeping documents occur for a certain period of time.

Investment

in operating leases at March 31, 2024 and 2025 consists of the following:


	Millions of yen
	March 31, 2024			March 31, 2025
Transportation equipment	¥	1,892,410		¥	1,912,604
Measuring and information-related equipment		377,195			436,122
Real estate		308,989			364,004
Other		87,525			82,516

		2,666,119			2,795,246
Accumulated depreciation		(936,001	)		(946,341	)

Net		1,730,118			1,848,905
Right-of-use assets		87,359			73,518
Accrued rental receivables		54,230			46,248
Allowance for doubtful receivables on operating leases		(3,133	)		(1,493	)

Total	¥	1,868,574		¥	1,967,178

Costs of operating leases include depreciation and various expenses (insurance, property tax and other). Depreciation and various expenses for fiscal 2023, 2024 and 2025 are as follows:


	Millions of yen
	2023		2024		2025
Depreciation expenses	¥	245,180	¥	261,723	¥	283,219
Various expenses		91,807		95,037		111,602

Total	¥	336,987	¥	356,760	¥	394,821

Remaining lease receivables of net investment in leases (including residual value guarantees) range up to 17 years at March 31, 2025. Remaining lease receivables of the operating lease contracts range up to 56 years at March 31, 2025. At March 31, 2025, the amounts due in each of the next five years and thereafter are as follows:


	Millions of yen
Years ending March 31,	Net investment in leases			Operating leases
2026	¥	480,728		¥	405,914
2027		326,021			261,880
2028		214,855			173,012
2029		130,697			109,486
2030		73,476			62,653
Thereafter		54,129			147,762

Total lease payments		1,279,906		¥	1,160,707

Less imputed interest		(147,720	)

Total lease receivables	¥	1,132,186

(2) Lessee

The Company and its subsidiaries determine if an arrangement is a lease at inception of each contract. The Company and its subsidiaries have operating and finance leases for various assets including lands, office buildings, employees’ accommodations, and vehicles.

Some

of the lease arrangements include options to extend or terminate lease term. The Company and its subsidiaries determine the lease term while taking such options into account when determining the lease term when it is reasonably certain that it will exercise these options. The Company and its subsidiaries’ lease arrangements do not contain material residual value guarantees or material restrictive covenants. As a rate implicit in most of the leases cannot be readily determinable, the Company and its subsidiaries use incremental borrowing rate based on the information available at commencement to determine the present values of lease payments.

The component of lease expense for fiscal 2023, 2024 and 2025 are as follows:


	Millions of yen			Millions of yen			Millions of yen
	Year ended March 31, 2023			Year ended March 31, 2024			Year ended March 31, 2025
Finance lease cost
Depreciation expenses of right-of-use assets	¥	536		¥	580		¥	574
Interest expenses of lease liabilities		150			84			67

		686			664			641

Operating lease cost		52,279			53,405			53,013
Short-term lease cost		2,742			3,048			2,997
Variable lease cost		1,297			2,721			4,339
Sublease income		(8,819	)		(9,512	)		(9,971	)

Total	¥	48,185		¥	50,326		¥	51,019

The Company and its subsidiaries recorded net gains on sale and leaseback transactions of ¥2,661 million for fiscal 2024.

Supplemental cash flow information related to leases for fiscal 2023, 2024 and 2025 are as follows:


	Millions of yen
	Year Ended March 31, 2023
	Finance leases		Operating leases
Cash paid for amounts included in the measurements of lease liabilities:
Cash flows from operating activities	¥	150	¥	50,369
Cash flows from financing activities		781		0

Right-of-use assets obtained in exchange for lease liabilities:	¥	93	¥	39,823


	Millions of yen
	Year Ended March 31, 2024
	Finance leases		Operating leases
Cash paid for amounts included in the measurements of lease liabilities:
Cash flows from operating activities	¥	84	¥	52,759
Cash flows from financing activities		664		0

Right-of-use assets obtained in exchange for lease liabilities:	¥	1,481	¥	27,427


	Millions of yen
	Year Ended March 31, 2025
	Finance leases		Operating leases
Cash paid for amounts included in the measurements of lease liabilities:
Cash flows from operating activities	¥	67	¥	52,277
Cash flows from financing activities		725		0

Right-of-use assets obtained in exchange for lease liabilities:	¥	407	¥	54,161

Supplemental balance

sheet information related to lessee leases at March 31, 2024 and 2025 are as follows:


	Millions of yen, except lease term and discount rate
	March 31, 2024
	Finance leases			Operating leases
Investment in Operating Leases	¥	4,685		¥	82,674
Property under Facility Operations		2,306			72,284
Office Facilities		293			94,932

Total right-of-use assets		7,284			249,890

Other Liabilities		7,877			252,344

Total lease liabilities	¥	7,877		¥	252,344

Weighted average remaining lease term		35 years			11 years

Weighted average discount rate		2.2	%		1.7	%


	Millions of yen, except lease term and discount rate
	March 31, 2025
	Finance leases			Operating leases
Investment in Operating Leases	¥	4,634		¥	68,883
Property under Facility Operations		1,863			99,201
Office Facilities		537			81,396

Total right-of-use assets		7,034			249,480

Other Liabilities		7,479			251,860

Total lease liabilities	¥	7,479		¥	251,860

Weighted average remaining lease term		35 years			12 years

Weighted average discount rate		2.0	%		1.7	%

At March 31, 2025, the amounts of lease liabilities related to lessee leases due in each of the next five years and thereafter are as follows:


	Millions of yen
Years ending March 31,	Finance leases			Operating leases
2026	¥	558		¥	52,560
2027		540			37,238
2028		523			30,826
2029		498			26,484
2030		425			23,057
Thereafter		7,960			115,482

Total lease payments		10,504			285,647

Less imputed interest		(3,025	)		(33,787	)

Total lease liabilities	¥	7,479		¥	251,860