The Company's basic policy is to obtain funds from global financial markets through debt as necessary, while maintaining appropriate credit ratings and strong consolidated financial position, in order to secure liquidity required for smooth operations and to invest flexibly for its long-term business strategy that will lead to increasing its enterprise value.
The Company aims to maintain a sufficient level of shareholders' equity while achieving appropriate capital efficiency, in order to respond flexibly to investment opportunities for future growth while at the same time enhancing its ability to address possible risks relating to its business operations and assets.
Use of Capital
The Company allocates its capital mainly to working capital, corporate taxes, mergers and acquisitions, asset acquisitions and capital expenditures by its SBUs as well as repayments of borrowings, payment of interest, payment of dividends, and share repurchases.
The Company's primary source of liquidity for working capital and investments are cash flows from operating activities. However, the Company may consider and execute external financing when various conditions are deemed favorable, such as demand for funds, interest rate trends, repayment amount, redemption period of existing interest-bearing debt, amount to be raised, and financing structure.
For short-term working capital, the Company primarily utilizes borrowings from financial institutions and/or commercial paper. For mid- to long-term needs, the Company will raise funds mainly through borrowings from financial institutions and/or the corporate bond market. To maintain flexible financing capabilities, the Company has registered a maximum 200 billion yen worth of corporate bonds for potential issuances, the full amount of which is unused as of March 31, 2021.
Additionally, the Company has entered into overdraft agreements with four financial institutions to secure liquidity and raise working capital funds efficiently. The maximum amount of borrowings under these overdraft agreements is 113.0 billion yen as of March 31, 2021, and the entire amount remains unused. In addition, the Company entered into a committed credit facility agreement providing for a total commitment amount of 399.9 billion yen on April 30, 2020. The entire amount available under these credit facilities remains unused as of March 31, 2021.Reviewing the Company's liquidity situation and other factors after the conclusion of the above-mentioned committed credit facility agreement, the Company terminated it as of March 31, 2021 and entered a new agreement providing for a commitment amount of 200 billion yen effective as of April 1, 2021. The Company maintains these overdraft agreements and credit facilities to ensure sufficient liquidity in the event of significant changes in the business environment.
The table below sets forth a breakdown of the book value of interest-bearing debt by payment due period as of March 31, 2021. Each amount shown is the required cash outflow by payment due period excluding discounts and including interest payments.
（In millions of yen）
|Book value||Payment due period|
|1 year or less||Over 1 year through 5 years||Over 5 years|
The Company has long-term credit ratings of AA- from Rating and Investment Information, Inc. (R&I), A3 from Moody's Japan, and A from S&P Global Rating Japan as of March 31, 2021.
In order to maximize overall capital efficiency, the Company prioritizes internal lending and borrowing within the Company over external financing, mainly through a cash management system, when it is legally permissible and economically reasonable to do so.
The Company maintains internal liquidity of cash and cash equivalents by consolidating the cash management operations of all currencies to the Holding Company and its subsidiaries, which provide internal treasury management services. The Company seeks to maintain a sufficient cash position to maintain financial stability through potential changes in the economic environment including financial crises, and to create flexibility for investment opportunities that enable future growth. The amount of cash and cash equivalents is 501.0 billion yen and the amount of net cash*1 is 388.2 billion yen as of March 31, 2021.
Note1: Net cash = cash and cash equivalents - interest-bearing debt*2
Note2: Interest-bearing debt includes bonds and borrowings, excluding lease liabilities.
The Company invests only in principal-guaranteed financial instruments that are deemed safe and efficient, and does not engage in such investments for speculative purposes.
- Investor Relations