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Industrial Finance, Logistics & Development Group - Group CEO Message

Hideshi Takeuchi - Executive Vice President, Group CEO, Industrial Finance, Logistics & Development Group

The Industrial Finance, Logistics & Development Group integrates MC's strengths in terms of extensive knowledge of and expertise in industrial fields, plus a vast global network of contacts in all industries, to develop various industrial finance businesses.

Our main businesses are in leasing, buyout investment*, asset management and real estate finance. We have built on traditional financing models to develop new types of financial intermediation that only a major trading company such as MC could deliver. The group is also involved in the development of logistics facilities, other commercial real estate and residential housing, and in the provision of solutions in the logistics and insurance fields.

Midterm Corporate Strategy 2012 Targets and Progress

Under MC's Midterm Corporate Strategy 2012, the group is focusing on building blue-chip asset portfolios and reinforcing MC's asset management skills. We are also seeking to take advantage of the growth in emerging economies such as China.

Strategically, we have defined five business domains where we are targeting growth: real estate finance and property development in China and other overseas markets; aircraft, automobile and general leasing; infrastructure-related finance to develop financing models for the infrastructure sector; buyout investment for corporate clients in Japan and overseas; and logistics-related finance for shipping and other logistics assets. Overall, our aim is to develop a globally integrated industrial finance business where we offer financial intermediary services linked to real assets or underlying operations.

In October 2010, we created the Real Estate Investment & Management Unit to help develop a more dynamic role for the group in real estate finance. Reporting directly to the Group CEO, this unit will oversee the development of MC's medium- to long-term real estate portfolio and facilitate the development of related financial products.

In the year ended March 2011, we feel that our operations gradually gained momentum due to certain proven business frameworks that were established when the group was formed. Financial markets in the year ended March 2011 generally marked healthy growth as the world recovered from the global financial crisis. Given these factors, we posted net income of ¥11.6 billion. This represented a ¥19.2 billion turnaround from the ¥7.6 billion net loss we posted in the year ended March 2010.

Business Environment and Outlook for Year Ending March 2012

Although we will need to continue monitoring business conditions in the coming year due to the impact of the Great East Japan Earthquake, we believe that the temporary effects of the downturn associated with the global financial crisis have now receded.

For the year ending March 2012, we are projecting a ¥1.4 billion year-on-year increase in net income to ¥13.0 billion. This forecast is based on projected strong earnings from the leasing business and other assumptions.

* Buyout investment: an investment technique for earning a return by investing in an existing company and providing management support to increase the invested company's corporate value.