14. Financial Instruments1. Status of financial instruments(1) Policy regarding financial instrumentsThe LINTEC Group (the “Group”) limits the scope of its cash and fund management activities to short-term deposits and has a policy of relying principally on bank borrowings.The Group makes use of derivatives only to reduce risk of foreign currency exchange fluctuations and has a policy of not engaging in derivative transactions for speculative purposes.(2) Details of financial instruments and associated risk and risk management systemIn the course of its business activities, the Group is exposed to credit risk arising from trade notes and accounts receivable that are outstanding from its customers. Regarding the risk pursuant to the internal regulations for managing its credit exposure and trade receivables, due dates and balances are managed appropriately for each customer, to mitigate risks of uncollectible accounts.Investment securities are stocks being exposed to market price risk, and these are mainly the stocks of companies with which the Group has business relationships and they are periodically confirmed the market value.All of the trade payables – trade notes and accounts payable – are due within 1 year.The Group has commitment line contracts with financial institutions and the borrowings are raised mainly for business activities and capital investments.The Group is exposed to liquidity risk from its business-related obligations and borrowings but the Company and its consolidated subsidiaries prepare and implement financing plans to manage the liquidity risk.The Group conducts and manages derivative transactions based on internal rules and regulations. Director of administration division is in charge of managing derivative transactions and related reports are submitted to top management for each case. In addition, the contract amounts of derivative transactions described below in Note 16, “Derivatives,” do not represent the market risk associated with derivative transactions.2. Estimated fair value and other matters related to financial instrumentsCarrying value on the consolidated balance sheet as of March 31, 2016 and 2015 along with their fair value and the variance were shown in the following table.Millions of yenThousands ofU.S. dollars2016Carrying valueEstimated fair valueVarianceCarrying valueEstimated fair valueVariance(1) Cash and deposits¥ 65,733¥ 65,733¥ —$ 583,363$ 583,363$ —(2) Trade notes and accounts receivable62,33162,331—553,176553,176—(3) Investment securitiesOther securities2,4692,469—21,91321,913—(4) Trade notes and accounts payable(39,683)(39,683)—(352,177)(352,177)—(5) Short-term borrowings(1,695)(1,695)—(15,042)(15,042)—(6) Accrued income taxes(2,272)(2,272)—(20,172)(20,172)—(7) Derivative instruments44—3636—Note:i.Figures shown in parentheses are liability items.ii.The value of assets and liabilities arising from derivative instruments is shown by net value.Millions of yen2015Carrying valueEstimated fair valueVariance(1) Cash and deposits¥ 62,059¥ 62,059¥ —(2) Trade notes and accounts receivable64,09464,094—(3) Investment securitiesOther securities2,6562,656—(4) Trade notes and accounts payable(40,674)(40,674)—(5) Short-term borrowings(1,695)(1,695)—(6) Accrued income taxes(3,413)(3,413)—(7) Derivative instruments(3)(3)—Notes: i. Figures shown in parentheses are liability items.55LINTEC ANNUAL REPORT 2016


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