Integrated Report 2020

12. 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 loans.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 regula-tions 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 short-term loans payable are raised mainly for business activities and capital investments.The long-term loans payable are raised for corporate acquisitions. Interest rate swaps and interest rate and currency swaps are used to manage exposure to market risks from changes in interest rates and foreign currency exchange rate of the long-term loans payable.The Group is exposed to liquidity risk from its business-related obliga-tions and loans 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. Executive officer 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 14, “Derivatives,” do not represent the market risk associated with derivative transactions.2. Fair value and other matters related to financial instrumentsCarrying value on the consolidated balance sheet as of March 31, 2020 and 2019 along with their fair value and the variance were shown in the following table.Millions of yenThousands ofU.S. dollars2020Carrying valueFair valueVarianceCarrying valueFair valueVariance(1) Cash and deposits¥ 57,190¥ 57,190¥—$ 525,501$ 525,501$   —(2) Trade notes and accounts receivable62,89662,896—577,931577,931—(3) Investment securitiesOther securities1,2221,222—11,23511,235—(4) Trade notes and accounts payable(41,465)(41,465)—(381,016)(381,016)—(5) Short-term loans payable(1,580)(1,580)—(14,521)(14,521)—(6) Accrued income taxes(2,638)(2,638)—(24,245)(24,245)—(7) Long-term loans payable(11,525)(11,573)48(105,903)(106,347)443(8) Derivatives88—8181—Notes:i.Figures shown in parentheses are liability items.ii.The current portion of long-term loans payable is included in long-term loans payable.iii.The value of assets and liabilities arising from derivatives is shown by net value.Millions of yen2019Carrying valueFair valueVariance(1) Cash and deposits¥ 62,148¥ 62,148¥  —(2) Trade notes and accounts receivable69,47969,479—(3) Investment securitiesOther securities1,6341,634—(4) Trade notes and accounts payable(52,873)(52,873)—(5) Short-term loans payable(2,531)(2,531)—(6) Accrued income taxes(2,429)(2,429)—(7) Long-term loans payable(14,661)(14,543)(117)(8) Derivatives44—Notes:i.Figures shown in parentheses are liability items.ii.The current portion of long-term loans payable is included in long-term loans payable.iii.The value of assets and liabilities arising from derivatives is shown by net value.(As Lessor)The minimum lease receivables under noncancellable operating leases as of March 31, 2020 and 2019 were as follows:Millions of yen Thousands ofU.S. dollars202020192020Due within 1 year¥10¥27$ 95Due after 1 year1727156Total¥27¥55$252LINTEC Integrated Report 2020Financial Information82

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