Annual Report 2009 - Toyota Financial Services

Annual Report2009Toyota Financial Services Czech s.r.o.

Toyota Financial Services Czech s.r.o.2

Annual Report 20093

Winter 2009 | NIC Foundation NewsletterScholarship to Honour Stan HagenProvince, Foundation, and industry contributeA new $105,000 scholarship was created in memory of Agricultureand Lands Minister and Comox Valley MLA Stan Hagen in order tocarry on the legacy of the dedicated and caring public servant.“Throughout his years in public service, Stan Hagen was passionateabout helping young people reach their full potential,” said PremierCampbell. “This scholarship will help to ensure that Stan’s legacy ofcaring for youth and for education carries on for years to come.”The Province of British Columbia is contributing $35,000, the NorthIsland College Foundation is contributing $35,000 and Western ForestProducts, International Forest Products and TimberWest Forest Corp.are contributing a further $35,000 to the Stanley B. Hagen Scholarshipat North Island College.“Stan Hagen was a strong voice for advanced education and forNorth Island College,” said Dr. Lou Dryden, President of North IslandCollege. “By creating this scholarship in his memory, we can honourhis contributions in perpetuity to building our community and ourprovince.”“British Columbians were fortunate to have a caring public servantand supporter of the forest industry like Stan Hagen,” said Rick Jeffery,CEO of Coast Forest Products Association. “We are honouredto partner in this scholarship inmemory of a strong advocate forthe communities and people ofthe coast.”The scholarship funding will beheld in trust by the North IslandCollege Foundation, with theinterest generated going to fundtwo annual scholarships equivalentto a year of full-time tuitionat North Island College.“Investing in our province’s best students by providing scholarshipsfor their education is a fitting tribute to a friend and colleague whodevoted decades of his life to serving British Columbians,” said AdvancedEducation and Labour Market Development Minister MurrayCoell. “Stan would be proud to see that his legacy lives on in NorthIsland College.”Stan Hagen served as minister in 10 ministries between 1986 and2009, including Education; Advanced Education; Tourism, Sport andthe Arts; and Children and Family Development.On behalf of the North Island College FoundationBoard of Directors, thank you for supporting NorthO Island College students by creating scholarships andbursaries, by providing funds for program development andenhancement, and by contributing to our equipment andlibrary resources. We very much enjoyed getting to know youand talking with you about the importance of supporting postsecondaryeducation in our community. We look forward tocontinuing our relationships and working together to supportour students in achieving their goals. The list to the rightrepresents our 2008 donors.To all our friends and donors, thank you!Alistair McVey, ChairDale Pateman, Secretary/TreasurerDr. Joan BoaseLorna CrowshawDr. Lou DrydenJoe GrisBert Heeringa, Vice ChairDon JonesBrook KiddleArne EinarsonJanet LackeyAudrey Sullivan250-334.5000 ext 4267foundation@nic.bc.caWWW.NIC.BC.CAABC Printing | Shirley Ackland | Cindy Adams | Adult Basic Education Association of BC | Sylvia Aiello | Alberni Valley CommunityFoundation | Alberni Valley Lions Club | Roger Albert | Janis Almond | Alzheimer Society of BC | Marguerite Ancell | Anderton Nursery| Andrew Sheret Limited | Constance Anshelm | Dr. Marlene Atleo | Susan Auchterlonie | Leo Auterson | Samantha Banton-Smith |Richard Barnum | John Belshaw | Janet Bergunder | Laurie Bird | Ron & Mary Black | Casey Black | Dr. Joan Boase | John & YvetteBrett | Brook G Kiddle Personal Law Corporation | Campbell River Altrusa Club | Campbell River Dragon Boat Society | CampbellRiver Garden Centre | Canadian Daughters’ Assembly # 6 | Canadian Federation of University Women - Comox Valley | CanterburyFood Service | Myrtle Capling | Carl-Marg Holdings Ltd | Dr. Michael Catchpole | CGA Association of BC | Ellen Chambers | Cityof Port Alberni | Marilyn Clements | Coca-Cola Bottling Co. | Comox Valley Art Gallery | Comox Valley Community Foundation |Comox Valley ElderCollege | Comox Valley Horticultural Society | Comox Valley Potters Club | Comox Valley Rainbow Chorus | ComoxValley Recovery Centre Society | Comox Valley Regional District | Comox Valley Retired Teachers’ Association | Comox Valley RotaryClubs | Comox Valley Sports and Aquatic Centre | Cheryl Cooper | Colleen Copithorne | Patricia Corbett-Labatt | Helena Corry | JoyceCoutts | Kevin Craig | Creative Employment Access Society | Credit Union Foundation of BC | Les Crimp | Brian Croll | Ivan & LauraCronsberry | Barry Cross | Susan Cross | Lorna Crowshaw | Anne Cubitt | Anne Cumming | CUPE Local 3479 | Emmalyn Davies | GayDavis | John & Laurene Davis | Sue de Bruin-Eiselen | Jason DeForge | Digital Communications Rogers Wireless | Lisa Domae | PhyllidaDrummond | Dr. Lou Dryden | Duncan Sabine Collyer Partners LLP | Sara Durocher | Eagle Radio 97.3 | Ron Evans | Evergreen SeniorsClub | Sandy Faust | Jack & Sharon Fletcher | Helen Foster | Mona Fournier | Future Shop | Catherine Gailloux | Corrine Gailloux |Gordon Gallacher | Don Gillingham | Grieg Seafood BC Ltd | George Hamilton | Mary Louise Hamson | Derek Hanebury | ColleenHanley | Bert Heeringa | Marianne Henriksson | Vivian Hermansen | Liz Hinke | Christine Hodgson | Dr. Jennifer Holden | HomeDepot of Canada Inc | Debby Howard | Barbara Howie | Robert Hughes | Michelle Hume | Sharon Hylands | John & Jean Illman |IODE Laura Gordon Chapter | Lorne Irwin | Islands West Manufacturers Ltd | Judy Johnson | JohnsonDiversey | Betty Karau | WilmaKeitlah | Norma Kenny | Kinsmen Club of Campbell River | Carolyn Kirk-Albert | Kiwanis Club of Port Alberni | Leslyann Komljenovic| Thea Kovach | Theodore Kremer | Kathleen Kuhnert | Lela Kulesh | Lady Rose Marine Ltd | Clara Lake | Joe Larche | Jane Larsen |Hannah Leprette | Donna Ley | Carol Lidster | Barbara MacKenzie | Anne MacKnight | Peter Maguire | Marsha Mann | Jane Marinakis| Marine Harvest Canada Inc | Carol Matheson | Brenda McBride | McCain Foods (Canada) | Victoria McCoy | Sarah McDowell |Summer McGee | Isobel McLeish | Bill McLeod | Norma McLeod | Garry McLeod | Nicole McQueen | Alistair McVey | Thomas &Irene Miles | Alanna Miller | Minerva Foundation for BC Women | Monk Office Supply Ltd | Nicole Mooney | James Morton | LorraineMounce | Mt. Washington Alpine Resort | Marianne Muir | James & Patricia Muldowney | Judith Murphy | Neptune Food Service |Diane Newman | Mac Newton | Grace Norman | North Douglas Sysco Food Services | North Island College Faculty Association | NorthIsland Young Musicians Society | Denise Olson | On Deck Systems Inc. | Margaret O’Sullivan | Tracy Parker | Sandra Parkes | RejeanPatenaude | Serena Patterson | Catherine Peters | Dr. Martin Petter | Marian Pickton | Michael Plant | Port Alberni ElderCollege | CherylPorter | Ruthanne Price | Angela Price | Mary Ann Pruyser | Jerry Pulido | Quality Foods | Russell Ramsden | Gene Regier | Marie Roberts| Mr. J. Roberts | Louise Robertson | Andrea Rowe | Royal Purple of Canada Lodge No 158 | Phyllis Ryan | Elaine Shelton | Showcase5 Theatre | Slava Simice | Wendy Smith | Soroptomist International Club of Courtenay | Sound Advice Music Shop | Glenn Staples |Edison Stewart | Ken Stone | Gordon & Marianne Strain | Strathcona Gardens Recreation Complex | Betty Tate | The Peak 93.3 | ThePotters Place | Linda Thompson | Mary Pat Thompson | Linda Thompson | Maimee Tomlinson | Gillian Trumper | Dr. Barrie Turnham |Tyee Chevrolet | Union Bay O.A.P.O. #147 | Vancouver Foundation | Rose Vasile | Viking Air Ltd | Sandra Wagner | Kevin Walters | Dr.Sherrie Wang | Tom Weegar | Rachel Wellock | Women for Women | Richard Wu | Pamela Wylie | Jill Xotta 4

Annual Report 2009ContentIntroduction 6Company 8Establishment of the Company and its history 8Products and services 10Retail 10Wholesale 20Risk management 21Strategy for the financial year 2010 22Independent auditor’s report 24Financial statements 30Balance sheet 30Income Statement 31Statement of changes in shareholder’s equity 32Cash flow statement 33General information 34Accounting policie 35Intangible fixed assets 39Tangible fixed assets 40Receivables 42Equity 43Payables 43Bank loans 44Derivate financial instruments 44Taxation 45Accruals and deferrals 46Revenue analysis 46Employee analysis 47Fees paid and payable to the audit company 47Related party transactions 48Commitments 49Contingent liabilities 49Subsequent events 49Cash flow statement 49Report on relations among related parties 505

Toyota Financial Services Czech s.r.o.Ladies and Gentlemen,Dear friends,If I am to evaluate the previous fiscal year just with one word, the most appropriate one would be the word„difficult“.It was difficult for several reasons. First of all – due to the influence of various aspects of the public finance reform– which, as a whole was certainly a correct solution – an almost complete suspension of financial leasing (whichwas until then a very popular measure, and was offered by our company under a brand name Toyota Leasing) tookplace in 2008. Financial lease became less popular for business entities due to the abolition of the valid option tocover the payments for a vehicle with tax deductible instalments in less time than if it was bought for cash. Althoughwe had been prepared for such a situation, and since 2002 we offer an alternative in the form of loan financing(Series Toyota Credit), we nevertheless experienced an outflow of customers. We were trying to gain them back notonly with our loan products but also with our operating leases (available in our offer under the names of ToyotaRent and Toyota Rent Plus), which are provided as a standard product in established market economies. There isno doubt that operational leases have a great future, but it will take some time before they are accepted by thebusiness sector, particularly by smaller companies.In addition, our business was influenced by the upcoming economic and financial crisis, resulting in a further lossof interest of potential clients in funding.This means that the financial services sector, as we have known it before, has completely changed. And we mustdeal with this fact in the future.In addition to changes in the market, the financial sector crisis caused also changes in our cost inputs. If it waspossible to work with a relatively predictable development of interest rates and margins until 2008, this conceptwas completely changed afterwards. Besides the significant reduction of the value of assets due to a lower volumeof funds lent, our current result was also impaired due to the change in the value of the interest rate swaps. And,unfortunately, this change was negative.Although we have been trying hard to cope with the effects of the changes in the macro-environment on ourbusiness, we have not stopped working on our projects and products that we consider to be essential in the light offuture developments.Already in the previous fiscal year, we have marketed our first brand insurance – Toyota Pojištění – and we havebeen trying, as the first company of our type, to operate as an insurance agent and mediate insurance to a type ofcustomer which is new to us. These are customers who are buying their assets (vehicles) for cash. Today, we alreadyknow more – we have been working for a year in this business and we know all its strengths and weaknesses whichwe rather expected to happen in the project preparation stage.It is certain that there is great potential in mediated insurance – firstly, it is a service increasing customersatisfaction as both the car sales and support services are provided in one location. Secondly, we see furtherpotential in selling insurance via the internet and in other improvements of our related services provided to Toyotacustomers, aiming at the top quality service.During the past fiscal year, we were dealing with the completion of the „toyota724“ project (as was its originalinternal name). Since autumn 2008, we had been gradually delivering parts of the TFS ONLINE system, which isthe name of the final solution prepared for our customers and cooperating partners. In October 2008, we madeavailable to our customers the first part of it denominated „My Account“ (its original name was „Client Accounts“).As far as I know, we are the second company of our type which enables its customers on-line access to view lease orcredit agreements, and potential changes to these contracts.6

Annual Report 2009In January 2009, we made available a very similar part of the solution also to our cooperating partners (its originalname was”Dealer Accounts“). Authorized Toyota and Lexus dealers have therefore been given a tool which providesthem with all information relating the funding they need. Besides a quick look on the financial support levelswhich are updated daily, it is also possible to see, through the so-called cascade declining, the status of a specificloan agreement relating to one particular vehicle. Our partners also receive an electronic statement of the requiredmonthly payments, and the system can also be used to file any requests or suggestions.Contrary to our original assumption, we have not fully completed the system due to its great complexity anda limited number of staff allocated to the project. We will therefore be able to launch other parts of the system aslate as in the upcoming fiscal year.The full implementation of the project is linked to the analysis and improvement of internal company processes.This task shall also be addressed in relation to the complete introduction of all parts of TFS ONLINE to the market.Despite all the difficulties we had to face in this fiscal year, we see the oncoming years in a positive light, andalthough it is difficult to establish the end of the crisis, we will continue our efforts to build a modern companymeeting all the demands placed on a 21st century business.In doing all the above, we intend to rely on our traditional partners – Toyota and Lexus sales networks, the Toyotaand Lexus car distributor – TOYOTA MOTOR CZECH spol. s r.o., and both the insurance companies which cooperatewith us – i.e. Allianz pojišťovna, a.s. and Kooperativa pojišťovna a.s., Vienna Insurance Group.I would like also to thank the employees of all these organizations on behalf of our company for their support andcooperation.I also believe that my colleagues will carry on the good work, without which the development of our companywould be unthinkable. I appreciate not only their commitment in our daily routine, but also their extraordinarysupport when working on projects and development of new products, and I would like to thank them very much fortheir continuous support.In the fiscal year 2010, it is likely that the trend initiated in the current fiscal year is going to continue. Despite therelatively vague prospects due to the fact that it is difficult to assess when the crisis is going to end, and due to otherexternal factors, our company will go on with its work and strategy based on the „customer first“ philosophy.We are going to complete the TFS ONLINE project and adjust our internal processes in line with the functionality ofthis web portal. Similarly, we will build on our current knowledge and try to improve it further. We believe that themission of our company will be supported also by the fact that our registered office moved in June 2009to a new building of the Toyota and Lexus vehicle distributor, an associate of the companyTOYOTA MOTOR CZECH spol. s r.o.. This change will enhance our cooperation, help to simplify and accelerate ourcommunication, and have a positive impact on the quality of services provided to our clients.Yours sincerely,Ing. Aleš KamarýtStatutory representativePrague, 16 July 20097

Toyota Financial Services Czech s.r.o.ANNUAL REPORT FOR THE FINANCIAL YEAR ENDED 31 MARCH 2009COMPANYBasic information:Name:Toyota Financial Services Czech s.r.o.Company ID: 65413261Registered office: Rubín Office Center, Sokolovská 192/79, 186 00 Praha 8Date of establishment: 30 April 1996Legal form:a limited liability companyOwnership interest: TOYOTA FINANCIAL SERVICES (UK) plc 100%Share capital:Statutory body:CZK 44,000,000 paid upIng. Aleš Kamarýt – statutory representativeToyota Financial Services Czech s.r.o. is a member of the Czech Leasing and Finance Association.Establishment of the Company and its history:Toyota Financial Services Czech s.r.o. was established in 2000 as a successor to the original business of BB-Leasing s.r.o.(established in 1996) on the basis of the acquisition of 100% business share of the original company BB-Leasing s.r.o.by the new owner – TOYOTA FINANCIAL SERVICES (UK) plc from Great Britain.From 1996 to April 2000 – BB-Leasing, s.r.o., universal leasing company.2 0 0 0May 2000 – Establishment of Toyota Financial Services Czech s.r.o. (“TFSCZ”) through acquisition of 100% business shareof BB-Leasing s.r.o., new owner – TOYOTA FINANCIAL SERVICES (UK) plc from Great Britain.June 2000 – First lease contract concluded under the name of TFSCZ (Toyota Leasing product).2 0 0 1March 2001 – Cooperation agreement concluded between TFSCZ and the Toyota car importer –TOYOTA MOTOR CZECH spol. s r.o. (“TMCZ”).March 2001– First meeting with all Toyota authorized dealers from the Czech Republic, official launch of Toyota Vario product,introduction of the new calculation program.April – June 2001 – First joint campaign (“Spring campaign”) in cooperation with TMCZ, aimed at support of Yaris, Corollaand Avensis models sale, a first sales record was achieved during this campaign.September 2001 – Work commenced on implementation and adjusting of the STEP_SQL system (master software serving forcontracts administration and their accounting).October 2001 – Cooperation started with Toyota Material Handling Česká republika a.s. (formerly Kromexim a.s., Kroměříž)– importer of Toyota handling equipment in the Czech Republic, the leasing product Toyota Forklift Leasinglaunched on the market.2 0 0 2March 2002 – Presentation of the first credit-based product (Toyota Kredit) to the network of Toyota authorized dealers and itssubsequent launch on the market.April 2002 – Work commenced on the new dealer support scheme.June 2002 – Historic sales record achieved (in terms of the market share so far unbeaten).August 2002 – Registered office of the Company struck by floods, TFSCZ offices moved to spare premises provided by TMCZ.October 2002 – Successful return to the registered office of the Company.8

Annual Report 20092 0 0 3February 2003 – The Company was awarded a prize for the 2nd best result among the companies of the Toyota FinancialServices Group in Europe and Africa.February 2003 – Testing phase of the new dealer support scheme with pilot partners launched.April 2003 – First product based on operating lease (Toyota Rent) launched on the market.May 2003 – The rest of Toyota’s authorized dealers included in the new dealer support scheme.September 2003 – STEP_SQL system put into full operation.December 2003 – On-line calculator for authorized dealers put into operation.2 0 0 4February 2004 – Cooperation with Toyota Material Handling Česká republika a.s. (formerly Kromexim a.s., Kroměříž) extendedby the offer of the product based on the operating lease (Toyota Forklift Rent).February 2004 – TFSCZ hosted 6th TFS Marketing Conference, at the same time it was awarded a prize for the 1st place (thehighest market share) among the companies of the Toyota Financial Services Group in Europe and Africa.May 2004 – A change in the VAT Act and subsequent dramatic decline in the volume of newly concluded lease contracts.August 2004 – Work commenced on the project of starting Toyota Financial Services Slovakia s.r.o. subsidiary establishment.September 2004 – First product of the line Toyota Direct (insurance following due expiration of the lease or credit contract).December 2004 – Historic sales record in the number of contracts concluded in one month.2 0 0 5January 2005 – Project finalization and establishment of Toyota Financial Services Slovakia s.r.o.August 2005 – Variable credit Toyota Genio launched.October 2005 – Completely revised (wholesale) dealer support offer launched.2 0 0 6March 2006 – New web sites, for the first time with the customer section (off-line) launched.October 2006 – TFSCZ is a fully authorized insurance agent on the basis of meeting all mandatory conditions.December 2006 – An initial client rating scheme created.2 0 0 7February 2007 – Joining the Non-bank register of client information (NRKI).February 2007 – Winning the biggest tender in the history of TFSCZ for financing of car fleet for the TPCA Kolín employeeprogram.March 2007 – Modification of corporate identity design in core products.June 2007 – Work on web interface (portal) internally labelled as „toyota724“ has been started.2 0 0 8February 2008 – The first contract within the Toyota Pojištění (insurance) line was concluded.March 2008 – Work on the Toyota Rent Plus product line was completed.October 2008 – The first part of the TFS ONLINE web interface – My Account, designed for TFSCZ customers, was launched live.December 2008 – A new website was launched with a completely new design and with a newly created Client Center.2 0 0 9January 2009 – The second part of the TFS ONLINE web interface – My Account, designed for cooperating partners (dealers),was launched live.9

Toyota Financial Services Czech s.r.o.Products and ServicesAt present business activities of Toyota Financial Services Czech s.r.o. are performed on three basic product levels.The first one is the provision of financial services to end customers who have the intention to acquire (finance) Toyota and Lexuscars or Toyota and BT forklift trucks. This area of services is termed “retail”.The second part of TFSCZ product portfolio, usually called “wholesale”, is intended for support to Toyota’s authorized dealernetwork.Above both these basic product portfolio levels, which primarily serve to acquire assets, there is a third level - insurance.Insurance currently consist of property insurance relating to cars (and handling equipment).RetailThe financial service portfolio, which was substantially modified particularly in the last two years in relation to the amendmentsof the Income Tax Act and of the Value Added Tax Act, is at present able to satisfy a wide range of customer needs andexpectations. It includes both lease and loan products and, as a new feature, also a complete range of insurance productsdesigned for customers who do not finance their vehicles through Toyota Financial Services Czech s.r.o. too. The details of theindividual products are listed as follows:Toyota LeasingToyota Financial Services Czech s.r.o. product pillar, offeredsince the commencement of the Company’s operations in theCzech Republic, has been based on a finance lease with fullamortization, which means a finance lease with subsequentpurchase of the leased asset. Either businessmen or nonbusinessmenmay be the lessees. The specific conditions ofthe lease contract are based on a combination of standardparameters as follows:❍ an extra instalment accounting for 10% – 60% of thevehicle cost,❍ term of the contract is 36, 42, 48, 60 or 72 months for nonbusinessmen,60 or 72 months for businessmen,❍ fixed motor vehicle liability insurance (a minimum limitof CZK 50 million/CZK 50 million) throughout the wholelease term is part of regular instalments,❍ motor hull casco insurance, with a deductible of 5%(a minimum of CZK 5,000) or 10% (a minimum ofCZK 10,000), is fixed throughout the whole lease term andis part of regular instalments,❍ it is possible to take out an insurance policy for any Toyotaor Lexus brand model, for both new and used cars,❍ the contract is terminated by settling the repurchase pricein the notional amount of CZK 1,190 inclusive of VAT.Toyota KreditOur product, offered since 2002 and based on the creditfinancing principle, is intended for customers who want toown the vehicle immediately but do not want or may notuse their own financial means for its purchase. Toyota Kreditis suitable not only for businessmen or non-businessmen,but also for contributory organizations of self-governingterritories, cities (including the Capital City of Prague),municipalities and regions. The contract structure is veryflexible:10

Annual Report 2009❍ the standard financed amount ranges from 30% to 90% ofthe asset’s cost (i.e. the minimum amount of own financialmeans for covering the purchase is 10%),❍ credit contract term is 12, 24, 36, 48 or 60 months,❍ fixed motor vehicle liability insurance (a limit ofCZK 50 million/CZK 50 million) is part of regularinstalments throughout the whole credit contract term,❍ motor hull casco insurance, with a deductible of 5%(a minimum of CZK 5,000) or 10% (a minimum ofCZK 10,000) is fixed throughout the whole credit contractterm and is part of regular instalments,❍ the product can be normally used for financing new andused Toyota and Lexus brand cars,❍ the contract is terminated by repayment of the total principal(credit); the credit contract may be extended, shortened orrepaid earlier, subject to agreement with our Company.Toyota VarioThe principle of this modified credit product is the option of theincreased last instalment. This enables the debtor to achievea very reasonable amount of the regular monthly instalment.The product is intended in particular for non-businessmen. Thefollowing applies for the Toyota Vario product:❍ own financial means in the amount of 20% – 60% of thevehicle cost,❍ contract term is 36 or 48 months,❍ fixed motor vehicle liability insurance (a limit ofCZK 50 million/CZK 50 million) throughout the wholecredit contract term is part of regular instalments,❍ motor hull casco insurance, with a deductible of 5%(a minimum of CZK 5,000) or 10% (a minimum ofCZK 10,000) is fixed throughout the whole credit contractterm and is part of regular instalments,❍ the amount of the last increased credit instalment can bechosen between 10% and 30%, or 25% of the total vehiclevalue, subject to the contract term and model of thefinanced vehicle,❍ the contract can be concluded for models Aygo, Yaris,Auris, Corolla SDN, Corolla Verso, Avensis and RAV4,❍ at the end of the contractual term, it is necessary to chooseone of the following options:– payment of the last increased instalment,– continued financing of the last increased instalment(extension of the credit contract till final repayment),– vehicle repurchase at market value (at least in the amountof the last increased instalment) by the dealer, using theoffer for a very advantageous purchase of a new vehicle,including similarly advantageous financing terms.Toyota GenioNew product for end-customers with the option of earlyrepayment of the principal every 12 months, free of interest.For our customers this product is interesting since the advancepayment required is lower (starting at 10% of own financialmeans), credit instalments are incomparably lower (dueto the longer contract term) and the amount of insurancepremium included in the instalment is very reasonable. Thecustomer is informed about the value determined for thepurposes of the early repayment already in the credit contractitself. Specific features of Toyota Genio are as follows:❍ amount of own financial means starting at 10% of thevehicle (acquisition) cost,❍ contract term: 72 months,❍ fixed motor vehicle liability insurance (a limit ofCZK 50 million/CZK 50 million) is included in regularinstalments throughout the whole loan contract term,❍ motor hull casco insurance, with a deductible of 5%(a minimum of CZK 5,000) or 10% (a minimum of11

Toyota Financial Services Czech s.r.o.CZK 10,000) is fixed over the entire loan contract term andis part of regular instalments,❍ option of early repayment every 12 months of the contractterm,❍ currently, the contract may be concluded for the wholeToyota model line.Toyota RentA newcomer in the portfolio, since the financial year 2004, isintended in particular for corporate clients. It is an operatinglease, which is based on partial amortization of the vehicleaccording to a specified travelling timetable (length ofuse and total mileage). The key benefit for customers isin particular this product’s very reasonable instalmentpositively influencing financial expenses, with limitedadministration relating to the vehicle operation. The totalrental is based on the following parameters:❍ financing of 100% of the vehicle cost,❍ contract term is 12 – 48 months,❍ maximum number of kilometres driven during the leaseterm is 160,000,❍ fixed motor vehicle liability insurance (a limit ofCZK 50 million/CZK 50 million) throughout the wholelease term is always part of regular instalments,❍ motor hull casco insurance, with a deductible of 5%(a minimum of CZK 5,000) or 10% (a minimum ofCZK 10,000), is fixed throughout the whole lease term andis always part of regular instalments,❍ the rental cost also includes the vehicle registration,payment of the road tax and the radio licence fee,❍ after the contract expires, the vehicle is returned to ourCompany and, if the vehicle ‘s wear and tear correspondsto the contractual terms and conditions, no additionalcosts are charged to the client.Toyota Rent PlusToyota Rent Plus is a new product in the portfolio of ToyotaFinancial Services Czech s.r.o. which has been offered sinceMarch 2008. It is intended in particular for corporate clientsand for customers who wish to take advantage of the typeof lease reflecting actual use of the vehicle with no needto address the issue of how to treat the vehicle when thelease term expires. It is an operating lease which is based onpartial amortization of the vehicle according to a specifiedtravelling timetable (length of use and total mileage). Thekey benefit for customers from the ranks of businessmenand business companies is in particular this product’s veryreasonable monthly instalment which is a fully tax-deductibleexpense and also limited administration relating to the vehicleoperation and the possibility of regular replacement of thecar fleet. This is an extended version of the basic Toyota Rentproduct. The basic features of the product are as follows:❍ financing of up to 100% of the vehicle cost,❍ standard contract term is 12, 24, 36 or 48 months, howevera maximum of 60 months,❍ maximum number of kilometres driven during the leaseterm is 160,000,❍ monthly rental instalments include complete servicingand road assistance according to the client’s specificrequirements (repair and maintenance, change andstorage of tyres, road assistance, alternate car and fuelcard),❍ the rental cost also includes the vehicle registration,payment of the road tax and the radio licence fee,❍ fixed and very favourable motor vehicle liability insuranceis part of regular instalments throughout the whole leaseterm,❍ motor hull casco insurance, with attractive rates and anoptional deductible of 5% (a minimum of CZK 5,000) or12

Annual Report 200910% (a minimum of CZK 10,000) is fixed throughout thewhole lease term and is part of regular instalments,❍ after the contract expires, the vehicle is returned to ourCompany and the customer therefore does not have toaddress the issue of either retaining or sale of the vehicle,he can rent a new vehicle and thereby optimize the costs ofits operation❍ if the vehicle‘s wear and tear corresponds to thecontractual terms and conditions, no additional costs arecharged to the client upon returning of the vehicle.Toyota Forklift LeasingComplex financial support of the Toyota brand is alsoreflected in the sale of handling equipment , Toyota forklifttrucks and BT handling equipment. In cooperation withdistributors of these brands it is possible to enter intoa finance lease with full amortization and other standardparameters as follows:❍ extraordinary instalment in the amount of 10% – 60% ofthe vehicle cost,❍ payment term is 60 or 72 months,❍ net book amount 0% (possibly 10%) of the vehicle cost,❍ machinery insurance is fixed and is part of instalmentsthroughout the whole lease term, with a maximumdeductible amount of CZK 10,000,❍ third party insurance (a limit of CZK 50 million/CZK 50million) is part of regular instalments throughout thewhole lease term,❍ the contract is terminated by settling the repurchase pricein the notional amount of CZK 1,190 inclusive of VAT orpaying the net book amount.Toyota Forklift KreditOur product, offered since November 2008 and based on thecredit financing principle, is intended for customers who wantto own the handling equipment immediately but do not wantor may not use their own financial means for its purchase.Toyota Forklift Kredit is suitable for businessmen interested inshort-term and variable financing. The contract structure isvery flexible:❍ the standard financed amount ranges from 40% to 90% ofthe cost of handling machines (i.e. the minimum amountof own financial means for covering the purchase is 10%),❍ credit contract term is 12, 24, 36, 48 or 60 months,❍ third party insurance is part of instalments, fixedthroughout the whole contract term,❍ machinery insurance with a maximum deductible amountof CZK 10,000 as part of instalments, fixed throughout thewhole contract term,❍ the contract is terminated by repayment of the totalprincipal (credit); the credit contract may be extended,shortened or repaid earlier subject to agreement with ourCompany.Toyota Forklift RentTogether with the exclusive distributor of forklift trucks andhandling equipment of the Toyota and BT brand, we havebrought to our customers since February 2004 a uniqueproduct which provides comprehensive services in the areaof the operation and care for the vehicle. Toyota ForkliftRent is an operating lease with full servicing. The terms andconditions of the lease contract, which is concluded with thedistributor, are based on the combination of the followingparameters:13

Toyota Financial Services Czech s.r.o.❍ financing of 100% of the vehicle cost,❍ contract term is 12 – 84 months,❍ machinery insurance is fixed and is part of instalmentsthroughout the whole lease term, with a maximumdeductible of CZK 10,000,❍ third party insurance (a limit of CZK 50 million/CZK 50million) is fixed and it is part of regular rental payments,❍ the rental cost includes the provision of normal servicesassociated with the operation of the vehicle and isproportional to the number of hours in operation,❍ in excess of normal services, it is possible to arrange alsofor a change of tyres and the fork of the vehicle.❍ certainty of guaranteed and high-quality services,❍ special approach towards claims adjustment,❍ alternate car for free for a period of 5 days in the case of cardamage due to the insured event,❍ first-class road assistance services both in the CzechRepublic and abroad,❍ a wide range of supplementary insurance,❍ insurance directly upon the purchase of a vehicle from theauthorized dealer of the Toyota/Lexus brand with specialinsurance premium rates,❍ bonuses for claims-free record for years that you had noaccidents.Toyota PojištěníThe first brand insurance product on the Czech market,offered since the 1st quarter of 2008, is intended forcustomers buying Toyota and Lexus cars for cash or viaanother financial institution offered through the network ofToyota and Lexus dealers, web interface (portal) or directly viaToyota Financial Services Czech. The basic offer includes:❍ motor vehicle liability insurance (hereinafter referred to as“liability insurance“),❍ basic motor hull casco insurance (crash, theft, elementaryloss, vandalism),❍ supplementary motor hull casco insurance (plate glassinsurance, luggage insurance, alternate car insurance, roadassistance insurance and personal accident insurance).As part of this product the customer acquires in particular:❍ first brand insurance product on the Czech market offeredby our Company and the renowned Allianz pojišťovna, a.s.(insurance company),Toyota DirectToyota Direct is a new name of the product line, which isfocused on any user of Toyota and Lexus cars. Currently, it isfocused in particular on those customers, who have properlyterminated their credit or lease contracts with Toyota FinancialServices Czech s.r.o. for a vehicle which they retain or onowners of Toyota and Lexus cars, who in the past have notpurchased those cars through brand financial services or arenot even considering them. Due to the fact that Toyota Directis based on customer expectations, we also anticipate theongoing change and extension of this product, with respect towhich at present it is possible to arrange for the following:❍ complete motor hull casco insurance in collaborationwith Allianz pojišťovna a.s., together with supplementaryinsurance (insurance of the windscreen, an alternate car,luggage insurance, accident insurance for passengers) –we guarantee the provision of best rates on the market,❍ motor vehicle liability insurance in cooperation with Allianzpojišťovna a.s.14

Annual Report 2009The proportion of individual products (related to handed over contracts in the financial year) is clear from Table 1.“Financed value” represents the amount of funds lent to customers. “Number of contracts” shows the number of units(financed assets) which were financed in a given financial year. The column “Cost (exclusive of VAT)” represents the total costof individual assets at the time of their acquisition again split into individual products.Table 1 – Contracts handed over in the financial year 2008 (CZK)Product Financed value ShareNumber ShareCost (exclusive Shareof contractsof VAT)Toyota Leasing 65,402,403 14.95%212 16.42%83,400,274 13.44%Toyota Equipment 0 0.00%0 0.00%0 0.00%Toyota Kredit 242,321,657 55.38%732 56.70% 387,270,234 62.41%Toyota Vario 3,448,236 0.79%9 0.70%5,157,240 0.83%Toyota Genio 69,614,616 15.91%243 18.82%87,581,625 14.11%Toyota Rent/Rent Plus 55,494,411 12.68%92 7.13%55,693,441 8.97%Toyota Forklift Leasing/Kredit 1,258,017 0.29%3 0.23%1,458,906 0.24%Total 437,539,340 100.00%1,291 100.00%620,561,720 100.00%In this fiscal year, the trend of previous years was confirmed which consisted in a gradual weakening of the previously dominantposition of financial lease for the benefit of loan products. The above situation was influenced mainly by the impacts of theamendments of the Income Tax Act and of the Value Added Tax Act at the end of 2007, which adversely affected the overall approachto funding, in particular that of the business entities. The increase in popularity of credit products is certainly also due to banks whichbrought many products closer to the public. Customers appreciate loan products due to their availability, flexibility and simplicity.Looking back at the financial year 2009, we see some interesting facts:❍ Toyota and Lexus authorised dealers state that during the calendar year 2008, their share of customers paying cash significantlyincreased. The original 60/40 ratio in favour of financing through dealership, which we saw in the recent years, changed in theabove period to 31/69 in favour of cash. There are no official statistics; however, the information received from the market andfrom independent research confirms that a similar trend has been recorded also for the other companies focused on vehiclefinancing.❍ Finance lease with full amortization Toyota Leasing has maintained its position, due to the above facts (a comparison between2009/2008: 14.95% / 26.63% according to the value financed (see Figure 2), respectively. 13.44% / 28.27% in terms ofacquisition prices and 16.42% / 31.37% in terms of number of contracts, respectively). This confirms the prospect that loanproducts and products based on operating leases are going to strengthen in the coming years.❍ There was an annual increase in our most popular loan product, Toyota Kredit, not only in terms of the number of contracts(comparison 2009/2008: 56.70% / 26%, respectively), but also in terms of the parameters of the value financed and theacquisition cost.❍ Toyota Genio reaffirmed the high demand for a similar type of products, even though in the year-on-year terms, the share of theproduct in the portfolio decreased (comparison 2009/2008: 19% / 27% respectively by number of contracts). This situation ispartly due to several successful campaigns and the fact that the entire Toyota model range was included in this product.❍ There was a slightly increased year-on-year share of the operating leases, which were represented in the product portfolio bythe Toyota Rent and the new Toyota Rent Plus products (comparison 2009/2008: a ratio of 7.13% / 5.96%, respectively), andthere was also an increase in contracts with direct customers - in the previous years, the key lessee in the operating lease wasour associate company TOYOTA MOTOR CZECH spol. s r.o. (TMCZ); however, in the fiscal year 2009, there was a significantincrease in the share of new customers (the share of customers outside TMCZ in 2009/2008 was 46% / 35%, respectively).❍ Since its deployment within our portfolio, the Toyota Vario product has a problem with the insufficient willingness of thevendors to pay more attention to it. Although even a minimal effort can bring recurring business and the potential of highqualityused vehicles as another potential profit centre for dealers. However, we are going to keep the product in our offer,assuming it will become more popular with the further development of the market.❍ The statistics also include a Toyota Equipment Rent range, which enables the financing of authorized partners on the basis ofshowroom equipment and was represented in the last year solely by financing of dealer marks. As this option includes financingof “tailored“ products, the distributor (TMCZ), is committed to repurchase the merchandise.There was stagnation in the products intended for the financing of handling equipment. The main reason was the fact that in2008, there were significant changes in the structure of the companies Toyota Material Handling Česká Republika a.s. (privatedistributor) as the exclusive importer of Toyota forklift trucks in the Czech Republic, and the company BT Česká republika s.r.o(a company belonging to the Toyota Group) as the exclusive importer of the BT handling equipment in the Czech Republic.15

Toyota Financial Services Czech s.r.o.Due to its long-term strategy, the company Toyota Industrial Equipment Europe terminated an exclusive representation contractwith a private distributor for the importation of Toyota forklift trucks, and handed this activity fully over to the company BT Českárepublika s.r.o. There are initialization procedures still underway with the newly created entity, Toyota Material Handling CZ s.r.o.aimed at developing a new business strategy for the Czech Republic, but the situation is rather complicated due to the overallFigure 1Share of products undernew contracts accordingto the number ofcontractsToyota Vario0.7%Toyota Forklift Leasing/Kredit0.2%Toyota Equipment0.0%Toyota Rent/Rent Plus7.1%Toyota Leasing16.4%Toyota Genio18.8%Toyota Kredit56.7%Figure 2Share of products undernew contracts accordingto the value financedToyota Vario0.8%Toyota Forklift Leasing/Kredit0.3%Toyota Equipment0.0%Toyota Rent/Rent Plus12.7%Toyota Leasing14.9%Toyota Genio15.9%Toyota Kredit55.4%situation in the specific business activities of Toyota Motor Corporation, where the vehicles and handling equipment businesses arestrictly separated in both financial and commercial terms. We therefore, expect the decline of funding in this area in the future.Overall, we experienced an year-on-year decline in trade; in terms of the value financed, by CZK 283 million (less than 40%) interms of contracts, by 622 (33%), and in terms of cost excluding VAT, the turnover decreased by CZK 339 million (less than 36%).The reasons for the decline in total transactions implemented were the following :❍ The impact of the amendment of the Income Tax Act and of the end of 2007, which negatively affected the overall approach tofunding, namely that of business entities. The amendment limited the tax relief related to the financial lease, established limitson the deduction of interest on loans, and also represented a low-capitalization test for companies.❍ In the second half of 2008, not only companies but also individual entrepreneurs and citizens were strongly influenced by theinformation on the global economic crisis. This resulted in a shift, or rather by a certain reluctance of some entities as to financeand investment in general.❍ At the end of 2008, there was also the „unfortunate leak“ of information from a government meeting on the upcomingamendment of the Income Taxes Act (this was another measure in a short period of time which directly affected purchasingand financing of vehicles) of the Value Added Tax Act. The leaked information related to upcoming amendments of legislationallowing deduction of VAT to taxpayers with newly purchased business vehicles, and also on the reduction of 1 and 216

Annual Report 2009depreciation periods to 1 and 2 years respectively, as a direct response to the increasing financial crisis. In such a situation, theinterest of business entities in new investment, and thus also in the financing of cars, significantly decreased in anticipation ofthe approval of this amendment at the beginning of 2009.❍ The decrease of vehicle-funding potential was also due to the announcement of the ”scrap allowance“ in the neighbouringcountries, which resulted in the fact that all automobile producers, including Toyota, gradually directed their sales to thesecountries to meet the growing demand. However, these customers are not available to a company providing financial serviceson the territory of the Czech Republic. The so-called re-export sales are included in the official statistics and they distort theoverall view of the passenger car sales especially in the Czech Republic. According to unofficial estimates, these involved asmuch as 30% of the total sales of passenger cars in the Czech Republic in the first quarter of 2009.❍ Despite the negative developments in financial services, Toyota Financial Services focused on complementary productsdesigned to cash-paying customers (see Toyota Pojištění section) in order to compensate for the existing status and createa large potential for the future.❍ Despite the negative developments in the recent months, we assume that this is a temporary phenomenon that will soon beovercome.Table 2 offers an insight into the overall market share of Toyota and Lexus in sales of new vehicles in the Czech Republic togetherwith the share of financing provided by our company.Looking at the realized outcome (besides the facts mentioned in the previous paragraph), it is necessary to realize that theresulting 17.84% penetration was achieved due to the pro-active business activities of our company, without the support of a jointcampaign with subsidies by the importer which was implemented in the previous years. It is therefore not necessary to see theresult as a strictly negative one, since even in the absence of joint programs with the distributor and given the objective marketfactors, we were able to increase market penetration to the level of almost 60% of the market share of funding (50% market shareis perceived as a half of the funding achievable. If we know that 31% of out of 100% cars sold are funded in some way, thenachieving a 17.84% penetration means that more than a half of the business opportunities to finance the acquisition of the car wereimplemented). Yet there is still some room for expansion and for the resources which were not spent.Table 2 – Market share of new cars sold on the market by Toyota and Lexus (passenger and light commercial vehicles)Parameter / fiscal year 2004 20052006 20072008 2009Car sales in the Czech Republic (units) 171,116 158,308166,278 178,394199,885 195,694Sales of Toyota and Lexus makes (units) 4,418 4,7494,717 5,7266,041 6,402Toyota’s share on the Czech market 2.58% 3.00%2.84% 3.21%3.02% 3.27%Number of vehicles financed by the TFSCZ (units) 1,455 1,3361,571 1,676 1,644 1,142Penetration reached by the TFSCZ 32.93% 28.13%33.31% 29.27%27.21% 17.84%Figure 3 – Development of number of vehicles funded (newly contracted business cases) and of the penetration achieved1,800 32.93%1,6001,4551,4001,20028.13%1,33633.31%1,5711,67629.27%27.21%1,6441,14235.00%30.00%25.00%1,0008006004002000Units17.84%2004 2005 2006 2007 2008 200920.00%15.00%10.00%5.00%0.00%PenetrationAchieved TFSCZ penetrationNumber of vehicles financed by TFSCZ (units)17

Toyota Financial Services Czech s.r.o.As part of the company activities, the company was monitoring in the fiscal year 2009 for the first time the performance of a newlyintroduced product Toyota Pojištění, i.e. an insurance of Toyota and Lexus customers who purchased a vehicle in cash or throughother lenders. The project was submitted for pilot operation to the network of authorized dealers already in February 2008, but thefirst contracts were actually entered into in March 2008 and in the subsequent months. Four vendors participated in the pilot phaseof the product installation; by the end of the pilot operation in August 2008, they were followed by virtually the entire network ofauthorized vendors. The key elements of the preliminary phase of the launch of the Toyota Pojištění project were as follows:❍ At the beginning of September 2008, the first sales campaign was launched which resulted in a dramatic increase in thenumber of the contracts concluded. The essence of the campaign was a bonus in the form of fuel cards in the amount of annualthird-party risk insurance for Toyota Yaris.❍ In the second phase of the campaign (January 2009), the same system applied also to Toyota Auris, which resulted in a furtherboost after the decline in December (season fluctuation).❍ The average percentage (penetration) of the Toyota Pojištění product to Toyota and Lexus vehicles sold during the period inquestion reached a 8% level by the end of 2009, i.e. for each 100 cars sold, an average of 8 contracts were entered into.❍ 95% of the overall number of contracts relate to new passenger and utility vehicles; 84% of customers entered at the same timeinto a third party liability and accident insurance; only 16% clients concluded only a single liability insurance contract, withoutaccident insurance.❍ If the above data (a 8% penetration of Toyota Pojištění, see above) are added to the overall financial service penetration, theoverall penetration of the financial and insurance services provided by the Toyota Financial Services Czech s.r.o in relation to thesale of Toyota and Lexus in the Czech Republic by the end of 2009 amounted to about 25%.❍ The project seems to be viable with a great potential for the future, promising gradual growth and increased activity of thevendors in this area who perceive the product as an opportunity at the times of decreased interest in financial services.❍ For further information, Figures 4 and 5 have been included which monitor the development of number of contracts enteredinto during the period and the ratio between the insured entities by entity type.Figure 4 – Number of contracts Toyota Insurance entered into in the period FY2009Number of contracts (pcs)4 5 6 7 8 9 10 11 12 1 2 3Month 2008 – 2009Figure 5 – Toyota Pojištěnícustomers by type of entityEnterpreneurs and companies12%Individuals88%18

Annual Report 2009As at 31 March 2009, our company was managing 5,472 active contracts; 44% were contracts based on operational and financialleases, 56% were loan contracts. The overall year-on-year number of contracts decreased by 5.62%. The year-on-year number ofloan contracts increased by 14.94%, the number of lease contracts decreased by 23.19%. Further details can be found in Table 3.Table 3 – Number of active contracts by productProducts / as at (date) 31. 3. 2005 31. 3. 200631 .3. 2007 31. 3. 200831. 3. 2009 Intra-year changeToyota Leasing 2,820 26512,253 2,0631,404 (31.94%)Toyota Vario (leasing) 381 237 111 394 (89.74%)Toyota Kredit 738 991 1,380 1,430 1,745 22.03%Toyota Vario (úvěr) 96 134 148 11867 (43.22%)Toyota Genio 0 313700 1,1231,257 11.93%Toyota Forklift Leasing 39 5061 4630 (34.78%)Toyota Forklift Rent 313 528705 787782 (0.64%)Toyota Forklift (úvěr) 0 00 01 0.00%Toyota Rent 140 155186 167150 (10.18 %)Toyota Equipment 1 22 21 (50.00%)Other (Non Toyota Leasing/Kredit/Rent)* 27 2924 2331 34.78%Portfolio taken over from BB-Leasing s.r.o. 9 00 00 0.00%Total 4,564 5,0905,570 5,7985,472 (5.62%)*) Financing of other than Toyota or Lexus vehicles by Toyota Leasing or Toyota KreditThe overall book values of the tangible fixed assets financed under financial and operating leases (after depreciation) by31 March 2009 represented an amount of more than CZK 564 million (a decrease of 33.78% as compared to the previous year).The overall balance of the values funded by the same date amounts to CZK 476 million (a decrease by 31.86%).The balance of liabilities related to the consumer loans provided (principal and outstanding interest) amounted toCZK 625 million (an increase by 10.34%). The overall volume financed then amounted to CZK 1.102 billion, and its year-on-yeardecrease amounted to 12.96% – see Table 4.Table 4 – Volumes of funding (in CZK‘000)Balances / as at (date) 31. 3. 2005 31. 3. 200631. 3. 2007 31. 3. 200831. 3. 2009 Intra-yearchangeBook values of leased assets 929,172 1,012,455954,639 851,561 563,862 (33.78%)Book values of funded assets 641,650 760,879756,695 698,847476,204 (31.86%)Book value of receivables– loan principals 234,877 318,816466,174 555,052614,683 10.74%Book value of receivables– loan total 239,445 325,651475,514 566,861625,452 10.34%Total volume of financing 1 ) 881,095 1,086,5301,232,209 1,265,7081,101,656 (12.96%)1) The total volume of financing is expressed as the sum of the balances of the values financed (leasing) and the values ofreceivables (loans)19

Toyota Financial Services Czech s.r.o.WholesaleOur Company, already since 2000, when it started its operations on the Czech market, has been supporting the sale of Toyotaand Lexus brands also by way of the provision of financial assistance to authorized brand dealers for the purpose of acquiringstock inventories of new and used cars, demonstration cars and the provision of special-purpose financial credits.In February 2003, we offered to car dealers in response to their needs, a new support scheme that opened up wider possibilitiesand put in place for our Company also more effective securing and monitoring of the support product portfolio.The scheme was subsequently modified in October 2005 when new securing arrangements were incorporated into it, the limitswere restructured and the scheme for the financing of demonstration cars was radically changed. Produkt was redesigned totake into account new market conditions, with new price list being effective from 1 March 2009.The wholesale products offered have their logical names: Toyota New SF – financing of stocks of new cars, Toyota Used SF –financing of stocks of used cars, Toyota Demo – financing of stocks of demonstration cars, Toyota Financing I/C – financing inthe form of investment credits, Toyota Financing W/C – financing of the working capital. In addition, we offer financing underfinance lease or operating lease contracts, where the parameters of these products are very similar to retail products (ToyotaLeasing and Toyota Rent), only some details are different.The dealer support scheme also includes the plan of participation of our Company in advertising activities of individual dealersand the commission scheme. For all of the above products, product limits are set that differ according to the solvency ofindividual partners, their requirements and other parameters affecting them.The dealers’ interest in the financial support provided by our Company has been growing inyear-on-year terms. Whereas in the fiscal year 2005 our Company provided funds in the amount of CZK 1,095 million, in fiscalyear 2009 the volume provided amounted to CZK 1,951 million (an increase by 78%). Compared to the previous year, thevalues financed increased by 24% (comparison 2009/2008: CZK 1,95 billion / CZK 1,57 billion).Figure 6 – Development of financial support provided to dealersFinanced value (in CZK million)2,0001,8001,6001,4001,2001,00080060040020002005 2006 2007 2008 2009Fiscal yearThe above figures were very markedly influenced in particular by the financing of the Toyota New SF product (financing ofstocks of new cars) thanks to which we have also indirectly speeded up the delivery of vehicles for end-customers between thestocks (warehouses) of the distributor of Toyota cars in the Czech Republic – the company TOYOTA MOTOR CZECH spol. s r.o.and individual authorized dealers.Also the financing of demonstration cars (Toyota Demo) gained in importance. We endeavour to meet 100% of the dealers’demands for demonstration cars.20

Annual Report 2009Risk ManagementCredit riskCredit risk is based mainly on the receivables from lease and loan contracts and is largely secured by the assets financed, whichare repossessed and sold in the event of default.In the process of reducing the above risk, the Company became as early as in 2006 a member of the Non-banking Registerof Client Information (NRKI) which serves to inform non-banking entities on the financial standing, credibility and paymentmorale of their clients. NRKI also provides for the exchange of the relevant data with the Banking Register of Client Information.The company also monitors the status of its current clients on a daily basis using tools provided by specialised externalcompanies.Credit risk is evaluated monthly on the basis of the monitoring of the amount of individual receivables and the relevantprovisions.The company recovers its receivables in relation to the reminder procedure which has three stages (e-mail, written andtelephone reminders). If the client fails to repay its liabilities even after these invitations to pay, the company withdraws fromthe contract, i.e. the contract is prematurely terminated and the client is invited to hand over the financed asset. If the client failsboth to repay his debt and to hand over the financed asset, the portfolio management employee hands over the supportingdocumentation along with the contract and the quantified amount of the debt to a contractual recovery agency which providesdebt recovery and eventually the confiscation of the asset financed. The proceeds from the sale of the repossessed assets shallcover the claims of the company, and any potential remaining debt is forwarded to a contractual law firm to be recovered bylegal means, often in execution proceedings.Liquidity riskLiquidity risk is the risk that the company is unable to meet its obligations due to lack of funds. Sufficient quantities of liquidfunds are ensured through cash flow management which eliminates unexpected demands on cash resources.To hedge against the liquidity risk, the company cooperates with banks with a high credit rating provided by internationalrating agencies, a higher number of cooperating banks, sets credit line limits (maximum drawdown of 75% of the total creditline), and works with the share of long-term loans (up to 50% of the total value of the loans drawn).Interest rate riskInterest rate risk consists in a change in market interest rates applied to refinancing resources. The objective of interest rate riskmanagement is to achieve stable interest costs by minimizing the impact of changes in the market interest rates. To ensure thisobjective, the company uses financial derivatives, interest rate swaps, by which it fixes the interest rates of its financial resources.21

Toyota Financial Services Czech s.r.o.Strategy for the Financial Year 2010Our strategy for the upcoming period is the following:1. To market the remaining parts of the portal for dynamic exchange of information (TFS ONLINE)a. A Dealer POS system (an on-line system for processing of lease or loan contracts by the dealer – vendor)b. A system for a preliminary approval of contractsc. A module for calculation and negotiation of insurance (Toyota Pojištění)Objective: Increase customer satisfaction and that of the cooperating vendors2. Adjustment of internal processes and regulations to the situation after the TFS ONLINE is launchedObjective: optimize internal processes, eliminate „blind spots”22

Annual Report 200923

Toyota Financial Services Czech s.r.o.Independent Auditor’s ReportPricewaterhouseCoopers Audit, s.r.o.Kateřinská 40/466120 00 Prague 2Czech RepublicTelephone +420 251 151 111Facsimile +420 251 156 111www.pwc.comINDEPENDENT AUDITOR’S REPORTTO THE SHAREHOLDER OF TOYOTA FINANCIAL SERVICES CZECH S.R.O.We have audited the accompanying financial statements of Toyota Financial Services Czechs.r.o. (“the Company”), which comprise the balance sheet as at 31 March 2009, the incomestatement, statement of changes in equity and cash flow statement for the year then ended andnotes, including a summary of significant accounting policies (“the financial statements”).Statutory Director‘s Responsibility for the Financial StatementsThe statutory director is responsible for the preparation and fair presentation of the financialstatements in accordance with Czech accounting legislation. This responsibility includes:designing, implementing and maintaining internal control relevant to the preparation andfair presentation of financial statements that are free from material misstatement, whetherdue to fraud or error; selecting and applying appropriate accounting policies; and makingaccounting estimates that are reasonable in the circumstances.Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with the Act on Auditors of the Czech Republic, InternationalStandards on Auditing and the related application guidance of the Chamber of Auditorsof the Czech Republic. Those standards require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance whether the financial statements arefree from material misstatement.PricewaterhouseCoopers Audit, s.r.o., registered seat Kateřinská 40/466, 120 00 Prague 2, Czech Republic, Identification Number:40765521, registered with the Commercial Register kept by the Municipal Court in Prague, Section C, Insert 3637, and in the Register ofAudit Companies with the Chamber of Auditors of the Czech Republic under Licence No 021.© 2009 PricewaterhouseCoopers Audit, s.r.o. All rights reserved. „PricewaterhouseCoopers“ refers to the Czech firm ofPricewaterhouseCoopers Audit, s.r.o. or, as the context requires, the network of member firms of PricewaterhouseCoopers InternationalLimited, each of which is a separate and independent legal entity.24

Annual Report 2009Independent Auditor’s ReportShareholder of Toyota Financial Services Czech s.r.o.Independent auditor’s reportAuditor’s Responsibility (continued)An audit involves performing procedures to obtain audit evidence about the amountsand disclosures in the financial statements. The procedures selected depend on the auditor’sjudgment, including assessment of the risks of material misstatement of the financial statements,whether due to fraud or error. In making those risk assessments, the auditor considers internalcontrol relevant to the Company‘s preparation and fair presentation of the financial statementsin order to design audit procedures that are appropriate in the circumstances, but not forthe purpose of expressing an opinion on the effectiveness of the Company‘s internal control.An audit also includes evaluating the appropriateness of the accounting policies used andthe reasonableness of accounting estimates made by management, as well as evaluatingthe overall presentation of the financial statements.We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion.OpinionWe believe that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion.24 June 2009PricewaterhouseCoopers Audit, s.r.o.represented byPaul InmanKristina VančurováDirector Statutory Auditor, Licence No. 2085NoteOur report has been prepared in Czech language and in English. In all matters of interpretation of information, views or opinions, the Czechversion of our report takes precedence over the English version.25

Toyota Financial Services Czech s.r.o.Independent Auditor’s ReportPricewaterhouseCoopers Audit, s.r.o.Kateřinská 40/466120 00 Prague 2Czech RepublicTelephone +420 251 151 111Facsimile +420 251 156 111www.pwc.comINDEPENDENT AUDITOR’S REPORTTO THE SHAREHOLDER OF TOYOTA FINANCIAL SERVICES CZECH S.R.O.We have audited the financial statements of Toyota Financial Services Czech s.r.o., identificationnumber 654 13 261, with registered office at Bavorská 2662/1, Praha 5 (“the Company”) forthe year ended 31 March 2009 disclosed in the annual report on pages 30–49 and issuedthe opinion dated 24 June 2009 and disclosed on pages 24 and 25.Report on the Annual ReportWe have verified that the other information included in the annual report of the Company forthe year ended 31 March 2009 is consistent with the financial statements referred to above.Statutory Director is responsible for the accuracy of the annual report. Our responsibility is toexpress an opinion on the consistency of the annual report with the financial statements basedon our verification procedures.Auditor’s ResponsibilityWe conducted our verification procedures in accordance with the International Standardson Auditing and the related application guidance of the Chamber of Auditors of the CzechRepublic. Those standards require that we plan and perform the verification procedures toobtain reasonable assurance about whether the other information included in the annual reportwhich describes matters that are also presented in the financial statements is, in all materialrespects, consistent with the relevant financial statements. We believe that the verificationprocedures performed provide a reasonable basis for our opinion.OpinionIn our opinion, the other information included in the annual report of the Company for the yearended 31 March 2009 is consistent, in all material respects, with the financial statements.PricewaterhouseCoopers Audit, s.r.o., registered seat Kateřinská 40/466, 120 00 Prague 2, Czech Republic, Identification Number:40765521, registered with the Commercial Register kept by the Municipal Court in Prague, Section C, Insert 3637, and in the Register ofAudit Companies with the Chamber of Auditors of the Czech Republic under Licence No 021.© 2009 PricewaterhouseCoopers Audit, s.r.o. All rights reserved. „PricewaterhouseCoopers“ refers to the Czech firm ofPricewaterhouseCoopers Audit, s.r.o. or, as the context requires, the network of member firms of PricewaterhouseCoopers InternationalLimited, each of which is a separate and independent legal entity.26

Annual Report 2009Independent Auditor’s ReportShareholders of Toyota Financial Services Czech s.r.o.Independent auditor’s reportReport on review of the Report on RelationsIn addition we have also reviewed the accompanying report on relations between the Companyand its controlling party and between the Company and the other persons controlled by thesame controlling party for the year ended 31 March 2009 (the “Report”). The completenessand accuracy of the Report is the responsibility of the Statutory Director of the Company. Ourresponsibility is to review the accuracy of information included in the Report.Scope of ReviewWe conducted our review in accordance with the International Standard on Review Engagements2410 and related application guidance of the Chamber of Auditors of the Czech Republic forreview of the report on relations. These standards require that we plan and perform the review toobtain moderate assurance as to whether the Report is free of material misstatement. A review islimited primarily to inquiries of Company personnel, analytical procedures and examination, ona test basis, of factual accuracy of data. A review therefore provides less assurance than an audit.We have not performed an audit and, accordingly, we do not express an audit opinion.ConclusionBased on our review, nothing has come to our attention that causes us to believe that theaccompanying Report has not been properly prepared, in all material respects, in accordancewith the requirements of Article 66a of the Commercial Code.7 October 2009PricewaterhouseCoopers Audit, s.r.o.represented byPaul InmanKristina VančurováDirector Statutory Auditor, Licence No. 2085NoteOur report has been prepared in Czech language and in English. In all matters of interpretation of information, views or opinions, the Czechversion of our report takes precedence over the English version.27

28Toyota Financial Services Czech s.r.o.

Annual Report 200929

Toyota Financial Services Czech s.r.o.Financial StatementsCompany name:Toyota Financial Services Czech s.r.o.Residence: Rubín Office Center, Sokolovská 192/79, Praha 8Identification number: 65413261Legal form:limited liability companyPrimary business:financial and operating lease, consumer creditsBalance sheet date: 31 March 2009Date of preparation of the financial statements: 24 June 2009BALANCE SHEET AS AT 31 MARCH 200931 March 2009 31 March 2008NoteGross amount Provision Net amount Net amountASSETS CZK’000 CZK’000CZK’000 CZK’000B. Fixed assets 1,289,539 (714,966)574,573 856,177B. I. Intangible fixed assets 311,274 (4,646)6,628 3,940B. II. Tangible fixed assets 41,278,265 (710,320) 567,945 852,237C. Current assets 1,029,347 (13,723)1,015,624 817,556C. I. Inventories 590 0590 748C. II. Long-term receivables 5454,678 (387) 454,291 406,193C. III. Short-term receivables 5501,730 (13,336)488,394 398,470C. IV. Financial assets 18 72,349 072,349 12,145D. I. Accruals and deferrals 2,066 02,066 2,417TOTAL ASSETS 2,320,952 (728,689)1,592,263 1,676,150LIABILITIES AND EQUITYA. Equity 6158,533 148,928A. I. Share capital 44,000 44,000A. II. Capital contributions 28,000 28,000A. III. Statutory reserve fund 4,400 4,400A. IV. Retained earnings 72,528 37,950A. V. Profit for the current period 9,605 34,578B. Liabilities 1,341,863 1,368,661B. I. Provisions 1,294 2,557B. II. Long-term liabilities 7312,917 160,155B. III. Short-term liabilities 752,126 204,950B. IV. Bank loans & overdrafts 8975,526 1,000,999C. I. Accruals and deferrals 1191,867 158,561TOTAL LIABILITIES AND EQUITY 1,592,263 1,676,15030

Annual Report 2009INCOME STATEMENT YEAR ENDED 31 MARCH 2009Year ended 31 March20092008Výkaz zisku a ztráty za rok končící 31. března 2008Note CZK’000CZK’000I. Sales of goods 12 1,319940A. Cost of goods sold 1,319940+ Gross profit 00II. Sales of production 12 499,935 641,346B. Cost of sales 34,782 37,732+ Added value 465,153 603,614C. Staff costs 13 17,383 16,556D. Taxes and charges 409996E. Depreciation of long-term assets 3, 4 357,664474,390III. Sale of long-term assets 12 73,20896,662F. Net book amount of long-term assets sold 71,53593,113G. Change in provisions for operating liabilities and charges (5,872)1,411IV. Other operating income 12 25,11620,003H. Other operating charges 47,88862,220* Operating result 74,470 71,593IX. Gain on revaluation of derivatives 9 4,43610,712L. Loss on revaluation of derivatives 9 22,2823,237X. Interest income 14,145 10,832N. Interest expense 53,829 49,087XI. Other financial income 1,0758,997O. Other financial expense 5,5082,984* Financial result (61,964)(24,767)Q. Tax on profit or loss on ordinary activities 10 2,90112,248** Profit or loss on ordinary activities after taxation 9,605 34,578*** Net profit for the financial period 9,60534,578*** Net profit before taxation 12,506 46,82631

Toyota Financial Services Czech s.r.o.STATEMENT OF CHANGES IN SHAREHOLDER’S EQUITYStatutoryShareShare reserve RetainedNote capitalpremium fund earnings TotalCZK’000CZK’000 CZK’000CZK’000 CZK’000At 31 March 2007 44,00028,000 3,44138,909 114,350Contribution to reserve fund 6 00 959(959) 0Net profit for the currentperiod 00 0 34,578 34,578At 31 March 2008 44,00028,000 4,40072,528 148,928Net profit for the currentperiod 00 09,605 9,605At 31 March 2009 44,00028,000 4,40082,133 158,53332

Annual Report 2009CASH FLOW STATEMENTYear ended 31 March20092008CZK’000CZK’000Cash flows from operating activitiesNET PROFIT ON ORDINARY ACTIVITIES BEFORE TAX 12,50646,826A.1 Adjustments for non-cash movements:A.1.1 Depreciation of fixed assets 357,664474,390A.1.2 Change in provisions (5,872)1,411A.1.3 Profit / (loss) from disposal of fixed assets (1,673)(3,549)A.1.5 Net interest expense 39,68338,255A.* Net cash flow from ordinary activities before tax, changesin working capital and extraordinary items 402,308 557,333A.2 Working capital changes:A.2.1 Increase in receivables and prepayments (135,079)(114,701)A.2.2 Decrease in short-term payables and accruals (217,870)(52,153)A.2.3 Increase in inventories 158(112)A.** Net cash flow from ordinary activities before tax 49,517390,367A.3 Interest paid (52,884) (48,038)A.4 Interest received 14,14510,832A.5 Tax on ordinary activities and additional tax paid for previous periods (7,778)0A.*** Net cash flow from ordinary activities 3,000353,161Cash flows from investing activitiesB.1 Acquisition of fixed assets (143,293)(479,270)B.2 Proceeds from sale of fixed assets 73,20896,662B.*** Net cash flow from investing activities (70,085)(382,608)Cash flows from financing activitiesC.1 Change in long and short-term liabilities 127,2891,669C.*** Net cash flow from financing activity 127,2891,669Net (decrease) / increase in cash and cash equivalents 60,204(27,778)Cash and cash equivalents at the beginning of the year 12,14539,923Cash and cash equivalents at the end of the year 72,34912,14533

Toyota Financial Services Czech s.r.o.1. GENERAL INFORMATIONToyota Financial Services Czech s.r.o. (“the Company”) was incorporated on 30 April 1996. The Company has its registeredoffice in the building Rubín Office Center, Sokolovská 192/79, 186 00 Praha 8 – Karlín.The Company’s business activities are:❍ Leasing;❍ Purchase of goods for sale and resale;❍ Lease of manufactured goods;❍ Advisory activities in the area of business and services;❍ Intermediation activities in the area of business and services;❍ Provision of loans.The sole partner of the Company is:TOYOTA FINANCIAL SERVICES (UK) plcYew Tree Bottom Road, Great Burgh, Burgh HeathEpsom, Surrey KT18 5UZUnited Kingdom of Great Britain and Northern IrelandContribution in the total amount of CZK 44,000,000 (100% of the share capital) was fully paid up.Ing. Aleš Kamarýt is the Company’s statutory representative.The business year of the Company always begins on 1 April and ends on 31 March of the following calendar year. Thereforethe financial statements as at 31 March 2009 include a period of twelve months, i.e. from 1 April 2008 to 31 March 2009(“2008/09”).34

Annual Report 20092. ACCOUNTING POLICIESa) Basis of preparationThe financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the Czech Republic and CzechAccounting Standards. The financial statements have been prepared under the historical cost convention. Derivatives are shown at fair value.The amounts disclosed in the financial statements including notes are rounded to thousands of Czech Crowns (CZK´000) unlessstated otherwise.Ongoing global financial crisisThe ongoing global financial crisis which commenced in the middle of 2007 has resulted in, among other things, a lower level ofcapital market funding, lower liquidity levels across the banking sector, and, at times, higher interbank lending rates and very highvolatility in stock markets. The uncertainties in the global financial markets, have also led to bank failures and bank rescues in theUnited States of America, Western Europe, Russia and elsewhere. Indeed the full extent of the impact of the ongoing financial crisisis proving to be impossible to anticipate or completely guard against.Management is unable to reliably estimate the effects on the Company‘s financial position of any further deterioration in theliquidity of the financial markets and the increased volatility in the currency and equity markets. Management believes it is taking allthe necessary measures to support the sustainability and development of the Company’s business in the current circumstances.“The volume of wholesale financing has significantly reduced. Such circumstances may affect the ability of the Company to obtainnew borrowings and re-finance its existing borrowings at terms and conditions similar to those applied to earlier transactions.”Debtors of the Company may be affected by the lower liquidity situation which could in turn impact their ability to repay theamounts owed. Deteriorating operating conditions for debtors [or borrowers] may also have an impact on management‘s cashflow forecasts and assessment of the impairment of financial and non-financial assets. To the extent that information is available,management have properly reflected revised estimates of expected future cash flows in their impairment assessments.b) Intangible fixed assetsPurchased intangible assets are recorded at cost.The Company applies the following annual depreciation rates for the intangible fixed assets purchased until 2005:In the first year of depreciation In the subsequent years For increased initial costSoftware 14.20%28.60% 25.00%Since 1 January 2006 the Company applies monthly depreciation in the amount of the purchase price share and the term agreed in thecontract with respect to software to which the Company has the right of usage for a definite period of time. In other cases, the Companydepreciates software for 36 months. Depreciations are determined with an entire month’s accuracy, beginning the following month afterthe day when the depreciation conditions were met, i.e. software was booked in the assets of the accounting entity and it was put in use.Intangible fixed assets with a unit cost less than CZK 60,000 are expensed upon acquisition.A provision for impairment is established when the carrying value of an asset is greater than its estimated recoverable amount.c) Tangible fixed assetsAcquired tangible fixed assets are recorded at cost, which includes costs incurred in bringing the assets to their present locationand condition.Tangible fixed assets are depreciated applying the straight-line method over the their estimated useful lives.The Company applies these annual depreciation rates for non-leasing assets:In the first year of depreciation In the subsequent years For increased initial costFurniture and fittings 11.00%22.25% 20.00%Machinery and equipment 20.00%40.00% 33.30%Passenger vehicles 14.20%28.60% 25.00%35

Toyota Financial Services Czech s.r.o.2. ACCOUNTING POLICIES (continue)Repairs and maintenance expenditures relating to tangible assets are expensed as incurred. Property enhancements (i.e.extending the life or improving the productivity of the asset) exceeding CZK 40,000 per item per year are capitalised.Tangible fixed assets with a unit cost less than CZK 40,000 are treated as inventory and are expensed upon consumption.Tangible fixed assets leased under the finance lease contracts acquired after 31 March 2005, are depreciated on a daily basis bythe accounting entity, starting from the day when the conditions for depreciation were met, i.e. the assets were recorded in thefixed asset register of the accounting entity and the leased asset was handed over to the lessee in compliance with the financelease contract with subsequent purchase of the leased asset or in a condition fit for the agreed or customary use.The accounting unit depreciates fixed assets leased under finance leases, acquired up to 31 March 2005, on a monthly basis,starting with the month following the month in which the conditions for depreciation were met.Depreciation of financial leasing assets is calculated on linear basis from the purchase price up to the amount of the residualvalue agreed in the leasing contract over the term of the leasing contract.Accounting depreciation of tangible fixed assets leased under operational lease contracts is determined on a straight-line basison a daily basis according to the duration of the operational lease contract. The depreciation commences on a day when theconditions for depreciation were met, i.e. the assets were recorded in the fixed asset register of the accounting entity and theleased asset was handed over to the lessee in compliance with the finance lease contract with subsequent purchase of theleased asset or in a condition fit for the agreed or customary use.Depreciation of operating leasing assets is calculated on linear basis from the purchase price up to the amount of the residualvalue agreed in the leasing contract over the term of the leasing contract.A provision for impairment is established when the carrying value of an asset is greater than its estimated recoverable amount.d) InventoriesInventories contain mainly repossessed cars from early terminated consumer loan contracts. Inventories are carried at a marketvalue assigned by the expert during stocking process. Value of assets is decreased in case of a decrease in its market value.e) ReceivablesReceivables are stated at the nominal value less a provision for doubtful amounts. Irrecoverable receivables are generallywritten-off upon completion of bankruptcy or administration or legal proceedings against the customer. A provision for baddebts and its amount is created on the basis of maturity analysis, the customers´ solvency, recovery of debts and the results oflegal enforcement.f) Foreign currency translationThe accounting unit translates foreign currency to Czech crowns using a fixed annual exchange rate set on the basis of exchangerate announced by the Czech National Bank on the first working day of the accounting period.All monetary assets and liabilities denominated in foreign currencies have been translated at the period-end exchange rate aspublished by the Czech National Bank. All foreign exchange gains and losses from translation of receivables and payables arerecognized in the profit and loss account.g) Derivative financial instrumentsDerivative financial instruments, including interest rate swaps, are initially recognised on the balance sheet at cost andsubsequently are re-measured at their fair value. The Company acquires these derivatives for the purpose of covering its interestrate risk. Because these derivatives do not qualify for hedge accounting they are classified as trading derivatives. Fair values areobtained from quoted market prices and from discounted cash-flow models.All derivatives are presented in other receivables or in other payables when their fair value is positive or negative, respectively.Changes in the fair value of derivatives are recognised as financial expense or financial income.36

Annual Report 20092. ACCOUNTING POLICIES (continue)h) Revenue recognitionSales are recognised upon the performance of services and are stated including discounts and net of the Value Added Tax.Lease income from the finance and operating leases is recognised evenly over the life of the relevant lease contracts. Incomeinterest on consumer loans is recorded on an accrual basis.Commission income for insurance intermediary services concluded as part of leasing contracts, consumer credit contracts orseparate contracts is recognized in the income statement over the duration of the contract on the maturity dates of the timelimitinsurance.i) Consumer creditsReceivables from consumer credits are stated at the nominal value less a provision for doubtful amounts.j) ProvisionsProvisions are recognised when the Company has a present obligation, it is probable that an outflow of resources will berequired to settle the obligation, and a reliable estimate of the amount can be made.k) Pension planThe Company does not operate any pension plan. Regular contributions are made to the state to fund the national pensionplan.l) Interest costsInterest costs on borrowings to finance the acquisition of tangible and intangible fixed assets are capitalised during the periodof completion and preparation of the asset for its intended use. Other borrowing costs are expensed.m) Deferred taxDeferred tax is recognised on all temporary differences between the carrying amount of an asset or liability in balance sheetand its tax base. Deferred tax assets are recognised if it is probable that sufficient future taxable profit will be available againstwhich the assets can be utilised.n) Recognition of revenues and expenses related to leasingIn accordance with the accounting principles valid in the Czech Republic, the leasing sales, depreciations, costs and insurancerevenues from the leased assets are shown within the operating result, while the interest costs for leasing assets financing areshown as part of the financial result. As the result of this, both operating and financial result do not reflect a mutual matchingof these revenues and costs.o) Related partiesThe Company’s related parties are considered to be the following:❍ Group companies;❍ Sole partner, of which the Company is a subsidiary or an associate, directly or indirectly, and subsidiaries and associates ofthe partner;❍ Members of the Company’s statutory and supervisory bodies and management and parties close to such members,including the subsidiaries and associates of the members and their close parties;❍ Companies with the same member of management.Material transactions and outstanding balances with related parties are disclosed in Notes 13 and 15.37

Toyota Financial Services Czech s.r.o.2. ACCOUNTING POLICIES (continue)p) Subsequent eventsThe effects of events, which occurred between the balance sheet date and the date of preparation of the financial statements,are recognised in the financial statements in the case that these events provide further evidence of conditions that existed at thebalance sheet date.Where significant events occur subsequent to the balance sheet date but prior to the preparation of the financial statements,which are indicative of conditions that arose subsequent to the balance sheet date, the effects of these events are disclosed, butare not themselves recognised in the financial statements.38

Annual Report 20093. INTANGIBLE FIXED ASSETSCost1 April 2008 AdditionsDisposal 31 March 2009CZK’000 CZK’000CZK’000 CZK’000Software 3,600 4,3460 7,946Incomplete investments 3,503 4,1714,346 3,328Total 7,103 8,5174,346 11,274Accumulated amortisation1 April 2008 AdditionsDisposal 31 March 2009CZK’000 CZK’000CZK’000 CZK’000Software 3,163 1,4830 4,646Total 3,163 1,4830 4,646Net book amount 3,940 6,628Cost1 April 2007 AdditionsDisposal 31 March 2008CZK’000 CZK’000CZK’000 CZK’000Software 3,122 4780 3,600Incomplete investments 240 3,741478 3,503Total 3,362 4,219478 7,103Accumulated amortisation1 April 2007 AdditionsDisposal 31 March 2008CZK’000 CZK’000CZK’000 CZK’000Software 2,819 3440 3,163Total 2,819 3440 3,163Net book amount 543 3,94039

Toyota Financial Services Czech s.r.o.4. TANGIBLE FIXED ASSETSCost1 April 2008 AdditionsDisposal 31 March 2009CZK’000 CZK’000CZK’000 CZK’000Finance lease – cars 1,055,253 83,400473,461 665,192Finance lease – machinery 29,960 81112,021 18,750Operating lease – cars 168,887 55,74498,178 126,453Operating lease – machinery 457,843 4222,800 455,465Machinery and equipment 3,103 1580 3,261Passenger cars 4,123 515480 4,158Furniture and fittings 2,464 1100 2,574Incomplete investments 0 3,195783 2,412Total 1,721,633 144,355587,723 1,278,265Accumulated depreciation1 April 2008 AdditionsDisposal 31 March 2009CZK’000 CZK’000CZK’000 CZK’000Machinery and equipment 2,579 2660 2,845Passenger cars 860 1,252480 1,632Furniture and fittings 2,453 1210 2,574Finance lease – cars 612,752 241,827474,485 380,094Finance lease – machinery 21,475 7,22012,021 16,674Operating lease – cars 38,436 98,68798,178 38,945Operating lease – machinery 187,719 81,3662,800 266,285Provisions for assets 3,122 2762,127 1,271Total 869,396 431,015590,091 710,320Net book amount 852,237 567,945Additions to accumulated depreciation also include the net book amount of the sold assets of CZK 71,535,000 (2007/08: CZK93,113,000) from terminated lease contracts and net book amount of the stolen or destroyed assets of CZK 3,299,000 (2007/08:CZK 1,812,000).40

Annual Report 20094. TANGIBLE FIXED ASSETS (continued)Cost1 April 2007 AdditionsDisposals 31 March 2008CZK’000 CZK’000CZK’000 CZK’000Machinery and equipment 2,801 3020 3,103Passenger cars 4,097 3,6433,617 4,123Furniture and fittings 2,317 18437 2,464Finance lease – cars 1,202,196 268,054414,997 1,055,253Finance lease – machinery 40,111 63710,788 29,960Operating lease – cars 138,217 136,898106,228 168,887Operating lease – machinery 421,430 56,83520,422 457,843Total 1,811,169 466,553556,089 1,721,633Accumulated depreciation1 April 2007 AdditionsDisposals 31 March 2008CZK’000 CZK’000CZK’000 CZK’000Machinery and equipment 2,215 3640 2,579Passenger cars 1,754 2,7233,617 860Furniture and fittings 2,108 38237 2,453Finance lease – cars 669,882 357,867414,997 612,752Finance lease – machinery 21,025 11,23810,788 21,475Operating lease – cars 37,106 107,558106,228 38,436Operating lease – machinery 119,302 88,83920,422 187,719Provisions for assets 4,779 3251,982 3,122Total 858,171 569,296558,071 869,396Net book amount 952,998 852,237The Company did not acquired in the financial year 2008/09 any low value intangible fixed assets which were expensedas incurred (2007/08: CZK 0) and low value tangible fixed assets expensed in the same way in the amount of CZK 51,000(2007/08: CZK 316,000).41

Toyota Financial Services Czech s.r.o.5. RECEIVABLES31 March 2009 31 March 2008CZK’000CZK’000Trade receivables – current 237,156 216,892– overdue 22,699 14,042259,855 230,934Other receivables – current 240,592 181,253240,592 181,253Short-term advances provided 1,283 1,246501,730 413,433Provisions for short-term doubtful receivables (13,336) (14,963)Net short-term receivables 488,394 398,470Long-term trade receivables 399,743 362,283Other long-term receivables 54,935 45,429454,678 407,712Provisions for long-term doubtful receivables (387) (1,519)Net long-term receivables 454,291 406,193Net total receivables 942,685 804,663Trade receivables include mainly receivables from customer credit contracts. For these contracts the Company enters into theagreement on securing an obligation by the transfer of ownership title. At 31 March 2009 these receivables amounted toCZK 614,683 ths. (31 March 2008: CZK 555,052 ths.).Other short and long-term receivables include receivables from funding the dealers network.For securing receivables from contracts on investment loan provided to Toyota dealers the Company uses the right of lien overthe property owned by them. At 31 March 2009 these receivables amounted to: CZK 62,438 ths.(At 31 March 2008: CZK 61,013 ths.).ProvisionsThe change in the provision for doubtful receivables may be analysed as follows:31 March 2009 31 March 2008CZK’000CZK’000Opening balance 16,482 12,888Charge for the year 5,612 11,633Utilized during the year 0 (63)Released during the year (8,371) (7,976)Closing balance 13,723 16,482In 2007/08 the Company wrote-off irrevocable receivables in the amount of CZK 0 (2007/2008: CZK 63 ths.).42

Annual Report 20096. EQUITYIn accordance with the respective provisions of the commercial code, the Company did not supplement its mandatory reservefund from the net profit achieved in 2007/08. The mandatory reserve fund may not be distributed among the shareholders butit can be used solely to cover the losses.The net profit of CZK 34,578,000 for 2007/08 was approved and allocated by the General meeting of the shareholder on11 July 2008 (see Statement of changes in shareholder’s equity).7. PAYABLES31 March 2009 31 March 2008CZK’000CZK’000Short-term trade payablesu 23,923 31,931Short-term advances received 6 362Short-term portion of long-term loan (see Note 15) 0 150,000Negative fair value of derivatives (see note 9) 15,227 039,156 182,293Other short-term payables 12,970 22,657Total short-term payables 52,126 204,950Long-term advances received 0 8Long-term loan (see note 15) 300,000 150,000Deferred tax liability (see note 10) 12,917 10,147Total long-term liabilities 312,917 160,155Total short- and long-term liabilities 365,037 365,105Advances received are recognised as revenue on a straight-line basis over the lease term along with related lease instalments inaccordance with the individual payment calendar.Trade and other payables have not been secured over any assets of the Company. Total overdue payables as at 31 March 2009amounted to CZK 1,445,000 (at 31 March 2008: CZK 1,663,000).Toyota Motor Finance (Netherlands) B.V. provided to the Company a long-term loan (credit) of CZK 300 million, with its twoCZK 150 million tranches falling due on 13 August 2010 and 12 August 2011, respectively. Interest on the loan is based onvariable interest rates.The Company entered into agreements on interest rate swaps (see note 9) in order to fix the interest rate on loans bearinga variable interest rate.43

Toyota Financial Services Czech s.r.o.8. BANK LOANS31 March 2009 31 March 2008CZK’000CZK’000Loans due within 1 year 610,000 620,000Long-term loans – a portion payable within 1 year 323,018 20,411Long-term loans due between 1 – 5 years 42,508 360,588Total bank loans and overdrafts 975,526 1,000,999Total short-term bank loans 933,018 640,411Total bank loans 42,508 360,588Short-term loans were provided by domestic banks.HSBC Bank provided a long-term loan of EUR 1,923,000, which is due by 30 June 2011 in regular monthly payments inaccordance with a payment calendar. The loan bears fixed interest of 4.65% p.a. for the whole repayment term.In 2005/06 HSBC Bank provided to the Company a long-term loan (credit) of EUR 2,115,000 which is payable in regularmonthly instalments in accordance with the repayment schedule to 30 March 2012 in two tranches amounting to EUR1,050,000 and EUR 1,065,000. In 2006/07, the Company drew down on a provided long-term credit within the second tranchein the amount of EUR 795,000 up to the final agreed loan of EUR 1,860,000. In the course of the drawdown of the funding, theinterest charged on the loan is variable. After the complete drawdown of the funding, the interest on the loan is fixed over theentire duration (term) of the loan contract, namely for the first tranche at 4.00% p.a and for the second tranche at 3.95% p.a.In financial year 2007/08 a bank Citibank provided a middle-term loan of EUR 300,000 which is due on 30 November 2009. Theinterest charged on the loan is based on variable interest rate.9. DERIVATIVE FINANCIAL INSTRUMENTSThe Company recognises finance derivatives as trading derivatives.The fair value of derivatives is presented in “Other receivables”, if positive or in “Other payables” (Note 7), if negative. Thederivatives can be analysed as follows:Trading agreements FixedFair Notional(interest rate swap) interest ratevalue amount%CZK’000 CZK’000At 31 March 2009 2.38–4.39(15,227) 970,000At 31 March 2008 2.38–4.196,584 1,115,000In 2008/09 the year-to-year change in a negative fair value of the above derivatives amounting to CZK 21,811,000 (in 2007/08positive change in fair value of CZK 8,455,000) was recognized as a loss from revaluation of derivatives of CZK 21,811,000(2007/08: CZK 210,000) and as a gain from revaluation of derivatives of CZK 0 (2007/08: CZK 8,665,000).Realized gains in amount of CZK 4,436,000 and realized losses in amount of CZK 471,000 are recognized in gains and lossesfrom derivatives.44

Annual Report 200910. TAXATIONThe income tax expense is comprised of the following:2008/09 2007/08CZK’000CZK’000Deferred tax expense 2,770 7,194Current tax expense 0 5,054Supplementary tax 2007/08 131 0Total income tax expense 2,901 12,248Current tax can be analysed as follows:2008/09 2007/08CZK’000CZK’000Net profit before taxation 12,506 46,826Adjustments for tax purposes:Non taxable income (15,842) (22,096)Non-tax deductible costs 14,472 33,449Diference between tax and accounting depreciation of fixed assets (14,856) (20,843)Net taxable profit (3,720) 37,336Tax losses carried forward 0 (13,269)Corporate taxation at 21% (2007/08: 21%) 0 5,054The deferred tax liability is calculated at 19% (the tax rate enacted for period of expected realisation of deferred tax;2007/08: 21%) from the net taxable profit and can be analysed as follows:31 March 2009 31 March 2008CZK’000CZK’000Deferred tax liability/asset:Difference between accounting and tax depreciation rate (14,882) (12,779)Other provisions 1,300 2,661Other temporary differences (42) (29)Tax losses carried forward 707 0Net deferred tax liability (see Note 7) (12,917) (10,147)45

Toyota Financial Services Czech s.r.o.11. ACCRUALS AND DEFERRALS31 March 2009 31 March 2008CZK’000CZK’000Accrued expenses 3,207 3,497Accrued revenues on related party grants (subsidies)(see Note 15) 718 1,636Accrued revenues from other subsidies 257 446Accrued extraordinary lease instalments 87,652 152,350Other accrued revenues 33 6,327Total accruals and deferrals 91,867 158,561In connection with legislative adjustments in the Value Added Tax after 1 May 2004 and the relating change in contractualconditions the down payments settled by lessees at the commencement of the lease contract are considered to be extraordinarypayments and are recognised on the accrued basis.Down payments in contracts concluded prior to this date were recognised in advances received (note 7).12. REVENUE ANALYSISRevenue from ordinary activities has been generated as follows:2008/09 2007/08CZK’000CZK’000Sales of services provided (finance lease) 302,228 440,885Sales of services provided (operating lease) 139,028 147,586Interest received from customer credits provided to clients 58,287 52,757Proceeds from sale of fixed assets 73,208 96,662Other revenues 26,827 21,061Total revenues from ordinary activities 599,578 758,951Other revenues are recognised in the income statement mainly in other operating income.All revenues have been derived only from domestic activities.46

Annual Report 200913. EMPLOYEE ANALYSISEmployee numbers 2008/09 2007/08Average number of members of management 4 4Average number of staff 13 14Total 17 18The Company’s management comprises the statutory representative (in the employment relation as a Company director) andemployees at managerial positions directly reporting to him.In the year 2008/09 company cars were made available for use by the senior staff members with the total cost of CZK 3,048,000(in 2007/08: CZK 3,048,000).In the business year 2008/09 no remuneration was paid to the Company’s statutory representative acting as the statutory body.No loans have been provided to senior staff members.ManagementOther TotalCZK’000CZK’000 CZK’00031 March 2009Wages and salaries 6,0915,818 11,909Emoluments 641584 1,225Social security costs 1,4592,270 3,729Other social costs 173347 520Total staff costs 8,3649,019 17,38331 March 2008Wages and salaries 5,4005,399 10,799Emoluments 633415 1,048Social security costs 2,1472,046 4,193Other social costs 169347 516Total staff costs 8,3498,207 16,55614. FEES PAID AND PAYABLE TO THE AUDIT COMPANYThe total fees paid and payable for services performed by the audit company PricewaterhouseCoopers Audit, s.r.o. can beanalysed as follows:2008/09CZK’000Statutory audit of financial statements 990Total fees paid and payable to the audit company PricewaterhouseCoopers Audit, s.r.o. 99047

Toyota Financial Services Czech s.r.o.15. RELATED PARTY TRANSACTIONSThe following related party balances were outstanding as at:31 March 2009 31 March 2008CZK’000CZK’000Short-term trade receivableToyota Financial Services Slovakia s.r.o. 2,908 0TOYOTA MOTOR CZECH spol. s r.o. 4,858 1,463Total receivable 7,766 1,463Short-term trade payablesTOYOTA MOTOR CZECH spol. s r.o. 0 2,849Anticipated payablesToyota Kreditbank GmbH 83 61TOYOTA FINANCIAL SERVICES (UK) plc 387 994Toyota Financial Services Corporation 50 26520 1,081Other payablesToyota Motor Finance (Netherlands) B.V. (see note 7) 300,000 300,000Accrued expenses from subventionsTOYOTA MOTOR CZECH spol. s r.o. (see note 11) 718 1,636Accrued expensesToyota Motor Finance (Netherlands) B.V. 1,109 1,653Total liabilities 302,347 307,219Income from subventionsTOYOTA MOTOR CZECH spol. s r.o. 1,059 3,185Total income 1,059 3,185Purchase of servicesToyota Kreditbank GmbH 123 155TOYOTA FINANCIAL SERVICES (UK) plc 2,301 1,965Toyota Financial Services Corporation 87 29TOYOTA MOTOR CZECH spol. s r.o. 7 (51)Total purchase of services 2,518 2,098Interest expenseToyota Motor Finance (Netherlands) B.V. 12,532 10,463Total expense 15,050 12,561The Company does not create provisions to receivables from related parties.Besides the above stated remuneration and benefits, there was no other consideration provided to the Company’s statutoryrepresentative and members of the Company’s management in 2008/09 and 2007/08.48

Annual Report 200916. COMMITMENTSThe Company had no significant capital commitments as at 31 March 2008.17. CONTINGENT LIABILITIESABN AMRO bank N.V. provided the Company with a bank guarantee of CZK 411,000 for the office space rent payment.The management of the Company is not aware of any other significant unrecorded contingent liabilities as at 31 March 2009.18. SUBSEQUENT EVENTSNo events have occurred subsequent to year-end that would have a material impact on the financial statements as at31 March 2009.19. CASH FLOW STATEMENTThe Company has prepared a cash flow statement following the indirect method. Cash equivalents represent short-term liquidinvestments, which are readily convertible for a known amount of cash. Cash and cash equivalents disclosed in the cash flowstatement can be analysed as follows:31 March 2009 31 March 2008CZK’000CZK’000Cash on hand and in transit 91 177Cash in banks 72,258 11,968Cash and cash equivalents 72,349 12,145STATUTORY APPROVALSThese financial statements have been approved for submission to the sole partner of the Company by the Company’s statutoryrepresentative.Prague, 24 June 2009Ing. Aleš KamarýtStatutory Representative49

Toyota Financial Services Czech s.r.o.Reporton relations among related partiespursuant to the provisions of Section 66a) of Act No. 513/1991 Coll., the Commercial Code,as amended (hereinafter “CC”)of the statutory representative ofToyota Financial Services Czech s.r.o.1. Controlled EntityToyota Financial Services Czech s.r.o.Rubín Office CenterSokolovská 192/79, 186 00 Praha 8 - KarlínID No.: 65413261Kept by the Registration Court in Prague, Section C, Inset 44764(hereinafter the “Company”)2. Relevant PeriodThis report describes relations among related parties pursuant to Section 66a of Act No. 513/1991 for the last accounting period,i.e. for the period from 1 April 2008 to 31 March 2009 (hereinafter the “Relevant period”).3. Structure of the GroupControlling entity:TOYOTA FINANCIAL SERVICES (UK) plcGreat Burgh, Burgh Heath, Epsom, Surrey KT18 5UZUnited Kingdom of Great Britain and Northern IrelandTOYOTA FINANCIAL SERVICES (UK) plc is controlled by Toyota Financial Services Corporation, which is directly controlled byToyota Motor Corporation.Related parties, with whom Toyota Financial Services Czech s.r.o. has contractual relations:Toyota Financial Services CorporationMitsui Sumitomo Bank Nagoya Bld. 10 F 18-19Nishiki 2-Chome, Naka-ku, NagoyaJapanTOYOTA FINANCIAL SERVICES (UK) plcGreat Burgh, Burgh Heath, Epsom, Surrey KT18 5UZUnited Kingdom of Great Britain and Northern IrelandToyota Kreditbank GmbHToyota-Allee 5, Köln-MarsdorfFederal Republic of GermanyToyota Kreditbank GmbH International DivisionGreat Burgh, Burgh Heath, Epsom, Surrey KT18 5UZUnited Kingdom of Great Britain and Northern IrelandToyota Motor Finance (Netherlands) B.V.DeBoelelaan 7, 1083HJ, AmsterdamThe Netherlands50

Annual Report 20094. Relations among related partiesToyota Financial Services Slovakia s.r.o.Gagarinova 7/C, 821 03 BratislavaSlovak RepublicTOYOTA MOTOR CZECH spol. s. r.o.Šafránkova 1238, 150 00 Praha 5Czech Republic4.1 List of all contracts with related parties concluded in the Relevant period and fulfilments provided among the relatedparties realised in the Relevant periodThe Company did not conclude any new contracts with the related parties within the Relevant period.The details of individual transactions can be found in the note 15 “Related party transactions” in the notes to the financialstatements, which are a part of this annual report.4.2 Other legal operations in favour of the Related partiesNo other legal operations have been performed in favour of or on requirement of the related parties.4.3 Other (unrealised) actions in favour of or on requirement of the related partiesThere are no other measures that have been taken (but not realised) in favour of or on requirement of the related parties.4.4 Assessment of adequacy of consideration and fulfilment in return from realised legal operations and detriments from(unrealised) measures in favour of or on requirement of the Related PartiesNone of the legal operations realised with the related parties or in favour of and on requirement of the related parties havebeen detrimental to the Company.Prague, 30 June 2009Ing. Aleš KamarýtStatutory Representative51

Toyota Financial Services Czech s.r.o.Toyota Financial Services Czech s.r.o.Bavorská 2662/1155 00 Praha 5 - StodůlkyT +420 222 998 300F +420 222 998 390toyotafinance@toyotafinance.czwww.toyotafinance.cz52