Shigeyoshi Kinoshita
Chairman, President & CEO
ACOM CO., LTD. | | Letter to ShareholdersThe Outline of the Second Quarter Consolidated Financial Results for Fiscal Year Ending March 2012 At the second quarter consolidated financial results for the fiscal year ending March 2012, operating revenue was 108.0 billion yen, down 16.1% year-on-year. In guarantee business, guaranteed receivables showed an increase due to following factors: partial succession of guarantee business in the MUFG Group, stable growth of "BANQUIC," card loan product provided by The Bank of Tokyo-Mitsubishi UFJ, Ltd., and extension of guarantee business alliance partners, mainly top tier regional banks. However, this was not sufficient to match decreases in the balance of accounts receivable-operating loans and average loan yield.
On the other hand, operating expenses were down 51.2% year-on-year to 75,926 million yen. Even though financial expenses saw 9.9% year-on-year increase to 12,082 million yen, following factors mainly contributed to decrease in overall operating expenses: 16.8% decrease in provision of allowance for doubtful accounts to 27,528 million yen, no additional provision for loss on interest repayment, and 15.4% decrease in other operating expenses to 36,316 million yen due to promotion of cost structure reform.
As a result, operating income, ordinary income, and net income were 32,116 million yen, 32,729 million yen, and 28,391 million yen, respectively.
Although consolidated net income of 42.9 billion yen is expected, expansion of shareholder's equity is task of the highest priority for implementation of future growth strategies in view of improving management stability and security. ACOM truly regrets to inform that no dividend will be paid for this second quarter. We also plan to make no dividend payment for the fourth quarter of current fiscal year.
We will make group-wide efforts to swiftly recover the business performance. We humbly ask for your ongoing support as we embrace the challenges for the future.
Business Alliance with MUFG Group in Progress In September 2008, ACOM, MUFG, and BTMU agreed to position ACOM as the core company in the consumer loan business within the consumer finance segment of the MUFG group based on mutual understanding that closer alliance is necessary. The repositioning was done to also establish ACOM's competitive advantages in consumer finance industry and materialize consumer finance segment with potential for massive growth in the MUFG group. Afterward, in December 2008, ACOM became a consolidated subsidiary of MUFG.
As a part of alliance strategy, the loan business of DC Cash One Ltd. was integrated into ACOM in May 2009. In September 2009, ACOM succeeded unsecured card loan guarantee business of The Mitsubishi UFJ Home Loan Credit Co., Ltd. Unsecured card loan guarantee business of Mitsubishi UFJ NICOS Co., Ltd. was integrated into ACOM in October, 2010. We intend to further promote business alliance emphasizing selection and concentration through close tie-up with MUFG group. Further Strengthening Business Management ACOM has made prompt responses to drastically changing business environment. In November 2006, ACOM commenced implementation of "Group Management Reform" after foreseeing impacts of decreases in the unsecured loans receivable outstanding and average loan yield. It is followed by measures to strengthen its internal control system, and becoming the forerunner in the industry to implement lowering the maximum interest rate in June 2007.
However, business environment surrounding us has increased in severity from that of period when "Group Management Reform" was announced. For example, requests for interest repayment have stayed at high level, and the balance of accounts receivable-operating loans has been decreasing. Under such business environment, ACOM decided to pursue the strengthening business management policy in November 2009. ACOM promoted drastic cost reduction policy by restructuring business outlets, improving personnel efficiency, and reducing other operation costs.
Therefore, ACOM expects to achieve reduction of operation cost at the fiscal year March 2012 to below 60 billion yen.
ACOM Group: Mid-term Outlook The business environment surrounding consumer credit industry will remain to be severe. However, we believe that "personal loan market," which we position as our central business domain, will enter into growth stage anew as market turmoil triggered by the Money Lending Business Act subsides and continuous decline in requests for interest repayments becomes clear.
Although managing amendments and execution of measures to enhance managerial basis have been matters of high priority, transition to strategic investment focusing on business expansion will be necessary in mid-term perspective.
In addition to former cost reduction measures, we will execute assertive strategic investments such as marketing strategies, with aim to recover operating revenue.
ACOM Group's Vision We have set management vision in mid-term management plan of "becoming the `leading company` which provide prime satisfactions to as many customers as possible and win trust in the consumer finance industry."
<3 components emphasized in the management vision>
1. Customers first, which is the basis of our business and a constituent of our corporate philosophy. This also reflects each and every member of ACOM's intention to provide prime satisfactions to as many customers as possible.
2. Concentrate our management resources to "personal loan market" regardless of the nature of business segment.
3. Establish a solid brand image of "leading company which win trust from the market" by further strengthening the brand of "safety and trust."
Under this management vision, ACOM is going to respond precisely to the environmental changes while attempting to transform its business model. We will keep moving to materialize the company with the "top share" in personal loan market.
We humbly ask for your ongoing support as we embrace the challenges for the future.
 Shigeyoshi Kinoshita
Chairman, President & CEO
ACOM CO., LTD.
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