Medium-term Management Plan

Improving profitability is an urgent issue, and there is a need to improve ROA for each segment. For example, ROA for the Loan and Credit Card Business is 5% of our receivables outstanding (on an operating profit basis), 1.5% of the credit guarantee balance in the Guarantee Business, and around 10% of the stable period for the Overseas Financial Business.

Since the Loan and Credit Card Business, which is our main business, accounts for a large proportion of our business volume and business performance, we must increase profit margins by acquiring new customers and growing receivables outstanding while improving cost efficiency. For example, it is important to take a long-term view of the balance that a single customer will hold after one year, the interest income that can be earned, the percentage of customers with whom we can continue transactions from the second year onward, and the associated revenue. In addition to this, it is necessary to calculate appropriate advertising expenses and invest in attracting new customers, while staying mindful of the profits obtained throughout the entire transaction with customers, rather than just seeking to recover profits in a single year. To maximize profits, it is also essential to build lasting relationships that foster customer satisfaction and promote ongoing, long-term transactions.

We believe that efficient circulation of these initiatives is the key to improving profitability. By providing the know-how cultivated in our Loan and Credit Card Business to the retail businesses of our partners, we will also improve the profitability of the Guarantee Business. In addition, we believe that it is necessary for the Corporate Planning Department, which manages budgets, to thoroughly control expenses incurred in each business and work to reduce unnecessary costs.

Under the previous Medium-term Management Plan, the target for dividend payout ratio was set at 35%. In the new plan, it was raised to 50%. The dividend amount for the full year will be increased by 6 yen to 20 yen in the first year of the new plan. The use of the expression "firmly maintain" at the end of our approach to capital policy expresses our strong will to secure a dividend amount of 20 yen even if profits fluctuate, while aiming to achieve a dividend payout ratio of 50%.

To reiterate, we aim to achieve a dividend payout ratio of 50%. Even if profits decline temporarily due to unforeseen circumstances, we will maintain a dividend amount of 20 yen per share. If profits continue to grow steadily, we believe that it will be possible to increase dividends further by aiming for a dividend payout ratio of 50%.

As of the end of March 2025, the shareholders' equity ratio, calculated by adding the credit guarantee balance to consolidated total assets, was 22.9%. As guarantee obligations may arise as contingent liabilities due to the nature of our business, we include the credit guarantee balance when calculating our shareholders' equity ratio. Given such risks, we have determined that it is more appropriate from a business management perspective to calculate shareholders' equity ratio by adding the credit guarantee balance.

Our reason for setting the target value for shareholders' equity ratio at 25% under the previous Medium-term Management Plan is that it has been evaluated as appropriate through continuous communication with external rating agencies, and we have determined that it is necessary to secure a certain margin with a view to future investment through new businesses and M&A, and compliance with international accounting standards (IFRS).

Under the new Medium-term Management Plan, we have reviewed the margin and set a new target of 23%, a decrease of 2% from the previous target. Equity capital will accumulate as a result of continuing to record stable profits. However, if the balance of receivables outstanding and credit guarantees increases, then the denominator for our shareholders' equity ratio will also increase. For this reason, we would like to continue to expand our businesses while steadily accumulating a certain amount of profit, implementing stable and continuous dividends, and maintaining the current level.

Based on these capital policies, carrying on from the previous Medium-term Management Plan, we will continue to expand our business operations by increasing GeNiE business partnerships, expanding new guarantee partners, and strengthening our Overseas Financial Business. The business target under the new Medium-term Management Plan is 3.2 trillion yen, which is 1.2 times higher than for the fiscal year ended March 2025. Operating revenue is expected to increase over three consecutive fiscal years to 366.5 billion yen, reflecting steady growth in business volume. Operating profit is also expected to increase over three consecutive fiscal years to 100.4 billion yen.

In addition, the new Medium-term Management Plan has set the medium-term priority theme of taking on the challenge of expanding into new countries and creating new businesses. Over the next three years, we will conduct research activities with a view to expanding into one or more countries. We are considering M&A as one option for entering these markets, and we plan to invest in expanding into new countries and creating new businesses.

In recent years, many guidelines for information disclosure have been put forward both in Japan and abroad, and we recognize that we have not yet been able to adequately respond to them. Going forward, we will work actively to enhance information disclosure and strive to eliminate asymmetry in the information we disclose. Information disclosure is an important item that is attracting the attention of all stakeholders, including shareholders, partners, employees, and even students who are considering joining the company. We believe that clearly disclosing our values and the kind of initiatives in which we will engage is very important for ensuring smooth communication with all stakeholders.

Our corporate philosophy includes "The Spirit of Human Dignity," and this philosophy has permeated widely within the company. On the other hand, we had not established a formal human rights policy until now, but in June 2025 we formulated a new human rights policy. We have also been actively engaged in social contribution activities such as holding "barrier-free" concerts that can be enjoyed by children and people with disabilities, blood donation activities, and forest conservation activities. Despite this, we feel that there is a lack of proper information disclosure and awareness raising with regard to these activities, and I believe that we need to be more proactive than ever before in this area.

In recent years, as reported in the news, there have been many cases of financial fraud. We are also taking measures to prevent damage from such cases. Specifically, we are working to prevent damage by detecting signs of fraud from the information available at the time of application and contacting customers directly with that information. Another aspect of our corporate philosophy is "Customers First," and we believe that engaging in business with a constant awareness of what is truly beneficial to our customers is an important focal point within our company. I feel that it is necessary to work on sustainability, not only within the Sustainability Promotion Office, but in all departments. We will continue working to further enhance the level of our information disclosure and sustainability initiatives.