Consolidated Financial Results for the Fiscal Year Ended March 31, 2015 Supplementary Materials May 14, 2015

Transcription

1 Consolidated Financial Results for the Fiscal Year Ended March 31, 215 Supplementary Materials May 14, 215

2 Overview of Consolidated Financial Results for the Fiscal Year Ended March 31, 215 J Trust Group s Key Initiatives M&A (International) M&A in Southeast Asia We acquired 99.% shares of Indonesian commercial bank, PT Bank Mutiara Tbk. (Republic of Indonesia), making it a consolidated subsidiary in November 214. Prior to the acquisition, Indonesia Deposit Insurance Corporation owned % shares of Bank Mutiara. Going forward, we will improve our presence in Indonesian economy, expand business and contribute to the further expansion of Indonesian economy. 1. We will mainly cater to small and medium enterprises and wage earners, whose presence is growing rapidly as economy expands, and offer comprehensive financial services such as various loans (including mortgage etc.), card services and foreign exchange transactions. 2. We will establish a network of our group and partnered companies in Asia and combine our strength in financial, real estate and amusement area to provide premium services in Asia. In March 215, we concluded an agreement to underwrite convertible bond issued by Group Lease PCL (Kingdom of Thailand), listed on the Stock Exchange of Thailand, through JTRUST ASIA. In the future, we aim at generating synergy through provision of finance by Bank Mutiara, collaborative development of hire-purchase financing business in Indonesia, whose economy is expected to continue growing and business alliances when Group companies operate in Southeast Asia. M&A in South Korea In January 215, we acquired all shares of SC Savings Bank from Standard Chartered Korea Limited, making SC Savings Bank a consolidated subsidiary and changed its trade name to JT Savings Bank Co., Ltd. Additionally, in March 215, we acquired all shares of SC Capital, making it a consolidated subsidiary and changed its trade name to JT Capital Co., Ltd. Refer to Topics (P3) for more details Domestic In November 214, ADORES acquired all shares of Japan Care Welfare Group (hereinafter, JC-Group ) and J Trust Group started elderly care business. Going forward, we plan to develop business proactively through measures as follows: capitalizing on JC-Group s know-how in care and welfare business and its relationship with users, families and local communities cultivated by JC-Group; conversion of care facilities to the ones which conform to administrative demand; and startup of new service which meets various demands. Organizational restructuring (International) In August 214, we transferred loan business of HICAPITAL, KJI Consumer Finance (currently TA Asset Management) and Neoline Credit, to Chinae Savings Bank. After the transfer, we have restructured business and loan disbursement is handled by Chinae Savings Bank and three consumer finance companies specialize in purchase and collection of non-performing loan (NPL). through this move, 1. We can improve profit structure by shifting business resources from high interest rate borrowings (three consumer finance companies in South Korea) to low interest rate deposits (Chinae Savings Bank). 2. By utilizing customer base of three South Korean consumer finance companies, we can increase balance of receivables, enabling us to pursuit economies of scale. 3. We can accommodate a wide range of customer requirements by providing low interest rate borrowings and enhancing convenience. (Domestic) We transferred KC Card brand of KC Card Co., Ltd. in Jan. 215 and changed its trade name to J TRUST Card Co., Ltd. We conducted organizational restructuring of credit card business including assumption of partial business of NUCS by J TRUST Card. Others (Lawsuit) Regarding the lawsuit for damages filed against J Trust by A&P Financial Co., Ltd. (hereinafter, A&P ) and another lawsuit for damages filed by Yoon Choi, Representative Director of A&P, judgments have been rendered by Tokyo District Court on January 21, 215. J Trust concluded a sponsorship agreement with Takefuji Corporation, a corporation under the Reorganization and Rehabilitation Act, (currently TFK Corporation; hereinafter, Takefuji ) to support the reconstruction of Takefuji s business. A&P and Yoon Choi filed lawsuits against J Trust, J Trust s directors and trustees of Takefuji, claiming that A&P suffered damages by alleged joint tort during the process of sponsor selection. Tokyo District Court ruled that J Trust did not commit joint tort, and the judgments fully backed J Trust s arguments, and all of plaintiffs claims were dismissed. 1

3 Topics Analysis of the Difference between Previously Announced Consolidated Forecast and Revised Forecast Income/Loss Additional temporary expenses incurred owing to Chinae Savings Bank s proactive stance in handling of NPL and the delay in share acquisitions of SC Savings Bank and SC Capital, etc. which resulted in decrease in operating compared to the original forecast. We have set up a framework for full-fledged business expansion and accelerate growth from FY 216. Unit: billion yen 2.6 Previously announced forecast Temporary expenses Additional provision of allowance for doubtful accounts at Chinae Savings Bank 2 Decrease in operating due to the delay in share acquisitions of SC Savings Bank and SC Capital 3.4 Provision for loss on interest repayment at KC Card.7 3 Initial cost, etc. at new subsidiaries.3.7 Cost savings and gain on sales of shares 1.6 Decrease in operating at domestic subsidiaries 4 Revised forecast (5.2) Proactive stance in handling of NPL for full-fledged business 1 expansion Temporary provision of allowance for doubtful accounts due to asset transfer from SC Capital to Chinae Savings Bank. Adopted more conservative allowance ratio for delinquent loans and loans under individual rehabilitation program, meaning no loss will arise even if sold as NPL Decrease in operating due to the delay in share acquisitions of SC Savings Bank and SC Capital. Full profit contribution expected from FY 216 The acquisitions, originally scheduled to finalize by the end of September, did not take place until March 215 for SC Capital and January 215 for SC Savings Bank. As a result, originally expected was carried forward from FY 215 to FY 216. Sale of KC Card/Temporary expenses at new consolidated subsidiaries Increased provision for loss on interest repayment by approximately.7 billion yen. However, the amount was reflected in sales price and recorded under an extraordinary. Cost increase due to consolidation of 3 subsidiaries during FY 215. Asset transfer and restructuring of HICAPITAL in South Korea incurred restructuring expenses. Decrease in operating for domestic subsidiaries/cost savings dropped at Keynote and ADORES and profit decreased due to higher operating expenses. Sought to boost sales and continued efforts to reduce costs for solid profit generation. Sale of LCD Global Investments shares, etc. increased by approximately.6 billion yen at JTRUST ASIA. 2

4 Topics Share acquisition of SC Savings Bank and SC Capital Infrastructure to provide comprehensive financial services in South Korea is now established. We will further enhance the group-wide profitability with the following initiatives. Attain synergy from organic growth of each Group company and Improve network effect derived from collaboration with other businesses in Asia Trade name was changed from Standard Chartered Capital (Korea) Co., Ltd.) Business structure in South Korea Chinae Savings Bank and JT Savings Bank proactively disburse new loans utilizing low interest rate deposits. TA Asset Management and Neoline Credit specialize in servicing business and purchase of NPL. Savings Bank Purchase and Collection of NPL Ranks 3 rd in savings bank industry in South Korea Chinae Savings Bank + JT Savings Bank 3 rd in total assets, 2 nd in number of branches *Data as of end Dec. 214 *Unit:.1 billion Korean won Name of Savings Bank Total Assets Deposits Loans No. of Branch SBI Mutual Savings Bank *4 banks combined 38,173 32,959 3,488 2 HK Mutual Savings Bank 19,973 17,386 19, Chinae Savings Bank JT Savings Bank 14,791 13,178 9, Korea Mutual Savings Bank 14,269 11,186 13, Moa Mutual Savings Bank 13,925 12,68 11,488 6 Chinae Savings Bank 11,422 1,453 7, Dongbu Mutual Savings Bank 1,963 8,67 6,652 9 Hana Savings Bank 1,729 8,859 8, Shinan Mutual Savings Bank 9,238 8,254 8,199 1 Pureun Mutual Savings Bank 9,138 7,1 7,657 5 JT Savings Bank 3,369 2,725 2,581 4 Source: prepared by J Trust based on materials of Korea Federation of Savings Banks area after merger covers 7% of South Korea Branch office location No.3 New loans Trade name was changed from Standard Chartered Savings Bank Korea Co., Ltd. Low interest rate deposits as business resource New loans Purchase of loans receivable Ranks 3rd in savings bank industry in South Korea Collection of receivables Purchase of NPL Seoul 8 Cheonan 1 Jeonju 1 Gwangju 1 Jeju 1 Gyeonggi-do Cheongju 1 Daejeon 1 Gwangyang 1 SC Savings Bank s operating area Boasts second largest number of branch offices in S.Korea We can reinforce our marketing effort and provide services throughout South Korea Increase loan and deposit balance Better cost performance in marketing and advertising Improve reputation Secure talented personnel across South Korea Generate profit from JT Savings Bank s loan receivables utilizing J Trust Group s receivable collection and management capability Acquire internationally recognized financial institution s (Standard Chartered Bank) subsidiaries Gain know-how in managing a global institution and globally competent employees 3

5 Topics Chinae Savings Bank Steady Progress toward Generating Full Year Profit Change in operating (South Korean standard) 1 Korean won =.1 yen) Purchase of receivables, assumption of loan business from 3 affiliated financial companies, increase in new loans supported by advertising and promotion activities increased loan balance Ratio of new loans receivable with low probability of default will rise Expect improvement in loan quality and steady increase in operating 148 Unit 1 million yen Revenue 19 Change in ordinary (South Korean standard) (1 Korean won =.1 yen) Recorded quarterly ordinary continuously since Q3 of FY 215 Posted ordinary loss due to increase in expenses such as allowance for doubtful accounts and loss on sales of receivable On the back of steady increase in operating, we expect to generate profit Unit 1 million yen Ordinary Income /3 FY /3 FY /3 FY 215 (1) (43) (14) FY 13/3 213 FY 14/ /3 1Q FY 215 Q1 FY 2Q 215 Q2 FY 3Q 215 Q3 FY 4Q 215 Q4 Increase in new loan amount led to an increase in ratio of customers with low probability of default to 5% of overall balance temporarily Loan balance steadily increased by approximately 3 times within 2 years since its founding Delinquency ratio drastically fell to 12% from its peak of approximately 5% Unit 1 million yen 1,2 1, Increase in ratio of new loan leads to improvement in loan quality Left axis : total loan balance Left axis : balance of new loan Ratio of loans delinquent for 3 days or more 12.3 billion yen 5% 45% 4% 35% Improvement 3% in delinquency ratio 25% 45.3 billion yen 2% Jan Apr Jul 7 Oct Jan Apr Jul 7 Oct Jan 215 *The end of month exchange rate is applied. Increase in new loan Delinquency ratio12% 15% 1% 5% % Purchased receivables, etc. 75 billion yen Ratio of new loan 37% New loan 45.3 billion yen New loan amount continues to increase New loan amount continues to grow Grew 3.9 times YOY for Q4 of FY 215 and 3.6 times YOY for FY times TV Commercial started Unit 1 million yen YOY Monthly new loan of Chinae Savings Bank Ban on direct marketing activity due to information leakage by a credit card company *The end of month exchange rate is applied Oct Jan Apr 13.7 Jul Oct 13.1 Jan Apr 14.7 Jul Oct 14.1 Jan

6 Topics Improvement in profitability of international business Refer to P21 for details Unit 1 million yen International Business Aiming for Significant Improvement in Profitability of South Korean Business Segment Segment expense Segment Segment 15/3 1Q 2Q 3Q 4Q Q1 of FY 215 Q2 Q3 Q4 Temporary factor 63 (13) Recorded loss on sales of loans receivable under banking business expenses when NPL was sold Temporary factor 68 (2) Making KJI and HICAPITAL consolidated subsidiaries and disposal of NPL at Chinae Savings Bank resulted in an increase in provision of allowance for doubtful accounts 49 (1) Temporary factor 76 (15) Following factors increased provision of allowance for doubtful accounts. Increase in loan balance due to assumption of receivables by Chinae Savings Bank from SC Capital and conservative estimates of allowance for doubtful accounts in view of possible sale of receivables in the future Assumption of receivables and increase in new loans at Chinae Savings Bank increased loan balance, leading to a surge in operating. As a result, segment during 4th quarter of FY 215 increased considerably Acquired JT Savings Bank and JT Capital in South Korea and Bank Mutiara in Southeast Asia through M&A Infrastructure to provide comprehensive financial services is now established. Going forward, utilizing the network in South Korea and Southeast Asia, we aim to improve profitability Segment Tackled structural reform involving M&A and business restructuring till 4th quarter and recorded expenses related to NPL including sales of NPL as temporary factor. This resulted in increase in losses Going forward, we expect to generate sustainable profit since the foundation to improve profitability is already established 5

7 Fiscal Year Ended March 31, 215 Overview of Consolidated Financial Results 6

8 Overview of Consolidated Financial Results for the Fiscal Year Ended March 31, 215 YOY Comparison of Consolidated Financial Results (Cumulative) March 214 (cumulative) March 215 (cumulative) Result (%) Result (%) YOY change YO Y (%) Major factors behind the change Unit: million yen 61, , , Transfer of loan business from three Group financial companies to Chinae Savings Bank and increase in new loans receivable increased banking business. Transfer of loan business from the said three companies decreased interest on loans. However, we acquired KJI and HICAPITAL at the end of the previous year and included their P/L in the scope of consolidation from the beginning of the current fiscal year. This increased interest on loans. Gain on sales of securities of LCD Global Investments LTD. at JTRUST ASIA and addition of operating of JC-Group and AI Denshi, etc. which were included in the scope of consolidation from the current fiscal year and other factors boosted other operating. - Transfer of KC Card brand by KC Card, etc., led to a decline in balance of advances paidinstallment and installment payment paying for commission fell. Sluggish personal consumption due to consumption tax hike decreased sales on amusement business. expenses 26, , , gross profit 35, , (1,59) (4.5) SG & A 21, , , Posting loss on sales of loans receivable, etc. due to sale of NPL at Chinae Savings Bank in Q1 increased banking business expenses. JC-Group and AI Denshi, etc. were included in the scope of consolidation from the current fiscal year and their operating expenses were added. As a result, other operating expenses rose. As a temporary factor, making KJI and HICAPITAL our subsidiaries, assumption of loans at Chinae Savings Bank and accelerated disposal of NPL increased provision of allowance for doubtful accounts. Moreover, as an extraordinary factor, provision for loss on guarantees increased compared to the previous fiscal year in which reversal of provision for loss on guarantee was recorded at completion of repayment of borrowings to RCC. Therefore, bad debt related expenses climbed. 13, (5,217) (8.2) (18,963) Ordinary 13, (2,385) (3.8) (15,736) + At J Trust, share issuance cost decreased (zero in the current fiscal year) compared to the previous fiscal year when we recorded stock issuance cost related to rights offering. Due to expansion of overseas business, foreign exchange gains were posted. - fell. Net 11, , (1,2) (9.) + Acquisition of JT Capital and JT Savings Bank, etc. boosted gain on bargain purchase. - Ordinary declined. Income tax burden rose. 7

9 Overview of Consolidated Financial Results for the Fiscal Year Ended March 31, 215 YOY Comparison of Revenue and Income (Consolidated, Cumulative) by Business Segment Unit: million yen March 214 (Cumulative March 215 (Cumulative) YOY change YOY (%) Major factors behind the change Domestic financial business 25,3 18,79 (6,51) (25.7) 11,435 1,852 (9,583) (83.8) Installment payment paying for commission and interest on loans fell due to the decrease in balance of advances paid-installment and accounts receivable-operating loans in Japan. As a result, operating fell. dropped, also as an extraordinary factor, provision for loss on guarantees increased compared to the previous fiscal year in which reversal of provision for loss on guarantees was recorded at completion of repayment of loans to RCC. For above reasons, bad debt related expenses increased, resulting in decrease in operating. Real estate business Amusement business 4,975 5, Despite the sluggish market conditions, number of housing sold increased. Completion and handover of property was carried over from the previous fiscal year due to the hike in demand prior to (94) (18.9) consumption tax increase. remained strong. 16,597 15,87 (1,51) (9.1) Though aggressive sales promotion/branding activity helped support spending per customer and number of customers, it was not enough to offset the slowdown in personal consumption due to (468) (49.2) consumption tax hike. Therefore, operating and operating fell. International business Other business Total Elimination or corporate Consolidation 13,214 19,857 6, ,46 (5,811) (8,857) 3,72 4,561 1, (69) (139) 63,16 64, , (3,142) (19,142) (1,234) (837) 396 (2,255) (2,75) ,926 63,281 1, ,745 (5,217) (18,963) The transfer of loan business from three Group financial companies to Chinae Savings Bank and an increase in new loans receivable contributed to an increase in banking business. Transfer of loan business from three companies decreased interest on loans. However, including KJI and HICAPITAL which we had acquired at the end of the previous fiscal year in the scope of consolidation increased interest on loans, resulting in an increase in operating. Temporary factors, such as making KJI and HICAPITAL consolidated subsidiaries, an increase in balance of loans caused by assumption of receivables by Chinae Savings Bank, and accelerated disposal of NPL increased provision of allowance for doubtful accounts. Also, recording loss on sales of loans receivable as banking business expenses due to disposal of NPL at Chinae Savings Bank led to a decrease in operating. JC-Group and AI Denshi, etc. were included in the scope of consolidation from the current fiscal year, contributing to an increase in operating. 8

10 Changes in Key Consolidated Management Indices and Other Figures (Quarterly) 9

11 Change in Key Consolidated Management Indices and Other Figures (Quarterly) Balance by Product Unit: million yen Changes in balance of key products Jun 213 Sep 213 Dec 213 Mar 214 Jun 214 Sep 214 Dec 214 Mar 215 Commercial notes 1,429 1,684 2,25 2,369 2,231 2,362 2,381 2,355 Accounts receivable - operating loans 16,861 15,267 14,49 49,242 45,152 18,31 15,526 65,315 Loans by banking business 59,969 51,698 48,489 46,71 43,233 71, , ,41 S. Korea (Chinae Savings Bank, JT Savings Bank) 59,969 51,698 48,489 46,71 43,233 71,364 78, ,71 Indonesia (Bank Mutiara) 76,83 75,699 Advances paid-installment 45,544 42,95 41,17 39,776 37,84 36,147 35,181 1,395 Purchased receivables 2,454 2,239 2,259 2,527 2,929 2,814 5,939 8,647 Credit guarantee balance 33,983 34,814 36,5 4,839 42,795 44,373 45,725 36,712 3, 2, 1, Loans by banking business 48,489 46,71 43,233 71, , ,41 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 6, 5, 4, 3, 2, 1, 36,5 Credit guarantee balance 4,839 42,795 44,373 45,725 36,712 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 7, 6, 5, 4, 3, 2, 1, Accounts receivable - operating loans 65,315 14,49 49,242 45,152 18,31 15,526 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 1, 8, 6, 4, 2, Purchased receivables 8,647 5,939 2,259 2,527 2,929 2,814 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 6, 5, 4, 3, 2, 1, Advances paid-installment 41,17 39,776 37,84 36,147 35,181 1,395 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 3, 2, 1, Commercial notes 2,25 2,369 2,231 2,362 2,381 2,355 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar The balance of loans by banking business increased due to transfer of loan business from three Group companies to Chinae Savings Bank, assumption of loans receivable from JT Capital by Chinae Savings Bank and an increase in new loans through aggressive advertising using TV commercial. In addition, we made JT Savings Bank our subsidiary, which increased the balance. In Indonesia, making Bank Mutiara our subsidiary led to a significant increase in balance. 2. As for credit guarantee balance, transfer of credit guarantee business at KC Card led to its reduction. However, the Group aims at increasing credit guarantee balance by forming partnership with regional financial institutions and launching new schemes including credit guarantee for rental housing loans. 3. The balance of accounts receivable-operating loans increased by making KJI and HICAPITAL our subsidiaries in Mar. 214 in South Korea. However, it decreased due to the transfer of loan business of three subsidiaries including Neoline Credit to Chinae Savings Bank in Aug Making JT Capital our subsidiary at the end of Mar. 215 increased the balance. 4. Three financial companies in South Korea started to specialize in purchase and collection of receivable from Aug They purchased NPL from subsidiaries. As a result, the balance of purchased receivables increased. 5. The balance of advances paid-installment decreased due to the decrease in cash advance balance and others. The transfer of business at KC Card greatly reduced the balance. 6. The balance of commercial notes remains at the same level due to aggressive efforts on the back of credit line expansion at partnered financial institutions. 1

12 Changes in Key Consolidated Management Indices and Other Figures (Quarterly) Allowance for Doubtful Accounts etc. Unit: million yen Allowance for doubtful accounts Jun 213 Sep 213 Dec 213 Mar 214 Jun 214 Sep 214 Dec 214 Mar 215 Balance of NPL (a) 17,679 18,471 18,41 27,413 24,89 24,292 22,737 49,258 Allowance for doubtful accounts(b) 1,838 9,996 11,422 11,684 1,814 12,51 12,199 21,632 Allowance rate against NPL (b)/(a) 61.3% 54.1% 62.% 42.6% 44.9% 51.5% 53.7% 43.9% Allowance against advances paid-installment 5,85 4,292 3,537 3,5 2,781 2,588 2, Other allowance for doubtful accounts ,46 1,465 1,355 1,348 1,435 1,375 *For secured loans and guaranteed loans, the estimated realizable value from disposal of collateral and the estimated realizable value guaranteed is subtracted from the loan balance. Allowance for doubtful accounts is calculated based on the remaining balance taking the financial condition and financial result of the obligor into consideration. Other allowance for doubtful accounts is provided for purchased receivables, subrogation receivable, membership, investment and other asset. Provision for loss on interest repayment Provision for loss on interest repayment 8,145 7,593 7,388 6,833 6,463 6,555 6,222 6,38 Provision for loss on interest repayment against advances paid-installment Provision for loss on guarantees 9,34 8,544 7,723 6,65 6,65 5,686 5,591 Credit guarantee balance (c)* 1 33,983 34,814 36,5 4,839 42,795 44,373 45,725 36,712 Unsecured 16,293 16,56 16,853 21,7 22,55 22,718 23,272 13,89 Secured 17,689 18,38 19,196 19,832 2,74 21,654 22,452 22,821 Provision for loss on guarantees (d) Provision rate against credit guarantee balance (d)/(c) 1.5% 1.4% 1.3% 1.1% 1.% 1.% 1.% 1.2% Provision for contingent liabilities of subsidiaries* 2 3,513 3,578 *1 In addition to the above figure, we have the credit guarantee balance by banking business of 7,14 million yen at end Dec. 214 and end Mar. 215 since we made Bank Mutiara our consolidated subsidiary. *2 Provision for contingent liabilities of subsidiaries was reversed when the Group completed full repayment of borrowings, etc. to RCC during the quarter ended December 213. Allowance rate against NPL increased due to the increase in allowance for doubtful accounts during the quarter ended Sep. 214 at Chinae Savings Bank. This was temporary expenses for future turnaround. During the quarter ended Dec. 214, the allowance rate remained at the same level. We made Bank Mutiara our consolidated subsidiary during the quarter ended Dec. 214 and its figures have been included since the quarter ended Mar. 215 and balance of both NPL and allowance for doubtful accounts greatly increased. Provision for loss on interest repayment is recorded in consideration of expected claims based on the latest figure of loans with overcharged interest. The provision decreased slightly due to the stabilization in number and amount of refund claims. Transfer of KC brand at KC Card in Jan. 215 led to a large decrease in allowance for doubtful accounts against advances-paid installment and provision for loss on interest repayment. Regarding provision for loss on guarantees, transfer of KC brand at KC Card led to a significant decrease same as advances paid-installment. However, the Group s strategy remains the same and it aims to expand tie-up financial institution network and increase balance mainly in credit guarantee for unsecured loans. On the other hand, the Group tries to increase credit guarantee balance of secured loans. The allowance rate against credit guarantee balance remained at certain level. 11

13 Changes in Key Consolidated Management Indices (Quarterly) Revenue FY 214 FY 215 Jun 13 Sep 13 Dec 13 Mar 14 Cumulative Jun 14 Sep 14 Dec 14 Mar 15 Cumulative Discount Interest on loans ,54 3, ,934 Collection from purchased receivable Installment payment paying for commission Unit: million yen , , ,439 2,46 1,923 1,833 1,659 7,463 1,622 1,548 1, ,71 Guarantee commission , ,443 Other financial ,264 3, ,51 Gain on bad debts recovered 1,247 1,139 1,189 1,559 5,135 1,174 1,169 1,275 1,19 4,89 Sales on real estate business 73 1,326 1,835 1,13 4,97 1,846 1,626 1,287 1,61 5,821 Sales on amusement business 4,222 4,493 3,947 3,846 16,51 3,631 4,54 3,826 3,561 15,73 Completed work (design/construction) , ,747 Banking business 2,431 2,2 2,622 5,137 12,392 2,194 4,84 3,45 4,647 14,376 Others , ,196 2,428 4,693 14,545 14,3 15,171 17,98 61,926 15,928 16,51 16,14 15,161 63,281 2, 17,5 15, 12,5 1, 7,5 5, 2,5 17,98 14,545 14,3 15,171 15,928 16,51 16,14 15,161 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Solid operating. Major breakdown is as follows: 1. Banking business steadily increased owing to assumption of loans receivable and increase in new loan disbursement at Chinae Savings bank as well as making JT Savings Bank our subsidiary. For the quarter ended Mar. 214, due to the review of consolidated fiscal year, its accounting period has been increased by three months for the quarter ended Mar. 214 and for the quarter ended Sep. 214, assumption of loan business from three Group financial companies contributed to a large increase. 2. Sales on amusement business were solid by making ADORES and BREAK our consolidated subsidiaries since the quarter ended Sep However, factors such as consumption tax hike and popularity of free social gaming caused the decrease recently. 3. Interest on loans had been on the increase since the quarter ended Jun. 214 after KJI Consumer Finance and HICAPITAL were included within the scope of P/L consolidation. However, due to the transfer of loan business to Chinae Savings Bank, they fell for the quarter ended Sep Collection from purchased receivable grew since the quarter ended Dec. 214, because three Group companies started servicing business. Guarantee commission was steadily increasing with the expansion of credit guarantee balance, however, transfer of credit guarantee business at KC Card led to a decrease. Gain on bad debts recovered has been almost flat recently. 4. Installment payment paying for commission was on the decrease overall, affected by a decrease in balance in cash advance. However, it declined significantly owing to the transfer of credit card business of KC Card. 5. Sales on real estate business have been recovering overall. 12

14 Changes in Key Consolidated Management Indices (Quarterly) Selling, General and Administrative Expenses FY 214 FY 215 Unit: million yen Jun 13 Sep 13 Dec 13 Mar 14 Cumulative Jun 14 Sep 14 Dec 14 Mar 15 Cumulative Personnel expenses 2,74 2,788 2,785 3,525 11,84 3,36 3,15 3,112 2,87 12,62 Other expenses 2,529 2,933 2,96 4,76 12,446 3,717 4,117 4,22 3,387 15,245 Expenses related to bad debts Selling, general and administrative expenses 981 2,248 (1,32) (4,337) (2,49) 1,792 4,399 2,613 3,1 11,96 6,216 7,97 4,389 3,264 21,841 8,546 11,622 9,749 9,295 39,214 5, 4, 3, 2,74 2,788 2,785 Personnel expenses 3,525 3,36 3,15 3,112 2,87 5, 4, 3, 2,529 Other expenses 4,76 3,717 2,933 2,96 4,117 4,22 3,387 2, 2, 1, 1, Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 5, 2,5 (2,5) (5,) Expenses related to bad debts 4,399 2,248 2,613 1, (1,32) (4,337) 3,1 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 <Expenses related to bad debts> Making KJI and HICAPITAL consolidated subsidiaries, assumption of loans receivables, etc. at Chinae Savings Bank and accelerated disposal of NPL resulted in an increase in provision of allowance for doubtful accounts. During the quarter ended Mar. 215, assumption of loans receivable from JT Capital further increased these expenses. During the quarter ended Mar. 214, Chinae Savings Bank changed the method of calculating allowance for doubtful accounts to the one based on historical data, which contributed to the substantial reduction in expenses related to bad debts. <Personnel and other expenses> These expenses gradually increased along with expansion of the Group s business, however, during the fiscal year ended Mar. 215, they were almost flat. During the quarter ended Mar. 214, the accounting period at Chinae Savings Bank and Nihon Hoshou has been increased by 3 months and 1 month respectively due to the change in its consolidated closing date. 13

15 Changes in Key Consolidated Management Indices (Quarterly) Quarterly Consolidated Results FY 214 FY 215 Unit: million yen Jun 213 Sep 213 Dec 213 Mar 214 Cumulative Jun 214 Sep 214 Dec 214 Mar 215 Cumulative (loss) 2, ,847 7,665 13,745 (358) (2,274) (688) (1,896) (5,217) Ordinary (loss) 2,262 (6) 3,946 7,742 13,351 (294) (2,164) 2,142 (2,68) (2,385) Net (loss) 2,5 (861) 1,441 8,56 11,145 (395) (3,359) 2,611 11,286 1,143 Gain on bargain purchase ,6-22 1,2 13,53 14,573 Net excluding gain on bargain purchase 2,5 (922) 1,19 7,811 1,85 (395) (3,381) 1,591 (2,244) (4,429) 1, 7,665 1, Ordinary 7,742 5, 2,225 3,847 5, 2,262 3,946 2,142 (5,) 6 (358) (688) (2,274) (1,896) Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 (5,) (6) (294) (2,164) (2,68) Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 15, 1, 5, (5,) Net Net Income Net Income excluding gain on bargain purchase 11,286 8,56 2,5 2,611 1,441 (861) (395) (3,359) Jun H Sep H H25.12 Dec 13 Mar H Jun H Sep H H26.12 Dec 14 Mar H For the 4 th quarter, we posted operating loss and ordinary loss. However, we recorded net same as previous quarter. Major contributing factors are as follows: grew due to interest on loans and banking business and contribution from elderly care business which is in the scope of consolidation for the first time, etc. despite a decline in installment payment paying for commission and sales on amusement business. We posted operating loss as we recorded operating expenses for the newly consolidated companies and provision of allowance for doubtful accounts by business in South Korea although the amount of provision has declined significantly compared with the second quarter. Ordinary loss was posted due to a decrease in foreign exchange gains stemming from overseas expansion, etc. coupled with operating loss. However, we recorded net of 1.14 billion yen for full year due to a large increase in gain on bargain purchase caused by share acquisitions of JT Capital and JT Savings Bank, etc. although we recorded business structure improvement expenses at Nihon Hoshou and tax burden increased at the Group companies. 14

16 Changes in Key Consolidated Management Indices and Other Figures Cash Out Amount etc. due to Interest Refund Claims 7, 6, 5, 4, 3, 2, 1, Apr 212 May 212 Jun 212 Jul 212 Aug 212 Sep 212 Oct 212 Nov 212 Dec 212 Jan 213 Feb 213 Mar 213 No. of claims YOY 4.7% 83.8% 36.7% 73.3% (38.6)% (4.3)% (25.7)% (27.5)% (27.6)% (21.6)% (34.6)% (14.3)% Cash out 479,82 498,97 648,29 375,19 27, ,812 28,99 314,48 424, , ,2 265,434 Apr 213 May 213 Jun 213 Jul 213 Aug 213 Sep 213 Oct 213 Nov 213 Dec 213 Jan 214 Feb 214 Mar 214 No. of claims YOY (6.6)% (8.8)% (1.3)% 4.8% 4.7% 13.8% 17.7% 2.8% 22.5% 18.4% 24.9% 7.9% Cash out 232,533 31, , ,27 283,89 26, ,59 316, , ,321 28, ,843 Apr 214 May 214 Jun 214 Jul 214 Aug 214 Sep 214 Oct 214 Nov 214 Dec 214 Jan 215 Feb 215 Mar 215 No. of claims YOY 1.% (7.5)% 9.2% (8.7)% (4.7)% (5.4)% (21.5)% (18.4)% (.6)% (81.1)% (73.)% (7.3)% Cash out 228, ,4 282,82 321,24 244, , , ,365 35,234 34,95 41,33 34, Change in the number of claims and refund amount Cash out Refund claims Unit: cases, thousand yen Regarding number of refund claims, law firm which handles refund claims is contacting potential customers in countryside who completely paid off the balance. The outlook remains uncertain. However, since the Group transferred part of the business at KC Card in Jan 215, loans with overcharged interest substantially decreased. As a result, both the number of refund claims and cash out amount plunge and we assume that refund claim trends will not impact us excessively in the future. The Group made part of KC Card s business mainly operated under the name of KC Card assumed by a new company through absorption-type company split and transferred all shares of the new company on Jan. 5, 215. The new company assumed some of loans with overcharged interest. For reference, the below shows the number of refund claims and cash out amount throughout 214 excluding figures for KC Card. Jan 214 Feb 214 Mar 214 Apr 214 May 214 Jun 214 Jul 214 Aug 214 Sep 214 Oct 214 Nov 214 Dec 214 No. of claims Cash out 51,43 55,74 57,936 55,36 53,312 51,52 5,763 3,579 52,29 55,417 3,96 41,916 15

17 (Reference ) Overview of Non-Consolidated Financial Results for the Fiscal Year Ended March 31,

18 Overview of Non-Consolidated Financial Results for the Fiscal Year Ended March 31, 215 YOY Comparison of Financial Results (cumulative) Mar 214 Cumulative) Mar 215 Cumulative Results (%) Results (%) YOY change YOY, % Unit: million yen Major factors behind the change expenses gross profit 4, , (359) (7.8) (35) (43.9) 3, , (9) (.2) Owing to decrease in loans receivable from subsidiaries and associates, interest from subsidiaries fell Other financial decreased (zero in the current fiscal year) compared to previous fiscal year since purchased receivables have been paid off Interest on loans decreased compared to previous fiscal year because repayment of borrowing to RCC was completed during previous fiscal year SG & A 1, , (224) (11.5) Salaries and allowances fell as employee headcount fell Ordinary 1, , , , Share issuance cost (rights offering related expenses were posted during previous fiscal year) decreased (zero in the current fiscal year) Overseas operation contributed to posting of foreign exchange gains Net 1, , , Ordinary increased Gain on sales of investment securities decreased 17

19 (Reference 2) Overview of Results of Major Consolidated Subsidiaries 18

20 Overview of Results of Major Consolidated Subsidiaries Domestic Financial Business Domestic Financial Business (P/L Cumulative) Unit: million yen Nihon Hoshou Co., Ltd. Partir Servicer Co., Ltd. J TRUST Card Co., Ltd. *Former KC Card Co., Ltd. (Figures shown on the right include those of KC Card ) CREDIA Co., Ltd. NUCS Co., Ltd. March 214 March 215 YOY Change 12,219 9,951 (2,268) 4,47 2,364 (2,42) 1,296 1, ,552 6,288 (3,263) 3,382 (964) (4,347) 1,8 783 (296) (537) (Note) Since NUCS was included in the scope of P/L consolidation from the 1 st quarter of the current fiscal year, the YOY change is omitted. In January 214, Nihon Hoshou changed its fiscal year end from February to March. As a result, its accounting period for FY 214 covers 13 months. 19

21 Overview of Results of Major Consolidated Subsidiaries Real Estate Business, Amusement Business Real estate business (P/L cumulative) Unit: million yen Keynote Co., Ltd. March 214 March 215 YOY change 4,62 5,767 1, Amusement business (P/L cumulative) Unit: million yen ADORES, Inc. BREAK Co., Ltd. March 214 March 215 YOY change 16,632 15,387 (1,244) (519) 2,739 2, (58) 2

22 Overview of Results of Major Consolidated Subsidiaries International Business International Business (P/L Cumulative) Chinae Savings Bank Co., Ltd. Mar 214 Mar 215 YOY change 12,392 13,614 1,221 2,944 (6,7) (9,15) (Reference) Quarterly operating after adjustment for consolidation (Upper row: cumulative, lower row: quarterly) Jun 214 Sep 214 Dec 214 Mar 215 (1,98) Unit: million yen (3,466) (3,799) (5,95) (1,558) (332) (2,15) JT Savings Bank Co., Ltd (4) Neoline Credit Co., Ltd. TA Asset Management LLC former KJI Consumer Finance LLC HICAPITAL Co., Ltd (442) 187 (13) (317) - 2, , (431) (387) (423) (618) 44 JTRUST ASIA PTE. LTD. 3 1,58 1,55 (39) (67) 643 (21) (21) (17) (28) 71 (Reference) 1. TA Asset Management and HICAPITAL were included in the scope of P/L consolidation from the 1 st quarter of the current fiscal year and JT Savings Bank was included in the scope of P/L consolidation from the 4 th quarter of the current fiscal year. Therefore, YOY change is omitted. As for JTRUST ASIA s important transaction during the quarter ended March 214, adjustment necessary for consolidation was made to financial statements as of December 213. Also, JTRUST ASIA changed preparation method for financial statements for FY 215 from the one based on provisional closing of accounts to actual results. Due to this, its accounting period for the current fiscal year covers 15 months. 2. Cumulative figures based on monthly P/L in foreign currency converted by monthly average rate. Monthly average rate (AR) Chinae Savings Bank, JT Savings Bank, Neoline Credit, TA Asset Management, HICAPITAL (1KRW) JTRUST ASIA (1SGD) FY 214 FY 215 Apr May Jun Jul Aug Sep Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Oct Nov Dec Jan Feb Mar

23 Overview of Results of Major Consolidated Subsidiaries Other Business Other business (P/L cumulative) Unit: million yen J Trust System Co., Ltd. AAD Co., Ltd. *Sold in December 214 AI Denshi Co., Ltd. Japan Care Welfare Group Co., Ltd. March 214 March 215 YOY change (21) (48) (24) (26) (17) (53) (48) - (Note) Since AI Denshi and Japan Care Welfare Group were included in the scope of P/L consolidation from the 4 th quarter of the current fiscal year, the YOY change is omitted. 22

24 Disclaimer This material was prepared to provide information to facilitate greater understanding of J Trust. It is not intended for use in soliciting investments in the securities issued by the Company. While this material has been drawn up carefully, its complete integrity is not guaranteed. J Trust bears no responsibility for any damages or impediments that may arise as a result of the forecasts and/or information presented in this material. The information published in this material, including opinions and forecasts, is based on assessments made by the Company at the time of creation of this material and therefore includes potential risks and/or uncertainties. As such, please be aware that actual results may differ from the forecasts provided in this material as a result of various factors, such as changes in the operating environment. This material is an English translation of the original Japanese document, prepared solely for the convenience of and reference by overseas investors. If there exist any discrepancies between the original Japanese language and English translation, the Japanese language will always prevail. The issuer shall not be liable for this translation or any loss or damage arising from this translation. For any inquiries on this material and other IR matters J Trust Co., Ltd. Public Relations & Investor Relations Department TEL +81(3) URL: 23