Results for First Three Quarters of Fiscal 2017, ending September 30, 2017

Transcription

1 The firm of innovative financing Results for Quarters of Fiscal 2017, ending September 30, 2017 August 2017 FinTech Global Incorporated Mothers Stock Code: FinTech, in katakana script and English letters (registration ), FinTech Global, in English letters (registration ) and in katakana script (registration ), and FGI (registration ) are registered trademarks of FinTech Global Incorporated.

2 Fiscal 2017 Quarters Business Summary Investment Banking Business Investment Banking Corporate Investment Metsä Project Favorable demand for real estate securitization arrangements. Expanded scope of target business sectors. Asset investment activities delivered 975 million in first quarter, through sale of renewable energy power generation facilities. Real estate securitization arrangements showed drop in number of transactions closed in third quarter. More inquiries for securitization arrangements contributing to local renaissance, such as large-scale repairs at commercial facilities. Exited investments but also pursued new investment targeting companies with potential. In fund investment, booked gross profit of 228 million through transfer of money claims (in first quarter) and fund income capture. New investment in one high-revenue company (first quarter) Construction began July Partial transfer of real estate through securitization. Construction contracts signed for civil engineering work at Metsä Village and structures at MOOMINVALLEY PARK. After third-quarter books closed, real estate at MOOMINVALLEY PARK was securitized, but no revenue was recognized on an accounting basis even though 2.0 billion transferred to special purpose company. Real Estate Business Progress on building e-business structure. Revenue and income up year on year. Promoted measures to expand number of companies to which employee welfare services are provided and to encourage greater use of such services by employees of those companies. Leveraged new system architecture to boost usage of housing introduction services. Home sales business showed year-on-year increase in sales and income. Integrated property management services among Group companies. Number of units managed was up, due to new purchases. Housing services reinforced. Public Management Consulting Business Established and expanded consulting capabilities for public sector. (Segment included in consolidated statements of income from second quarter) Anticipate increase in requests for support in creating financial documents paralleling implementation of unified standard for fiscal accounting (all local governments required to comply by fiscal year ending March 31, 2018). Public management consulting capabilities of FGI Group centralized with PMC and structure established to address possible introduction of public-private partnership/public financial initiative techniques as well as public enterprise accounting for sewer works and other infrastructure projects. 1

3 Fiscal 2017 Quarters Consolidated Performance (Millions of yen) Fiscal 2016 Quarters (A) Fiscal 2017 Quarters (B) YOY Change (B)-(A) Fiscal 2016 Full Year Revenues 4,954 5, ,485 Gross profit 1,126 1, ,496 Operating income(loss) (851) (547) 303 (1,031) Ordinary income(loss) (1,096) (534) 562 (1,369) Profit/(loss) attributable to owners of the parent (1,082) (551) 531 (1,384) Revenues were up, reflecting real estate securitization arrangements and investment exits in the investment banking business and an increase in the number of subsidiaries in the public management consulting business. But revenue growth failed to absorb higher expenses due to increase in personnel and prior investment for Metsä business, leading to operating loss. Booked 60 million in foreign exchange gains on foreign-currency-denominated investments under nonoperating income. 2

4 Business Summary by Segment Note: Revenue includes intersegment transactions. (Millions of yen) Investment Banking Business Fiscal 2016 Quarters Fiscal 2017 Quarters YOY Change Principal Consolidated Subsidiaries Revenue 1,387 1, FGI, FinTech Global Trading(FGT) Operating income FinTech Asset Management Inc.(FAM) Real Estate Business Public Management Business Revenue 3,557 3, Operating income Better Life Support Holdings Co., Ltd. Better Life Support Co., Ltd. (BELS) Unihouse Co.,Ltd., Better Life House Co.,Ltd. Better Life Property Co.,Ltd.(Note) Revenue Public Management Consulting Corporation(PMC)(Note) New Public Accounting Laboratory, Co., Ltd.(NPAL)(Note) Operating income (loss) - (0) 0 Others Adjustment Amount Booked on Consolidated Statement of Income Revenue Moomin Monogatari Ltd. Adacotech Incorporated Operating income (loss) (90) (229) (139) Toranomon Ham (Note) Revenue (7) (7) 0 Operating income (loss) (855) (772) 82 Revenue 4,954 5, Operating income (loss) (851) (547) 303 Note: Better Life Property falls under the scope of consolidation from the third quarter of fiscal Toranomon Ham falls under the scope of consolidation from the first quarter of fiscal The statements of income for Public Management Consulting Corporation (PMC) and New Public Accounting Laboratory Co., Ltd. (NPAL) are included in consolidated results from the second quarter of fiscal The public management consulting business is a reporting segment comprising these two companies. * The 547 million operating loss for the first three quarters of fiscal 2017, under adjustment, includes intersegment elimination ( 39 million in the first three quarters of fiscal 2017) as well as corporate expenses ( 812 million in the same period) that are not allocated to any reporting segment. Corporate expenses are general and administrative expenses not associated with any reporting segment, mainly because it is difficult to justifiably allocate such expenses to any particular reporting segment. * From the first quarter of fiscal 2017, FGI applies a different method to calculate reporting segment income and loss, based on a review of factors including the allocation standard for general and administrative expenses, to more appropriately evaluate results by each reporting segment. Segment information for the first three quarters of fiscal 2016, as noted above, was prepared according to the new calculation method for income and loss, leading to a discrepancy with segment income and loss disclosed for the first three quarters of fiscal 2016 that was calculated by the method that prevailed at that time. 3

5 Consolidated Performance Forecast Because the Company and companies under consolidation are involved in financial arrangements and exits on asset investments, which are susceptible to the impact of external factors, such as interest rates and foreign exchange, management will not disclose a consolidated performance forecast for the full-year until such impact is better understood. 4

6 Changes in Investments and Loans (Consolidated) Major Factors of Change during First Two Quarters (October June 2017) of Fiscal 2017 Principal investment: Decreased despite new investment into one venture company because of exit on real estate development project Venture capital fund: Booked foreign exchange gains and made new investment, but balance dropped mainly due to investment exit activity Real estate (investment banking business): Sold asset investment (solar power generation facility) development project and sold portion of revenuegenerating real estate (for sale), but Metsä land and construction in progress account expanded Real estate for sale (real estate business): Increased, despite higher sales, due to greater purchasing and progress on development. Revenue-generating rental properties (real estate business): Increased due to building purchase by rental subsidiary (Millions of yen) 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, ,365 1,084 1, , , , ,832 7, ,744 2,593 1,394 8, , ,484 1,350 2,853 3,065 3,025 1,343 1,497 1,497 1, Fiscal 2017 Quarters Principal investment (investments using capital sourced within FGI Group) Venture capital fund (Investment into FinTech GIMV Fund) Corporate loans Real estate (investment banking business) includes land for Metsä project Real estate for sale (real estate business) Revenue-generating rental properties (real estate business) Notes: Principal investment is total of investments in securities, trade, investments in securities, equity in affiliated companies, investments in capital to affiliated companies, and investments in capital. Amount excludes investments into venture capital funds. Corporate loans exclude receivables that have been fully provided for in allowance for doubtful accounts. Real estate for sale (real estate business) includes real estate for sale in progress. 5

7 Trends in Balance of Assets under Management at FAM Major Factors of Change during Quarters (October June 2017) of Fiscal 2017 Moving forward on real estate development projects. Balance of assets under management other than health care facilities decreased due to sale Began asset management services for long-established Japanese-style inn (details on next page) Balance of health care facility assets under management increased, reflecting progress on projects under development as well as the addition of assets for two new development projects (Millions of yen) 12,000 10,000 Investment targets Real estate, excluding health care facilities Health care facilities Corporations *Health care facilities: Mainly housing for seniors. *The balance of assets under management is calculated on the basis of such factors as recent financial statements available to FAM and the acquisition cost of real estate. 10,303 10,948 10,258 10,464 10,496 8,000 6,000 5,534 5,641 5,970 6,885 7,410 4,000 2, Fiscal 2017 Quarters 6

8 Metsä Construction Start Overview of Construction Work (Numbers rounded down to the nearest whole number) Contracting parties Site area Metsä Village Ordering: FGI Receiving: Metsä Project Hanno Consortium 163,000m 2 (Entire site, excluding water area) MOOMINVALLEY PARK Ordering: Hanno Local Resource Utilization LLC Receiving: Metsä Project Hanno Consortium 73,000m 2 (Entire site, excluding water area) Total floor space Schedule Cost of contracted construction work Other Capital Investment Jul. 3, 2017 Jul. 28, 2017 Oct. 2, ,918 m 2 (Excluding multi-level parking structure) Start of construction (civil engineering) Start of construction (buildings) Completion and delivery (planned) Civil engineering: 1.2 billion Structures: 1.1 billion (Civil engineering work based on contract signed June 29, 2017; construction of buildings based on contract signed July 28, 2017) Jul. 3, 2017 Oct. 2, ,444 m 2 Start of construction Completion and delivery (planned) Structures (civil engineering and buildings): 3.4 billion (Contract signed June 29, 2017) Key facilities Other aspects, including design Multi-level parking structure: 500 million 500 million (note) (Includes amount already paid as of June 30, Does not include land.) Special interior and exterior work: 2.5 billion 600 million (Includes amount already paid as of June 30, Does not include land.) Note: Capital investment, such as interior work, is currently under discussion, so only the investment amount decided at this time is presented in the table above Total capital investment (provisional) 3.2 billion 6.4 billion 7

9 MOOMINVALLEY PARK Real Estate Securitized Real estate sale, investment exit through securitization MOOMINVALLEY PARK real estate was securitized. On July 14, 2017, FGI transferred real estate to special purpose company Hanno Local Resource Utilization LLC ( Local SPC ) for 2.0 billion and achieved return on investment. FinTech Asset Management will oversee development, based on real estate joint venture contract with Local SPC. SPC s fund procurement for development With investment and loans from regional financial institutions, local companies and Moomin Monogatari, Local SPC definitely taps into 6,350 million (borrowings of 5.6 billion and silent partnership contribution of 750 million). Additional investment and loans may be taken, depending on the progress of development, but most of the capital needed for development has been accessed. MOOMINVALLEY PARK real estate turned into public assets FGI turns underlying MOOMINVALLEY PARK assets into public assets that contribute to development of local community by ensuring separation and bankruptcy remoteness from the Company, as originator of underlying assets, and supports formation of enduring community asset. 8

10 Metsä Investment Exit Policy Promote real estate securitization Efforts to promote securitization of Metsä business real estate hinge on three points Higher revenue Enhanced investment efficiency Risk management Revenue contribution Cash recovery, improved capital turnover ratio Asset risk reduction Securitization of Metsä business real estate * Legally, ownership changed hands. But revenue from this transfer of real estate not recognized on an accounting basis. Accounting treatment when real estate is transferred to an SPC is based mainly on the following guidelines. Real estate sale transactions to SPCs Practical Guideline Regarding Accounting Treatment for Securitization of Real Estate Using Special Purpose Companies by Transferors (Accounting Standards Board of Japan, July 31, 2000). Treatment on consolidated basis In accordance with the following guidelines, the sale of real estate by FGI to Local SPC is deemed as a financial transaction rather than a sales transaction since Local SPC is regarded as a consolidated subsidiary. Practical Guideline Regarding Accounting Treatment for Securitization of Real Estate Using Special Purpose Companies by Transferors (ASBJ, No. 15) Practical Solution on Application of Control Criteria and Influence Criteria to Investment Associations (ASBJ Practical Issues Task Force No. 20) Application Guidance on Determining the Scope of Consolidation for Subsidiaries and Affiliates 9

11 Accounting Treatment for Metsä Investment Exit Accounting Treatment (non-consolidated) FGI Transfer of real estate to Local SPC treated as financial transaction due to continuing involvement, such as real estate management services for said real estate by subsidiary and equity participation. (Land remains on balance sheets without recording profit/loss.) Book loans under liabilities. Local SPC Book loans to FGI under assets. Accounting Treatment (consolidated) Land booked on FGI s consolidated balance sheets. Assets and liabilities of Local SPC booked on consolidated balance sheets. Payment to FGI by Local SPC for transferred real estate processed as loan to FGI, effectively cancelling out on consolidated basis. No income booked. FGI s Non-Consolidated Balance Sheets Assets Liabilities Local SPC s Non- Consolidated Balance Sheets Assets Liabilities Consolidated Balance Sheets Assets Liabilities Cash and deposits 2 billion Land Borrowings 2 billion Capital Lending 2 billion Borrowings (from financial institutions) Silent partnership contributions Capital Cash and deposits Land Borrowings Silent partnership contributions Capital Local SPC s financial institution borrowings External investor contributions to Local SPC If it is generally determined that involvement, such as real estate management services by the subsidiary and capital contribution into the SPC, has become leaner, revenue will be recognized, and the difference between book value* of the real estate and the transfer price will be booked as revenue. * Total book value of MOOMINVALLEY PARK, Metsä Village and associated lands held by FGI is 685 million. 10

12 Future Expansion of Investment Banking Business Real estate securitization contributing to regional revitalization (1) Draw out value in real estate and securitize it to develop MOOMINVALLEY PARK Procure 6,350 million through financing from regional financial institutions, silent partnership contributions mainly from local companies and support from local government (Hanno) Business model for securitization financing that keeps outflow from public sector to a minimum while attracting capital participation from private sector could be deployed for other development projects as well. Promote arrangements for such purposes as seismic strengthening and redevelopment projects throughout Japan, using this kind of real estate securitization technique. Scheme following real estate securitization Site owner FGI Real estate transfer Hanno Local Resource Utilization LLC (Local SPC) Construction companies in Hanno Construction contract Debt Loans Regional financial institutions Operator Moomin Monogatari Asset manager FinTech Asset Management Leasing option contract Specified joint real estate venture contract Assets Equity Investment Investment Moomin Monogatari Companies in Hanno 11

13 Future Expansion of Investment Banking Business Real estate securitization contributing to regional revitalization (2) Government emphasizes regional revitalization using real estate securitization Government holds opinion exchange session on real estate securitization contributing to regional revitalization from the perspective of facilitating smooth supply of real estate to businesses geared to a growing need in rural areas, particularly in efforts to promote tourism and support health and longevity of an aging population. FGI attended the first session, on May 19, 2017, as a business with experience in regional securitization projects. At the opinion exchange, private operators had the opportunity to describe how they promote regional revitalization through real estate securitization, especially in the areas of social welfare and tourism, using private-sector capital to lighten the financial burden otherwise placed on local governments. The Cabinet Office Regional Revitalization Promotion Office website, noted below, provides more details but the content is currently only available in Japanese. The FGI Group provides various services using real estate securitization techniques FGI Group Solutions to regional concerns through real estate securitization Rural real estate securitization know-how Accumulated through local public accounting Commercialization methods based on reorganization Consultations on effective utilization of idle assets Seismic strengthening City-center revitalization Aging facility upgrades Effective utilization of idle assets 12

14 Consolidated Balance Sheets (Thousands of yen) Assets Fiscal 2016 Fiscal 2017 Quarters Change Liabilties Fiscal 2016 Fiscal 2017 Quarters Change Current assets 8,265,216 7,553,113 (712,102) Cash and time deposits 2,290,523 2,048,874 (241,649) Notes and accounts receivable, trade 67, ,961 41,237 Investments in securities, trade 1,291,852 1,151,976 (139,876) Loans receivable, trade 793, ,937 (147,824) Merchandise - 16,160 16,160 Real estate for sale 977,020 1,762, ,439 Real estate for sale in progress 2,693,211 1,624,701 (1,068,509) Deferred tax assets 11, (10,785) Other current assets 328, ,278 (89,124) Allowance for doubtful assets (188,909) (46,078) 142,831 Noncurrent assets 2,710,409 3,260, ,576 Property, plant and equipment 2,307,618 2,806, ,965 Intangible fixed assets 90,627 88,562 (2,064) Investments and other assets 312, ,838 53,674 Total assets 10,975,625 10,814,099 (161,526) Balance decreased, despite foreign exchange gains on foreign currency denominated investments, new investment into a high-earning company and new venture fund investment, because of investment exit through transfer of money claim obligations and exit on real estate development project Homes for sale increased due to completion of construction on work in progress. Progress on sale of asset investments, leading to decrease. Work in progress in real estate business wrapped up, leading to decrease. Increase in revenue-generating property held by real estate rental subsidiary Increase in construction in progress account mainly due to Metsä design work Current liabilities 2,772,281 2,950, ,330 Notes and accounts payable, trade 14, , ,589 Short-term loans payable 1,981,862 2,220, ,519 Current portion of bonds 38,000 30,000 (8,000) Current portion of long-term loans payable 115, ,520 22,855 Income taxes payable 30,719 28,885 (1,833) Deferred tax liabilities 2, (2,200) Accrued employee bonuses 50,099 33,588 (16,511) Other current liabilities 538, ,868 (162,088) Noncurrent liabilities 1,890,459 1,994, ,244 Bonds payable 60,000 45,000 (15,000) Long-term loans payable 1,540,470 1,658, ,885 Deferred tax liability 141, ,617 (13,223) Net defined benefit liability 105, ,901 11,999 Other noncurrent liabilities 42,246 44,829 2,582 Total liabilities 4,662,741 4,945, ,575 Net Assets Shareholders equity 6,455,655 5,918,957 (536,697) Common stock 4,548,647 4,549, Additional paid-in capital 2,122,245 2,123,710 1,464 Retained earnings (215,238) (753,769) (538,531) Accumulated other comprehensive income (194,875) (171,858) 23,016 Subscription rights to shares 33,560 47,063 13,503 Non-controlling interests 18,544 74,620 56,075 Total net assets 6,312,884 5,868,782 (444,101) Total liabilities and net assets 10,975,625 10,814,099 (161,526) 13

15 Consolidated Statement of Income Fiscal 2016 Quarters Fiscal 2017 Quarters Change (Thousands of yen) Revenues 4,954,260 5,838, ,736 Cost of revenues 3,827,978 4,333, ,447 Gross profit 1,126,282 1,505, ,289 Selling, general and administrative expenses 1,977,283 2,052,768 75,484 Operating income/(loss) (851,001) (547,196) 303,805 Other income 25,613 87,004 61,390 Other expenses 270,915 73,978 (196,937) Ordinary profit/(loss) (1,096,303) (534,169) 562,133 Extraordinary profit 1,415 9,983 8,567 Extraordinary loss 6,943 1,081 (5,862) Income before income taxes (1,101,831) (525,267) 576,563 Income taxes (211) 26,853 27,065 Profit /(loss) (1,101,620) (552,121) 549,498 Profit /(loss) attributable to non-controlling interests 1 2 (18,884) (993) 17,891 Profit /(loss) attributable to owners of parent (1,082,735) (551,128) 531, Revenues rose 17.9% year on year, owing to more real estate securitization transactions, corporate investment exits and the addition of subsidiaries under consolidation Selling, general and administrative expenses grew 3.8% year on year, reflecting increase in personnel costs. 3 Booked 60 million in foreign exchange gains. 14

16 The firm of innovative financing Reference Materials Non-Consolidated Financial Statements (Balance Sheets and Statements of Income) Changes in Key Financial Data (Six years) Corporate Data 15

17 Non-Consolidated Balance Sheets (Thousands of yen) Assets Fiscal 2016 Fiscal 2017 Quarters Change Liabilties Fiscal 2016 Fiscal 2017 Quarters Change Current Assets 5,783,247 5,140,618 (642,629) Cash and time deposits 1,700,066 1,364,433 (335,633) Accounts receivable, trade 5,218 6,451 1,233 Investment securities, trade 1,090, ,035 (114,209) Loans receivable, trade 846, ,597 (147,824) Short-term loans, receivable 1,712,448 1,885, ,004 Real estate for sale in progress 347,280 - (347,280) Other current assets 357, ,586 94,390 Allowance for doubtful assets (275,627) (241,938) 33,689 Noncurrent assets 1,789,716 1,886,790 97,074 Property, plant and equipment 750, , ,147 Intangible assets 19,201 19, Investments and other assets 1,020, ,212 (102,214) Total assets 7,572,963 7,027,408 (545,554) Current liabilities 660, ,375 (192,595) Accounts payable-trade - 1,666 1,666 Short-term loans payable 356, ,994 (106,306) Current portion of long-term debt 32,589 29,618 (2,971) Accounts payable-others 58,000 65,586 7,586 Deposits received 51,969 22,896 (29,073) Advances received 102,958 27,711 (75,247) Accrued employee bonuses 33,297 18,891 (14,406) Others 25,856 52,012 26,155 Long-term liabilities 416, ,227 (14,795) Long-term loans payable 308, ,160 (25,340) Provision for retirement benefits 75,544 86,089 10,544 Others 31,978 31,978 0 Total liabilities 1,076, ,603 (207,390) Net Assets Shareholders' equity 6,657,284 6,282,007 (375,277) Capital stock 4,548,647 4,549, Additional paid-in capital 2,113,870 2,114, Retained earnings (5,232) (381,249) (376,016) Valuation difference on availablefor-sale securities (194,875) (171,265) 23,610 Subscription rights to shares 33,560 47,063 13,503 Total net assets 6,495,969 6,157,805 (338,163) Total liabilities and net assets 7,572,963 7,027,408 (545,554) 16

18 Non-Consolidated Statements of Income (Thousands of yen) Fiscal 2016 Quarters Fiscal 2017 Quarters Change Revenues 1,311,125 1,019,994 (291,131) Cost of revenues 1,038, ,437 (551,542) Gross profit 272, , ,411 Selling,general and administrative expenses 1,127,855 1,030,770 (97,084) Operating income/(loss) (855,709) (498,213) 357,496 Other income 66, , ,757 Other expenses 275, ,397 (92,667) Ordinary income/(loss) (1,064,360) (402,438) 661,921 Extraordinary profit 1,165 9,178 8,013 Extraordinary loss 6, (6,017) Income before income taxes (1,070,012) (394,059) 675,952 Income taxes (15,239) (18,043) (2,803) Net income/(loss) (1,054,772) (376,016) 678,756 17

19 Changes in Key Financial Data Fiscal 2012 Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016 Quarters Fiscal 2017 Net revenue (millions of yen) 2,038 1,603 3,911 5,429 7,485 5,838 Gross profit (millions of yen) 908 1,468 2,398 2,495 1,496 1,505 Operating income/(loss) (millions of yen) (974) (31) (1,031) (547) Ordinary income (loss) (millions of yen) (915) (1,369) (534) Profit /(loss) attributable to owners of parent (millions of yen) (1,274) (1,384) (551) Net assets (millions of yen) 3,632 2,716 5,534 7,879 6,312 5,868 Total assets (millions of yen) 6,417 4,770 7,452 11,958 10,975 10,814 Net assets per share (yen) Net income (loss) per share (yen) (10.70) (8.56) (3.40) Diluted net income (loss) per share (yen) Equity to total asset ratio (%) Equity to net income ratio (%) (41.7) (19.7) - Price earning ratio (PER) (times) Cash flow from operating activities (millions of yen) 959 (464) (2,208) (1,791) (1,305) - Cash flow from investing activities (millions of yen) (644) (302) - Cash flow from financing activities (millions of yen) (233) (128) 2,065 4,761 (751) - Cash and cash quivalents at the end of the fiscal year (millions of yen) 2,522 1,644 2,024 4,612 2,240 - Number of employees(consolidated) (part-time employees) Number of employees(non-consolidated)(part-time employees) (employees) 60(19) 51(13) 109(7) 117(8) 114(20) 134(25) (employees) 20(3) 26(3) 24(3) 38(3) 45(8) 41(5) FGI executed a stock split on April 1, 2014, that split each share into 100 shares. Consequently, net assets per share, net income (loss) per share and net income per share after adjustment for diluted shares have been calculated as if the aforementioned stock split had occurred at the beginning of fiscal

20 Corporate Data: FinTech Global Incorporated Head office Toranomon Towers Office 19th Floor, 1-28, Toranomon 4-chome, Minato-ku, Tokyo Established December 7, 1994 Representative President and Chief Executive Officer Nobumitsu Tamai Date of listing June 8, 2005 Securities code 8789 (TSE Mothers) Fiscal year-end September 30 Main businesses 1. Investment banking business 2. Real estate business 3. Public management consulting business Number of issued shares 161,935,300 shares (As of June 30, 2017) Minimum trading unit 100 Capital stock 4,549 million (As of June 30, 2017) Net assets (consolidated) 5,868 million (As of June 30, 2017) Major shareholders (As of March 31, 2017) Nobumitsu Tamai Yuko Fujii Masaaki Aoshima SBI SECURITIES Co., Ltd. Naotake Tamura 20,095,500 shares (12.41%) 3,776,400 shares (2.33 %) 1,708,000 shares (1.05 %) 1,643,400 shares (1.01 %) 1,576,000 shares (0.97 %) Number of employees Consolidated: 134 (As of June 30, 2017) 19

21 Disclaimer The firm of innovative finance Certain statements made in these materials, including some management targets, may contain forward-looking statements which reflect management's views and assumptions. Management targets represent goals that management will strive to achieve through the successful implementation of business strategies for the FGI Group. The Group may not be successful in implementing its business strategies, and management may fail to achieve its targets. Management targets and other forward-looking statements involve current assumptions of future events as well as risks and uncertainties that could significantly affect expected results, including adverse economic conditions in Japan, the United States or other countries; declining real estate and/or stock prices; additional corporate bankruptcies or additional problems in business sectors to which Group companies lend; difficulties or delays in integrating businesses and achieving desired cost savings; increased competitive pressures; changes in laws and regulations applicable to the Group s businesses; and adverse changes in Japanese economic policies. To the extent materials containing forward-looking statements remain in available documents, we have no obligation nor the intent to update such forward-looking statements. 20