Aiful : Fourth Quarter (953KB)

(Translation for reference only)

May 10, 2024

Consolidated Financial Results

For the Fiscal Year ended in March 31, 2024 (Under Japanese GAAP)

Company name:	AIFUL Corporation
Stock Listing:	Tokyo Stock Exchange
Stock Code:	8515
URL:	https://www.aiful.co.jp
Representative:	Mitsuhide Fukuda, President and Chief Executive Officer
For inquiry:	Kimihiko Yanagi, General Manager of Operation Management Department TEL (03) 4503 - 6050

Scheduled date of annual general meeting of shareholders: June 25, 2024

Scheduled date of submission of Securities report: June 26, 2024

Scheduled date of commencement of dividend payments: June 6, 2024

Supplementary materials for financial results: Yes

Earnings release conference: Yes (For financial analysts and institutional investors)

I. Consolidated Financial Results for the Fiscal Year ended in March 31, 2024

(April 1, 2023 - March 31, 2024)

(Amounts less than one million yen have been rounded down)

1. Consolidated Operating Results

										(Millions of	yen, Percentages indicate	year-on-year changes)
		Operating Revenue		Operating Profit		Ordinary Profit		Profit Attributable to
						Owners of Parent
Fiscal year ended
March 31, 2024	163,109	13.2%		21,064	(11.2)%		22,067		(9.7)%		21,818	(2.3)%
March 31, 2023	144,152		9.1%		23,724	111.0%		24,428		99.2%		22,343	81.1%
Note:	Comprehensive income: For the Fiscal year ended
						March 31, 2024:	22,256 million yen	(5.5)%
						March 31, 2023:	23,550 million yen	90.5%
		Net Income per			Diluted Net			Profit to	Ordinary Profit to		Operating Profit to
			Income per Share			Shareholders'	Total Assets Ratio		Operating Revenue
		Share (Yen)
						(Yen)			Equity Ratio (%)		(%)					Ratio (%)
Fiscal year ended
March 31, 2024	45.10					-			11.7			1.9					12.9
March 31, 2023	46.19					-			13.5			2.4					16.5
Reference: Equity in earnings of affiliated companies: For the Fiscal year ended
							March 31, 2024:			63 million yen
							March 31, 2023:			184 million yen

2. Consolidated Financial Position

			Total Assets	Net Assets	Shareholders' Equity	Net Assets per Share
				Ratio (%)	(Yen)
As of
March 31, 2024		1,266,374		201,412		15.6	409.04
March 31, 2023		1,070,485		179,593		16.4	364.01
Reference:	Shareholders' equity:	As of March 31, 2024:	197,909 million yen
			As of March 31, 2023:	176,072 million yen

3. Consolidated Cash Flows

(Millions of yen)

			Cash Flow from		Cash Flow from			Cash Flow from		Cash and Cash
							Equivalents at the End
			Operating Activities		Investing Activities		Financing Activities
						of Period
	Fiscal year ended
	March 31, 2024			(74,208)			(12,762)				100,929				51,934
	March 31, 2023			(70,589)			(8,947)				78,195				37,885
II. Dividend Information
					Dividend per share (Yen)				Total dividend			Payout	Dividend to
			End of	End of		End of		Year-end		Annual		payment		Ratio %	equity ratio %
			1st quarter	2nd quarter	3rd quarter				(full year)		(Consolidated)	(Consolidated)
	FY ended March 31, 2023		-		0.00		－		1.00		1.00		483		2.2	0.3
	FY ended March 31, 2024		-		0.00		－		1.00		1.00		483		2.1	0.2
	FY ending March 31, 2025		-		0.00		-		1.00		1.00				2.2
	(Forecast)

1. Consolidated Earnings Forecast for the Fiscal Year ending March 31, 2025
   (April 1, 2024 - March 31, 2025)

(Millions of yen, Percentages indicate year-on-year changes)

	Operating Revenue	Operating Profit	Ordinary Profit	Profit Attributable to	Profit per
	Owners of Parent	Share (Yen)
Six months ending	87,900	11.1%	8,900	35.0%	8,800	22.1%	7,900	19.5%	16.33
September 30, 2024
Fiscal year ending	180,200	10.5%	23,800	13.0%	24,000	8.8%	21,600	(1.0)%	44.64
March 31, 2025

*Notes

(1) Changes in significant subsidiaries during the period

(Changes in specified subsidiaries resulting changes in scope of consolidation): None

(2) Changes in accounting principles, procedures and methods of presentation

(a) Changes accompanying amendments to accounting standards: None

(b) Changes other than those in (a): None

(c) Change in accounting estimates: None

(d) Restatement: None

(3) Number of shares issued (Common stock)

(a) Number of shares issued at the end of the period	FY2023	484,620,136 shares	FY2022	484,620,136 shares
(including treasury stock)
(b) Number of treasury stock at the end of the period
FY2023	783,316 shares	FY2022	917,614 shares
(c) Average number of shares during the period
FY2023	483,797,192 shares	FY2022	483,702,593 shares

(Reference) Highlights of Non-Consolidated Business Results

1. Non-ConsolidatedBusiness Results for the Fiscal Year ended in March 31, 2024 (April 1, 2023 - March 31, 2024)

1. Non-Consolidated Operating Results

(In millions of yen, except where noted; percentage figures show year-on-year changes)

	Operating Revenue	Operating Profit	Ordinary Profit		Profit
Fiscal year ended
March 31, 2024	103,867	17.4%	24,339	27.2%	27,147	(15.7)%	24,998	(19.4) %
March 31, 2023	88,449	6.4%	19,127	302.1%	32,213	377.4%	31,028	292.2 %
	Profit per Share (Yen)	Diluted Profit per
	Share (Yen)
Fiscal year ended
March 31, 2024	51.67			－
March 31, 2023	64.15			－

2. Non-Consolidated Financial Position

			(In millions of yen, except where noted)
	Total Assets	Net Assets	Shareholders' Equity	Net Assets per Share
	Ratio (%)	(Yen)
As of
March 31, 2024	985,303	165,222	16.8	341.48
March 31, 2023	834,868	140,660	16.8	290.80

Reference: Shareholders' equity:	As of March 31, 2024	165,222 million yen
	As of March 31, 2023	140,660 million yen

1. Non-ConsolidatedEarnings Forecast for the Fiscal Year ending March 31, 2025 (April 1, 2024 - March 31, 2025):

(In millions of yen, except where noted; percentage figures show year-on-year change.)

									Profit per
	Operating Revenue	Operating Profit	Ordinary Profit	Profit	Share
									(Yen)
Six months ending	55,500	12.1%	8,100	60.0%	9,600	49.5%	9,100	47.5%	18.81
September 30, 2024
Fiscal year ending	112,200	8.0%	20,300	(16.6)%	23,500	(13.4)%	22,300	(10.8)%	46.09
March 31, 2025

• Note: Brief Statement of financial results is not subject to audit procedures that are conducted by a certified public accountant or an audit corporation.
• Note: Disclaimer concerning the proper use of business results forecasts

The forecasts and other forward-looking statements contained in this Report are based on information currently available to the Company as well as certain assumptions that the AIFUL Group has judged to be reasonable. Accordingly, actual results may differ from the forecasts due to various factors. For matters related to earnings forecast above, please refer to "1. Business Results and Other, (4) Outlook for the fiscal year ending March 2025" on page 5.

Contents

1. Business Results and Others…………………………………………………………………………………	02
(1)	Overview of Business Results for the Current Fiscal Year ……………………………………...………	02
(2)	Overview of Financial Position for the Current Fiscal Year………………………………………..……	04
(3)	Overview of Cash Flows for the Current Fiscal Year…………..……………………………………..…	04
(4)	Outlook for the fiscal year ending March 2025……………………………………………………….…	05

1. Basic Policies on Profit Distribution and Dividend for the Current Fiscal Year and Next Fiscal
   Year……………………………………………………………………………………………………… 05

2. Basic Stance on Selection of Accounting Standards………………………………………………………...	05

3. Consolidated Financial Statements………………………………………………………………………….. 06

(1) Consolidated Balance Sheets……………………………………………………………………………. 06

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income…………	08
(3) Consolidated Statements of Change in Shareholders' Equity……………………………………………	11
(4) Consolidated Statements of Cash Flows……………………………………………………………	13
(5) Notes to Consolidated Financial Statements……………………………………………………………..	15
Notes on Premise of Going Concern……………………………………………………………………...	15
Changes in Presentation Method…………..……………………………………………………………...	15
Notes to Consolidated Balance Sheets…………………………………………………………………….	17
Notes to Segment Information…………………………………………………………………………….	21
Per Share Information……………………………………………………………………………………..	24
Important Subsequent Events…………………………………………………………………………….. 24

4. Non-Consolidated Financial Statements…………………………………………………..…………………	25
(1)	Non-Consolidated Balance Sheets…………………………..…….…………………..…………………	25
(2)	Non-Consolidated Statements of Income…………………………………………...……………………	28
(3)	Non-Consolidated Statements of Change in Shareholders' Equity………………………………………	29

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1. Business Results and Others

(1) Overview of Business Results for the Current Fiscal Year

During the consolidated fiscal year under review, Japanese economy showed a gradual recovery as restrictions on activities due to COVID-19 have been lifted and socioeconomic activities have normalized. However, the outlook remains uncertain due to factors such as rising interest rates resulting from changes in the Bank of Japan's monetary easing policy, fluctuations in foreign exchange rates, and rising prices against the backdrop of soaring energy and raw material prices.

In the consumer finance industry, the number of new contracts at major companies has continued to increase year on year and the balance of operating loans has expanded accordingly. Although the status of interest repayment claims is susceptible to changes in the external environment and certain considerations are necessary, the number of claims is steadily decreasing.

Under these circumstances, AIFUL Group has aimed to grow the balance of operating loans and the top line by enhancing UI/UX from a customer's perspective as well as by investing in advertising with an emphasis on efficiency. In addition, we will continue to invest in IT human resources to promote DX and in-house production in order to optimize costs and raise the profit level.

(Overview of the Results)

In the consolidated fiscal year under review, AIFUL Group's operating revenue amounted to 163,109 million yen (up 13.2% year on year). The principal components were 95,400 million yen in interest on loans receivable (up 14.6% year on year), 21,625 million yen in revenue from the credit card business (up 5.4% year on year) and 19,408 million yen in revenue from the credit guarantee business (up 14.0 % year on year).

Operating expenses increased 21,618 million yen, or 18.0% year on year, to 142,045 million yen. This was mainly due to an increase of 16,542 million yen or 45.9% year on year in provision for doubtful accounts to 52,546 million yen.

As a result, AIFUL Group's operating profit for the fiscal year under review was 21,064 million yen (down 11.2% year on year), and ordinary profit was 22,067 million yen (down 9.7% year on year). Profit attributable to owners of the parent was 21,818 million yen (down 2.3% year on year) as a result of posting loss attributable to non-controlling interests of 316 million yen.

The results by business segment are as follows.

(AIFUL Corporation)

Loan business

In the loan business, in addition to effective and efficient advertising strategies mainly on TV commercials and web, the Company is working to increase the number of new contracts and the operating loan balance by implementing initiatives to improve UI/UX and customer satisfaction, such as speedily upgrading official sites, smartphone apps, and application forms through in-house production in the digital field.

As a result, the number of new contracts for unsecured loans was 338,000 (up 12.4% year on year) and the contract rate was 35.9% (up 4.0pt year on year) in the fiscal year under review.

2

At the end of the fiscal year under review, unsecured loans outstanding were 548,554 million yen (up 11.9% year on year), secured loans outstanding were 1,836 million yen (down 26.6% year on year), small business loans outstanding were 12,522 million yen (up 21.9% year on year), and the total balance of operating loans in the loan segment was 562,913 million yen (up 11.9% year on year) (5,126 million yen off-balance sheet operating loans from the securitization have been included).

Credit guarantee business

In the credit guarantee business, AIFUL has leveraged its credit screening know-how for individuals and small- and medium- sized enterprises as well as its unique strengths as an independent entity to increase the credit guarantee balance by promoting the diversification of credit guarantee products and increasing the number of guarantee partners.

As a result, loans outstanding for personal loan guarantee at the end of the fiscal year under review was 162,266 million yen (up 14.1% year on year), and loans outstanding for business loan guarantee was 56,193 million yen (up 32.6% year on year).

Of the credit guarantee for the business loans, 1,415 million yen comes from guarantees provided to AG BUSINESS SUPPORT CORPORATION.

As a result of the above, in the consolidated fiscal year under review, AIFUL posted operating revenue of 103,867 million yen (up 17.4% year on year), operating profit of 24,339 million yen (up 27.2% year on year), ordinary profit of 27,147 million yen (down 15.7% year on year), and profit of 24,998 million yen (down 19.4% year on year).

(LIFECARD Co., Ltd.) Credit card business

In the credit card business, LIFECARD is working to attract new members and increase active cardholders by issuing new alliance and tie-up cards, redesigning proper cards, adding app functions and renewing benefits that meet the needs of customers as well as aggressive advertising.

As a result, the transaction volume for the consolidated fiscal year under review was 741,515 million yen (up 4.0% year on year), and the balance of installment receivables for credit card business at the end of the fiscal year under review was 111,725 million yen (up 4.2% year on year) (6,036 million yen off-balance sheet operating loans from the securitization have been included).

Card Cashing

The total amount of loans outstanding at the end of the fiscal year under review in LIFECARD's loan business was 22,708 million yen (down 2.5% year on year) (1,751 million yen off-balance sheet operating loans from the securitization have been included).

Credit guarantee business

In the credit guarantee business, LIFECARD leveraged its credit screening know-how for individuals and small- and medium-sized enterprises as well as its unique strengths as an independent entity to increase the credit guarantee balance by promoting the diversification of credit guarantee products and increasing the number of guarantee partners.

As a result, loans outstanding for personal loan guarantee at the end of the fiscal year under review was 28,034 million yen (up 1.0% year on year), and loans outstanding for business loan guarantee was 1,534 million yen (up 21.6% year on year).

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As a result of the above, LIFECARD Co., Ltd. recorded operating revenue of 37,669 million yen (up 5.5% year on year), operating profit of 816 million yen (down 35.9% year on year), ordinary profit of 947 million yen (down 33.3% year on year), and profit of 363 million yen (down 60.1% year on year).

(Other)

Six consolidated subsidiaries (AIRA & AIFUL Public Company Limited, AG BUSINESS SUPPORT CORPORATION, AG Loan Services Corporation, AG Capital Co., Ltd., AG Payment Service CO.,LTD and AG Medical Corporation) which are not included in reportable segments for the fiscal year under review, posted operating revenue of 27,004 million yen (up 31.3% year on year), operating loss of 1,659 million yen (compared with operating profit of 1,976 million yen in the previous fiscal year), ordinary loss of 1,629 million yen (compared with ordinary profit of 2,044 million yen in the previous fiscal year), and net loss of 2,319 million yen (compared with profit of 1,958 million yen in the previous fiscal year).

AG MIRAIBARAI CO., LTD was extinguished in an absorption-type merger with AG GUARANTEE CO., LTD. as a surviving company as of January 1, 2024 and AG GUARANTEE CO., LTD. changed its name to AG Payment Service CO., LTD on the same date.

(2) Overview of Financial Position for the Current Fiscal Year

(Assets, liabilities, net assets)

Assets at the end of the consolidated fiscal year under review increased by 195,888 million yen from the end of the previous fiscal year to 1,266,374 million yen (up 18.3% from the end of the previous fiscal year). This was primarily due to an increase of 94,907 million yen in operating loans and an increase of 31,194 million yen in installment receivables.

Liabilities increased by 174,070 million yen to 1,064,962 million yen (up 19.5% from the end of the previous fiscal year). This was primarily due to an increase of 103,669 million yen in bonds payable and borrowings.

Net assets increased by 21,818 million yen to 201,412 million yen (up 12.1% from the end of the previous fiscal year). The increase was mainly attributable to an increase in retained earnings.

1. Overview of Cash Flows for the Current Fiscal Year

Cash and cash equivalents (hereinafter referred to as "funds") at the end of the consolidated fiscal year under review increased by 14,048 million yen from the end of the previous fiscal year to 51,934 million yen (up 37.1% from the end of the previous fiscal year). The situation of each category of cash flow for the current consolidated fiscal year and the contributing factors are as follows.

(Cash flows from operating activities)

Net cash used for operating activities amounted to 74,208 million yen, an increase of 5.1 % compared with the previous fiscal year. This was mainly due to a decline in funds reflecting an increase in operating loans and installment receivables.

(Cash flows from investing activities)

Net cash used for investing activities amounted to 12,762 million yen, an increase of 42.6 % compared with the previous fiscal year. This was mainly due to purchases of property, plant and equipment and intangible assets.

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(Cash flow from financing activities)

Net cash provided by financing activities amounted to 100,929 million yen, an increase of 29.1% compared with the previous fiscal year. This was mainly due to proceeds from issuance of bonds and borrowings exceeding repayments.

1. Outlook for the fiscal year ending March 2025

Regarding the outlook, the number of new contracts and the balance of operating loans are expected to increase as the economy is on a path of gradual recovery. On the other hand, the impact of rising interest rates, fluctuations in foreign exchange rates, and price increases will continue to require close monitoring.

In addition, the environment surrounding the Group is changing rapidly due to new entry from outside industries and acceleration of digital transformation, etc., and it is necessary to respond promptly to the changes.

Under these circumstances, AIFUL Group has formulated a 3-yearmedium-term management plan starting in the fiscal year ending March 31, 2025. The plan is based on a 10-yearlong-term vision, "Transformation Towards an IT Company ~ Aiming to be a Company that Lasts for 100 Years ~." Under the theme of the medium-term management plan, "Try Harder: Toward a New Stage of Growth," the Group will strive to raise the profit levels for the entire Group by growing the balance of its mainstay businesses, such as the loan business, the credit guarantee business, and the credit business, and reforming its cost structure. In addition, in order to expand our customer base and acquire new business models toward a new stage of growth, we will invest profits of our mainstay businesses in high-growth businesses and М&A, thereby enhancing our corporate value.

With regard to its earnings forecasts for the fiscal year ending March 2025, the first year of the medium-term management plan, AIFUL Group expects to record operating revenue of 180,200 million yen (up 10.5% year on year), operating profit of 23,800 million yen (up 13.0% year on year), ordinary profit of 24,000 million yen (up 8.8% year on year), and profit attributable to owners of parent of 21,600 million yen (down 1.0% year on year).

The above forecasts are based on information available as of the date of publication of this document, and the actual financial results may differ from the forecasts due to various factors going forward.

(5) Basic Policies on Profit Distribution and Dividend for the Fiscal Year under Review and Next Fiscal Year

AIFUL Group recognizes that returning profits to our shareholders is one of the most important management issues. The Company's basic policy is to secure stable internal reserves and return profits to shareholders in accordance with our operating results, while aiming to maximize shareholder value through medium-tolong-term profit growth.

As initially planned, we plan to pay a dividend of 1 yen per share at the end of the current fiscal year. For the next fiscal year, we plan to pay an annual dividend of 1 yen per share (1 yen per share at the end of the fiscal year).

2. Basic stance on selection of accounting standards

In preparation for the pending application to the IFRS, AIFUL Group is developing internal manuals, guidelines and other documents and examining the timing of the application.

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3. Consolidated Financial Statements and Notes

1. Consolidated Balance Sheets

			(Millions of yen)
		As of March 31, 2023	As of March 31, 2024
Assets
Current assets
Cash and deposits	43,251	56,917
Operating loans	614,229	709,137
Accounts receivables - installment	136,559	167,753
Operational investment securities	2,540	2,989
Customers' liabilities for acceptances and guarantees	221,659	256,096
Other operating receivables	13,185	16,573
Purchased receivables	6,985	8,380
Other	34,576	51,752
Allowance for doubtful accounts	(63,040)	(79,021)
Total current assets	1,009,948	1,190,579
Non-current assets
Property, plant and equipment
Buildings and structures	23,837	23,730
Accumulated depreciation	(18,811)	(18,156)
Buildings and structures, net	5,026	5,574
Machinery, equipment and vehicles	450	451
Accumulated depreciation	(292)	(315)
Machinery, equipment and vehicles, net	158	136
Furniture and fixtures	5,440	5,729
Accumulated depreciation	(4,555)	(4,786)
Furniture and fixtures, net	884	942
Land	8,900	8,816
Leased assets	5,316	4,564
Accumulated depreciation	(4,121)	(3,946)
Leased assets, net	1,194	618
Construction in progress	73	1,003
Total property, plant and equipment	16,238	17,092
Intangible assets
Software	5,888	6,728
Software in progress	2,347	7,448
Other	157	173
Total intangible assets	8,392	14,349
Investment and other assets
Investment securities	10,978	12,086
Claims provable in bankruptcy	18,167	15,131
Deferred tax assets	15,012	20,212
Lease and guarantee deposits	3,913	3,979
Other	4,417	6,522
Allowance for doubtful accounts	(16,582)	(13,579)
Total investments and other assets	35,906	44,353
Total non-current assets	60,537	75,794
Total assets		1,070,485	1,266,374

6

			(Millions of yen)
		As of March 31, 2023	As of March 31, 2024
Liabilities
Current liabilities
Notes & accounts payable-trade	43,066	68,069
Acceptances and guarantees	221,659	256,096
Short-term borrowings	69,582	101,627
Short-term loans payable to subsidiaries and associates	1,734	959
Commercial papers	12,000	―
Current portion of bonds	―	30,000
Current portion of long-term borrowings	183,832	233,660
Income taxes payable	2,006	3,871
Allowance for bonuses	1,555	1,671
Provision for directors' bonuses	45	1
Provision for share-based remuneration	50	58
Deferred installment income	7,094	12,854
Other	30,284	38,727
Total current liabilities	572,912	747,598
Non-current liabilities
Bonds payable	45,000	50,000
Long-term borrowings	249,087	248,657
Deferred tax liabilities	―	107
Provision for loss on interest repayment	17,383	11,760
Other	6,509	6,838
Total non-current liabilities	317,979	317,364
Total liabilities	890,892	1,064,962
Net Assets
Shareholders' equity
Capital stock	94,028	94,028
Capital surplus	14,017	14,017
Retained earnings	69,419	90,345
Treasury shares	(3,110)	(2,655)
Total shareholders' equity	174,354	195,735
Accumulated other comprehensive income
Valuation difference on available-for-sale securities	1,123	1,283
Foreign currency translation adjustment	595	890
Total accumulated other comprehensive income	1,718	2,174
Non-controlling interests	3,520	3,502
Total net assets	179,593	201,412
Total liabilities and net assets		1,070,485	1,266,374

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