Q&A Session on Financial Results for the Six Months Ended September 30, 2021

1. The Aviation posted gain on valuation of certain receivables from bankrupt debtors, but what is the actual profit contribution excluding extraordinary items of the business at present? Furthermore, you explained the earnings forecasts for the year ending March 31, 2022 remains unchanged due to credit costs expected to be recorded in the Aviation. Please explain in detail.

1. The Aviation recognized billions of yen of gain on valuation of certain receivables from bankrupt debtors under US-GAAP. Furthermore, we are closely monitoring the condition of the Aviation in estimating the full-year earnings forecasts. In the first half of this fiscal year, we continued to record allowance for doubtful accounts towards airlines mainly in Southeast Asia, causing delay in business recovery of the Aviation. The International Air Transport Association (IATA) also expects that business recovery in the aviation industry will take a little longer although the situation varies depending on the region, and we plan to record the same level of allowance for doubtful accounts as the first half in the second half.
   We estimate that quarterly performance in the Aviation will continue to fluctuate for a while due to factors including gain on valuation or allowance for doubtful accounts. Meanwhile, its business excluding extraordinary items is steadily making profits. Our aircraft leasing portfolio mainly consists of relatively new and narrow-body aircraft many of which are used for domestic routes that are showing relatively early recovery. Furthermore, there are many latest models, and the recent leasing demand is recovering compared to last year. However, there are still risks associated with, for example, airlines in Southeast Asia, and if they go bankrupt, it is possible that it will have a considerable impact on us. So, we keep the full-year earnings forecasts unchanged.

1. Hitachi, Ltd. (Hitachi) has been selling your shares in the stock market. What do you think Hitachi's equity ratio of your shares will be when it is done selling?
   Furthermore, if Hitachi continues to sell, will you take any actions such as acquiring treasury shares in light of capital adequacy?

1. We have agreed with Hitachi on maintaining business collaboration and human resource exchanges as their important financial partner. As for the share trading, it is a shareholder's decision, so we are in no position to comment on that.
   Although we cannot deny the possibility of acquiring treasury shares in the future, we intend to return profits to shareholders through dividend as in the past. We will continue to conduct M&As if they are necessary for our growth. Using capital effectively is our basic policy.

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