IR-FAQ
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Financial Information
Q1 |
Can you give an overview of financial results in the consumer finance business? |
A1 |
AIFUL's non-consolidated financial results for the FY ended March 31, 2011 showed 86.2 billion yen in operating revenue, down 31% year-on-year which was driven by the 31% fall on year-on-year in the balance of operating loans due to tighter credit criteria following full enforcement of Japan's new Money Lending Business Act and high level waiver of principal accompanying interest repayments. Additionally, a drop in interest following aggressive marketing of low interest products to new and prime customers also influenced decrease in operating revenue.
As for operating expenses, besides 64% decrease in provision for doubtful accounts to 44.8 billion yen, given the voluntary retirement and implementation of other business restructuring based on the consensual business revitalization alternative dispute resolution (ADR) plan, fixed costs, such as labor costs and land rent, declined. Variable costs also fell, reflecting a decline in the balance of loans outstanding and operational streamlining.
As a result, operating expenses fell 77% from the previous fiscal year, to 83.1 billion yen. Although ordinary income amounted to 5.5 billion yen, net loss stood at 70.1 billion yen due to the impairment on LIFE shares totaling 67.5 billion yen as result of group reorganization and a loss of 3.6 billion yen based on estimates of a certain level of impact from the Great Eastern Japan Earthquake. |
Q2 |
Can you outline financial results in the credit card business? |
A2 |
LIFE Co., Ltd. recorded operating revenue of 44.6 billion yen (on an operating receivables basis) for the fiscal year ended March 2011, down 39% from the previous fiscal year, given the impact of initiatives under which LIFE Co., Ltd. controlled the amount of loans in compliance with the restrictions on total lending, and dissolved card-related partnerships based on the business revitalization plan.
Operating expenses fell 25% from the previous fiscal year, to 72.1 billion yen, mainly reflecting a decline in selling, general and administrative expenses as a result of business restructuring, which offset a rise of expenses related to interest repayments of 5% year on year, to 27.2 billion yen.
As a result, ordinary loss amounted to 28.8 billion yen and net loss stood at 31.1 billion yen. |
Q3 |
Can you explain recent conditions in the business loan sector? |
A3 |
BUSINEXT Corporation, a subsidiary that was engaged in business loans, recorded operating revenue of 7.7 billion yen, down 12% from the previous year, as the balance of business loans fell 8% year on year, to 59.4 billion yen.
Operating expenses, meanwhile, fell 17% from the previous fiscal year, to 6.7 billion yen, mainly reflecting cuts in expenses related to sales operations. Ordinary income rose 37% year on year, to 1.0 billion yen.
With the recording of provision for doubtful accounts of 2.4 billion yen due to the Great Eastern Japan Earthquake, as extraordinary losses, net income amounted to 0.4 billion yen. |
Q4 |
Can you explain the current trends for bad debts? |
A4 |
AIFUL's non-consolidated bad debts for the FY ended March 31, 2011 decreased 51.4 billion yen from a year earlier to 124.5 billion yen. The sub-total for unsecured loans, a core product, decreased 31.5 billion yen from a year earlier to 52.6 billion yen.
The quality of claims has risen due to the implementation of tighter credit criteria as a strategy to prevent the incidence of bad debts in advance. |
Q5 |
Can you explain the current demand for interest repayments? |
A5 |
Following the application for the court protection under the Corporate Reorganization Act by a major consumer finance company in September 2010, the level of interest refund claims remains high.
Interest repayments (cash outflows) on a consolidated basis for the fiscal year ended March 2011 fell 0.1 billion yen from the previous fiscal year, to 77.5 billion yen.
In light of an increase in the interest refund claims, following the application for court protection under the Corporate Reorganization Act by a major consumer finance company, the Company posted a new provision for losses related to interest repayments of 76.9 billion yen (including a provision for losses on interest repayments of 27.2 billion yen, and a provision for the waiver of principals of 49.7 billion yen, as a result of interest repayments) for the fiscal year ended March 2011. As a result, as at the end of the fiscal year ended March 2011, provisions for losses related to interest repayments stood at 255.7 billion yen (including a provision for losses on interest repayments of 178.7 billion yen, and a provision for the waiver of principals of 77.0 billion yen, as a result of interest repayments).
For the detailed information about interest refund claims, please refer to the "Annual Report 2009". |
Q6 |
What is the current equity ratio? |
A6 |
The AIFUL Group's equity ratio stood at 7.1% on a consolidated basis and 11.2% on a non-consolidated basis at the end of FY2010. |
Q8 |
Can you describe your strategies to strengthen corporate governance? |
A8 |
Under a corporate philosophy of "Earn the support of the public with sincerity and hard work," the AIFUL Group recognizes that the important objective of its corporate governance is to become a company that is trusted by shareholders and society through its contribution to socioeconomic development, and to achieve corporate management that offers transparency, fairness, and efficiency, based on corporate activities that observe compliance.
For the details, please refer to Corporate Governance. |
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