Credit Loss Risk in the Cambodia Finance Business

「The company transferred all issued shares of its consolidated subsidiary RENET JAPAN (CAMBODIA) CO.,LTD. to an individual who operates a public relations business in Japan and plans to develop an investment business overseas, and excluded RJC from the scope of consolidation.」

「For the six months ended Q2, the company recorded a total of ¥366.982 million as an extraordinary loss related to its overseas finance business. This comprised ¥10.784 million in operating loans and ¥2.248 million in accrued revenue recorded as a result of the fraud, which were written down from their carrying values; ¥192.393 million in investigation expenses and expenses related to correcting prior-year financial statements; and ¥161.556 million in costs arising from the suspension of operations at branches where the fraud was discovered during the investigation, including extraordinary losses related to operating loans arising from the suspension of operations, recorded as provisions for doubtful accounts.」

「In the first quarter of the current fiscal year, the company recorded an extraordinary loss of ¥13.033 million related to its overseas finance business as an extraordinary loss, mainly due to the write-down from carrying value of ¥10.341 million in operating loans recorded as a result of the fraud.」

「Bad debt loss 119,768」

「During the quarter, the company also implemented additional precautionary provisioning measures in the microfinance business, taking into account economic and financial conditions in Cambodia and globally, particularly the impact of natural disasters such as the floods in Cambodia the previous year.」

「In line with its basic policy of contributing to society through social inclusion by providing funds for businesses that support the livelihoods of people in poverty and other vulnerable groups in Cambodia, the Other Financial Business segment has expanded its microfinance business to a certain extent. However, after carefully assessing economic and financial conditions in Cambodia and globally during the quarter, the company implemented precautionary provisioning measures.」

「After concentrating on the collection of these non-performing loans for more than 2 years, the company had completed the resolution of approximately 90% of the outstanding balance and therefore formally decided at the end of the current fiscal year to withdraw from the used-vehicle sales business.」

「In the vehicle sales and leasing businesses, the company continued to focus on collecting trade receivables, substantially reducing receivables and the allowance for doubtful accounts.」

「In the vehicle sales and leasing businesses, the company continued to focus on collecting trade receivables, substantially reducing receivables and the allowance for doubtful accounts.」

「The balances of receivables and the allowance for doubtful accounts were substantially reduced.」

「The collection and resolution of non-performing loans in the vehicle sales business, for which substantial loss provisions were recorded in the previous fiscal year, progressed smoothly, resulting in a greater-than-planned reduction in credit costs.」

「During the nine-month cumulative period, there were no new business or other risks, nor any material changes to the business or other risks described in the securities report for the previous fiscal year.」

「Through portfolio diversification, the microfinance business is growing its loan balance while keeping its delinquency rate more stable than the industry average」

「The Cambodian microfinance business has been performing well while taking a measured approach to growing its loan balance through risk reduction via the diversification of small loans and a conservative lending policy.」

「For the consolidated fiscal year, the Group recorded a provision for doubtful accounts of ¥1,410.690 million in preparation for shortfalls in collections and other issues arising from repayment rescheduling for Group borrowers engaged in Cambodia's tourism industry, due to the impact of the spread of COVID-19.」

「During the nine-month cumulative period, there were no new business or other risks, nor any material changes to the business or other risks described in the securities report for the previous fiscal year.」

「There have been no new business or other risks, nor any material changes to the business and other risks described in the annual securities report for the previous fiscal year.」

「During the first quarter of the current consolidated fiscal year, there were no newly arising business or other risks, and no material changes to the business or other risks described in the securities report for the previous fiscal year.」

「The Group operates a finance business in Cambodia and records allowances for doubtful accounts in accordance with local standards. However, if the balance of non-performing loans increases beyond expectations, this could affect the Group's operating results and financial position.」