Aiful : Publication of Annual Report 2021

Corporate Philosophy

Earn the trust of society through corporate activity based in integrity

We defined our vision, mission, and value for embodying our corporate philosophy.

The AIFUL Group has upheld the corporate philosophy: "Earn the trust of society through corporate activity based in integrity" as an unalterable underlying philosophy, and in April 2021, we defined our vision, mission, and value as concrete goals suited for the present age for redeveloping the system of our philosophy.

V I S I O N MISSION VALUE

VISION

For realizing a society in which your traits will shine

Your originality in your daily life and work. AIFUL hopes to brighten our society further with the characteristics of individuals. So that all kinds of people can envision a future in which they will be able to be themselves, we value individuality.

Unification and utilization of our group brands

●In July 2020, the names of domestic group companies, excluding some companies, were renamed to include "AIFUL" or "AG" in their new names.

●We aim to improve the performance of the entire corporate group, by enhancing a sense of unity as a corporate group and taking full advantage of the popularity of AIFUL.

Toward customers

Let's go beyond the expectations of customers.

Go beyond.

Requirements

• To understand customers
• To think from the viewpoint of customers
• To give a proposal while foreseeing future trends

We always think from the viewpoint of customers and keep exceeding the expectations of customers with our swift services while devoting the utmost effort.

MISSION

Toward society

Let's create a better tomorrow.

Step forward.

Requirements

• To create a happy tomorrow for everyone
• To continue our efforts to improve things

By improving things on a daily basis, we will contribute to the happy tomorrow of many people.

Toward our staff

We recognize the characteristics of each other.

Be unique.

Requirements

• To exert one's individuality
• To recognize each other

While respecting the characteristics of each other, we will keep creating a variety of values.

Contents

Forward-Looking Statements

The figures contained in this Annual Report with respect to AIFUL's plans and strategies and other statements that are not historical facts are forward-looking statements about the future performance of AIFUL, which are based on management's assumptions and beliefs in light of the information currently available to it and involve risks and uncertainties and actual results may differ from those in the forward-looking statements as a result of various factors.

Potential risks and uncertainties include, without limitation, general economic conditions in AIFUL's market and changes in the overall market for consumer loans, the rate of default by customers, and the level of interest rates charged by AIFUL.

Year-on-Year Summary

Financial Highlight

Operating revenue (millions of yen)

Ordinary profit (millions of yen)

Profit attributable to owners of parent (millions of yen)

Financial Indicators（%）

Non-Financial Highlight

Total greenhouse gas emissions (t-CO2)

Education/training cost per person*1 (yen)

Ratio of employees who have taken paid holidays (%)

Number of male employees who have taken childcare leave(person)

Number of non-Japanese employees

(including those recruited outside Japan) (person)

Credit card statements

Ratio of paperless transactions (%)

Average number of paid holidays taken (days)

Number of employees who have taken childcare leave (person)

Expenditure for social contribution (donations, etc. in fiscal 2020)

Ratio of (locally recruited) non-Japanese managers outside Japan(%)

*1 The number of employees is calculated by dividing the sum of the number of regular employees at the beginning of a term and the number of regular employees at the end of the term by 2.

Our History

1967

Yoshitaka Fukuda, AIFUL CORPORATION's current chairman, establishes a sole proprietorship as a consumer finance company

1978

Established Marutaka, Inc. (now AIFUL CORPORATION) and began business with three branches in Kyusyu and one in Kyoto

1982

Marutaka, Inc. absorbs three related companies

Name simultaneously changed to AIFUL CORPORATION

1984

Start of ATM operations

1985

Introduced first Scoring System (automated credit check system)

1994

Opened Heartful Center (now Contact Center)

1995

Completed installation of "Ojidousan", an automated loan agreement machine, at Kanda north exit branch and Ikebukuro west exit branch

1997

Over-the-counter registration of company's stock with the Japan Securities Dealers Association

2002

Established Compliance Committee

2003

Received "Listed Company Disclosure Commendation" from the Tokyo Stock Exchange

2004

Converted KOKUSAI Capital Co., Ltd. into 100% subsidiary

KOKUSAI Capital Corporation changed its name to New Frontier Partners Co., Ltd.

2007

Revised management philosophy. The new management philosophy is "Earn the trust of society through corporate activity based in integrity"

2009

Transferred all shares of 4 consolidated subsidiaries to NEOLINE CAPITAL Co., Ltd.

2010

LIFE Co., Ltd. established a wholly owned subsidiary for the credit card business and credit guarantee business, called Life Card Co., Ltd.

2011

2013

New Frontier Partners Co., Ltd. (a consolidated subsidiary) acquired all shares in BUSINEXT CORPORATION owned by the Company and Sumitomo Mitsui Trust Bank Limited and made it a wholly-owned subsidiary

2014

LIFE GUARANTEE CO., LTD. (now AIFUL GUARANTEE CO., LTD.) commenced installment sales and credit guarantee business.

AIRA & AIFUL Public Company Limited, a joint venture, was established with AIRA Capital, as an overseas subsidiary in Thailand

2015

AIRA & AIFUL Public Company Limited commenced the consumer finance business in Thailand with the A Money brand

Shares of Anshin Guarantor Service Co., Ltd., a group company, were listed on the Tokyo Stock Exchange Mothers

2016

New Frontier Partners Co., Ltd. changed its corporate name to AG Capital Corporation

2017

The 50th anniversary of AIFUL's establishment

2018

Established AsTry Partners Corporation (now AIFUL Partners Corporation), which manages the corporate turnaround & restructuring business

2020

Established AG Miraibarai Co., Ltd., which manages the Postpay settlement business

Established Aiful Medical Finance Co., Ltd., which manages the business of medical fee-type secured loans

AIFUL Group companies below have been renamed as follows:

BUSINEXT CORPORATION to AIFUL BUSINESS FINANCE CORPORATION; AsTry Loan Services Corporation to AG Loan Services Corporation; and LIFE GUARANTEE CO., LTD. to AIFUL GUARANTEE CO., LTD.

2021

Aiful Medical Finance Co., Ltd. changed its corporate name to AG MEDICAL CORPORATION

2000

Listed on First Section, Tokyo Stock Exchange and First Section, Osaka Securities Exchange

2001

Established business finance company Businext Co., Ltd. (now AIFUL BUSINESS FINANCE Corporation) through a joint venture with Sumitomo Trust and Banking Co., Ltd.

Transferred the head office to Shimogyo-ku, Kyoto (current location)

Converted LIFE Co., Ltd., into 100% subsidiary

Established servicer company AsTry Loan Services Corporation (now AG Loan Services Corporation) in joint venture with Aozora Bank, Ltd.

Under the group reorganization, credit sales business as well as the credit guarantee and insurance businesses of LIFE Co., Ltd. was transferred to LIFE CARD Co., Ltd. by way of corporate spinoff and merger

Furthermore, four consolidated subsidiaries including LIFE Co., Ltd. (following its spin-off) were merged into AIFUL

Listing onFirst Section, Tokyo Stock Exchange

Opening of Heartfu l Center

Entry into overseas markets

To Our Investors and Shareholders

To Our Investors and Shareholders

Summary of financial results for fiscal 2020

During fiscal 2020, the AIFUL Group posted operating revenue of 127.4 billion yen (up 0.3% year on year) and ordinary profit of 19.3 billion yen (1.7 billion yen in fiscal 2019). Meanwhile, profit attributable to owners of parent came to 18.4 billion yen (1.3 billion yen in fiscal 2019), showing the growth of sales and profit.

Operating revenue increased from the previous fiscal year, despite the decline in the growth rate of operating assets due to the novel coronavirus. Operating expenses were 109.9 billion yen, down 12.3% year on year, mainly because sales promotion expenses were reduced in response to the slowdown of consumer spending amid the spread of COVID-19 and financial expenses decreased due to the drop in the balance of loans

outstanding.

Current business environment

Regarding the business environment surrounding the Group, the retail finance market of loans and credit cards for consumers and business operators shrank temporari- ly, due to the stagnation of economic activities caused by the spread of COVID-19 inside and outside Japan.

The outlook is uncertain, due to the recent increase of infected people and the nationwide spread of the novel coronavirus, but consumer spending is expected to recover gradually, thanks to the curtailment of the number of infected people through rigorous measures against COVID-19, the start and nationwide implementation of vaccination, consumption promotion campaigns

by the public and private sectors, etc.

On the other hand, the market environment is changing rapidly, with the entry of new enterprises, the spread of new settlement methods, the acceleration of digital transformation, etc., so it is necessary to swiftly respond to such changes.

In light of this environment, we undertook business operations that emphasized the balance between safety, profitability and growth potential. In the AIFUL Group as a whole, we endeavored to expand our operating assets and diversify the finance business based on the loan business, the credit card business, the credit guarantee business and the overseas business while addressing interest repayment claims which is one of the management issues.

Ideal state of the Group

We, the AIFUL Group, are committed to contributing to economy and society by supporting our customers' sound consumption and business activities under the corporate philosophy: "Earn the trust of society through corporate activity based in integrity," and aim to "grow as an IT-based financial group by reforming our organization and systems according to the changes in the business environment and utilizing digital technologies."

In addition, in order to adapt to the changing environ- ment, we will evolve into an enterprise that can win strong support from stakeholders by establishing the AIFUL Group brand and sophisticating data utilization, and develop a highly profitable system by improving productivity by utilizing IT and digital technologies and reforming the profit structure.

Summary of financial results for fiscal 2020

Indicators of Reliability/Profitability/Growth Potential in AIFUL Group