CREDIT SAISONFINANCIAL SECTION 2023
For the Year Ended March 31, 2023

Basis of Presentation
The consolidated financial statements are stated in Japanese yen, the currency of the country inwhich Credit Saison Co.,Ltd. (the “Company”) is incorporated and operates. The translations ofJapanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers
outside Japan and have been made at the rate of ¥133.54 to $1, the approximate rate of exchange at
March 31, 2023. Such translations should not be construed as representations that the Japanese yenamounts could be converted into U.S. dollars at that or any other rate.

The accompanying consolidated financial statements expressed in Japanese yen are the translationof those issued domestically. The amounts expressed in U.S. dollars are not included in the original
audited consolidated financial statements. Such U.S. dollar amounts are translated in accordancewith the basis stated in "Basis of Presentation" on the next page and are additionally presented
herein solely for the convenience of readers outside Japan, and are not subject to audit.

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AssetsCash and cash equivalents
Trade and other receivables
Inventories
Operational investment securities
Investment securities
Other financial assets
Property, plant, and equipment
Right-of-use assets
Intangible assets
Investment property
Investments accounted for using equity
methodDeferred tax assets
Other assets
Assets held for sale
Total assets

FY2022(As of March 31, 2023)
Thousands ofMillions of yen
U.S. dollars¥159,671
2,990,519
133,247
62,521
74,394
20,34628,753
11,044150,458
116,612
89,176$1,195,681
22,394,182
997,810468,181557,098
152,359
215,319
82,706
1,126,688
873,236
667,785

41,615
16,714
1,030¥3,896,105

311,636
125,165
7,713$29,175,566-3-Liabilities and equity
Liabilities
Trade and other payables
Financial guarantee liabilities
Bonds and borrowings
Other financial liabilities
Income taxes payable
Provision for point card certificates
Provision for loss on interest repayments
Other provisions
Deferred tax liabilities
Other liabilities
Total liabilities
EquityEquity attributable to owners of parent
Share capital
Capital surplus
Retained earnings
Treasury shares
Other components of equity
Non-controlling interests
Total equity
Total liabilities and equity

FY2022(As of March 31, 2023)
Thousands ofMillions of yen
U.S. dollars¥253,329
7,875
2,805,175
19,606
10,385126,023
18,0911,437
86
54,051
3,296,063$1,897,029
58,97621,006,256
146,823
77,767
943,717
135,479
10,766647
404,757
24,682,220

598,301
75,92983,560481,163

4,480,317
568,588625,7313,603,138△ 62,668△469,286

20,3171,739
600,041¥3,896,105

152,145
13,0284,493,345$29,175,566-4-

CONSOLIDATED STATEMENT OF INCOME

RECONCILIATION FROM PROFIT BEFORE TAX TO BUSINESS PROFITFY2022(April 1, 2022 toMarch 31, 2023)
Thousands ofMillions of yen
U.S. dollars

Revenues
Income from the payment business
Income from the lease business
Income from the finance business
Revenue from the real estate-related business
Revenue from the entertainment business
Finance income

FY2022(April 1, 2022 toMarch 31, 2023)
Thousands ofMillions of yen
U.S. dollars¥61,044$457,128

Profit before tax

Total
Of which, interest income
Cost of sales
Cost of sales for the real estate-related business
Cost of sales for the entertainment business
Total
Net revenue
Selling, general, and administrative expenses
Impairment losses on financial assets
Finance costs
Gain arising from the derecognition of financial assets measured atamortized cost
Share of profit of investments accounted for using equity method
Other income
Other expenses
Profit before tax
Income tax expense
ProfitProfit attributable to
Owners of parent
Non-controlling interests
Profit-5-¥229,336
12,04850,75458,71530,807877
382,540
118,520$1,717,364
90,223380,070439,683
230,702
6,571
2,864,615
887,526

35,30924,59359,902
322,638
229,322
34,611
15,25743

264,407
184,165448,573
2,416,042
1,717,256
259,187
114,255
326

5,982
12,5901,017
61,044
17,183¥43,861

44,801
94,2797,621
457,128
128,677$328,451¥43,599261¥43,861$326,493
1,957$328,451

Reconciliations (Other income)△616

Reconciliations (Other expenses)
Adjustments for the application of the effective interest method tofinancial assets
SubtotalBusiness profit-6-△4,614

825

6,180

△276

△2,070△67¥60,977△503$456,624

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FY2022 (April 1, 2022 to March 31, 2023)

SharecapitalBalance as of April 1,
2022¥75,929(Notes on important matters forming the basis for preparation of consolidated financial statements)

Millions of yen
Equity attributable to owners of parent
Other
CapitalRetained
Treasurycomponents
surplusearnings
sharesof equity¥85,152¥442,550¥△62,737

Other comprehensive
incomeComprehensive income－

Purchase of treasury
sharesShare-based paymenttransactions－－

43,599182

Dividends

2,442

43,599
2,442

261
22

43,861
2,464

2,442

46,041

283

46,325

△1

△1

70

253

3,612

¥1,351 ¥563,738

0

254△8,600

－

－

－

100

100

△4

△1,7793△1,775

Total transactions withowners－△1,591△4,98769△3,617△10,127

104 △10,022

Balance as of March 31,
2023¥75,929¥83,560¥481,163¥△62,668¥20,317¥598,301¥1,739 ¥600,041

SharecapitalBalance as of April 1,
2022

Thousands of U.S. dollars
Equity attributable to owners of parent
Other
CapitalRetained
Treasurycomponents
surplusearnings
sharesof equity$568,588 $637,651 $3,313,993 $△469,804

Other comprehensive
incomeComprehensive income
Purchase of treasury
sharesShare-based paymenttransactions－－

Total transactions withownersBalance as of March 31,
2023

－

1,369

328,451
18,452

18,286

344,780

2,123

346,903△8
1,896△27,055△37,349518$568,588 $625,731 $3,603,138 $△469,286

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△8
6

1,902

△64,404△64,404－－－－ △11,920$10,119 $4,221,496
1,957
165

526

△13,290

Total

326,493
18,286△64,404
27,055

Total

18,286△8

Dividends
Transfer from othercomponents of equity toretained earnings
Obtaining of control ofsubsidiaries
Changes in ownershipinterest in subsidiaries

326,493

2. SCOPE OF CONSOLIDATION
Number of consolidated
subsidiaries
Names of principal consolidated
subsidiary

41
・SAISON FUNDEX CORPORATION
・JPN COLLECTION SERVICE CO.,LTD.
・SAISON ASSET MANAGEMENT CO., LTD.
・Atrium Servicing Co., Ltd.
・Saison Personalplus Co., Ltd.
・Atrium Co., Ltd.
・Concerto Inc.
・Saison Partners CO., LTD.

Noncontrollinginterests$160,947 $4,211,377

326,493

Profit

The consolidated financial statements of Credit Saison Co., Ltd. (the “Company”) and its subsidiaries (the“Group”) are prepared in accordance with International Financial Reporting Standards (IFRS) pursuant to
the provisions of Article 120-1 of Regulations for Companies Accounting Regulation. In accordance withthe second sentence of the same paragraph, some of the disclosure items required by IFRS have been
omitted from the consolidated financial statements. Statements of comprehensive income and cash flows
are not required as a part of the basic financial statements under the Companies Act of Japan and applicableregulations and, accordingly, are not presented herein.

△1△8,600△3,612△1,774

Total¥562,387△8,600Transfer from othercomponents of equity toretained earnings
Obtaining of control ofsubsidiaries
Changes in ownershipinterest in subsidiaries

Total¥21,492

43,599Profit

1. BASIS FOR PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS
Noncontrollinginterests

754

754

△33

△13,323

23 △13,299△27,088△75,840785 △75,055$152,145 $4,480,317$13,028 $4,493,345

・L-BLUE・Saison International Pte. Ltd.
・Kisetsu Saison Finance(India)Pvt. Ltd.

・Saison Capital Pte. Ltd.
・PT. Saison Modern Finance3. ACCOUNTED FOR USING EQUITY METHOD
Number of companies accounted 41
for using equity method
Names of principal companies
・Saison Information Systems Co., Ltd.
・IDEMITSU CREDIT CO., LTD.
・Resona Card Co., Ltd.
・Shizugin Saison Card Co., Ltd.
・Daiwa House Financial Co., Ltd.
・Takashimaya Financial Partners Co., Ltd.
・Seven CS Card Service Co., Ltd.
・eplus inc.
・HD SAISON Finance Company Limited-8-

comprehensive income is reclassified to profit or loss.

4. FISCAL YEAR OF CONSOLIDATED SUBSIDIARIESWhen the reporting date of a subsidiary is different from that of the Company, the subsidiary prepares,
for consolidation purposes, additional financial information as of the reporting date of the consolidated
financial statements.

(iii) Financial assets measured at fair value through profit or loss
A gain or loss on financial assets measured at fair value through profit or loss is recognized in
profit or loss.
(iv) Equity instruments measured at fair value through other comprehensive income

5. ACCOUNTING POLICIES⑴ Valuation standards and methods for financial assets(a)Financial assets

1)

Initial recognition and measurement

A gain or loss on equity instruments designated as those measured at fair value through othercomprehensive income is recognized in other comprehensive income.
Dividends received from such financial assets are recorded in profit or loss under “Other income.”

The Group classifies financial assets into financial assets measured at amortized cost, at fair value
through profit or loss, or at fair value through other comprehensive income. The Group determinessuch classification at the time of initial recognition.
The Group recognizes financial assets on the transaction date when it becomes a party to thecontract on such financial instruments.
All financial assets are measured at fair value plus any transaction costs, except for those classified
as financial assets measured at fair value through profit or loss.

3)

Financial assets are derecognized if the contractual rights to receive cash flows from the financial
assets expire or if the Group has transferred substantially all the risks and rewards of ownership ofthe financial assets. If the Group retains control of a transferred asset, the asset and any liability
associated with the asset are recognized to the extent of their continuing involvement.
4)

If the credit risk on financial assets at the end of the reporting period has not increased significantly
since initial recognition, allowance for doubtful accounts is measured at an amount equal to theamount of expected credit losses from possible defaults in the next 12 months after the end of thereporting period (12-month expected credit losses). In this case, 12-month expected credit losses
are collectively estimated to measure the allowance for doubtful accounts based on informationsuch as the probability of default, subsequent collection rates, and other reasonable and supportable
information, including forward-looking data.

・ The assets are held within a business model whose objective is to hold the assets in order tocollect contractual cash flows.
・ The contractual terms of the financial asset give rise on specified dates to cash flows that aresolely payments of principal and interest on the principal amount outstanding.
Financial assets other than those measured at amortized cost are classified as financial assets
measured at fair value.

Conversely, if the credit risk on financial assets at the end of the reporting period has increased
significantly since initial recognition, allowance for doubtful accounts is measured at an amountequal to the expected credit losses that result from all possible default events over the expected lifeof such financial assets (lifetime expected credit losses). In this case, allowance for doubtful
accounts is determined by estimating the lifetime expected credit losses related to the collection ofsuch financial assets based on information such as the probability of default, future recoverable
amounts, and other reasonable and supportable information, including forward-looking data. In
principle, it is presumed that the credit risk on financial assets has increased significantly whencontractual payments are more than 30 days past due. In assessing whether the credit risk has
increased significantly, the Group considers reasonably available and supportable information in
addition to past due information.

Equity instruments measured at fair value are individually designated as measured at fair value
through profit or loss or at fair value through other comprehensive income, and such designation isapplied consistently after the initial recognition.
Debt instruments measured at fair value that meet both of the following conditions are classified as
debt instruments measured at fair value through other comprehensive income:・ The financial assets are held within a business model whose objective is achieved by bothcollecting contractual cash flows and selling financial assets.
・ The contractual terms of the financial asset give rise on specified dates to cash flows that aresolely payments of principal and interest on the principal amount outstanding.

However, for trade receivables that result from transactions that are within the scope of IFRS 15,“Revenue from Contracts with Customers” (IFRS 15) and that do not contain a significant financing
component, allowance for doubtful accounts is always recognized at an amount equal to the lifetime
expected credit losses, regardless of whether or not the credit risk has increased significantly sinceinitial recognition.

Operational investment securities include stocks, investment trusts, and investments in partnerships,
which are held solely for the purpose of investment. Investment securities include stocks,
investment trusts, investments in partnerships held for the purpose of promoting business primarily
through business, and capital alliances.
Subsequent measurement

As a general rule, the Group determines that a default has occurred when the contractual paymentof a receivable is 90 days or more past due. When it is determined that there is a default of areceivable, such receivable is deemed to be a credit-impaired receivable.

After initial recognition, financial assets are measured as follows, depending on their classifications:(i) Financial assets measured at amortized cost

The Group directly reduces the gross carrying amount of a financial asset when it has no reasonable
expectations of recovering a financial asset in its entirety or a portion thereof.

Financial assets are measured at amortized cost using the effective interest method.
(ii) Debt instruments measured at fair value through other comprehensive income
A gain or loss on debt instruments measured at fair value through other comprehensive income
is recognized in other comprehensive income, except for impairment gains or losses and foreignexchange gains and losses, until the debt instrument is derecognized or reclassified. When thefinancial asset is derecognized, cumulative gain or loss previously recognized in other-9-

Impairment of financial assets
Allowance for doubtful accounts is recognized for expected credit losses on financial assets
measured at amortized cost and debt instruments measured at fair value through othercomprehensive income.

Financial assets that meet both of the following conditions are classified as financial assets
measured at amortized cost:2)

Derecognition of financial assets(b) Financial liabilities
1)

Initial recognition and measurement
The Group classifies financial liabilities as subsequently measured at amortized cost, except forderivatives and financial guarantee liabilities. The classification is made at the time of initial- 10 -

recognition.

1)

Debt securities issued by the Group are initially recognized at the date of issuance. All otherfinancial liabilities are recognized on the transaction date when the Group becomes a party to thecontract of such financial liabilities.

Fair value changes on derivatives are recognized in profit or loss of the consolidated statement ofincome. Fair value changes on hedged items attributable to hedged risks are recognized in profit orloss in the consolidated statement of income with the carrying amounts of the hedged items being
adjusted.

Financial liabilities measured at amortized cost are recognized at an amount after deducting
transaction costs directly attributable to the issuance of the liabilities.
2)

2)

Amortization using the effective interest method as well as gains and losses arising from
derecognition are recognized as “Finance costs” in profit or loss of the period.

The amount posted in other comprehensive income is reclassified to profit or loss when the hedgedtransaction affects profit or loss.

Derecognition of financial liabilities

If a forecast transaction or a firm commitment is no longer expected to occur, cumulative gains orlosses previously recognized in equity through other comprehensive income are reclassified to
profit or loss. If a hedged future cash flow is still expected to occur, the amount previously
recognized in equity through other comprehensive income remains in equity until the future cash
flow occurs.

The Group derecognizes financial liabilities when they are extinguished (i.e., when the obligation
specified in the contract is discharged), canceled, or expired.
(c)Presentation of financial assets and financial liabilities
Financial assets and financial liabilities offset each other with the net amount presented in the
consolidated statement of financial position only if the Group has a legal right to offset and has theintention to either settle amounts on a net basis or realize the assets and settle the liabilities
simultaneously.

(e)

The Group utilizes derivatives, such as interest rate swaps, for the purpose of hedging interest raterisk and foreign currency risk. These derivatives are initially recognized at fair value at the date when
the contracts are entered into and subsequently remeasured at fair value.

Financial guarantee liability is measured at fair value when the contract is initially signed. Afterinitial recognition, the amount is measured at the higher of the following:
1)

The amount of allowance for doubtful accounts calculated in accordance with the section above
titled “Impairment of financial assets”

2)

The initially measured amount, less the cumulative amount of revenue recognized in accordancewith IFRS 15⑵

A hedging relationship is considered to be effective when it meets all the following requirements:

・ The hedge ratio of the hedging relationship is the same as that resulting from the quantity of thehedged item that the Group actually hedges and the quantity of the hedging instrument that theGroup actually uses to hedge that quantity of hedged item.
The Group prospectively assesses whether the hedging relationships will be effective on an ongoingbasis. Hedge ineffectiveness may arise when the fair value change on the hedging instrument exceeds
or falls below that of the hedged item.
Hedge ratio is appropriately determined based on an economic relationship between the hedged itemand hedging instrument, as well as the Group’s risk management strategies.
If a hedging relationship ceases to meet the hedging effectiveness requirement, but the risk
management objective remains the same, the Group adjusts the hedge ratio so that the hedging
relationship becomes effective again. The Group terminates the hedge accounting if the risk
management objective for the designated hedge relationship is changed.
Hedges that qualify for hedge accounting are classified and accounted for as follows:- 11 -

Valuation standards and methods for inventories
Inventories are measured at the lower of cost or net realizable value. Net realizable value isdetermined at the estimated selling price in the ordinary course of business, less estimated costs forcompletion and estimated selling expenses. Cost is calculated mainly based on the specificidentification method.

・ There is an economic relationship between the hedged item and the hedging instrument.
・ The effect of credit risk does not dominate the value changes that result from that economic
relationship.

Financial guarantee liabilities
A financial guarantee contract is a contract that requires a contract issuer to make specified payments
to reimburse the holder of a guarantee contract for a loss it incurs because a specified debtor fails to
make payment when due in accordance with the original or modified terms of a debt instrument.
Revenue is recognized by multiplying the balance of guarantee by the guarantee fee rate.

(d) Derivatives and hedge accounting

At the inception of the hedging relationship, there is formal designation and documentation of thehedging relationship to which the Group plans to apply hedge accounting as well as the Group’s risk
management objective and strategy for undertaking the hedge. That documentation includes
identification of the hedging instrument, the hedged item or transaction, the nature of the risk being
hedged, and the description of how the Group will assess the effectiveness of changes in fair valueof the hedging instruments used in offsetting its exposures to changes in the fair value or cash flowsof the hedged items arising from the hedged risk.

Cash flow hedges
The effective portion of gains or losses on hedging instruments is recognized in othercomprehensive income in the consolidated statement of comprehensive income, while theineffective portion is immediately recognized in profit or loss in the consolidated statement ofincome.

Subsequent measurement
After initial recognition, financial liabilities are measured at amortized cost using the effective
interest method, except for derivatives and financial guarantee liabilities.

3)

Fair value hedges⑶(a)Valuation standards and methods for property, plant, equipment and depreciation methods
Recognition and measurement
Property, plant, and equipment are measured by using the cost model and are stated at acquisition
cost less accumulated depreciation and accumulated impairment losses. Acquisition cost includes
costs directly attributable to the acquisition of assets and costs involved in dismantling, removing
and restoring. Gain or loss on disposal of an item of property, plant and equipment represents the net
amount of proceeds from disposal less carrying amount, which is recognized in profit or loss.

(b) Depreciation
Depreciation is calculated based on the depreciable amount. The depreciable amount is calculated bydeducting the residual value from the acquisition cost of the asset. Depreciation is recognized in
profit or loss by mainly using the straight-line method over the estimated useful life of eachcomponent of property, plant and equipment. Land and construction in progress are not subject todepreciation.
- 12 -

Lease payments are allocated to finance costs and repayments of lease liabilities based on the interest
method. Finance costs are recognized in the consolidated statement of income.

The estimated useful lives of main assets are as follows:
Buildings

39 to 50 years

Other

5 to 6 years

However, for short-term leases within a lease term of 12 months or leases for which the underlying
asset is of low value, the right-of-use asset and lease liability are not recognized. The lease payments
are recognized as expenses over the lease term under the straight-line method.

Depreciation methods, estimated useful lives, and residual values are reviewed at the end of eachreporting period. Any change is applied prospectively as a change in accounting estimates.
⑷

Depreciation method for investment property
Investment property is property (including property under construction) held to earn rental income orcapital gains, or both. Investment property is measured under the cost model and is measured at costless accumulated depreciation and accumulated impairment losses.

(b) Leases as a lessor
The Group classifies each of its leases as either an operating lease or a finance lease. A lease isclassified as a finance lease if it transfers substantially all the risks and rewards incidental toownership of an underlying asset. A lease is classified as an operating lease if it does not transfer
substantially all the risks and rewards incidental to ownership of an underlying asset.

Depreciation is calculated based on the depreciable amount. The depreciable amount is calculated bydeducting the residual value from the acquisition cost or the amount equivalent to the acquisition cost.
Depreciation is recognized in profit or loss over the estimated useful life of each asset, other than land,by mainly using the straight-line method.

For the finance lease, the Group recognizes assets held under a finance lease in its consolidated
statement of financial position at the commencement date and presents them as receivable at an
amount equal to the net investment in the lease.

The estimated useful lives of main assets are as follows:
Investment property

An investment property is derecognized on disposal or when the investment property is permanently
withdrawn from use and no future economic benefits are expected from its disposal. Gains or losses
arising from the derecognition are calculated as the difference between the net disposal proceeds andthe carrying amount of the asset and are recognized in profit or loss at the time of derecognition.
⑸

For the operating lease, the Group presents assets subject to operating leases in its consolidated
statement of financial position and recognizes lease payments to be received as income over the leaseterm under the straight-line method in the consolidated statement of income.

15 to 50 years⑺

The Group measures goodwill as the excess of the aggregate of the consideration transferred and theamount of any non-controlling interests in the acquiree measured at the acquisition date over the netof acquisition-date amounts of identifiable assets acquired and liabilities assumed (ordinarily in theirfair value).

Valuation standards and methods for intangible assets (excluding goodwill) and amortization methods
Intangible assets acquired individually are measured under the cost model. Intangible assets are statedat cost, less accumulated amortization and accumulated impairment losses. These intangible assets
include borrowing costs to be capitalized.

Goodwill is not amortized but is tested for impairment in each reporting period or each time when
there is an indication of impairment.
Impairment losses of goodwill are recognized in the consolidated statement of income and not reversed
subsequently.

After initial recognition, intangible assets other than goodwill and software in progress are amortizedover their estimated useful lives under the straight-line method and are recognized in profit or loss,
except for intangible assets with indefinite useful lives.

Goodwill is stated at cost less accumulated impairment losses in the consolidated statement offinancial position.

The estimated useful lives of main assets are as follows:
Software5 to 15 years

Other

5 to 10 years

Amortization methods, estimated useful lives, and residual values are reviewed at the end of eachreporting period, and any change is applied prospectively as a change in accounting estimates.
⑹(a)LeasesLeases as a lessee
At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contractis, or contains, a lease if the contract conveys the right to control the use of an identified asset for aperiod of time in exchange for consideration.
If a contract is, or contains, a lease, the Group recognizes a right-of-use asset and a lease liability at
the commencement date. The lease liability is measured at the present value of the lease paymentsthat are not paid at the commencement date. The right-of-use asset is measured at cost, which is theamount of the initial measurement of the lease liability, adjusted for any lease payments made at or
before the commencement date, any initial direct costs incurred by the lessee, and any other costs
such as obligations to restore the leased assets to their original condition as required under leaseagreements.
After initial recognition, the right-of-use asset is depreciated over the shorter of the useful life or thelease term under the straight-line method.
- 13 -

Goodwill⑻

Impairment of non-financial assets
At the end of each reporting period, the Group reviews the carrying amount of non-financial assets todetermine whether there is any indication of impairment. If any such indication exists, the recoverable
amount of the asset is estimated. Recoverable amounts of goodwill and intangible assets withindefinite useful lives or those not yet available for use are estimated at the same time each year,
regardless of whether or not there is an indication of impairment.
The recoverable amount of an asset or a cash-generating unit is the higher of value in use or fair valueless costs of disposal. In calculating the value in use, the estimated future cash flows are discounted
to their present value by using a pretax discount rate that reflects the time value of money and risks
specific to the asset. Assets that are not tested individually for impairment are integrated into thesmallest cash-generating unit that generates cash inflows through continuing use that are largely
independent of those from other assets or groups of assets. At the time of goodwill impairment testing,cash-generating units to which goodwill is allocated are integrated so that impairment testing is
conducted in a manner that reflects the smallest unit with which goodwill can be associated. Goodwill
acquired in a business combination is allocated to each cash-generating unit that is expected to benefit
from synergies of the combination.
Impairment losses are recognized in profit or loss when the carrying amount of an asset or a cashgenerating unit exceeds its recoverable amount. Impairment loss recognized for a cash-generating unit
is first allocated to reduce the carrying amount of goodwill allocated to the unit and subsequently
allocated to reduce other assets of the unit on a pro -rata basis, based on the carrying amount of each
asset in the unit.
- 14 -

Impairment losses recognized for goodwill are not reversed. Impairment loss recognized in priorperiods for other assets is assessed at the end of each reporting period to determine whether there is
any indication that such impairment losses may no longer exist or may have decreased. If any change
has been made to the estimate used to determine the recoverable amount of an asset, an impairment
loss for the asset is reversed up to the carrying amount of the asset that would have been determined
had no impairment loss been recognized for the asset in prior years (net of any associated depreciation
and amortization expenses).
⑼

(a)

1)

Revenue is recognized at the time when a credit card is used, which is when service is completed
and the performance obligation is satisfied under the contracts with affiliated stores, who are
customers of the Group.
(ⅱ) Customer fees
Customer fees mainly represent fees received from cardholders for using revolving payments
and other services. As stated in Note “5. ACCOUNTING POLICIES, (1) Valuation standards
and methods for financial assets, (a) Financial assets, 2) Subsequent measurement,” revenue isrecognized under IFRS 9, “Financial Instruments” (“IFRS 9”), using the effective interest
method.

Provision for point card certificates
The Group offers a rewards program to its card holders (members) as the major benefit of holding acredit card. Under the program, card holders can exchange points earned based on the amount ofcredit card purchases for a variety of items. Points granted to members have no expiry date.
The Group recognizes a provision for point card certificates as a liability by estimating costs to be
incurred through the exchange of points in the future. To measure liability, the Group determines
the estimated points to be exchanged in the future out of the outstanding number of points at theend of the period, which is multiplied by a point unit value. The use of points by members involves
uncertainty.

(iii) Annual membership fees, etc.
Revenue is recognized over a certain period determined under the contracts with cardholders towhich performance obligation is satisfied for the membership fees received.
2)

(c)

3)

(a)

Employee benefits
4)

Defined contribution pension plans

Processing/agency for other companies’ credit cards and business agencies
Processing/agency for other companies’ credit cards is a service provided on a contractual basis forprocessing and use of the Company’s ATMs, for which the Company receives fees from its partnercompanies. Business agencies refers to receivables collection businesses and temporary staffing
businesses, which receive fees from their partner companies. Revenue is recognized when service
is rendered, and the performance obligation is satisfied on a contractual basis.

The Group adopts defined contribution pension plans. Defined contribution pension plans are postemployment benefit plans under which an employer pays fixed contributions to an independent entity
and has no legal or constructive obligation to pay further contributions. Contributions under thedefined contribution pension plans are recognized in profit or loss in the period in which employees
render the related services.

(b) Lease business(b) Short-term employee benefits

Revenue is recognized under IFRS 16, “Leases.” (“IFRS 16”). For details, see Note “5.
ACCOUNTING POLICIES, (6) Leases, (b) Leases as a lessor.”

Undiscounted amount of short-term employee benefits is recognized as an expense in the period inwhich the employees render related services.
Expenses for bonuses and paid absences are recognized as a liability at an amount estimated to be
paid based on applicable policies for the bonuses and paid absences when the Group has a legal orconstructive obligation for the payment and a reliable estimate can be made for the amount.
⑾

Term loans
Revenue from term loan services represents fees received from cardholders or customers who
obtain loans directly from the Group in forms other than credit card cash advance. As stated in Note
“5. ACCOUNTING POLICIES, (1) Valuation standards and methods for financial assets, (a)Financial assets, 2) Subsequent measurement,” revenue is recognized under IFRS 9 using theeffective interest method.

Other provisions
Other provisions include asset retirement obligations, and provision for loss on collecting gift tickets,
all of which are individually immaterial.

⑽

Credit card cash advance
Revenue from cash advance services represents fees received from cardholders for using credit card
cash advance via credit cards or loan cards issued by the Group. As stated in Note “5.
ACCOUNTING POLICIES, (1) Valuation standards and methods for financial assets, (a) Financial
assets, 2) Subsequent measurement,” revenue is recognized under IFRS 9 using the effective interest
method.

(b) Provision for loss on interest repayments
The Group recognizes a provision for loss on interest repayments at an amount required in
preparation for future claims for interest repayments, considering historical data on repayments andother information.

Credit card shopping(i) Affiliated store fees

Accounting policy for significant provisions
A provision is recognized when the Group has a present legal or constructive obligation as a result ofa past event, it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation, and a reliable estimate can be made of the amount of the obligation. When thetime value of money is significant, the estimated future cash flows are discounted to their present value
by using a pretax discount rate that reflects the time value of money and risks specific to the liability.
Unwinding of the discounted amount arising from the passage of time is recognized in profit or loss.

(a)

Payment business
The payment business provides services such as credit card shopping, credit card cash advance, termloans, and processing/agency for other companies’ credit cards and business agencies. Revenue
recognition criteria by service are as follows:(c)

Finance business

1)

Credit guarantees
Fees are received when the Group guarantee loans provided by their partner financial institutions.
Revenue is recognized under IFRS 9. For details, see Note “5 ACCOUNTING POLICIES, (1)Valuation standards and methods for financial assets, (e) Financial guarantee liabilities .”Revenue
Centering on the card business, the Group engages in multiple business domains, such as the Internet
business, lease business, and finance business. For the purpose of segment reporting, the Group’sbusinesses are divided into five reportable segments: Payment business, Lease business, Financebusiness, Real estate-related business, and Entertainment business. Revenue recognition criteria bysegment are as follows:- 15 -

2)

Finance-related business
Fees are directly received from customers who obtain loans directly from the Group. As stated in
Note “5. ACCOUNTING POLICIES, (1) Valuation standards and methods for financial assets, (a)- 16 -

Financial assets, 2) Subsequent measurement,” revenue is recognized under IFRS 9 using theeffective interest method.
(d) Real estate-related businessFor real estate sales, revenue is recognized when property is delivered to customers, which is whena performance obligation is satisfied. For real estate rentals, revenue is recognized under IFRS 16.
(e)Entertainment business
Revenue is recognized primarily when services are rendered at stores engaged in amusement business,
which is when a performance obligation is satisfied.
Revenues from the above businesses are recognized at an amount reflecting the amount ofconsideration to which the Group expects to be entitled in exchange for transferring the goods orservices to the customer based on the following five-step approach in accordance with IFRS 15,
except for interest and dividend income received under IFRS 9 and income from lease arrangements
under IFRS 16:
Step 1:

Identify contract(s) with a customer

Step 2:

Identify the performance obligations in the contract

Step 3:

Determine the transaction price

Step 4:

Allocate the transaction price to performance obligations in the contract

Step 5:

Recognize revenue when (or as) the performance obligation is satisfied

Revenue recognized under IFRS 15 is based on contracts with customers, and the amount of revenue
containing variable consideration is immaterial. No significant financing component is included in
the amount of promised consideration.
⑿(a)"Finance business segment," has been changed to the "Payment business segment" in accordance with thereorganization that was conducted in October 2022. In order to reflect this change in presentation, the income
from the rent guarantee business has been transferred from "income from the finance business" to "income
from the payment business" in the consolidated statements of income. As a result, for the current fiscal year,"income from the payment business" increased by ¥1,745 million (U.S. $13,068 thousand) and "income fromthe finance business" decreased by the same amount.

Foreign currency translation
Foreign currency transactions
Foreign currency transactions are translated into functional currency of each entity of the Group by
using the spot exchange rate at the date of the transaction.
Foreign currency monetary assets and liabilities at the end of the reporting period are translated intofunctional currency using the spot exchange rate at the end of the reporting period.
Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated
into functional currency using the exchange rate at the date when the fair value was measured.
Exchange differences arising from translations or settlements are recognized in profit or loss.
Exchange differences arising from the translation of equity instruments measured at fair value
through other comprehensive income are recognized in other comprehensive income.

(b) Foreign operations
Assets and liabilities of foreign operations, including any goodwill arising on the acquisition of aforeign operation and any fair value adjustments, are translated into Japanese yen using the spot
exchange rate at the end of the reporting period, while income and expenses are translated into
Japanese yen using average exchange rates during the period.
Exchange differences arising from the translation of financial statements of foreign operations arerecognized in other comprehensive income.
Upon the disposal of a foreign operation, exchange differences relating to the foreign operation arereclassified to profit or loss as part of the gain or loss on disposal.

(Notes regarding changes in presentation)
Effective from the current fiscal year, the rent guarantee business, which was originally grouped to the- 17 -(Notes on accounting estimates)
The items that are included in the consolidated financial statements for the current fiscal year as a resultof accounting estimates and which may have a significant impact on the consolidated financial statements
for the following fiscal year are as follows:
Millions of yen¥2,990,519
12,31228,753
11,044150,458
116,61241,6157,875
2,616
126,023

Trade and other receivables
Other financial assets
Property, plant, and equipment
Right-of-use assets
Intangible assets
Investment property
Deferred tax assets
Financial guarantee liabilities
Other financial liabilities
Provision for point card certificates
Provision for loss on interest repayments¥18,091

Thousands of U.S. dollars$22,394,182
92,197215,319
82,706
1,126,688
873,236
311,636
58,976
19,590943,717$135,479

The above amounts for "Trade and other receivables" and "Other financial assets" are net of theallowance for doubtful debts; the amounts are ¥71,498 million (U.S. $535,408 thousand) and ¥18 million(U.S. $140 thousand), respectively.
SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONSThe Group makes estimates and assumptions on future events in preparing the consolidated financial
statements in compliance with IFRS. Results of accounting estimates may differ from the related actual
results by nature. Estimates and assumptions with risks of significantly affecting the carrying amountsof assets and liabilities in the following fiscal year are as follows:
With regard to the impact of the coronavirus disease (COVID-19) infection, although the economy isexpected to continue to pick up as people learn to coexist with COVID-19, it is considered that theuncertainty remains. COVID-19 has various impacts, but particularly with regard to the credit risk onreceivables held by the Group, due to the repayment of effectively interest-free and unsecured loans
provided as a countermeasure against COVID-19 has started, the deterioration in cash flow was expected.
To appropriately reflect the impact on the collection rate, the Group calculates the expected negative
impacts on its operating performance under such scenarios. The Group adjusts accounting estimates,
such as the allowance for doubtful accounts, if the expected negative impacts relate to those estimates.
Although the Group believes that these estimates are best available at the time of preparation of theconsolidated financial statements, there is a high degree of uncertainty in the assumptions used in theestimates. In the event that COVID-19 accompanying changes in the economic situation occur in the
future, the estimates may be reviewed in the consolidated financial statements from the next fiscal year.
(a)

Impairment of financial assets measured at amortized cost and debt instruments measured at fairvalue through other comprehensive income (Allowance for doubtful accounts and financial guarantee
liabilities)
The Group recognizes expected credit losses for financial assets measured at amortized cost and debt
instruments measured at fair value through other comprehensive income as the present value ofdifferences between contractual future cash flows that it will receive in accordance with the contractand future cash flows that it expects to receive.
- 18 -

In estimating future cash flows, the Group takes into account not only historical information, such as
the possibility of default and the collection rate of receivables after default, but also reasonably
expected future events and other factors. Specifically, when various macroeconomic variables are
expected to deteriorate in the future and the probability of default of the Group's receivables is
expected to increase, the Group adjusts the probability of default by using macroeconomic variables,such as GDP and unemployment rate, which are correlated with expected credit losses. At eachreporting date, the Group obtains the most recent future forecast values for macroeconomic variables
and considers whether the estimate needs to be changed.
Regarding the probability of default, collection rate of receivables after default, forecast of economic
environment using macroeconomic variables, evaluation of correlation between macroeconomic
variables and expected credit losses, and the amount of impairment losses recognized for the financial
assets may substantially differ if assumed circumstances change.

(f)

Recoverability of deferred tax assets
Deferred tax assets and liabilities are recognized for temporary differences between the carrying
amounts of assets and liabilities in the consolidated statement of financial position and their tax bases.
Deferred tax assets and deferred tax liabilities are calculated using the tax rates expected to be
applicable at the time when the relevant deferred tax assets are realized or deferred tax liabilities aresettled in accordance with laws and regulations enacted or substantially enacted at the end of thereporting period. Deferred tax assets are recognized for all of the deductible temporary differences,
unused tax losses, and unused tax credits to the extent that it is probable that the Group will earnsufficient future taxable profit. Estimates of future taxable profit are based on subjective judgments
and assumptions made by the Group’s management, which are supported primarily by business plansapproved by management. The changes in assumed circumstances or amendment to tax laws in the
future may significantly affect the amounts of deferred tax assets and deferred tax liabilities.

(b) Provision for point card certificates
The Group offers a rewards program to its card holders (members) as the major benefit of holding acredit card. Under the program, card holders can exchange points earned based on the amount ofcredit card purchases for a variety of items. Points granted to members have no expiry date.
The Group recognizes a provision for point card certificates as a liability by estimating costs to be
incurred through the exchange of points in the future. To measure liability, the Group determines theestimated points to be exchanged in the future out of the outstanding number of points at the end of
the period, which is multiplied by a point unit value. The use of points by members involves
uncertainty. These estimates and assumptions may significantly affect provision amounts if assumed
circumstances change.
(c)Provision for loss on interest repayments
The Group recognizes a provision for loss on interest repayments at an amount required for future
claims by considering historical data on interest repayments. If such claims for interest repayments
unexpectedly increase or decrease due to a change in legal regulations or other reasons, the actual
amount of repayments may differ from the initial estimate, resulting in the over- or understatementof provision for loss on interest repayments.

(d) Impairment of non-financial assets
The Group conducts impairment testing for property, plant and equipment, intangible assets
including goodwill and investment property. In determining recoverable amounts through the
impairment test, the Group makes certain assumptions on useful lives of assets, future cash flows,
pretax discount rate, long-term growth rate, and other factors. These assumptions are determinedbased on management’s best estimates and judgments; however, the assumptions may be affected byresults of changes in uncertain economic conditions in the future. If the assumptions need to bereviewed, this may significantly affect amounts recognized in consolidated financial statements inthe following fiscal years.
(e)Financial instruments measured at fair value, including derivatives
The Group determines the value of financial assets and liabilities measured at fair value, including
derivatives, using the following: quoted prices in an active market for identical assets or liabilities;
fair values determined by using inputs other than the abovementioned quoted prices that are
observable for the assets and liabilities, either directly or indirectly; or fair values determined byusing valuation techniques that incorporate unobservable inputs. Among others, fair values
determined using valuation techniques that incorporate unobservable inputs are based on
management judgments and assumptions, including appropriate actuarial assumptions andcalculation models. These estimates and assumptions may significantly affect the fair values offinancial instruments if assumed circumstances change.
The details and amounts of fair values of financial instruments are stated in the note of financial
instruments.

- 19 -- 20 -

6. COMMITMENTS(NOTES TO CONSOLIDATED FINANCIAL STATEMENTS）
1. ACCUMULATED DEPRECIATION AND ACCUMULATED IMPAIRMENT LOSSES OF
PROPERTY, PLANT, AND EQUIPMENT
30,959Millions of yen

231,836
Thousands of U.S. dollars

2. ALLOWANCE FOR DOUBTFUL ACCOUNTS DEDUCTED DIRECTLY FROM ASSETS
Trade and other receivables

71,498Millions of yen
18
Millions of yen

Other financial assets

Trade and other receivables(Accounts receivable –installment)(Finance lease receivables)

304,148 Millions of yen

535,408
Thousands of U.S. dollars
140
Thousands of U.S. dollars

2,277,579 Thousands of
U.S. dollars
1,511 Millions of yen

Other financial assets(Guarantee deposits)

11,314 Thousands of
U.S. dollars

296,756 Millions of yen
2,222,232 Thousands of
U.S. dollars
603 Millions of yen

Other financial liabilities(Deposits received)

4,515 Thousands of
U.S. dollars
80 Millions of yen

Other financial liabilities(Advances received)

599 Thousands of
U.S. dollars
297,439 Millions of yen

305,659 Millions of yen
Total

2,288,894 Thousands of
U.S. dollars

Total

2,227,347 Thousands of
U.S. dollars"Long-term loans payable under securitized borrowings" are liabilities arising from the securitization of
instalment receivables and finance lease receivables.
"Guarantee deposits" are deposited as guarantee money for issuance, etc., in accordance with Article 141 of the Law Concerning Funds Settlement.
4. INVESTMENT SECURITIESInvestment securities of ¥1,504 million (U.S. $11,262 thousand) are subject to stock lending agreements.
5. CONTINGENCIES
Debt guarantee
Customers related to retail loans provided by partner financial
institutions
Customers related to loans with pictures pledged as collateral provided
by partner financial institutions
Customers related to rent guarantee business
Customers related to mortgage loans provided by partner financial
institutions
Customers related to housing loans provided by partner financial
institutions
Total- 21 -

Thousands of U.S. dollars$29,831,222
1,352,436$28,478,785

Regarding the contracts equivalent to loan commitments above, the majority are for cash advance
services that accompany credit card services furnished to the Company’s cardholders, and thus, not all
loan commitments will be taken out.

Liabilities related to collateral
Type
Ending Balance
Bonds and borrowings(Long-term borrowings)(Long-term loans payable
under securitizedborrowings)

Millions of yen¥3,983,661
180,604¥3,803,057

Total loan commitments
Balance of loans taken out
Net amount

3. ASSETS PLEDGED AS COLLATERAL AND LIABILITIES RELATED TO COLLATERAL
Assets pledged as collateral
Type
Ending Balance（Lender）
The Group provide cash advance and card loan services that accompany its credit card operations in
the Payment business. The amount of undrawn loans equivalent to loan commitments in the line ofcredit facility for the operations as well as for unconsolidated subsidiaries and associates is as follows:

Millions of yen

Thousands of
U.S. dollars¥215,751$1,615,634

26

196

226,669

1,697,393

196,895

1,474,431

7,176

53,736¥646,519$4,841,393(Borrower)
The Company enters into loan commitment contracts with five banks to finance working capitalefficiently.
The unused portion of the loan commitment under these contracts is as follows:
Millions of yen

Thousands of U.S. dollars$2,246,517－－$2,246,517¥300,000

Total amount of commitments
Borrowings made under the commitment¥300,000

Net amount(NOTES TO CONSOLIDATED STATEMENT OF INCOME）
BUSINESS PROFIT
Business profit is determined by adding or subtracting certain reconciliation items to or from profit before
tax.
Given the nature and frequency of income and expenses, reconciliations are determined based on ajudgement of whether they can help provide effective comparative information on the Group’s
performance and appropriately reflect how the businesses are managed.
The breakdown of reconciliations is as follows:
Reconciliations (Other income)Gain on valuation of investment securities (stocks,
etc.)
Gain on sale of fixed assets

Millions of yen

Thousands of U.S. dollars¥△616$△4,614△530△3,971△23△177

Gain on change in equity

△1

△8

Other

△60

△456

825
649
170
6

6,180
4,861
1,273
45

△276

△2,070

¥△67

$△503

Reconciliations (Other expenses)

Impairment losses on non-financial assets
Loss on disposal of fixed assets
Other
Adjustments for the application of the effective interest
method to financial assets(*)
Total* Mainly reversal of effective interest rate adjustments, such as loan administration fees and transaction costs.

(NOTES TO CONSOLIDATED STATEMENT OF CHANGES IN EQUITY）
1. TYPE AND NUMBER OF SHARES ISSUED AS OF MARCH 31, 2023
Common stock

185,444,772 shares- 22 -

2. DIVIDENDS⑴⑶

Dividends paid
Resolution

Class ofsharesOrdinary general
meeting of shareholders
held on June 22, 2022

Commonstock⑵

Total amount of dividends(Millions of yen)*Thousands of U.S. dollars¥8,600*$64,404

Dividends per
Recordshare (Yen)
Effective date
date
*U.S. dollars¥55*$0.41 March 31, 2022 June 23, 2022

Dividends with an effective date falling in the following fiscal year are as follows:

Resolution (planned)

Class ofsharesOrdinary general
meeting of shareholders
held on June 21, 2023

Total amount ofdividends
Resource of(Millions of yen)
dividends*Thousands ofU.S.
dollars

Commonstock

Retainedearnings¥10,948*$81,986

Dividends per
share (Yen)*U.S. dollars

Record date

Effective date¥70 March 31, 2023 June 22, 2023*$0.52(NOTES TO FINANCIAL INSTRUMENTS)
1. STATUS OF FINANCIAL INSTRUMENTS⑴

Policy on financial instruments
The Group is engaged in the Payment business, Lease business, Finance business, Real estate-related
business, and Entertainment business. While considering market forces and the balance of short-termand long-term borrowings, the Group utilizes both indirect financing through bank borrowings anddirect financing through the issuance of bonds and commercial papers as well as securitization ofreceivables to operate businesses in each segment. As the Group is significantly affected by interest
rate fluctuations, the Group mitigates interest rate risks by promoting the use of Asset-Liability
Management(ALM), which is the practice of managing assets and liabilities in a comprehensive
manner. For the same purpose, the Group also enters into derivative transactions, such as interest rate
swaps.

⑵

Description of financial instruments and risks
Financial assets of the Group are mainly composed of accounts receivable – installment from its card
members. The Group is exposed to credit risks mainly when the repayment ability of credit card
members deteriorates. The majority of accounts receivable – installment as of March 31, 2023,
resulted from the Payment business. Changes in economic environment surrounding the business,such as labor conditions, household disposable income, and consumer spending due to recession,
may hinder card members from fulfilling their obligations in accordance with contract terms andconditions.
The Group’s (operational) investment securities mainly consist of stocks, investment trusts, andinvestments in partnerships, which are held for the purpose of pure investment and businesspromotion.
The Group is exposed to liquidity risk, which represents the risk that it cannot fulfil the repayment
obligation when due for interest-bearing debts, such as borrowings, bonds and commercial papers,
under certain circumstances. For example, a greater-than-expected change might be seen in financial
markets or the Group might not be able to participate in markets due to a downgrade of the Group’s
credit rating. In addition, the Group has borrowings with floating interest rates, which expose it to
the risk of interest rate fluctuations, but some of these borrowings are hedged against this risk byinterest rate swap transactions.
Derivative transactions include interest rate swap transactions conducted as a part of ALM. The
Group applies hedge accounting to these hedging instruments for interest rate fluctuation risks
associated with borrowings that are hedged items.

- 23 -

Risk management system for financial instruments① Credit risk management
The Group strives for continuous improvement in the quality of receivables and develops andoperates a system related to credit control, such as credit limits, credit information control, andinternal ratings, in accordance with the Company’s internal rules for credit risk management. The
Group periodically holds Board of Directors and other relevant meetings to discuss and report thestatus of credit controls. The ALM Committee is responsible for the management of (operational)
investment securities by regularly obtaining credit and fair value information. Long-term loans
receivable are regularly monitored at the level of each department for borrowers’ credit risk andother risks. In dealing with counterparty risk in derivative transactions, in order to avoid credit
risk that arises from default, the Group contracts with domestic and foreign banks and securities
companies with high creditworthiness.
② Market risks management(i) Interest rate risk management
The Group manages interest rate fluctuation risks through ALM. Methods and procedures for risk
management are stated under internal rules for ALM. Based on the policy determined by the
ALM Committee, the Board of Directors understands the implementation status and discusses
matters to be addressed. The relevant departments regularly review the overall status of interest
rates and terms of financial assets and liabilities and monitor them through sensitivity (gap)analysis and other measures. Through ALM, the Group also enters into derivative transactions forinterest rate swaps to hedge interest rate fluctuation risks.
(ⅱ) Price fluctuation risk management
Based on the ALM policy, the Group mitigates price fluctuation risks of investment products,
including (operational)investment securities by implementing preliminary investigations, setting
a cap on investment amounts, and also implementing ongoing monitoring for potential
investments. Additionally, stocks held for the purpose of promoting business through business orcapital alliances are monitored by relevant departments of the Group for issuers’ market
environments, financial conditions, and other risk factors.
Relevant departments are responsible for regularly reporting to the ALM Committee and othermanagement.
(iii) Derivative transactions
Regarding the derivative transactions, relevant departments are responsible for executing
derivative transactions in accordance with procedures specified in internal control regulations
stipulated by the Board of Directors, and the total transaction limit and the range of the hedge
ratios are authorized by the Board of Directors in advance. The status of major derivativetransactions is reported to the Board of Directors on a quarterly basis.
Consolidated subsidiaries enter into derivative transactions in accordance with control
regulations stipulated by each subsidiary. Subsidiaries are required to report to the Company on aquarterly basis regarding the hedging relationships between derivatives and corresponding
receivables/payables, counterparties, transaction amounts, remaining periods, and the fair valuesof transactions.
(iv) Quantitative information about market risk
Financial instruments affected by interest rate risk, the main risk variable of the Group, mainly
consist of trade and other receivables, bonds and borrowings, and interest rate swap transactions.
Quantitative analysis for the management of interest rate fluctuation risks for such financial
assets and liabilities is conducted by reasonably estimating changes in interest rates over the next
year or so after the end of the reporting period and the effect on profit or loss for the year due tothe change. To determine the effect on profit or loss, the Group classifies financial assets andliabilities into those with fixed interest rates and those with floating interest rates and takes thedifference between floating rate assets and floating rate liabilities to calculate an interest rate gap.
Assuming that all risk variables other than interest rates remain constant, when the benchmark
interest rate as of March 31, 2023, rises by one basis point (0.01%), profit before tax for the fiscal
year ended March 31, 2023, would increase by ¥7 million (U.S. $51 thousand), and conversely,
when the benchmark interest rate falls by one basis point (0.01%), profit before tax for the fiscal- 24 -

year ended March 31, 2023, would decrease by ¥7 million (U.S. $51 thousand). The effectassumes that risk variables other than interest rates remain constant and that there are nocorrelations between interest rates and other risk variables. When actual interest rates go beyond
the reasonably estimated range, it could have a greater impact on profit or loss compared to theestimated amount.
③ Liquidity risk management related to financing
The Group manages liquidity risks through ALM to implement timely cash management,
diversify financing methods, obtain commitment lines from multiple financial institutions, andbalance short-term and long-term borrowings in consideration of market forces.
⑷

Supplementary explanation of matters concerning fair value of financial instruments
The fair values of financial instruments include values based on quoted market prices and also
include reasonably estimated values in case there are no quoted market prices. Since certain
assumptions are used in the calculation of such values, the values may differ if different
assumptions are used. In addition, the contract amounts of derivative transactions in "2. Fair Valueof Financial Instruments" do not indicate the market risk associated with derivative transactions.

2. MATTERS RELATED TO THE FAIR VALUE OF FINANCIAL INSTRUMENTS
Classification based on fair value hierarchy
The Group analyses financial assets and financial liabilities measured at fair value or those whose
fair value is disclosed in the notes. The following shows the classification of fair value from Level
1 to Level 3 based on the fair value hierarchy.

The fair value calculation does not incorporate future interest repayments.
(b) Finance lease receivables
The fair value of finance lease receivables is determined by estimating future cash flows of theprincipal and interests arising from respective lease periods and subtracting debtor’s credit risk,
which is then discounted using a risk-free market rate.
3) Operational investment securities and investment securities
The fair value of operational investment securities and investment securities is determined as follows:
listed stocks are valued at prices on the stock exchanges; bonds are valued at prices on the exchange
markets or information provided by counterpart financial institutions, or at prices that are reasonably
calculated based on the value of underlying assets; and investment trusts are based on the disclosed
net asset value. The fair value of investments in limited liability investment partnerships and similar
partnerships is deemed to be the amount proportionate to the Group’s share of equity interests, which
is determined based on the fair value of assets belonging to the partnership as long as they can be fairvalued. The fair value of unlisted stocks is calculated by using valuation techniques based on
discounted cash flow, transactions and the market price of comparable companies. When determining
the fair value of unlisted stocks, unobservable inputs, such as weighted-average cost of capital, priceearnings ratio, and price-book value ratio, are used.

Level 1:

Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2:

Fair value, other than Level 1, that is determined by directly or indirectly using theobservable price4) Other financial assets
Derivatives and short-term investments, as financial assets or liabilities measured at fair value throughprofit or loss, are calculated based on prices quoted by counterparty financial institutions. Financial
assets other than derivatives and short-term investments are stated at that carrying amount since theseare settled in a short period of time and the carrying amount approximates the fair value.

Level 3:

Fair value determined by using valuation techniques that incorporate unobservable
inputsLiabilities

The levels under the fair value hierarchy are defined as follows:⑴ Fair Value Calculation Methodology
The fair value of financial instruments is calculated as follows:
Assets1)that the carrying amount approximates the fair value based on expected repayment periods andinterest rate terms.

Cash and cash equivalents
As cash and cash equivalents have short maturities, and the carrying amount approximates the fairvalue, the amounts are stated at that carrying amount.

2) Trade and other receivables(a) Accounts receivable – installment
Accounts receivable – installment with variable interest rates reflect market interest rates in the
short term and are stated at carrying amount given that the carrying amount approximates the fairvalue, unless the credit status of debtors changes significantly in later periods. In contrast, the fairvalue is determined for accounts receivable – installment with fixed interest rates by discounting
credit risk-adjusted future cash flows from the group of financial assets classified by the type ofloans and maturity terms, using a risk-free market interest rate. The fair value of certain delinquent
receivables is measured by deducting the estimated amount of loss allowance from the carrying
amount of receivables at the end of the reporting period, assuming that the calculated amountapproximates the fair value.
The fair value of certain receivables without a due date but with other limitations, such as limiting
the loan amount to the value of collateralized asset, is measured at the carrying amount, assuming- 25 -

1) Trade and other payables
Trade and other payables are stated at carrying amount as the carrying amount approximates the fairvalue due to the short settlement period.
2) Bonds and borrowings(a) Short-term loans payable
Short-term loans payable are stated at the carrying amount as the carrying amount approximates thefair value due to the short settlement period.
(b) Commercial papers
Commercial papers are stated at the carrying amount as the carrying amount approximates the fairvalue due to the short settlement period.
(c) Long-term loans payable
Long-term loans payable with variable interest rates only take a change in credit spread into accountas variable interest rates reflect market interest rates in a short period. The current credit spread isdetermined by referring to a credit spread that would be offered by financial institutions if the Group
were to newly obtain finance with similar terms and conditions for the average remaining maturity
for the outstanding borrowings. To calculate the difference between the carrying amount and thefair value, the Group calculates the fair value by first compartmentalizing the differences of interest
arising from fluctuation of the credit spread by certain period of time, and then discounting them at
risk-free market interest rates corresponding to each period of time. The fair value of long-termloans payable with fixed interest rates is determined by discounting the aggregate amount ofprincipal and interest of the long-term loans compartmentalized by certain periods of time at interest- 26 -

rates that would be offered for similar borrowings.

(2)

Financial instruments measured at fair value
Financial instruments measured at fair value and the breakdown by level of the fair value hierarchy are
as follows:(d) Bonds
The fair value of public offering bonds issued by the Company is measured based on the market
price, which is the Reference Statistical Prices (Yields) for Over-the-Counter Bond Transactions
issued by the Japan Securities Dealers Association. As private placement bonds issued by theCompany are those subscribed privately by its main banks, the fair value is calculated in the same
way as described in “(c) Long-term loans payable.”

AssetsMeasured at fair value throughprofit or loss
Trade and other receivables
Operational investment
securities
Investment securities
Other financial assets
Equity instruments measured atfair value through othercomprehensive income
Investment securities
Debt instruments measured atfair value through othercomprehensive income
Trade and other receivables
Total
Liabilities
Measured at fair value throughprofit or loss
Other financial liabilities
Total(e) Long-term loans payable under securitized borrowings
Long-term loans payable under securitized borrowings will not be affected by ups and downs in the
Company’s creditworthiness; therefore, the fair value measurement of such payables only takes into
account changes in market interest rates. The fair value of Long-term loans payable under
securitized borrowings is determined by discounting the aggregate amount of principal and interestsof the borrowings compartmentalized by certain periods of time at interest rates that would beoffered for similar borrowings.
3) Other financial liabilities
In regard to derivatives, they are stated in "Assets 4) Other financial assets". For liabilities other thanderivatives, since these are settled in a short period of time, the carrying amount approximates thefair value, and is therefore stated at that carrying amount.
4) Financial guarantee liabilities
The fair value of financial guarantee liabilities is determined by discounting future cash outflows forguarantees to be provided under financial guarantee contracts, which is adjusted by debtor’s credit
risk.
The amount of financial guarantee contracts classified as contingent liabilities is ¥654,395 million(U.S. $4,900,369 thousand). The liability amount recognized in the consolidated statement offinancial position is ¥7,875 million (U.S. $58,976 thousand) and the fair value is ¥23,257 million(U.S. $174,161 thousand) (asset).

AssetsMeasured at fair value throughprofit or loss
Trade and other receivables
Operational investment
securities
Investment securities
Other financial assets
Equity instruments measured atfair value through othercomprehensive income
Investment securities
Debt instruments measured atfair value through othercomprehensive income
Trade and other receivables
Total
Liabilities
Measured at fair value throughprofit or loss
Other financial liabilities
Total

(3)

Level 1

Level 2

(Millions of yen)
Total

Level 3¥–

¥15,171¥–¥15,171–70

62,45062,521

–
–

4,047
3,250

20,910–24,9573,250

42,6586,029

749

49,437–42,658–28,5692,656
86,766

2,656
157,995

–
¥–

2,616
¥2,616–¥–2,616¥2,616

Level 1

Level 2$–

Level 3(Thousands of U.S. dollars)
Total$113,610
530$–
467,651$113,610
468,181––30,30624,344

156,584–

186,890
24,344319,445

45,1505,612

370,208–
319,445–
213,942

19,894
649,742

19,894
1,183,130–$–

19,590$19,590–$–

19,590$19,590–

Quantitative information on financial instruments classified as Level 3
Significant unobservable inputs used to measure the fair value of financial instruments classified as
Level 3 are as follows:- 27 -- 28 -

Measured at fair value throughprofit or loss
Operational investment
securities

Investment securities

Fair value(Millions ofyen)

Fair value(Thousands of
U.S. dollars)¥56,090$420,028

19,968

149,530

2,656

19,894

Measured at fair value throughother comprehensive income
Trade and other receivables

Valuationtechniques

Unobservable
inputsCapitalization
3.2% – 5.2%
rate––
weighted
3.65% –
Discounted cash
average cost of
10.31%
flow
capital (WACC)
price-earnings
10.6 – 23.6
ratio (PER)
Market prices ofcomparable
price bookcompanies
value ratio
0.9 – 2.2
(PBR)
Net asset value––
Discounted cashflow
Net asset value

2.98% –
12.17%–

Discount rate

(5)

Reconciliation of financial instruments classified as Level 3 from the beginning to the end of the period(Millions of yen)Total
¥72,935
8,933
8,934
△1
19,896△15,365△96
462
86,766

Total

Valuation processes
Valuations and procedures to determine the fair value of financial instruments classified as Level 3
are undertaken by the Group’s independent administrative division, which is responsible forregularly checking the details of investees’ businesses, the availability of their business plans, andcomparable listed companies to determine whether fair value measurements, including valuation
models, are appropriate.

The reconciliation of financial instruments measured at fair value classified as Level 3 is as follows:
Financial assets measured Financial assets measured
at fair value through profit at fair value through otheror loss
comprehensive income
Balance at beginning of period¥69,495¥3,439Total gains and losses
8,915
18
Profit or loss (Note 1)
8,915
19
Other comprehensive income–△1
Purchases
19,746150△15,163△201
Sales
Transfer from Level 3 (Note 2)△96–
Others462–
Balance at end of period
83,3603,406
Change in unrealized gains orlosses for the period included in
△169
5,347
profit or loss for assets held at
the end of the reporting period(Note 1)(Thousands of U.S. dollars)

Balance at beginning of$520,410$25,755$546,165
periodTotal gains and losses
66,760138
66,898
Profit or loss (Note 1)
66,760148
66,908Other comprehensive△9△9–
incomePurchases
147,871
1,123
148,994
Sales△113,548△1,510△115,059
Transfer from Level 3
△723
–
△723
(Note 2)
Other
3,465
–
3,465
Balance at end of period
624,235
25,506
649,742
Change in unrealized gains
or losses for the period
40,045△1,27038,775included in profit or loss for
assets held at the end of thereporting period (Note 1)(Notes) 1. The amounts are included in “Revenue from the payment business,” “Revenue from the financebusiness,” “Revenue from the real estate-related business,” “Other income,” as well as “Impairment
losses on financial assets” and “Other expenses” per the consolidated statement of income.
2. The transfer from Level 3 is due to the availability of observable data as a result of the listing.

Capitalization
methodNet asset value

Investment securities
749
5,612
–
Total
¥79,465$595,065(Notes) 1. Operational investment securities are mainly composed of investments in funds for real estate.
2. Investment securities are mainly composed of unlisted stocks and investments in funds for unlisted
stocks.
3. In addition to the valuation techniques in the table above, some issues are measured by the transaction
case method, etc.

(4)Financial assets measured Financial assets measured at
at fair value through profit
fair value through otheror loss
comprehensive income

Range

(6)

Sensitivity analysis of fair value measurement classified as Level 3
Fair value measurements classified as Level 3 are conducted using valuation techniques based on
inputs, such as prices and rates, whose fair values are not observable in the market. The following
sensitivity analysis shows the effect on profit or loss and other comprehensive income for changes
in unobservable inputs within a reasonably possible range, which are used to measure the fair valueof financial assets classified as Level 3 in the consolidated statement of financial position.
Sensitivity analysis is conducted by taking into account the type of financial instruments and market
conditions at the time of analysis. Changes in significant assumptions for each valuation technique
are set as follows:
・ Capitalization method: Capitalization rate changes within the range of plus/minus 0.5%
・ Discounted cash flow method: WACC changes within the range of plus/minus 1%

5,178

・ Market price of comparable companies: PBR and PER change within the range of plus/minus 0.1
and plus/minus 1.0, respectively
When fair values of operational investment securities, investment securities, and trade and otherreceivables classified as Level 3 are measured through a valuation technique other than the above
using reasonably possible alternative assumptions for unobservable inputs, such fair values would not
be included in the table below if the change in fair value is not material.

- 29 -- 30 -

Total fair value
Measured at fair value
through profit or loss
Operational investment
securities
Investment securities

Impact on profit or loss
FavorablechangesUnfavorable
changes(Millions of yen)
Impact on other comprehensive
incomeFavorable
Unfavorable
changeschanges¥6,503¥2,387¥ △1,867

¥–

¥–

7,815

1,374

△1,035––(NOTES TO INVESTMENT PROPERTY)
1. STATUS OF INVESTMENT PROPERTYThe Company and some of its consolidated subsidiaries have investment property in Tokyo and otherareas.
2. FAIR VALUE OF INVESTMENT PROPERTY
Millions of yen

Total fair value
Measured at fair value
through profit or loss
Operational investment
securities
Investment securities(7)

Impact on profit or loss
FavorablechangesUnfavorable
changes(Thousands of U.S. dollars)
Impact on other comprehensive
incomeFavorable
Unfavorable
changeschangesThousands of U.S. dollars¥116,612¥150,146

Carrying amount
Fair value（Note）⒈The carrying amount recorded in the consolidated statement of financial position is acquisition cost lessaccumulated depreciation and accumulated impairment losses.

⒉Fair value at the end of the period is mainly determined by the Group, which refers to the Real Estate Appraisal

Standard (and the appraisal value is adjusted using indicators as necessary).

$48,700$17,878$△13,981$–$–

58,525

10,295△7,751––(NOTES TO REVENUE RECOGNITION)
1. BREAKDOWN OF REVENUE
The breakdown of revenue recognized from contracts with customers and other sources is as follows:

Financial instruments that are not measured at fair value
Fair value of financial instruments that are not measured at fair value and the fair value hierarchy bylevel is as follows. Financial instruments whose carrying amounts approximate fair value are notincluded in the table below.

Level 1

Level 2

Fair value
Level 3

Total

(Millions of yen)
Total carrying
amountAssetsTrade and other receivables¥–¥1,926,471¥1,102,371¥3,028,843¥2,972,690

Total

–

1,926,471

1,102,371

3,028,843

2,972,690

Liabilities(Millions of yen)

Income from the payment business

Revenue recognizedfrom contracts withcustomers

Revenue recognizedfrom other sources–

Bonds and borrowings
Total

–

△23,257△23,257¥139,770¥89,566¥229,336–

12,04812,048

Income from the finance business
Revenue from the real estate-related
business
Revenue from the entertainment business–

50,75450,75452,492

6,222

58,71530,807–30,807

–

877

877

¥223,070¥159,470¥382,540

Revenue recognizedfrom contracts withcustomers

Revenue recognizedfrom other sources–

2,796,043–

2,796,043

2,805,175¥2,796,043¥ △23,257¥2,772,785¥2,813,051(Thousands of U.S. dollars)
Total carrying
amountTotal

Fair value
Level 2
Level 3

Level 1

Total

7,875

¥–

AssetsTrade and other receivables$–$14,426,179$8,254,992$22,681,172$22,260,677

Total

–

14,426,179

8,254,992

22,681,172

22,260,677(Thousands of U.S. dollars)

Income from the payment business

Financial guarantee
liabilities (assets)–

Bonds and borrowings

–
$–

–

△174,161△174,161

58,976

20,937,870–

20,937,870

21,006,256$20,937,870$△174,161$20,763,709$21,065,232- 31 -

Total$1,046,652$670,711

Income from the lease business–

90,22390,223

Income from the finance business
Revenue from the real estate-related
business
Revenue from the entertainment business–

380,070

380,070

393,085

46,597

439,683

230,702–230,702

–

6,571

6,571

$1,670,441$1,194,174$2,864,615

Finance income

Liabilities

Total

Income from the lease business

Finance income

Financial guarantee
liabilities (assets)

Total$873,236$1,124,353

Total$1,717,364

Revenue recognized from other sources includes interest and dividend income based on IFRS 9 andlease income based on IFRS 16.

- 32 -

Interest and dividend income is recognized as revenue in accordance with IFRS 9, and income from theLease business, and also from real estate rentals in the Real estate-related business, is recognized asrevenue in accordance with IFRS 16. Revenue recognized in accordance with IFRS 9 amounted to¥144,282 million (U.S. $1,080,447 thousand) for FY2022. Revenue recognized in accordance with IFRS
16 amounted to ¥15,187 million (U.S. $113,727 thousand) for FY2022.
2. CONTRACT BALANCE
The breakdown of contract balances is as follows:
Thousands of
U.S. dollars

Millions of yen
Beginning of
period(April 1, 2022)

End ofperiod(March 31, 2023)

Beginning of
period(April 1, 2022)

End ofperiod(March 31, 2023)¥103,824¥110,342$777,475$826,286

8,437

8,651

63,18464,784

Receivables arising fromcontracts with customers
Trade and other receivables
Contract liabilities

Contract liabilities mainly represent a deferred portion of annual membership fees. The amounts ofrevenue recognized in FY2022 that was included in the beginning balance of contract liabilities were
¥6,342 million (U.S. $47,495 thousand).
None of the revenue recognized in FY2022 arose from performance obligations satisfied (or partiallysatisfied) in previous periods.
3.

TRANSACTION PRICE ALLOCATED TO REMAINING PERFORMANCE OBLIGATIONSThe Group has adopted a practical expedient and omitted information on remaining performanceobligations, given that there were no significant transactions for which an individual estimatedcontract period exceeds one year.

(NOTES TO EARNINGS PER SHARE)⒈ EQUITY ATTRIBUTABLE TO OWNERS (Yen)
OF PARENT PER SHARE*U.S. dollars⒉ BASIC EARNINGS PER SHARE(Yen)*U.S. dollars¥3,827.22$28.66¥278.92$2.09(NOTES TO SIGNIFICANT SUBSEQUENT EVENTS)
On April 17, 2023, the Group sold its interest in a silent partnership, which was included in "Assets held
for sale" in the consolidated statement of financial position for the fiscal year ended March 31, 2023. It is
expected to have a gain of ¥3,920 million (U.S. $29,354 thousand) from this sale and will be recorded asother income in the consolidated statement of income for the fiscal year ending March 2024.

- 33 -

(TRANSLATION)(TRANSLATION)
INDEPENDENT AUDITOR'S REPORTMay 12, 2023

In connection with our audit of the consolidated financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent with theconsolidated financial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact. We have nothing to report in this regard.

To the Board of Directors of
Credit Saison Co., Ltd.:
Deloitte Touche Tohmatsu LLC
Tokyo office
Designated Engagement Partner,
Certified Public Accountant:
Mitsuo Kimura
Designated Engagement Partner,
Certified Public Accountant:
Takahisa Kudo
OpinionPursuant to the fourth paragraph of Article 444 of the Companies Act, we have audited the consolidated
financial statements of Credit Saison Co., Ltd. and its consolidated subsidiaries (the "Group"), namely, theconsolidated statement of financial position as of March 31, 2023, and the consolidated statement ofincome and consolidated statement of changes in equity for the fiscal year from April 1, 2022 to March 31,
2023, and the related notes.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the consolidated financial position of the Group as of March 31, 2023, and its consolidated financial
performance for the year then ended in accordance with accounting standards prescribed pursuant to theprovisions of the second sentence of the first paragraph of Article 120 of the Ordinance on Company
Accounting that omit a part of the disclosures required under International Financial Reporting Standards.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of
the Consolidated Financial Statements section of our report. We are independent of the Group inaccordance with the provisions of the Code of Professional Ethics in Japan, and we have fulfilled our otherethical responsibilities as auditors. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
Other Information
Management is responsible for the other information. Audit & Supervisory Board members and the Audit &Supervisory Board are responsible for overseeing the Directors' execution of duties relating to the designand operating effectiveness of the controls over the other information. The other information comprises theinformation included in the Business Report and the accompanying supplemental schedules.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.

-1-

Responsibilities of Management and Audit & Supervisory Board Members and the Audit &Supervisory Board for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with accounting standards prescribed pursuant to the provisions of the second
sentence of the first paragraph of Article 120 of the Ordinance on Company Accounting that omit a part ofthe disclosures required under International Financial Reporting Standards, and for such internal control as
management determines is necessary to enable the preparation of consolidated financial statements thatare free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group's
ability to continue as a going concern, disclosing, as applicable, matters related to going concern inaccordance with accounting standards prescribed pursuant to the provisions of the second sentence of thefirst paragraph of Article 120 of the Ordinance on Company Accounting that omit a part of the disclosuresrequired under International Financial Reporting Standards.
Audit & Supervisory Board members and the Audit & Supervisory Board are responsible for overseeing the
Directors' execution of duties relating to the design and operating effectiveness of the controls over theGroup's financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's reportthat includes our opinion. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions ofusers taken on the basis of these consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:• Identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks. The procedures
selected depend on the auditor's judgment. In addition, we obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion.
• Obtain, when performing risk assessment procedures, an understanding of internal control relevant tothe audit in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Group's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Group's ability to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in our auditor's report to therelated disclosures in the consolidated financial statements or, if such disclosures are inadequate, tomodify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However, future events or conditions may cause the Group to cease to continue as agoing concern.

-2-

(TRANSLATION)• Evaluate whether the overall presentation and disclosures of the consolidated financial statements are inaccordance with accounting standards prescribed pursuant to the provisions of the second sentence ofthe first paragraph of Article 120 of the Ordinance on Company Accounting that omit a part of thedisclosures required under International Financial Reporting Standards, as well as the overall
presentation, structure and content of the consolidated financial statements, including the disclosures,and whether the consolidated financial statements represent the underlying transactions and events in amanner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the Group to express an opinion on the consolidated financial statements. We areresponsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with Audit & Supervisory Board members and the Audit & Supervisory Board regarding,among other matters, the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We also provide Audit & Supervisory Board members and the Audit & Supervisory Board with a statementthat we have complied with relevant ethical requirements regarding independence, and communicate withthem all relationships and other matters that may reasonably be thought to bear on our independence, andwhere applicable, related safeguards.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required tobe disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

Notes to the Readers of Independent Auditor's Report
This is an English translation of the independent auditor's report as required by the Companies Act ofJapan for the conveniences of the reader. The other information in "the Business Report and theaccompanying supplemental schedules" referred to in the "Other Information" section of this English
translation is not translated.

-3-