■Financial results trends for Fuyo General Lease ＜8424＞

(2) Energy environment (AT field)

The balance of operating assets at the end of the 2024/3 fiscal year expanded greatly to 182 billion yen (55.8 billion yen increase from the end of the previous fiscal year), while ROA fell to 1.1% (1.9% in the previous fiscal year), and ordinary profit declined to 1.7 billion yen (down 0.4 billion yen from the previous fiscal year). Note, the reason for the decline in profit is that in addition to rising interest rates on foreign currency, costs associated with business domain expansion took precedence. Renewable energy has grown significantly due to collaboration with global players, such as offshore wind power generation businesses in the UK and renewable energy funds (solar, wind, hydropower, etc.) in the European Economic Area. Also, “renewable energy generation capacity,” which is a non-financial target, is growing steadily to 705 MW (190 MW increase compared to the end of the previous fiscal year) *1. In terms of activities, in addition to establishing a local subsidiary in the UK (London) to expand business in Europe, where there are plenty of investment opportunities, efforts with new alliances have also expanded ※2. Also, domestically, in addition to participating in large-scale system storage battery-related business*3 as a joint project with Daiwa Energy Infrastructure Co., Ltd. and Astmax ＜7162＞, we were able to leave certain results in new areas such as secondary energy, such as working on offsite corporate PPA*4 through joint projects with the Toda Construction Group and the Enaris Group.

*1 Including projects under development, it has greatly expanded to 995 MW (338 MW increase compared to the end of the previous fiscal year), and achievement of the medium-term management plan target value (1,000 MW) is also visible.

*2 We invested in a renewable energy development loan fund operated by Copenhagen Infrastructure Partner, which has the world's largest assets under management in the renewable energy sector. As an overseas alliance destination following Equitix Investment Management Ltd. and Aquila Capital Holding GmbH, it seems that collaboration on individual projects is also anticipated through strengthened cooperation.

*3 This is a business aimed at stabilizing power systems, and after the start of operation in fiscal 2025, it is planned to carry out transactions in the wholesale power market, supply-demand adjustment market, and capacity market based on market predictions, etc. using AI.

*4 It is an initiative where operators install renewable energy power generation facilities outside the consumer's site, and power supply to the resort hotel “Marissa Resort Southern Seto Suo-Oshima” operated by Towa Tourism Development Co., Ltd. of the Toda Construction Group has begun.

(3) BPO/ICT (AT field)

Ordinary income for the fiscal year ending 2024/3 increased to 4.4 billion yen (up 0.9 billion yen from the previous fiscal year). The intake of demand related to the invoice system and the Telegraph Act contributed to an increase in profits. Also, it seems that orders for PC rentals etc. are expanding against the backdrop of PC replacement demand in anticipation of the end of support for Windows 10. Going forward, it is our policy to increase profitability by expanding consulting capabilities through group synergy and improving work efficiency through the use of AI, etc. Meanwhile, the “customer workload reduction time (compared to the fiscal year ending 2022/3),” which is a non-financial target, is progressing steadily at 0.49 million hours (0.18 million hours in the previous fiscal year) (target value of the medium-term management plan is 1 million hours). Also, in terms of activities, in addition to the conclusion of business agreements*1 aimed at utilizing AI technology, various movements*2 have also become active in intra-group collaborations.

*1 In order to provide high-value-added BPO services utilizing AI, we have concluded a business agreement with Akiko, which provides DX solutions utilizing algorithms and AI technology, and are jointly implementing multiple internal and external PoC (proof of concept) aimed at promoting DX (partial implementation).

*2 Cooperation with WorkVision for system implementation needs associated with the invoice system and telegraph law revisions.

(4) Healthcare (AT field)

The balance of operating assets at the end of the 2024/3 fiscal year was sluggish at 87.4 billion yen (down 0.5 billion yen from the end of the previous fiscal year). Meanwhile, ROA improved slightly to 2.1% (2.0% in the previous fiscal year), and ordinary profit remained flat at 1.8 billion yen. One of the reasons why the accumulation of medical/nursing care compensation claim factoring did not progress due to satisfaction of funding needs through financial support from the government, etc., is one of the reasons why it stagnated. However, since repayment of COVID-19 loans by welfare and medical institutions will begin in earnest from 2025, demand for funds is expected to expand in the future. Meanwhile, “nursing homes for the elderly (number of newly provided rooms),” which is one of the non-financial targets, increased to 763 rooms (210 rooms increase compared to the end of the previous fiscal year) (medium-term management plan target value is 1,330 rooms). In terms of activities, we also worked on the execution of the No. 1 project*1 by a region-specific health care fund formed in collaboration with 77 Bank ＜8341＞ and the Japan Management Group, and the launch of the dental hygienist recruitment service business*2 by SFC.

*1 It provides support using a real estate securitization scheme for the rebuilding of hospital facilities promoted by medical corporations in Fukushima Prefecture.

*2 This is a recruitment service that matches dental clinics suffering from a shortage of dental hygienists with dental hygienists who want to achieve flexible work styles. The policy is to work on solving dental clinic issues by utilizing SFC's business infrastructure, which has a track record of transactions with approximately 40% of dental clinics nationwide and has a high industry share.

(5) Real estate (GP field)

Operating asset balances at the end of the 2024/3 fiscal year expanded to 1093.9 billion yen (up 63.4 billion yen from the end of the previous fiscal year), and since ROA also improved to 2.9% (2.3% in the previous fiscal year), ordinary profit increased significantly to 31.2 billion yen (up 9 billion yen from the previous fiscal year). The accumulation of assets from the previous fiscal year and the recording of large sales gains contributed to a significant increase in profit. Also, due to collaboration with partner companies and inquiries from a wide range of deal sources, asset accumulation is progressing at a pace that exceeds expectations. We will continue to quickly grasp changes in the environment surrounding the real estate market and aim to capture projects that are aware of risk and return.

(6) Aircraft (GP field)

Operating asset balances at the end of the 2024/3 fiscal year expanded significantly to 307.9 billion yen (up 80.8 billion yen from the end of the previous fiscal year), while ROA declined slightly to 1.9% (2.0% in the previous fiscal year) due to recording impairment losses due to conservative judgments, etc. Ordinary income increased to 5.1 billion yen (up 0.9 billion yen from the previous fiscal year). The fact that the number of “company-owned aircraft” was 58 (increase of 9 aircraft at the end of the previous fiscal year), and the steady accumulation of others (management aircraft, etc.) to 57 aircraft (same increase of 2 aircraft), and normalization of lease fee collection from airlines also progressed, contributed to a significant increase in profit. In response to a recovery in passenger demand, the environment for receiving orders from airlines is good, and a further increase in the number of aircraft is expected. In terms of activities, we are continuing to build high-quality portfolios through project selection, and we are working to further improve profitability by promoting a revolving business that performs agile aircraft sales through a wide range of approaches to domestic and international lessors and investors.

5. Summary for the fiscal year ending 2024/3

Summarizing the fiscal year ending 2024/3, although there was an increase in volume due to special factors such as recording large sales gains and a temporary decrease in retirement benefit costs, in addition to continuously updating record highs even on a performance value basis excluding these, efforts aimed at further business expansion are progressing smoothly in various fields for the future, and it can be said that it is a result that can be evaluated in both quantitative and qualitative terms. In particular, in the “energy environment,” the place where the overseas renewable energy business is expanding drastically, the construction of a new business model in the EV area in “mobility,” and even global expansion in the logistics area, etc. can be evaluated as efforts that make people feel upside potential beyond the boundaries of conventional markets. Also, in terms of activities, movements toward business expansion have accelerated in various fields due to collaboration with domestic and international partner companies, etc. On the other hand, although changes on the procurement side, such as an increase in foreign currency procurement due to the accumulation of overseas assets and a preconceived view of domestic interest rates, are not regarded as major factors of fluctuation in business performance, it is necessary to pay attention to future trends.

(Written by FISCO Visiting Analyst Ikuo Shibata)