イー・ギャランティ（8771） – Consolidated Financial Results for the Fiscal Year Ended March 31, 2022

Note: This document is a translation of the original Japanese version and provided for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail. Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 [Japanese GAAP] May 13, 2022 Company name: eGuarantee, Inc. Stock exchange listing: Tokyo Code number: 8771 URL: https://www.eguarantee.co.jp/ Representative: Masanori Eto Contact: Nozomu Murai Phone: 03-6327-3609 Scheduled date of ordinary general meeting of shareholders: June 28, 2022 Scheduled date of commencing dividend payments: June 29, 2022 Scheduled date of submitting annual securities report: June 29, 2022 Availability of supplementary briefing material on financial results: Yes Schedule of financial results briefing session: Yes (for institutional investors and securities analysts) President and Chief Executive Officer Director, General Manager of Corporate Administration Dept. 1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (April 1, 2021 to March 31, 2022) (1) Consolidated operating results (% indicates changes from the previous corresponding period.) (Amounts of less than one million yen are rounded down.) Net sales Operating profit Ordinary profit Fiscal year ended Million yen % Million yen % Million yen % 7,894 March 31, 2021 March 31, 2022 21.0 13.0 (Note) Comprehensive income: Fiscal year ended March 31, 2022: ¥ 2,613 million [20.9%] Fiscal year ended March 31, 2021: ¥ 2,161 million [(11.2)%] 3,760 3,108 7,194 3,732 3,088 20.8 13.6 20.8 9.7 Profit attributable to owners of parent Million yen % 2,463 2,004 22.9 (12.9) Basic earnings per share Diluted earnings per share Profit on equity Ordinary profit on total assets Operating profit on net sales Fiscal year ended March 31, 2022 March 31, 2021 Yen 52.92 45.12 Yen 51.32 42.51 % 14.5 14.6 % 15.7 15.9 % 47.3 42.9 (Reference) Equity in earnings of associates: Fiscal year ended March 31, 2022: ¥ 14 million Fiscal year ended March 31, 2021: ¥ (0) million (2) Consolidated financial position As of March 31, 2022 March 31, 2021 Total assets Net assets Capital adequacy ratio Net assets per share Million yen 25,256 22,570 Million yen 19,716 17,186 % 71.9 70.3 Yen 387.62 347.19 (Reference) Equity: As of March 31, 2022: ¥ 18,157 million As of March 31, 2021: ¥ 15,876 million (3) Consolidated cash flows Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Million yen 2,662 4,694 Million yen (1,824) (80) Cash and cash equivalents at end of the period Million yen (87) 2,209 Million yen 12,395 11,644 Fiscal year ended March 31, 2022 March 31, 2021 2. Dividends Annual dividends 1st quarter-end Yen 2nd quarter-end Yen 3rd quarter-end Year-end Yen Yen Total Total dividends Consolidated payout ratio Consolidated dividend on net assets Yen Million yen 0.00 0.00 0.00 ― ― ― 22.00 22.00 26.00 26.00 26.00 26.00 1,006 1,217 % 48.8 49.1 44,3 % 7.1 7.1 Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Fiscal year ending March 31, 2023 (Forecast) ― ― ― 3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2023 (April 1, 2022 to March 31, 2023) Net sales Operating profit First half Full year Million yen 4,100 8,800 % 6.6 11.5 Million yen 1,980 4,150 % 9.7 11.2 Ordinary profit (% indicates changes from the previous corresponding period.) Profit attributable to owners of parent Million yen 1,300 2,750 Basic earnings per share Million yen 2,000 4,200 Yen 27.75 58.70 % 10.5 11.7 % 10.2 11.6 (changes in specified subsidiaries resulting in change in scope of consolidation): Yes * Notes: (1) Changes in significant subsidiaries during the fiscal year ended March 31, 2022 New: 1 company (Company name: Credit Guarantee VI) (2) Changes in accounting policies, changes in accounting estimates and retrospective restatement (3) Total number of issued shares (common shares) 1) Changes in accounting policies due to the revision of accounting standards: Yes 2) Changes in accounting policies other than 1) above: No 3) Changes in accounting estimates: No 4) Retrospective restatement: No 1) Total number of issued shares at the end of the period (including treasury shares): March 31, 2022: March 31, 2021: 46,845,400 shares 45,729,800 shares 2) Total number of treasury shares at the end of the period: 1,434 shares 1,414 shares March 31, 2022: March 31, 2021: 3) Average number of shares during the period: Fiscal year ended March 31, 2022: Fiscal year ended March 31, 2021: 46,543,029 shares 44,415,315 shares (Reference) Overview of Non-consolidated Financial Results 1. Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (April 1, 2021 to March 31, 2022) (1) Non-consolidated operating results (% indicates changes from the previous corresponding period.) Fiscal year ended March 31, 2022 March 31, 2021 Net sales Million yen 8,171 7,776 % 5.1 27.5 Operating profit Million yen 3,257 2,689 % 21.1 14.4 Ordinary profit Million yen 3,580 2,941 % 21.7 12.9 Profit Million yen 2,461 2,008 % 22.6 (12.7) Fiscal year ended March 31, 2022 March 31, 2021 Basic earnings per share Diluted earnings per share Yen 52.89 45.22 Yen 51.28 42.60 (2) Non-consolidated financial position As of: March 31, 2022 March 31, 2021 31, 2023) First half Full year Total assets Net assets Million yen 23,852 21,517 Capital adequacy ratio % 76.2 73.9 Net assets per share Yen 387.95 347.56 Million yen 18,328 16,041 (Reference) Equity: As of March 31, 2022: ¥ 18,173 million As of March 31, 2021: ¥ 15,893 million 2. Non-consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2023 (April 1, 2022 to March (% indicates changes from the previous corresponding period.) Net sales Million yen 4,300 9,100 % 7.9 11.4 Ordinary profit Million yen 2,000 4,150 % 17.3 15.9 Profit Million yen 1,300 2,750 Basic earnings per share Yen 27.75 58.70 % 10.9 11.7 *These financial results are outside the scope of audits by certified public accountants or audit firms. *Guidance on the appropriate use of financial results forecasts and other special notes Notes on forward-looking statements Financial results forecasts and other forward-looking statements in this document are based on information currently available to the Company and certain assumptions deemed reasonable, and the Company does not guarantee their achievement. Actual performance and other results may be significantly different from the forecasts due to various factors. For details on the assumptions for financial results forecasts and notes on the use of financial results forecasts, etc., refer to “1. Overview of Operating Results, (4) Future Outlook” on page 3 of the attachment. Disclosure of supplementary briefing material on financial results Supplementary briefing material on financial results will be posted on the Company’s website. The Company also plans to hold a briefing session for institutional investors and securities analysts on Friday, May 13, 2022. ○ Contents of the Attachment 1. Overview of Operating Results ………………………………………………………………………………………. 2 (1) Overview of Operating Results for the Fiscal Year under Review ………………………………….. 2 (2) Overview of Financial Position for the Fiscal Year under Review ………………………………….. 2 (3) Overview of Cash Flows for the Fiscal Year under Review …………………………………………… 3 (4) Future Outlook ………………………………………………………………………………………………………… 3 (5) Significant Events Concerning Going Concern Assumption ………………………………………….. 3 2. Basic Policy on Selecting Accounting Standards ………………………………………………………………. 3 3. Consolidated Financial Statements and Primary Notes ………………………………………………………. 4 (1) Consolidated Balance Sheets …………………………………………………………………………………….. 4 (2) Consolidated Statements of Income and Comprehensive Income …………………………………… 6 (3) Consolidated Statements of Changes in Equity …………………………………………………………….. 8 (4) Consolidated Statements of Cash Flows ……………………………………………………………………..10 (5) Notes to Consolidated Financial Statements ………………………………………………………………..11 (Notes on Going Concern Assumption) ………………………………………………………………………11 (Important Matters Forming the Basis for Preparing Consolidated Financial Statements) ….11 (Changes in Accounting Policies) ………………………………………………………………………………13 (Notes on Consolidated Balance Sheets) ……………………………………………………………………..14 (Notes on Consolidated Statements of Income) ……………………………………………………………14 (Notes on Consolidated Statements of Comprehensive Income) …………………………………….14 (Notes on Consolidated Statements of Changes in Equity) …………………………………………….15 (Notes on Consolidated Statements of Cash Flows) ………………………………………………………16 (Segment Information, Etc.) ………………………………………………………………………………………17 (Per Share Information) …………………………………………………………………………………………….19 (Significant Subsequent Events) …………………………………………………………………………………20 1 1. Overview of Operating Results (1) Overview of Operating Results for the Fiscal Year under Review The Japanese economy in the fiscal year under review has shown signs of recovery amidst the gradual easing of the tough situation due to the COVID-19 infection. The recovery trend is expected to continue, supported by the effects of various policies and improvement in overseas economies while all possible measures are being taken against infectious diseases and economic and social activities move toward normalization. However, the future remains uncertain due mainly to the situation in Ukraine, rising prices of raw materials, and supply side constraints. As for the environment surrounding eGuarantee, Inc. (the “Company”) and its subsidiaries (collectively, the “Group”), the number of corporate bankruptcies decreased by 19.1% year on year to 5,916 cases in the fiscal year under review (source: TEIKOKU DATABANK, Ltd.), and it is believed that various benefits and institutional loans that are substantially interest-free and unsecured were successful in curbing the number of corporate bankruptcies. However, a lack of prospects for business improvement due to the prolonged stagnation of economic activities is expected to increase the number of companies going bankrupt, and the close monitoring of the trend of bankruptcies is needed to be continued accordingly. Amid such an environment, credit risk guarantee services continued to show robust results. The number of new contracts increased by developing new products and offering them promptly to meet customers’ growing needs due to the impact of the COVID-19 infection and other factors in the midst of restricted sales activities caused by the repeated declaration of a state of emergency. Also, in corporate transactions, the Company began offering “eG Pay” and “eG Collect” digital transformation-focused buy-now-pay-later (BNPL) services in which deferred settlement and invoicing, payment management, collections, and other clerical operations can be outsourced to the Group. The Group will continue to enhance its digital transformation-focused services and settlement services by using its strength of being able to make credit decisions in real time based on big data regarding business-to-business transactions. As a result, at the end of the fiscal year under review, due to increased underwriting of large balance deals with low risk, guarantee obligations amounted to 831.5 billion yen (up 30.5% year on year), guarantee liabilities were 582.2 billion yen (up 20.7% year on year), and net sales were 7,894,566 thousand yen (up 9.7% year on year), while operating profit was 3,732,175 thousand yen (up 20.8% year on year), ordinary profit was 3,760,382 thousand yen (up 21.0% year on year), and profit attributable to owners of parent was 2,463,201 thousand yen (up 22.9% year on year). Financial results by service are as follows: ・Guarantee services for commercial companies Note that this amount includes other revenues. ・Guarantee services for financial institutions Net sales for these services amounted to 7,711,250 thousand yen (up 10.4% year on year). Net sales for these services amounted to 183,316 thousand yen (down 11.7% year on year). (2) Overview of Financial Position for the Fiscal Year under Review Assets Total assets at the end of the fiscal year under review increased by 11.9% from the end of the previous fiscal year to 25,256,073 thousand yen. Current assets increased by 15.3% from the end of the previous fiscal year to 19,695,557 thousand yen. This is mainly due to an increase in cash and deposits of 1,238,763 thousand yen. Non-current assets increased by 1.4% from the end of the previous fiscal year to 5,560,516 thousand yen. This is mainly due to an increase in investments in other securities of subsidiaries and associates of 14,422 thousand yen. Liabilities Total liabilities increased by 2.9% from the end of the previous fiscal year to 5,539,115 thousand yen. Current liabilities increased by 2.9% from the end of the previous fiscal year to 5,423,832 thousand yen. This is mainly due to an increase in advances received of 212,299 thousand yen. Non-current liabilities was 115,282 thousand yen, the same amount as at the end of the previous fiscal year. Net assets 2 Total net assets increased by 14.7% from the end of the previous fiscal year to 19,716,958 thousand yen. This is mainly due to an increase in share capital and capital surplus of 412,057 thousand yen, respectively. (3) Overview of Cash Flows for the Fiscal Year under Review Cash and cash equivalents (“funds”) at the end of the fiscal year under review increased by 750,619 thousand yen from the end of the previous fiscal year to 12,395,011 thousand yen. The status of cash flows in the fiscal year under review and the factors responsible for those results are as follows: Cash flows from operating activities Funds provided by operating activities amounted to 2,662,585 thousand yen (4,694,093 thousand yen provided in the previous fiscal year). The major cause of this increase is the recording of profit before income taxes of 3,749,958 thousand yen. Cash flows from investing activities Funds used in investing activities amounted to 1,824,431 thousand yen (80,167 thousand yen used in the previous fiscal year). The major cause of this decrease is purchase of investment securities of 1,200,000 thousand yen. Cash flows from financing activities Funds used in financing activities amounted to 87,535 thousand yen (2,209,591 thousand yen provided in the previous fiscal year). The major cause of this decrease is dividends paid of 1,005,961 thousand yen. (Reference) Trends in cash flow indicators As of March 31, 2018 March 31, 2019 March 31, 2020 March 31, 2021 March 31, 2022 Capital adequacy ratio (%) Capital adequacy ratio at fair value (%) Interest-bearing debt to cash flow ratio (%) Interest coverage ratio (%) 58.0 317.7 ― ― 59.7 285.9 ― ― 70.3 408.7 ― ― 70.3 422.8 ― ― 71.9 380.4 ― ― Capital adequacy ratio: Equity/Total assets Capital adequacy ratio at fair value: Market capitalization/Total assets Interest-bearing debt to cash flow ratio: Interest-bearing debt/Cash flows Interest coverage ratio: Cash flows/Interest paid Note: 1. Calculated on a consolidated basis. 2. Cash flows refer to operating cash flows. 3. Interest-bearing debt covers all liabilities on the consolidated balance sheets for which interest is paid. (4) Future Outlook The Monthly Economic Report of the Cabinet Office announced in March states that “the Japanese economy continues to show movements of picking up, although some weaknesses are seen as a severe situation due to the Novel Coronavirus remains.” Amidst a sense of unpredictability due in part to the situation in Ukraine, however, the economic environment continues to be uncertain, with the risk of rising raw materials prices, supply side constraints, and other factors sending domestic and overseas economies into decline. Upon a firm understanding of such circumstances, the Company will develop risk management that continues to make prudent risk judgments while paying close attention to bankruptcy trends and changes in the economic environment. The Company aims to promote the use of guarantee services in corporate activities by providing services that meet customers’ growing needs at a reasonable price and in a timely manner. (5) Significant Events Concerning Going Concern Assumption Not applicable. 2. Basic Policy on Selecting Accounting Standards The Group will prepare its consolidated financial statements in accordance with Japanese standards for the time being, taking into account the comparability of the consolidated financial statements with other periods and the fact that the Company has little need for funding from overseas markets. 3 As of March 31, 2021 As of March 31, 2022 3. Consolidated Financial Statements and Primary Notes (1) Consolidated Balance Sheets Assets Current assets Cash and deposits Accounts receivable – trade Securities Prepaid expenses Accounts receivable – other Other Total current assets Non-current assets Property, plant and equipment Buildings and structures Machinery, equipment and vehicles, net Accumulated depreciation Buildings and structures, net Machinery, equipment and vehicles Accumulated depreciation Tools, furniture and fixtures Accumulated depreciation Tools, furniture and fixtures, net Land Total property, plant and equipment Intangible assets Software Other Total intangible assets Investments and other assets Investment securities Investments in other securities of subsidiaries and associates Long-term prepaid expenses Leasehold and guarantee deposits Deferred tax assets Other Total investments and other assets Total non-current assets Total assets (Thousand yen) 17,295,011 75,267 1,200,000 974,048 31,680 119,548 19,695,557 884,111 (161,583) 722,527 1,247 (1,247) 0 214,960 (148,045) 66,915 591,944 1,381,386 124,853 173 125,027 3,426,737 59 219,050 257,533 20,650 4,054,102 5,560,516 25,256,073 *1 *1 16,056,248 65,437 ― 793,539 63,981 106,609 17,085,816 881,721 (139,674) 742,046 1,247 (1,078) 168 183,469 (131,684) 51,784 591,944 1,385,945 110,985 193 111,178 3,426,737 117 211,197 233,829 ― 3,987,531 5,484,655 22,570,471 *2 115,649 *2 130,071 4 As of March 31, 2021 As of March 31, 2022 (Thousand yen) Long-term accounts payable – other Total non-current liabilities Liabilities Current liabilities Accounts payable – trade Income taxes payable Advances received Provision for settlement Provision for bonuses Deposits received Other Total current liabilities Non-current liabilities Total liabilities Net assets Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares Total shareholders’ equity Share acquisition rights Non-controlling interests Total net assets Total liabilities and net assets *3 *3 9,932 934,750 3,664,750 342,711 150,000 31,943 135,021 5,269,109 115,282 115,282 5,384,392 3,097,652 2,507,652 10,272,144 (824) 15,876,626 147,996 1,161,456 17,186,079 22,570,471 11,253 699,475 3,877,049 433,856 200,000 32,587 169,610 5,423,832 115,282 115,282 5,539,115 3,509,710 2,919,710 11,729,322 (877) 18,157,864 155,261 1,403,831 19,716,958 25,256,073 5 (2) Consolidated Statements of Income and Comprehensive Income Consolidated Statements of Income For the fiscal year ended March 31, 2021 For the fiscal year ended March 31, 2022 (Thousand yen) * * Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating profit Non-operating income Interest income Share of profit of entities accounted for using equity method Other Total non-operating income Non-operating expenses Share of loss of entities accounted for using equity method Miscellaneous losses Total non-operating expenses Ordinary profit Extraordinary losses Loss on retirement of non-current assets Loss on valuation of investment securities Total extraordinary losses Profit before income taxes Income taxes – current Income taxes – deferred Total income taxes Profit Profit attributable to non-controlling interests Profit attributable to owners of parent 7,194,885 1,816,178 5,378,706 2,289,859 3,088,846 17,648 ― 2,875 20,524 571 6 577 3,108,793 308 28,512 28,821 3,079,971 1,000,596 (82,542) 918,054 2,161,917 157,822 2,004,095 7,894,566 1,670,286 6,224,280 2,492,104 3,732,175 13,452 14,422 1,371 29,246 ― 1,039 1,039 3,760,382 10,424 ― 10,424 3,749,958 1,160,352 (23,703) 1,136,648 2,613,309 150,107 2,463,201 6 Consolidated Statements of Comprehensive Income For the fiscal year ended March 31, 2021 For the fiscal year ended March 31, 2022 (Thousand yen) Profit Comprehensive income Comprehensive income attributable to Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests 2,161,917 2,161,917 2,004,095 157,822 2,613,309 2,613,309 2,463,201 150,107 7 Balance at beginning of period Changes during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Net changes in items other than shareholders’ equity Balance at beginning of period Changes during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Net changes in items other than shareholders’ equity Total changes during period Balance at end of period (3) Consolidated Statements of Changes in Equity For the fiscal year ended March 31, 2021 Share capital Capital surplus Retained earnings Treasury shares Shareholders’ equity 1,643,135 1,053,135 8,863,119 (774) 11,558,616 Issuance of new shares 1,454,517 1,454,517 (Thousand yen) Total shareholders’ equity 2,909,034 (595,070) 2,004,095 (49) (49) Total changes during period Balance at end of period 1,454,517 3,097,652 1,454,517 2,507,652 1,409,024 10,272,144 (49) (824) 4,318,009 15,876,626 Share acquisition rights Total net assets Non-controlling interests 135,065 1,104,472 12,798,155 Issuance of new shares (3,851) 56,983 56,983 1,161,456 16,782 12,930 147,996 (595,070) 2,004,095 2,905,182 (595,070) 2,004,095 (49) 73,766 4,387,924 17,186,079 8 For the fiscal year ended March 31, 2022 Share capital Capital surplus Retained earnings Treasury shares Shareholders’ equity 3,097,652 2,507,652 10,272,144 (824) 15,876,626 Issuance of new shares 412,057 412,057 (Thousand yen) Total shareholders’ equity 824,114 (1,006,024) 2,463,201 (53) (53) Total changes during period Balance at end of period 412,057 3,509,710 412,057 2,919,710 1,457,177 11,729,322 (53) (877) 2,281,238 18,157,864 Balance at beginning of period Changes during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Net changes in items other than shareholders’ equity Balance at beginning of period Changes during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Net changes in items other than shareholders’ equity Share acquisition rights Total net assets Non-controlling interests 147,996 1,161,456 17,186,079 Issuance of new shares (13,161) 20,425 242,375 262,801 Total changes during period Balance at end of period 7,264 155,261 242,375 1,403,831 2,530,878 19,716,958 (1,006,024) 2,463,201 810,953 (1,006,024) 2,463,201 (53) 9 (4) Consolidated Statements of Cash Flows For the fiscal year ended March 31, 2021 For the fiscal year ended March 31, 2022 (Thousand yen) Cash flows from operating activities Profit before income taxes Depreciation Increase (decrease) in provision for settlement Increase (decrease) in provision for bonuses Interest income Share of loss (profit) of entities accounted for using equity method Share-based payment expenses Loss on retirement of non-current assets Loss (gain) on valuation of investment securities Decrease (increase) in trade receivables Increase (decrease) in trade payables Decrease (increase) in prepaid expenses Decrease (increase) in accounts receivable – other Increase (decrease) in deposits received Increase (decrease) in advances received Other, net Subtotal Interest received Income taxes refund (paid) Net cash provided by (used in) operating activities Cash flows from investing activities Net decrease (increase) in time deposits Purchase of property, plant and equipment Purchase of intangible assets Proceeds from redemption of investment securities Purchase of investment securities Purchase of golf club membership Payments of leasehold deposits Proceeds from refund of leasehold deposits Net cash provided by (used in) investing activities Cash flows from financing activities Proceeds from exercise of employee share options Purchase of treasury shares Proceeds from issuance of share acquisition rights Dividends paid Dividends paid to non-controlling interests Proceeds from share issuance to non-controlling shareholders Net cash provided by (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 3,079,971 63,692 125,729 25,851 (17,648) 571 17,142 308 28,512 (6,997) 2,042 358,682 294,852 7,402 605,383 55,620 4,641,117 23,678 29,297 4,694,093 ― (21,148) (53,498) 2,600,000 (2,600,000) ― (6,659) 1,139 (80,167) 2,905,182 (49) ― (594,703) (100,838) ― 2,209,591 6,823,517 4,820,874 11,644,392 3,749,958 81,664 91,145 50,000 (13,452) (14,422) 4,317 10,424 ― (9,830) 1,320 (179,598) 32,300 643 212,299 34,729 4,051,497 11,916 (1,400,828) 2,662,585 (488,143) (47,449) (58,514) ― (1,200,000) (20,650) (9,698) 25 (1,824,431) 810,012 (53) 16,200 (1,005,961) (152,732) 245,000 (87,535) 750,619 11,644,392 * * 12,395,011 10 (Important Matters Forming the Basis for Preparing Consolidated Financial Statements) (5) Notes to Consolidated Financial Statements (Notes on Going Concern Assumption) Not applicable. 1. Scope of consolidation (1) All subsidiaries are consolidated. Number of consolidated subsidiaries: 11 Names of consolidated subsidiaries: eGuarantee Solution, Inc. RG Guarantee, Inc. eG Payment, Inc. eGuarantee Investment, Inc. Credit Link Fund I Credit Investment I Credit Guarantee I Credit Guarantee II Credit Guarantee IV Credit Guarantee V Credit Guarantee VI (2) Names, etc. of non-consolidated subsidiaries: Not applicable. (3) Changes in scope of consolidation: Credit Guarantee VI was included in the scope of consolidation from the fiscal year under review. This is because Credit Guarantee VI was newly established in the fiscal year under review. (1) Number of associates that have been accounted for using equity method: 1 2. Scope of equity method Name of associate: Credit Guarantee III (3) Changes in scope of equity method: Not applicable. Not applicable. 3. Fiscal year-ends of consolidated subsidiaries (2) Names, etc. of non-consolidated subsidiaries and associates that are not accounted for using equity method: Fiscal year-ends of consolidated subsidiaries Credit Link Fund I, Credit Investment I, Credit Guarantee V, eGuarantee Solution, Inc., RG Guarantee, Inc., eG Payment, Inc., and eGuarantee Investment, Inc. are the same as the consolidated fiscal year-end. Fiscal year-ends of consolidated subsidiaries Credit Guarantee I, Credit Guarantee II, Credit Guarantee IV, and Credit Guarantee VI are the end of September, the end of February, the end of January, and the end of December respectively. Consolidated financial statements are prepared using provisional financial results as of the consolidated fiscal year-end. 11 The amount of profit or loss of silent partnerships corresponding to equity interest is recorded as non-operating income or expenses and the same amount is adjusted in investments in silent partnerships. 4. Accounting policies (1) Valuation standards and methods for important assets (a) Securities Bonds held to maturity Measured by the amortized cost method (straight-line method). (b) Investments in other securities of subsidiaries and associates Investments in silent partnerships (c) Derivatives Credit default swaps Without market prices: Processed in a similar method as loan guarantees. (2) Depreciation method of important depreciable assets 1) Property, plant and equipment Measured using the straight-line method or the declining-balance method. Useful lives are as follows: 8 to 47 years Buildings 4 years Vehicles Tools, furniture and fixtures 3 to 17 years 2) Intangible assets Measured by the straight-line method. Software for internal use is measured based on its internal useful life (5 years). (3) Recording standards for important provisions 1) Provision for settlement Recorded at the expected amount of payments required for the performance of guarantee liabilities that are not covered by insurance or guarantee by financial institutions, etc. to prepare for the performance of guarantee liabilities. 2) Provision for bonuses Recorded at the expected amount to be paid in the fiscal year under review to prepare for bonus payments to employees. (4) Standards for recognition of revenues and expenses; The Group’s business consists of a single segment of the “credit guarantee business” only. The main content of the performance obligations in the credit guarantee business is the act of guaranteeing receivables over the guarantee contract period, and since the performance obligations are satisfied during the guarantee contract period, revenue is recognized evenly in the contract period. (5) Scope of cash in the consolidated statements of cash flows Comprises cash on hand, demand deposits and short-term investments maturing within three months from the date of acquisition that are easily cashed with minimal risk of fluctuation in value. (6) Other important matters forming the basis for preparing consolidated financial statements Accounting treatment for asset-related non-deductible consumption taxes, etc. Asset-related non-deductible consumption taxes and local consumption taxes are recorded as expenses in the fiscal year under review. 12 （Changes in Accounting Policies） (Application of the Accounting Standard for Revenue Recognition, Etc.) The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020; hereinafter “Revenue Recognition Standard”) and other standards from the beginning of the fiscal year under review. The Company recognizes revenue when control of a promised good or service is transferred to a customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods and services. The Company applies the Revenue Recognition Standard, etc. in accordance with the transitional treatment provided for in the proviso to Paragraph 84 of the Revenue Recognition Standard. The cumulative impact of retrospectively applying the new accounting policies to prior periods is adjusted to retained earnings at the beginning of the fiscal year under review, with the new accounting policies applied from the beginning balance. This change does not affect the profit or loss for the fiscal year under review or the balance of retained earnings at the beginning of the period. (Application of the Accounting Standard for Fair Value Measurement, Etc.) The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019; hereinafter “Fair Value Measurement Standard”) and other standards from the beginning of the fiscal year under review, and will prospectively apply the new accounting policies stipulated by the Fair Value Measurement Standard, etc. in accordance with the transitional treatment provided in Paragraph 19 of the Fair Value Measurement Standard and Paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019). This does not affect the consolidated financial statements. 13 These are the amounts prepaid by the Company mainly pertaining to guarantee fees (guarantee commissions) paid to risk transferees and referral fees (commission expenses) paid to agents. (Notes on Consolidated Balance Sheets) *1 Prepaid expenses *2 Investments in associates are as follows: Investments in other securities of subsidiaries and associates *3 Advances received As of March 31, 2021 As of March 31, 2022 115,649 thousand yen 130,071 thousand yen These are amounts equivalent to advance payments pertaining to guarantee fees received by the Company from the contractors of the guarantee agreement. 4. Contingent liabilities As of March 31, 2021 As of March 31, 2022 Guarantee liabilities for guarantee services against sales credit The Company underwrites sales credit guarantees for contractors of the guarantee agreement as part of its sales activities. Guarantee liabilities for the abovementioned guarantee services are stated at the maximum amount guaranteed by the Company. Of these guarantee liabilities, 408,929,703 thousand yen is covered by insurance or guarantees provided by financial institutions, etc. 482,232,406 Guarantee liabilities for guarantee services against sales credit The Company underwrites sales credit guarantees for contractors of the guarantee agreement as part of its sales activities. Guarantee liabilities for the abovementioned guarantee services are stated at the maximum amount guaranteed by the Company. Of these guarantee liabilities, 485,317,981 thousand yen is covered by insurance or guarantees provided by financial institutions, etc. 582,259,140 (Thousand yen) (Notes on Consolidated Statements of Income) * Major items and amounts of selling, general and administrative expenses are as follows: For the fiscal year ended March 31, 2021 For the fiscal year ended March 31, 2022 (Thousand yen) Salaries and allowances Provision for bonuses Rent expenses on land and buildings Taxes and dues 746,231 150,000 230,320 237,843 773,485 200,000 235,029 260,373 (Notes on Consolidated Statements of Comprehensive Income) Not applicable. 14 Class of shares Beginning of period Increase Decrease End of period (Notes on Consolidated Statements of Changes in Equity) For the fiscal year ended March 31, 2021 1. Shares issued and outstanding and treasury shares Shares issued and outstanding Common shares (Note 1) Total Treasury shares Common shares (Note 2) Total 1,385 1,385 42,506,400 42,506,400 3,223,400 3,223,400 29 29 (Shares) 45,729,800 45,729,800 1,414 1,414 ― ― ― ― (Note) 1. The increase in shares issued and outstanding of 3,223,400 shares is due to the exercise of stock options. 2. The increase in common shares under treasury shares of 29 shares is due to purchase of odd-lot shares. 2. Share acquisition rights Company name Breakdown of share acquisition rights The Company Share acquisition rights as stock options Total Class of shares underlying the share acquisition rights ― ― 3. Dividends (1) Dividend payments Number of shares underlying the share acquisition rights (Shares) Beginning of period Increase Decrease End of period ― ― ― ― ― ― Balance at end of period (Thousand yen) ― 147,996 ― 147,996 Resolution Ordinary General Meeting of Shareholders held on June 26, 2020 Class of shares Common shares Total dividend amount (Thousand yen) Dividend per share (Yen) 595,070 14.00 Record date March 31, 2020 Effective date June 29, 2020 (2) Dividends with the record date falling in the fiscal year but the effective date falling in the following fiscal year Resolution Ordinary General Meeting of Shareholders held on June 28, 2021 Class of shares Dividend source Common shares Retained earnings Total dividend amount (Thousand yen) Dividend per share (Yen) 1,006,024 22.00 Record date March 31, 2021 Effective date June 29, 2021 15 Class of shares Beginning of period Increase Decrease End of period For the fiscal year ended March 31, 2022 1. Shares issued and outstanding and treasury shares Shares issued and outstanding Common shares (Note 1) Total Treasury shares Common shares (Note 2) Total 1,414 1,414 45,729,800 45,729,800 1,115,600 1,115,600 20 20 (Shares) 46,845,400 46,845,400 1,434 1,434 ― ― ― ― (Notes) 1. The increase in shares issued and outstanding of 1,115,600 shares is due to the exercise of 1,115,200 shares of stock options and the issuance of 400 shares of new stock as restricted share-based payment. 2. The increase in common shares under treasury shares of 20 shares is due to purchase of odd-lot shares. 2. Share acquisition rights Company name Breakdown of share acquisition rights The Company Share acquisition rights as stock options Total 3. Dividends (1) Dividend payments Class of shares underlying the share acquisition rights Beginning of period ― ― ― ― Number of shares underlying the share acquisition rights (Shares) Increase Decrease End of period Balance at end of period (Thousand yen) ― ― ― ― ― ― 155,261 155,261 Resolution Ordinary General Meeting of Shareholders held on June 28, 2021 Class of shares Common shares Total dividend amount (Thousand yen) Dividend per share (Yen) 1,006,024 22.00 Record date March 31, 2021 Effective date June 29, 2021 (2) Dividends with the record date falling in the fiscal year but the effective date falling in the following fiscal year Resolution Ordinary General Meeting of Shareholders held on June 28, 2022 Class of shares Dividend source Common shares Retained earnings Total dividend amount (Thousand yen) Dividend per share (Yen) 1,217,943 26.00 Record date March 31, 2022 Effective date June 29, 2022 (Notes on Consolidated Statements of Cash Flows) * Relation between balance of cash and cash equivalents at the end of the period and account items on the consolidated balance sheets For the fiscal year ended March 31, 2021 For the fiscal year ended March 31, 2022 (Thousand yen) 17,295,011 (4,900,000) 12,395,011 Cash and deposits Time deposits deposited for over three months Cash and cash equivalents 16,056,248 (4,411,856) 11,644,392 16 (Segment Information, Etc.) (Segment information) 1. Overview of reportable segments I For the fiscal year ended March 31, 2021 This information is omitted as the Group has only one reportable segment of the credit guarantee business. II For the fiscal year ended March 31, 2022 This information is omitted as the Group has only one reportable segment of the credit guarantee business. 2. Calculation method of net sales, profit or loss, assets, liabilities and other account items For the fiscal year ended March 31, 2021 1. Information per product and service This information is omitted as net sales to external customers under a single product/service category accounts for over 90% of net sales on the consolidated statements of income. 2. Information per geographic area (1) Net sales Not applicable, as there are no sales to external customers outside Japan. (2) Property, plant and equipment Not applicable, as there are no property, plant and equipment located outside Japan. 3. Information per major customer This information is omitted as there are no sales to specific customers accounting for 10% or more of net sales on the consolidated statements of income among sales to external customers. For the fiscal year ended March 31, 2022 1. Information per product and service This information is omitted as net sales to external customers under a single product/service category accounts for over 90% of net sales on the consolidated statements of income. 2. Information per geographic area (1) Net sales Not applicable, as there are no sales to external customers outside Japan. (2) Property, plant and equipment Not applicable, as there are no property, plant and equipment located outside Japan. 3. Information per major customer This information is omitted as there are no sales to specific customers accounting for 10% or more of net sales on the consolidated statements of income among sales to external customers. 17 3. Amount of net sales, profit or loss, assets, liabilities and other account items per reportable segment [Impairment losses on non-current assets per reportable segment] [Amount of amortization of goodwill and unamortized balance per reportable segment] For the fiscal year ended March 31, 2021 Not applicable. For the fiscal year ended March 31, 2022 Not applicable. For the fiscal year ended March 31, 2021 Not applicable. For the fiscal year ended March 31, 2022 Not applicable. [Gain on bargain purchase per reportable segment] For the fiscal year ended March 31, 2021 Not applicable. For the fiscal year ended March 31, 2022 Not applicable. 18 For the fiscal year ended March 31, 2021 For the fiscal year ended March 31, 2022 (Per Share Information) Net assets per share Basic earnings per share Diluted earnings per share Basic earnings per share 347.19 45.12 42.51 ― ― (Note) 1. The bases for calculating basic earnings per share and diluted earnings per share are as follows: For the fiscal year ended March 31, 2021 For the fiscal year ended March 31, 2022 Profit attributable to owners of parent (Thousand yen) 2,004,095 2,463,201 Amount not attributable to common shareholders (Thousand yen) Profit attributable to owners of parent related to common shares (Thousand yen) Average number of common shares during the period (Shares) 2,004,095 44,415,315 2,463,201 46,543,029 Diluted earnings per share Adjustment of profit attributable to owners of parent (Thousand yen) Increase in common shares (Shares) 2,729,595 1,458,041 [Of which, share acquisition rights (Shares)] [2,729,595] [1,458,041] Overview of potential shares not included in the calculation of diluted earnings per share as they have no dilutive effect ― (Yen) 387.62 52.92 51.32 ― ― 19 2. The bases for calculating net assets per share are as follows: Total net assets on the consolidated balance sheets (Thousand yen) Amount deducted from total net assets (Thousand yen) [Of which, share acquisition rights (Thousand yen)] 1,309,453 [147,996] As of March 31, 2021 As of March 31, 2022 17,186,079 19,716,958 [Of which, non-controlling interests (Thousand yen)] [1,161,456] [1,403,831] Net assets at the end of the period related to common shares (Thousand yen) 15,876,626 Number of common shares issued and outstanding (Shares) 45,729,800 Number of treasury shares in common shares (Shares) 1,414 Number of common shares used in calculating net assets per share (Shares) 45,728,386 46,843,966 1,559,093 [155,261] 18,157,864 46,845,400 1,434 (Significant Subsequent Events) Not applicable. NOTICE: For the convenience of capital market participants, the Company makes efforts to provide English translations of the information disclosed in Japanese, provided that the Japanese original prevails over its English translation in the case of any discrepancy found between documentation. 20