イントラスト（7191） – [Delayed]Fiscal Year Ended March 31, 2022 Full Year Results Briefing Information Materials

Fiscal Year Ended March 31, 2022 Full Year Results Briefing Information MaterialsEntrust Inc.Securities Code: 7191Copyright © Entrust Inc. All Rights Reserved.Copyright © Entrust Inc. All Rights Reserved.1. Fiscal Year Ended March 31, 2022 – Business Results2. Company Plan for the Fiscal Year Ending March 31, 20233. Company InformationCopyright © Entrust Inc. All Rights Reserved.11. Fiscal Year Ended March 31, 2022 – Business ResultsCopyright © Entrust Inc. All Rights Reserved.2Overview of PerformanceSales increased significantly due to the growth in property rent guaranteesFell short of the plan due to higher-than-expected impact of the coronavirus in medical care expense guaranteesOperating profit increased by absorbing bad debt costs and costs related to the opening of new centers.Revenues increased to 117.6%Operating profit increased to 103.0% Significant increase in revenue as a result of growth in property rent guarantees (143.3% year-on-year) Medical care expense guarantees failed to meet the plan due to operation restrictions caused by the COVID-19 pandemic in the first half of the year, which exceeded expectations. Bad debt costs increased due to an increase in subrogation payments as a result of growth in property rent guarantees One-time expenses incurred for the opening of the new center and the closing of the Yokohama Solution CenterCopyright © Entrust Inc. All Rights Reserved.(Million yen)2022/3Actual2021/3 Year-on-Actualyear2022/3BudgetPlanRevenues4,9434,203 117.6% 5,00098.9%1,1841,149 103.0% 1,27093.3%(Margin)24.0%27.4%25.4%1,1791,153 102.3% 1,27592.5%(Margin)23.9%27.4%25.5%Operating profitOrdinary incomeNet income779760102.5% 83593.4%(Margin)15.8%18.1%16.7%——3Revenues by QuarterSales in the guarantee business maintained substantial growthYear on Year 118% (+210 million yen)(Million yen)Solution servicesGuarantee services+18%1,353 1,234 1,195 1,142 1,160 Solution business 484 Some contracts shifted from the C&O service to the guarantee 1,016 1,012 1,004 1,043 525 464 460 464 458 467 520 481 858 845 866 898 466 428 432 444 391 417 434 453 491 548 544 579 621 679 728 776 869 business 93.0% compared with the year-on-year period (-36 million yen)Guarantee businessThe guarantee business grew due to continued growth in property rent guarantees and increased renewal guarantee fees 139.7% compared with the year-on-year period (247 1,2501,00075050025004Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4QFY2020/3FY2021/3FY2022/3million yen)Copyright © Entrust Inc. All Rights Reserved.4Analysis of Change in Operating ProfitSpending on core systems and opening of centers in preparation for growth in property rent guarantees and business growth, and following up with a continuous business improvement in the next fiscal year and beyondOutsourcing feesGrew in connection with increased revenues from property rent guarantees(Million yen)2,5002,0001,5001,0000Insurance premiums (guarantee related costs)Decreased due to an adjustment of guarantee fees in medical care expense guaranteesBad debt + guarantee performanceIncreased due to an increase in subrogation payments and delinquencies of some high value propertiesPersonnel expensesIncreased in line with increase in personnelOtherIncreased due to rent collection and settlement fees, costs related to debt collections, costs related to opening centers, etc.Copyright © Entrust Inc. All Rights Reserved.-18797582811371002665001,1491,184 Previous FY operating incomeGuarantee revenuesSolution revenuesOutsourcing feesBad debt + guarantee performancePersonnel expensesOtherCurrent FY operating incomeInsurance premiums (guarantee related)5Operating Profit by QuarterOperating profit increased steadily(operating profit ratio: 23.9%)(Million yen)350300250200150100500+4.6%265 261 251 238 270 280 287 273 308 302 283 275 322 4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4QFY2020/3FY2021/3FY2022/3Copyright © Entrust Inc. All Rights Reserved.6Number of Contracts in Property Rent AreaGrowth driven by the guarantee area, with a steady increase in the number of contracts(Number of contracts)Solution servicesGuarantee services327,469 334,327 340,679 348,740 359,392 364,136 370,522 376,522 +21,679385,833 392,351 398,016 401,682 407,512 227,114 234,775 240,689 247,118 258,390 261,440 265,845 267,729 272,550 272,982 271,745 267,354 260,627 50,000100,355 99,552 99,990 101,622 101,002 102,696 104,677 108,793 113,283 119,369 126,271 134,328 146,885 4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4QFY2020/3FY2021/3FY2022/3[Estimate]Copyright © Entrust Inc. All Rights Reserved.7400,000350,000300,000250,000200,000150,000100,0000Medical Care & Eldercare Expense Guarantee Sales by QuarterDespite the impact of the coronavirus, sales activities are intensifyingThe number of affiliated medical facilities continues to increaseLower guarantee fees for existing customers were absorbed in the fourth quarter due to the development of new customersPartner dataCo-signer Agent System Smahosu73 medical facilities (17 compared with the end of the previous fiscal year)19,608 hospital bedsHospitalization set with medical care expense guarantee and other products172 medical facilities (14 compared with the end of the previous fiscal year)34,404 hospital bedsEldercare expense guarantees205 eldercare service providers (6 compared with the end of the previous fiscal year)100806040200Copyright © Entrust Inc. All Rights Reserved.(Million yen)Medical Care & Eldercare Expense Number of Hospitals(Implementing Smahosu & Hospitalization set with guarantees)97 97 12091 92 12412782 84 82 8610713994 (No.)1401201006954 5935 1726 132420 1011 44Q1Q4Q1Q4Q1Q2Q3QFY2020/32Q3QFY2021/32Q3QFY2022/34Q8060402008Other Financial Data (Balance Sheet)2021/3(Previous fiscal year)2022/3(Current fiscal year)Change in amount(Million yen)Current assetsCash and depositsAccounts receivable -trade andAdvances paidOtherAllowance for doubtful accountsProperty, plant, and equipmentIntangible assetsInvestments and other assetsNon-current assets(Contract liabilities)(Guarantee performance provisioning)Non-current liabilitiesNet assetsTotal assets4,6773,0752521,537340-52786651239575946102593,9335,544Current liabilities1,5515,3103,2682542,011423-6461,015952506691,7741,182111964,4546,325632192247482-119148441094223235936520780Increased in connection with expanded sales of advance payment-type products in the property rent areaContact liabilities increased as new* Sources of earnings from the next fiscal yearcontracts in property rent guarantees increased (25% increase)⇒ Growth rate is stable due to increase in sales of monthly renewal guarantee typeCopyright © Entrust Inc. All Rights Reserved.92. Company Plan for the Fiscal Year Ending March 31, 2023Copyright © Entrust Inc. All Rights Reserved.10Summary Plan for the Entire Fiscal Year Ending March 31, 2023Sales growth plan to exceed the fiscal year ended March 31, 2022Operating profit to improve after the increase in bad debt costs levels off as a result of the establishment of a system to handle the increase in guarantee contracts, and due to the elimination of one-time expenses associated with the opening of the new center(Million yen)FY03/2022FY03/2023(Actual)(Plan)(Year-on-year)H1 planRevenues4,9436,200125.4%2,960Operating profit1,1841,450122.4%695(Margin)24.0%23.4%23.5%Ordinary income(Margin)1,1791,450122.9%69023.9%23.4%23.3%Net income779910116.7%430(Margin)15.8%14.7%14.5%—Copyright © Entrust Inc. All Rights Reserved.11Revenues by Year and PlanProperty rent guarantees are projected to exceed expectations relative to the Medium-term Management PlanMedical care expense guarantees face the challenge of building up contracts for the final fiscal year(Million yen)Solution servicesGuarantee services8,000 8,0007,0006,0005,0004,0003,0002,0001,0000+25.4%6,200 +17.6%4,944 1,660 1,890 8,000 4,204 1,909 3,626 1,830 3,136 1,644 1,492 1,796 4,538 3,053 2,294 2019/32020/32021/32022/3Copyright © Entrust Inc. All Rights Reserved.2023/3[Plan]2024/3[Medium-term Management Plan]12Annual Targets for Revenues (Details)(Million yen)6,200 48 145 Doc-onInsurance desk 1,467 C&O6,0005,0004,0003,0002,0001,00004,943 49 114 1,726 356 2,696 Solution businessDoc-on and Insurance desk servicesContinue to expand salesC&O service Continued switchover to guarantee services427 New guarantee business fields, etc. (medical care, eldercare, and child rearing)Guarantee businessProperty rent guarantees4,110 Rent liabilitiesGuarantee servicesSignificant increase in renewal guarantee fees due to stock buildup and increase in monthly renewal-type contractsMedical care expense guaranteesReflects the impact of the coronavirus on the plan based on FY2022, after the decline of guarantee fee levels offEldercare expense guarantees Increase efforts to expand sales as the coronavirus subsidesChild rearing expense guarantees Establish a business base for improving the content of products2022/3[Actual]2023/3[Plan]Copyright © Entrust Inc. All Rights Reserved.13Analysis of Change in Operating Profit (Plan)Increase in bad debt costs is expected to level off due to the establishment of the system to handle the increase in guarantee contracts, and one-time costs associated with the opening of the new center to be eliminatedOutsourcing feesGrew in connection with increased revenues from property rent guaranteesInsurance premiums (guarantee related costs)Medical care expense guarantees to increase after the round of guarantee fee adjustmentsBad debt + guarantee performanceIncrease in bad debt costs to level off due to the establishment of the system to handle the increase in advance paymentsOtherIncrease in settlement fees, etc.(Million yen)3,0002,5002,0001,5001,0001,184 5000Operating profit at the end of the previous FYCopyright © Entrust Inc. All Rights Reserved.-2281,486445479085322Guarantee revenuesSolution revenuesOutsourcing feesInsurance premiums (guarantee related)Bad debt + guarantee performancePersonnel expensesOtherOperating profit at the end of 18th FY1,450 14Dividends by Year and PlanDividend planned to increase by 1 yen to 13 yen based on shareholder return policy(Yen)1412108642011 12 13 (Plan)9 2020/32021/32022/32023/3Copyright © Entrust Inc. All Rights Reserved.153. Company InformationCopyright © Entrust Inc. All Rights Reserved.16Company Profile(As of March 31, 2022)● Company Name: Entrust Inc.● Date of establishment : March 2006● Capital: 1,044 million yen● Fiscal year: 12 months to March● Representative director: Yutaka Kuwabara● Head office location : 1-4 Kojimachi, Chiyoda-ku, Tokyo● Major branch offices: Akita, Sendai, Toyama, Nagoya, Osaka, Fukuoka, Tokyo Head Office ANNEXHamamatsu Solution Center● Number of employees : 231 (including part-time workers)● Business lines: guarantee business and solution businessCopyright © Entrust Inc. All Rights Reserved.17Business LinesDeveloping the guarantee business to take on risks and the solution business to meet needsGuarantee businessGuarantee service + riskSolution businessProvide professional servicesProperty rent guaranteesMedical care expense guaranteesEldercare expense guaranteesChild rearing expense guaranteesC&O serviceInsurance desk servicesDoc-on serviceBtoBProperty management companiesMedical institutionsEldercare service facilities, etcBtoCIndividual customersBtoBProperty management companiesInsurance companiesCredit companies, etc.Copyright © Entrust Inc. All Rights Reserved.18Business LinesGuarantee businessAssume debt delinquency risk and provide various services pertaining to guaranteesFor example,in the case of property rent guaranteesTenantsOwners Rollout to other businessesEldercareMedical careChild rearing expenseCopyright © Entrust Inc. All Rights Reserved.19Business LinesSolution businessProviding a unique business support service based on know-how cultivated in the field of property rent guaranteesScreening servicesContract managementCollecting agencyDelinquency managementSending SMSInvestigative visitsLegal action supportPromoting insurance enrollmentUnpaid items informationCall centerSettlement functionSolve unique customer needs with professional servicesCopyright © Entrust Inc. All Rights Reserved.20Source of growth potentialToward a society in which guarantors guarantee the credit of individuals as companies, something previously supported by the local ties or relativesSociety as it has beenTransformation of societyRevision of Civil CodeManagement companies, hospitals, etc.Requiring unlimited personal joint and several guaranteesThe need to set the maximum amount of guaranteesIn actuality, collection of debts from co-signers is not always possible, and the problem of accounts receivable is also acuteMay lead to lost opportunities due to inability to properly assess creditworthinessIn some cases, administrative burden for personal cosigners will increase due to the revision of the Civil CodeCollection of debts in excess of the maximum amount will become more difficult than everUser(Individual)Secure guarantors, which has always been difficultIt will be more difficult to secure a guarantor・”I don’t want others to know my illness”・Difficult to get a cosigner for various reasons such as weakening of human relationshipsMeanwhile, there are cases of bankruptcy due to having taken on the role of cosignerIt may be harder than ever to ask to be a cosigner. By presenting the maximum amount of the guarantee, you may be refused by the other person, saying, “I can’t pay that much.”Copyright © Entrust Inc. All Rights Reserved.New SocietySocial systems guarantee the creditworthiness of individuals.・ Guarantors guarantee individuals as companies・ Diversification of risk by underwriting multiple guarantees・ Appropriate assessment by screening system・ A solid financial foundation to preserve trustAsymmetries between lenders and borrowers will be eliminated throughout society to stimulate all transactionsImproving the overall efficiency of society21Profit structure for guaranteesAbout 120,000 casesDelinquency rate:Approx. 6.5%Number of guaranteed leasesPayment in subrogation(Advance payment)Delinquency recovery rate:97% or moreLegal responseControl delinquency rates by dealing with quality customers and through proper screeningConduct proper collection of delinquent payments, many of which are recoveredCopyright © Entrust Inc. All Rights Reserved.This gap is the source of profitThree key factors that generate profitsAssess-ment• Precise management through accurate risk assessment• Improved economics (high profit margins) by selecting quality lenders/borrowers rather than reckless expansion• Create a cycle of customer base expansionCollection• Compliance-driven collection(Certified by the strict screening for the listing)• Steadily carry out legitimate legal procedures• Efficient recovery schemes by professional staff and IT/infrastructure to support them• Build up screening and collection know-how (expertise)Expertise• Free client (property management companies, hospitals, etc.) staff from tasks they are not familiar with• Resolve needs by proposing solutions22The medical cost guarantee market shows expanding demandAccelerate implementations in hospitals in cooperation with a major non-life insurance companyTotal number of medical facilitiesApprox. 180,000Average account receivable per hospitalApprox. 4.5 million yen *In-house researchNumber of hospitals nationwideEntrust Inc. targetApprox. 8,300Our results139External factors for expanding demandRevision of Civil CodeIncrease in the number of foreign visitors to JapanIncrease in out-of-pocket medical costs Copyright © Entrust Inc. All Rights Reserved.23Key KPIs and financial structure of the guarantee businessKey KPIsNumber of new contracts・New move-ins・ New contractsGuarantee rent, elderly care, and child rearing expensesInitial guarantee fee・XX% of rent・ XX% of child rearing expenseNumber of existing customersRenewal guarantee feeGuarantee fee revenues* Prorated over warranty periodMedical care expense guaranteesNumber of hospital contractsAnnual guarantee feeAverage3 million yen / hospitalNumber of users of hospitalization setsSmahosuGuarantee feeGuarantee fee revenues* Prorated over warranty periodHospitalization set product that comes with the guaranteeFinancial structureCorporate revenuesGuarantee fee revenuesCost of business outsourcing fees, etc.Copyright © Entrust Inc. All Rights Reserved.Total gross profitGross profit from guarantee feesBad debt +Selling, general and administrative expenses including guaranteeperformance provisioningOperating revenue and expenses24Entrust provides social infrastructure through its guarantee schemes, contributing to the invigoration of services and distribution.Entrust Inc.Copyright © Entrust Inc. All Rights Reserved.25The statements concerning business results projections stated in thesematerials are based on judgments derived from information available at thattime, and actualresults may differ materially from those projected,depending on a variety of factors. Factors that have the potential to affectactual business results include a deterioration in the business environmentor economic conditions, trends surrounding laws, regulations, and relatedrules, and unfavorable rulings in litigation.If you have any comments or questions regarding these materials or anyother IR-related matters, please contact us at the contact point for inquiriesbelow.Contact for inquiries:Entrust Inc. IREmail:ent-ir@entrust-inc.jpCopyright © Entrust Inc. All Rights Reserved.26