ORIX Corporation

for joining this today's conference of Oryx Corporation for Second Quarter Confrontation Financial Results for the six-month period ended September 30th, 2020. The attendees of today's conference are members of the Board of Directors, President of Executive Director, President and Chief Executive Officer, Mr. Inoue, member of the Board of Directors, Senior Managing Executive Director, Responsible Treasury and Accounting Headquarters, Assistant CEO, Mr. Taniguchi, and Executive Officer, Head of Treasury and Accounting Headquarters, Mr. Yano. Materials to be used at today's meeting has been uploaded on the website at around 4 p.m. today. Please refer to those materials. Before we begin, we have some requests. In order to prevent howling, please make sure that you turn off your mobile phone which is nearby or put it away from the telephone. If we experience severe howling during the meeting, we may have to stop the meeting with the agreement of the sponsor, and they have to speak to the participant who's causing the howling. The first half of the meeting will be presented by Mr. Yano, second half by Mr. Inoue, followed by a Q&A session. We have approximately one hour for this whole meeting. Now we would like to begin the meeting. At this time, I'd like to turn the call over to Mr. Yano. Please begin.

This is Yano. Thank you very much for the introduction. And I'd like to thank all the participants to this financial results briefing meeting today, despite of your busy schedule. I'd like to explain our financial results for the second quarter of the financial year, ending March 2021. Please refer to page two of the financial results briefing materials on hand. Net income for the first half of the fiscal year ended March 31, 2021, was down by 41% year-on-year to 93.38 billion yen, and the annualized ROE was 6.3%. While with the impact of COVID-19 remaining, we reveraged on our strength of a diversified business portfolio to secure solid profits for the group as a whole. As compared to first quarter, the net profit went down by 6.2 billion yen, or 12%, as a result of a revision of the estimated tax rate. net income before tax, which are not affected by tax rates, or almost flat, with first quarter at 67.6 billion yen and second quarter at 66.5 billion yen. We booked profits and losses of some companies, such as Consensual Business, on a three-month flat. Therefore, in terms of the actual business condition, we believe that we are out of the bottom. So let's move on to the next stage, breakdown of segment profits. The income for the segment has totaled to 149.5 billion yen. We explained basic profits and gain on sales separately here. The dark blue colored base profit was down by 33% year-on-year to 112.8 billion yen. The main reason for the decline in profit by 54.6 billion yen was the impact of COVID-19 outbreak. The breakdown explained on the next page. The pale blue colored gain on sales was down by 50%. from ¥74.1 billion in the same period of last year to ¥36.8 billion in the previous fiscal year. There were gains on sales of Oryx Living and the Hooligan Lurking in the United States. We were able to realize a certain amount of gains this year as well by selling assets like logistics facilities and others. So please refer to the next page. So the page shows the impact of COVID-19 to the financial earnings. in the second quarter. As compared to the first quarter, the profit in total decreased by 3 billion yen to approximately 27 billion yen. The impact amount for aircraft leasing business was larger than first quarter, but the impact to the real estate operation business, the car rental business, and Oryx USA is certainly becoming less. Possession had a three-month lag in booking, as mentioned before, and also as a result of financial market recovery, there was a reversal of liability reserve of 5 billion yen in the first quarter from her fourth life. Taking these into account, second quarter can be described as being on a recovery trend. So let us move on to the next page. First is total segment profit. The total segment income was down by 38% from the same period of last year, at 149.5 billion yen. Compared to first quarter, the segment of corporate financial services, maintenance, leasing, real estate, banking and credit, Oryx USA and Oryx Europe achieved higher profits. In addition, the three segments of environment and energy, insurance and banking and credit that are least affected by COVID-19 achieved year-on-year profit growth. Detailed information for each segment are presented on page 15 and onwards So let me give a brief overview here. As for the three business divisions of the real estate concession and aircraft leasing that were mentioned at the time of the full year as well as the first quarter financial results announcement as the businesses that are significantly affected by COVID-19 will be explained in more detail later by Mr. Inouye, the CEO. The first is the corporate financial services and maintenance leasing segment. In Japan, a declaration of state of emergency restricted corporate sales activities. Rentech was also forced to slow down its utilization rate at the technology center. Automobiles were also affected by a decline in demand for rental cars and other factors. However, after the lifting of the state of emergency, tourism demand recovered, car rental sales improved significantly, and profits in the car rental distribution recovered from a loss in first quarter, too. positive profit. Corporate financial services commission income recovered significantly in the second quarter due to aggressive sales activities. Next is the real estate. Disposition is continuing at a constant pace, while Daikyo is not significantly affected by COVID-19, both remaining to be strong. Hotel and inn operations reopened and enjoying the recovery trend.

Next is the investment and concession. For private equity, There's been some portfolio turnover from the previous year, but the business of each company is solid, contributing to the profit. Weaker concession is due to the three-month lag of closing of the accounts, moving on to energy and the environment. Renewables business, including solar, is solid. It appears to be a reduction in profit compared to the first quarter, but this is due to the one-off profit posted in the first quarter for wind wind power in India. Excluding that, the profit is up compared to the first quarter. Next is insurance. The sales activity face-to-face was restricted, but by utilizing non-face-to-face activities such as online and TV shopping, we could increase the number of policies in force. Again, it seems to be lower profit compared to the first quarter, But this is due to the reversal profit recognized in the first quarter for Hartford Life, excluding that the profit is up compared to the previous quarter. Moving on to banking and credit. Similar to Oryx Life, non-face-to-face and online activities helped grow the assets for real investment loans. We are responding to the new lifestyle and maintaining stable profit. And both against the first quarter and the previous year, the profit was up. Moving on to aircraft and ships. The aircraft lease business, which is the main stay here, worsened due to COVID-19, but we expect a future recovery with an increase in demand in domestic lines. Moving on to Oryx USA. Compared to the first quarter, this was a major increase in profit. Thanks to the appraisal loss in the first quarter, MPE investment turning into gains and also smaller credit losses, in energy-related companies. It seems as if the profit is much lower than the previous year, but this is due to the gain on sales of Hulian Loki posted in the previous year. Next is RX Europe. RX Europe AUM hit bottom in end March 2020 at 233 billion euros, and it recovered to 260 billion euros at the end of September 2020. more than 10% improvement, and also profit growth up compared to the first quarter. Last is Asia and Australia. We recognize the impairment due to lower share prices of the deal that we invested into China, but the local operating companies are doing forward business and excluding the impairment. This is positive profit growth in the second quarter. Moving on to the next page regarding segment assets. Corporate finance services and maintenance leasing. Finance assets are decreasing slowly, standing at 1.7099 trillion yen. At the end of the term, this is 4% down. And insurance was 1.7104 trillion yen, up by 8%, thanks to the increase in the number of policies, banking and credit policies. was up by 3% after 2.6766 billion, thanks to the increase in the real estate investment loans. And Oryx USA reduces asset, focusing on balance sheet business more carefully and also putting the efforts into asset management. In Europe, there's a second wave of COVID-19 and the future is difficult to see, but we are building a profit based on distributed business portfolio, which is a strength. That's all about segment performance. I would like to move on to page seven about financial soundness. To the left, you can see that the financing right now, despite COVID-19, is solid. We have sufficient capacity, both from banking loans as well as capital market. And the long-term debt ratio is above 90% thanks to assets. When we made the four-year announcement in May, we presented the conservative scenario with extensive worsening of operating cash flow as on-hand liquidity stress test. But in fact, the request for referral as well as delayed collection has stayed at the low level. And including the aircraft lease business, the collection rate remains high at 95%. To the right, you can see the shareholder's equity index. employed capital ratio, which is 85% at the end of September 2020, which means that there is sufficient capital for potential future investments. That concludes my presentation regarding the performance for the first half of fiscal year ending March 2021. Next, we would like to invite our CEO, Mr. Inoue, for his presentation.