I'd like to start the financial results briefing for the sixth month, ending September 30th, 2023. 25 minutes will be spent for presentation, followed by Q&A. Let me introduce our presenters. First, Mr. Kato, Director, Managing Executive Officer, and CFO, will give you a presentation about our results and business status. Our CEO, Mr. Aoi, will discuss the outlook of our business and progress to achieve our midterm business plan. To answer your questions, we have Saito-san, President and Representative Director, Epos Card, and Mr. Aono, President and Representative Director, Marui Co., Ltd., and Ms. Kutsukake, General Manager, Investor Relations Department. Those will answer your questions. First, CFO, Mr. Kato, will give you the overview of our financial results of the second quarter of fiscal year 2020 for March.
I am Kato. I'll be talking about financial results and overview of each segment for Q2 of the year ending March 2024. First, the consolidated results. There are four major points. The total transaction volume exceeded JPY 2 trillion for the first half, for the first time, and operating income is JPY 18.7 billion, down 17% or JPY 7.3 billion year-on-year. Excluding liquidated accounts receivable, actual operating income was down JPY 1.2 billion. Net income was down 14% at JPY 11.5 billion or JPY 1.9 billion, lower year-on-year. Full year plan is now revised based on the progress in FinTech. I'll explain more when I get to the FinTech. This is the main financial indicators.
Group total transaction was JPY 2,172.5 billion, setting a new record high again. FinTech transaction increase made great contribution. Operating income exceeded the previous year by JPY 3.7 billion at JPY 18.7 billion. From this fiscal year, we changed the timing of funding through liquidation of accounts receivable, which led to JPY 2.5 billion drop in the first half. Excluding that impact, it was JPY 1.2 billion drop, and factors for the drop will be explained at FinTech segment. Net income was JPY 11.5 billion, down JPY 1.9 billion year-on-year. If you had this account receivable liquidation at the same time as the previous year, net income would have been on par with the previous fiscal year. I will explain the factors affecting operating income.
The operating income is JPY 18.7 billion, down JPY 3.7 billion year-on-year, excluding -J PY 2.5 billion impact of liquidated accounts receivable. Actual drop was JPY 1.2 billion. In breakdown, Retailing saw JPY 800 million increase, while FinTech saw a drop of JPY 1.3 billion. Corporate eliminations were negative JPY 700 million, due to granting of stock to employees and other increase in human capital. Delay in the liquidation of accounts receivable is now explained. From this fiscal year, in order to improve capital efficiency and even out gain on transfer, we decided to do this liquidation every quarter instead of once in first half. Therefore, in this first half, it resulted in JPY 2.5 billion drop for the full year.
It will be done in Q3 and Q4, and when in last year, it was not done. In total, gain on transfer equivalent to the write-off is scheduled, so there hardly any P&L impact is expected. And this is a segment of income and revenue and operating income. In retailing, due to the end of directly managed private brand, revenue dropped by JPY 600 million. Operating income went up by JPY 800 million, due to increase in revenue from tenants. And FinTech revenue increased by 9%. Steady progress was done, but there was increase in expenses. And due to the extraordinary factors, even considering the liquidated accounts receivable, there was a drop of JPY 1.3 billion.
In retailing business, factors affecting operating income, that despite the - JPY 900 million impact in revenue, due to the voluntary PB withdrawal, fixed term tenant revenue increase and personnel expense decline resulted in JPY 800 million increase in operating income to reach JPY 2 billion. Factors affecting revenue from the fixed term rental contract tenants in the fiscal year. Now, operating floor space decreased, and average monthly tsubo rent increased year-on-year, resulting in JPY 900 million increase in revenue. And this is a specific non-operating floor segment. It is now 8,700 tsubo, way down from the 10,200 tsubo . And average for the full year is expected to be reduced to 8,400 tsubo. And there's progress in stores that don't sell.
Non-retailing tenant floor area composition went up by 2%, and, so there has been steady progress in category conversion toward the plan of bringing up this floor composition to 70% in March 2026. Fixed-term rental contract tenant monthly use price is going up in line with the plan. This is a trend in the number of customers coming to the stores. It was 88 million or 109% year-on-year, 88% vis-a-vis pre-pandemic year of 2019. With the increase of non-retail tenants, the number gradually recovered from fiscal 2019, and in this fiscal year, is expected to reach 180 million, with 92% of pre-pandemic year of 2019.
... E-commerce transfer, we have increased hiring of professional talent further and enhanced efforts to increase the site visits, and so we will continue to grow the business. With this, the retail segment in the second half forecast is shown here. In the first half, we had a growth of JPY 800 million. From second half, we expect revenue from tenants to increase further, and also facility and other assets related expense will drop, and the posting of sales promotion expenses to be carried over. So we expect to accomplish the planned JPY 7 billion.
Next is OP breakdown. Revenue and expenses were categorized into those linked to transactions, those that are not. Thanks to transaction growth, those linked to transaction went up by JPY 2.6 billion.
Those that are not linked to the volume went up by JPY 4 billion. Total revenue went up by JPY 6.6 billion, but expenses went up by JPY 7.6 billion. Therefore, operating profit, excluding the liquidated receivables impact, the number was down by JPY 1.3 billion to JPY 23.5 billion. There are some one-off factors, such as merchant fee and point expenses, which I will elaborate more later. First, with merchant fee. First half commission rate was 1.21%, down by 0.04 percentage point year-on-year, generating the impact of JPY 500 million, year-on-year variance in the first half, out of which 0.02% is attributable to some merchants rate cut, which was not baked into our midterm business plan. Therefore, the impact is not expected to linger.
Also, companies trying to expand the share of household finances that will continue to give impact on our business. Remaining 0.02% comes from travel, entertainment, recovery, as well as prepaid charge. We reviewed point program systems, so prepaid charge impact is not going to repeat in the coming quarters. Regarding point expenses, we reviewed the calculation method of provision. As a result, expense went up by JPY 800 million in the first half of this fiscal year, and this impact is not going to be repeated in the second half. Also, prepaid card charge increased in order to gain points. As a result, point expenses went up by JPY 200 million. To respond to that, the company reviewed our point program in September, therefore, there will be no impact in the second half.
Excluding those one-off factors, it's fair to say that point expenses have been controlled within expectation. Last thing I'd like to touch on commission fee and labor cost. In the first half, because of weaker yen, commission rate over transaction increased by JPY 200 million year-on-year, and this fixed impact is likely to linger in the second half. Regarding labor cost, we reviewed our retail format, and strategic reallocation has led to increase of JPY 100 million 100 headcounts. In the first half of this fiscal year, we increased headcount by 80 people for the new businesses. As a result, cost went up by JPY 300 million, but there will be no more impact in the second half. Here are some one-off factors summary.
The impact of margin fee cut will linger to a certain extent, but, there are, other measures that would not be repeated. So excluding one-off factors, profit would increase by JPY 2.9 billion, which is almost on par with pre-COVID level of JPY 3 billion. Therefore, in midterm, business plan, we were expecting FinTech's contribution to profit, and, this trend will remain the same, no change with our expectation. Full year profit outlook is shown on this slide. Given the margin fee, revenue, we, decided to lower the guidance down to JPY 43 billion, down by JPY 3 billion. Next is about co-creative investment. In March 2025, JPY 100 million was invested to startups. Another JPY 100 million went to the fund. A total JPY 200 million worth of investment was made.
Accumulated investment amount has now reached JPY 27.2 billion since March 2017. As for co-creative, it would contribute to the core business one by JPY 1.2 billion, out of which 700 million went to retailing, 500 million went to FinTech. In March 2023, we are expecting JPY 5.5 billion. Next is the balance sheet. Operating receivables increased by JPY 32.5 billion in March 2023, with that, total assets to JPY 1,021.7 billion. Next is capital allocation. Basic operating cash flows stood at JPY 14.5 billion, out of which JPY 7 billion was allocated to growth investment, JPY 5.7 billion was allocated to dividend. Regarding expenses, the company invested JPY 4.7 billion in human capital, representing JPY 800 million increase year-on-year, or 26% of the total labor cost.
Profit outlook by segment, retailing profit is JPY 7 billion, in line with the plan. FinTech profit is down by JPY 3 billion from the original guidance, down to JPY 43 billion. Total company expense is JPY 8 billion, showing JPY 500 million negative variance due to expansion of capital, human capital investment. Consolidated OP will be revised down to JPY 42 billion by JPY 3.5 billion. Although, 3 KPIs are likely behind our original plan, we are aiming at top line, bottom line growth. Regarding dividend, the ROE stays at 8%, so DPS will stay the same at JPY 101. Lastly, I'd like to talk about full year 2026, March. That is the last fiscal year midterm business plan. Again, for some merchant, lower commission rate is expected, and impact will linger, and new impacts will be reviewed.
Therefore, we are expecting a -JPY 3 billion variance against the original expectation. However, we believe that we can catch up with the following measures, so we are not going to change the guidance.
Now, the future directions and medium-term management plan achievement prospect will be given by President Mr. Aoi.
Aoi speaking. I will be talking about future directions and the forecast for medium-term management plan. We are halfway through in the second quarter through the current medium-term management plan. In the first half, that result was challenging, but we still have remaining half to go, so we want to have a solid recovery to accomplish the original plan. So going forward, we will partially revise the plan and move up the execution of new growth strategies. There are three following points. First one, personnel plan review and improvement of human productivity. Second, cards tailored to each individual interest as a new growth strategy. And third, review of new business co-creative investment. First, personnel plan review and improvement of human productivity.
Our per capita productivity through the business structure transformation from the retailing focus to FintTech focus since year ended March 2015, steadily increased by 1.5 x for the past 10 years. However, on the other hand, in FinTech, per capita productivity during the same period, despite the transaction going up 4 x from JPY 1.1 trillion-JPY 4.3 trillion, remained only 1.1x only, a slight improvement. One of the factors behind the stalled growth in FinTech productivity was reallocation of talent associated with the business structure transformation. The headcount in FinTech was 1,300 as of April 2014, but for the subsequent 10 years, every year, about 140 people were reallocated from retail to FinTech, resulting in a total expected headcount of 2,700 in March 2024.
Reallocation of personnel was done in the form of upfront investment, a faster than increase in the scale of business in FinTech. However, in the previous fiscal year, the group business structure transformation was completed, and so was the reallocation of personnel. Therefore, going forward, personnel assigned in an upfront investment manner can now contribute to revenue and thus expected to significantly improve productivity. Therefore, we will review the personnel plan. In medium-term management plan, originally, we had expected increase of 100 people every year in FinTech, with business expansion. After March 2025, but this will be revised to ±0. So the impact on the cost of the final year of medium-term management plan is expected to be about JPY 1 billion.
With efficiency improvement by DX, per capita productivity is expected to be increased to 47, or rather JPY 36 million in March 2026, and JPY 47 million, or 1.6 x, in March 2029. Now, the cards tailored to each individual interest as a new growth strategy. In FinTech, so far, Gold Card with no annual membership fee, a unique business model, has been growth engine to achieve annual growth rate of 16%, which is quite high. Following the Gold Cards, in recent years, a potential second growth engine, new cards, has emerged. That is cards tailored to each individual interest. And number of holders of cards tailored to each individual interest among new sign-ups has been increasing year by year and expected to reach 40% in March 2024.
LTV of cards tailored to each individual interest is two- to seven-fold higher than general cards, approaching LTV of Gold Cards, potentially. Currently, 60 different types have been issued, and membership has reached 780,000, and members per plan is 110,000 at the largest, and 600 at the smallest.
The number of plans has increased dramatically over the past few years. Back in 2015-2019, we used to have two-three plans per year, but with introduction of print on demand in 2022, last year, we had 16. This year we are expecting to enjoy 23 plans. There are several reasons behind the increase of number of plans. First is not just the FinTech, but also retailing and co-creative investment. Group as a whole is engaged in development. In reality, retailing came up with 26, and FinTech came up with 27, almost on par. Partly because anime business was included in retailing, but e-commerce and stores are involved in development. And also, with co-creative investment, business partners and Marui are working together to develop collaboration card. So we are going beyond business boundaries to develop different types of cards.
And second is to do with motivation by employees. If we leverage individuals' interests, employees' motivation will increase, and as a result, if they see their work are resonant with what customers' interests, they think that it's rewarding and drive development. And also, we have a corporate culture to encourage people to take a challenge. In the past, because of higher printing costs, 5,000 was a lower limit to print per card, but thanks to print on demand, there is no such restriction for employees. The risk to fail became lower, so it's easier for them to make a proposal and take a challenge. And for our target, we'd like to nurture a culture to allow people to make mistake and promote, to take challenges.
If 5,000 people can leverage their interest and develop their individual cards, we may be able to come up with 5,000 different types of cards. But even if we have more plans, we need to acquire members, otherwise does not make sense. So we do have unique strengths and resources that other companies cannot copy. That is, events that can be held in our stores to attract traffic, and also we do have capability to attract members, which we nurtured in our retailing business. We develop eventful stores that are generating synergy. As a result, 70% of new applicants choose cards tailored to each individual's interest. And also, customers who participate in events talk about us with social media that bring online new application from an area where there are no stores.
Next is our cards tailored to individual interests, converting them into main card. In the past, or traditionally, we encourage existing cardholders to switch to Gold Card, but tailored cards have a strong intention to use their tailored card as main card. So a lot of people decided not to convert into Gold Card. As a result, upper usage limit stays the same, so their tailored cards cannot be used as main cards. But moving forward, without shifting to Gold Card, we allow customers to use their tailored card as main card. We allow them to increase the upper limit of usage. So again, cards tailored to each individual interest would bring JPY 2 billion-JPY 3 billion worth of profit contribution by the last year mid-term business plan. Next is about co-creative investment and new businesses. First, about new businesses.
Last year, we decided to take another look at what we have. Instead of a zero-from-scratch approach, we introduced so-called e-entrepreneurship business development approach. As a result, some businesses were canceled and some businesses were integrated, so the number of new businesses went down from 11 to six. So contribution coming from new business to our mid-term business plan will go down from JPY 2 billion to JPY 1 billion. And entrepreneurship business development status will be explained more in detail when we host IR Day. Next is about co-creative investment. So for we have been going after profit contribution to our core business and financial return, our policy will remain the same. However, in terms of operation, we are trying to increase probability of success. First, in the initial investment phase, we place more importance on potentials for collaboration.
So to that end, it is useful or practical to make an early investment in seed or early stage, but the risk is high, so investment amount is likely to be small. But once enterprise value goes up and see possibility of exit, it's reasonable to make a bigger investment, expecting higher financial returns. So in the past, we used to wait for higher enterprise value to make an investment. As a result, investment amount is likely to be big and incur higher impairment loss. But moving forward, we would like to control the initial spending, controlling the amount around JPY 50 million, and to invest JPY 100 million or more. As a result of a collaboration, we will spend money once we see a bigger possibility of exit.
And as a result, investment amount will go down from JPY 12 billion to JPY 5 billion after the revision of our policy. And with that, impairment loss is likely to go down by JPY 1.5 billion. So with that, profit contribution in terms will be by March 2026, will be JPY 3 billion-JPY 4 billion, and extraordinary loss will be down by JPY 1.5 billion. And with that, we believe that we can achieve our mid-term business plan.
Now we'd like to move to question and answer session. The first question, Mr. Kanamori from Okasan Securities, please.
Kanamori from Okasan Securities. So there's one question, there's one question. In FinTech, the downward revision for FinTech is what I would like to ask about. You explained a lot, but in the first quarter, there was a forecast, and with that, the merchant commission reduction impact was to a certain extent taken into account. What you said back then is that the point policy would be reviewed, and in various initiatives, there will be improvements done. So I don't think the direction has been changed. But in the first quarter, you had the forecast, but this revised forecast now on page 25 in the FinTech waterfall chart, what has changed how? Can you explain more about the change from the Q1?
The revenue itself in the doesn't seem to have changed from this first quarter forecast, but expenses may have gone up from the initial forecast. So what are the reshuffling of the positive and negative factors coming to the conclusion of this downward revision?
Saito speaking. Thank you very much for your question. So to your question, Mr. Kanamori, from the first quarter forecast, and the full year forecast has been changed from that, and what has changed? That was your question. And in terms of revenue and expenses, I'd like to explain. First, on revenue, as was explained earlier, in the first half, based on the actual results in the first half, as described in the fact book, the transaction expected has been changed slightly. Why?
Because in the first half, the prepaid charge type transaction has rapidly increased, and merchant commission rate has decreased, and point expenses has increased. So there was a double whammy. So by reviewing this program, the transaction is expected to decline in the second half. That's what we had expected in this revision. And 116% was the plan in the original plan, but we ended up with 115%, one percentage point down. So in the second half, including second half for the full year, full year, JPY 50 billion revision was done. So compared to the forecast in the first quarter, there was some slight decline in the revenue expected.
And as for expenses, as you said, in the first quarter, there are various factors, or there was various cost reduction initiatives scheduled, and we have been steadily making executing those. But what has mainly changed for the first quarter forecast, there are severalfold, and one, the first one is point expenses. Compared to the end of first quarter, the prepaid point increase had not been taken into account in the first quarter forecast. So that was the increase in the point expense increase. And also, in the foreign exchange expenses, we had thought that this would be the one-time effect in the first quarter, but now the yen is JPY 150 to the dollar or more, so the expenses forecast has to be increased slightly.
So there is some expense increase that we have come up with from the first quarter. So JPY 3 billion decline was taken into account in the full year forecast.
Well, as for the prepaid cards, the expenses for the prepaid card had not been taken into account. But in the first quarter, there were signs that were seen. As a layman, that's what I would assume. So what about your thoughts on that?
Well, as for the point expenses, if you can take a look at that page, as you can see on the right bottom, if you can see the transaction for prepaid charge from the second half of last fiscal year, it has gradually going up. But in the second half of last fiscal year, there was no conspicuous prominent increase.
We had realized that there was an increase, but I didn't think that there would be some responses needed. But from the first quarter, there were some signs for a rapid increase. So based on the results of first quarter, we have taken this action. So in, at the, as of the first quarter, there were some uncertainty about potential responses, so this was not taken into account.
So the merchants, some merchants fees decline, I think this would be maintained, or you said that this will be maintained to a certain duration. So in the continued impact, there was -JPY 100 million. Is this what you're talking about?
Like for the next two-three years, there will be an impact of JPY 200 million solely due to the merchant fee decline. Is that correct understanding? In the large scale merchants, the terms and conditions were changed, so the impact will be continued for the next fiscal year and after next. So that impact has been translated into this number. Don't you think that this would also spread to other merchants?
Well, if you look back for the past 10 years in historical terms, the terms and conditions changed for merchants had never dropped or reduced the- the total, merchant, fee rate. So we cannot say for sure, but this was a quite unique, event.
Or I'm sorry, I kept, asking the same question. I'm sorry. Thank you.
Thank you. We will take our next question. Next question comes from Takahashi-s an of Mizuho Securities. Takahashi-s an, over to you.
Hi, this is Takashi with Mizuho. Thank you so much for sharing detailed information. So I'd like to, ask a question to both present, first with retailing business. I know that our business is in line with your expectation, all in all, but what is working particularly well, and where do you see some rooms for improvement or opportunities?
And my question to Saito-san, as Aoi-san, CEO, mentioned, the company has to improve productivity, and because of larger number of headcounts, the company struggled to improve productivity, I assume. So why has productivity not improved? Maybe you did not put much focus on that, but looking back, I'm looking at page 44, you are trying to improve productivity aggressively. So what kind of actions are you going to take to make that happen? And lastly, I'd like to ask our CEO. I know there are some challenges, but to achieve your midterm business plan, I know that the company has continued to fine-tune your plans to achieve your goal. But while it's been still a few months since the previous IR day, you may not have a lot of update, but what's working well?
While retailing and FinTech and Co-creative investment are enjoying bigger collaboration, I assume, but to achieve midterm business plan, what is working well? And you are saying that you are determined to achieve your numerical target of midterm business plan, but in coming years, there may be some external factors. Anything that you are paying particular attention to? So that's all for my question.
Hi, this is Aoi, in charge of retailing business. Thanks for your question. So two points. So we are in line with our plan, but what's working well and what are some opportunities to make further improvement? So regarding fixed-term rental contract, I think that's working well. In order to achieve JPY 7 billion or JPY 12 billion, the engine for growth will be the increase of fixed-term rent.
So to achieve seven, more than JPY 2 billion revenue increase is expected coming from fixed-term, and we believe that we can achieve this, as of the first half. And as for opportunities, as mentioned in the second part, we do have cards tailored to each individual's interest. That's something that we are going to focus on and strengthen, not just for EPOS, but also for retailing. I think that's a big opportunity for retailing business. Cards, tailored cards, would help us to increase new customers for retail business. Tailored card would bring new customers, and also, thanks to event, revenue will increase. That would increase the value of stores and increase rent accordingly. So strategy of tailored card would bring bigger opportunities to our retailing business.
Hi, this is Saito. Thanks for your question. About FinTech's productivity. Today, productivity is hovering at lower level.
What's my view on that and how to improve the situation? So to answer your questions, as mentioned, Marui Group's FinTech, to streamline retailing business, we allocated the talents to higher productive business. FinTech has played a role to make that happen. However, without workplace, you cannot make the best use of the talents. So while transforming retailing business, FinTech business is trying to strengthen the nationwide business and strengthen sales capabilities. Well, we do have 40 business partners today, external business partners, so we have developed workplaces where we can leverage our talents. Fortunately, even if our people are engaged in retailing, we are able to issue cards in our retail stores. There are a lot of talents who are capable of retailing and FinTech businesses. A lot of people are productive from day one.
So as we continue to develop, we don't have enough talents, so we try to nurture our talents. And also, regarding processing department, we are trying to make the best use of IT technology, but the transaction increased by 4x . So we need talents for processing department, so we allocated people to back-end as well. So how to improve productivity from now? To be honest, in terms of operations, I know that we have a relatively large number of headcounts. So first, the external card center operations, we are now dependent on our full-time employees, but shifting to external part-time operators, we can cut costs. And also regarding digital transformation, particularly for back-end, I think there is a room for improvement. We can make the better use of digital technology. As we increase our transaction, we don't have to increase the headcount.
So with that, we would like to improve our productivity. And also, let me answer your question as well. So, since we developed our midterm business plan, we'll have phase I was already completed, so we have phase II to go.
So what's working well? What's not working well?
So to point out what's been working well, as Takasa mentioned, collaboration between retailing and FinTech group is united to run our business. I think we are able to enjoy a collaboration between different businesses. Again, designing and issuance of cards tailored to individual's interest is an example. That was originally FinTech business. You may think that other businesses don't have to do anything. What we did not ask, but people started to really get involved in this project to design and develop tailored cards voluntarily.
We are enjoying momentum, so as a group, we are united to really run our core business. I believe it's difficult for peers to copy. We are united to run our unique business. So I think, that's an example that's working well, that makes me really happy. On the other hand, regarding challenges, there are, of course, a lot of challenges to address, particularly in terms of external environment. New competitors are making inroads into our domain. For example, when it comes to FinTech business, conventional competitors are large retailers, credit cards. On top of that, we have emerging e-commerce players. Some are, marketers, some are retailers, some are telecommunication, code payment, credit card issuance, emerging FinTech players. They may be small, but, they may grow fast. So we are seeing, new FinTech players making inroads into our market, one after another.
So we have to keep our closer eye on the situation. We have to stay alert, so that we can come up with unique strategy that cannot be copied by others. So looking back, a lesson we learned is that we have new businesses. JPY 2 billion contribution was expected during midterm business plan term, so we were excited about new businesses, but we struggled. Our strengths and resources, well, should be maximized with what we call entrepreneurship. Business will be focused on from now on, so the size would be smaller, but we focus on businesses that are more likely to succeed. And regarding investment, we have a co-creative investment scheme. It's been seven years since we introduced this.
We have gone through trials and errors, and as I mentioned, we now see some challenges, so we'd like to learn lessons from the past so that we can invest in area where we believe we can enjoy success. That's all. Well, so basically... So you have a midterm business plan, or even beyond midterm business plan, you will continue to review your initiative, so that kind of attitude or policy will remain the same. Yeah, basically, as I mentioned, we believe that we can achieve the target, so please be rest assured.
Thank you.
Thank you very much. Now I'd like to move to the next question. Mr. Tsuda from Daiwa Securities, over to you?
I have two questions. First one is a simple question. Slide 62. So, there is a improvement effect, and with the review of new businesses, JPY 200 million decline has not been included, it seems. Is there any particular reason for that?
Yes. Kato actually explained in the first half, if the impact continues, then the impact on the final year of the medium-term management plan, the 2 billion, from 2 billion to 1 billion, is the contribution that we see from new businesses. So that, - 2 billion in FinTech and - 1 billion in forward-looking investments, so in total, JPY 3 billion impact is expected.
And then, to what extent we can recover from here is what you actually referred to on slide 62. And these two, operating income, and this, this is at the operating income level, so productivity and costs, tailored to each individual interest, JPY 3 billion-JPY 4 billion recovery is expected. And also, further below, extraordinary, profit or income or, sorry, loss of JPY 1.5 billion.
So the, impairment loss will be reduced by JPY 1.5 billion, right?
In the new businesses...
I'm sorry. So JPY 3 billion- JPY 4 billion, it should be assumed, right?
Minus, so that's a negative effect, and then we should offset that or recover from there. That is what is written on slide 62.
Okay, understood. Just for clarification. And the second question? The direction of medium-term management plan is quite solid, and what needs to be done is now being done, which is quite assuring. But if you look at the single-year performance, in the previous year, you were short of the target, and now you are behind the downward revision. And there could be some one-time factor from the previous year that was visible. And because direction of medium-term management plan is quite solid for the single year, the direction of the medium-term management plan is a big direction. So risk factor inclusion, and putting up the numbers, it seems that you are quite loose. And in this next fiscal year, maybe the traffic signal could change from yellow to a red.
So how do you look at the balance between the medium-term management plan as a whole and the single-year performance?
Well, Kato speaking. You rightly said, so for the revision for this fiscal year, we have not taken into account fully the extraordinary factors, and that is the lesson that we've learned. The actions taken were a bit delayed. So for this fiscal year, we had to revise the plan because we were not able to accomplish the original plan. But as we analyzed more closely, we now realize that we can recover, so we have to be earlier to take action going forward.
Well, for example, you explained this time, so it was assuring, but as for liquidation of accounts receivable, that was done in the second quarter, and also there was, the, that was also done, and that is going to be done for throughout the year. That's the first time that we have heard about that. So at the time of the fiscal year, at the beginning of the fiscal year, if you know that, if you can disclose that earlier, that would be appreciated. What do you think?
Well, for the liquidation of accounts receivable, the proceeds should be allocated to the new lending. So, we had known that once a year would be inefficient, but gain was recorded in a large sum so that we had that taken into account.
But in the first quarter, the cash advance receivables were liquidated, and we found that capital efficiency was quite good. So after the first quarter achievement, we had decided that this would be divided into four times throughout the year. And announcement was delayed, I'm sorry, but because of fund efficiency, we decided that we would do this every quarter, this from this fiscal year. Thank you.
In the next fiscal year, I don't want you to say the same thing for three years consecutively, please. Thank you.
Okay, next, Kawano-san of Goldman Sachs. Kawano-san, over to you.
Hi, this is Kawano speaking. Can you hear me?
Yes.
I have one question regarding FinTech business. In the previous term, you said that the card membership cost increased because of different factors. You were not able to meet the guidance, and this fiscal year, you would not able to meet your guidance. Seems like FinTech profit has not been really growing over the past two years. That's a big picture. OTC was also saying that GMV was growing, but the profit... is down, so it seems like industry as a whole is seeing the same challenge. I'm not sure if it's due to the acquisition cost or competition. Is it more difficult to generate profit in the entire industry?
Well, for your company, I believe that, you will enjoy, growth from now on, but it might be difficult to achieve your expectation in terms of growth. I know it's kind of a big question. I would appreciate it if you could share your take.
Thank you for your question. Hi, this is Saito. You are right, Kanamori-san, last year, well, the new card enjoyed a record high acquisition, so acquisition cost went up, and also the rent recovery after COVID, we assumed was aggressive. We are wrong. So that is why we failed to achieve the guidance. And in this fiscal year, as I mentioned, there were some one-off factors that were not baked into our original guidance. There were a lot of factors that we did not increase.
So Kanamori-san, you said that FinTech's business profitability is getting lower and lower. I understand your skepticism. So as of the second quarter, what I would like to say is that profit structure itself has not really changed. Negative variance is attributable to one-off factors. We decided to share details. More than JPY 3 billion worth of profit increase is something that we would like to maintain. So our profit structure itself hasn't really changed to continue to enjoy growth, and we have been focusing on or trying to accelerate the focus on cards tailored to each individual interest to strengthen our profit structure. So this time, well, of course, we took it seriously, and unfortunately, we had to revise our guidance. But let me repeat that our profit structure itself has not really changed.
I don't think you know, return or profit structure has changed, but in comparison to the past, you know, three or four factors, you're likely to see different factors as an industry. Just wondering if it's getting more and more difficult to generate profit? Yeah, I'd like to add more comments. So as Kawano-san mentioned, despite transaction growth, FinTech business is seeing some challenges to generate profit. It's not unique to EPOS. You are concerned that our industry as a whole is sharing the challenge. Well, in fact, we share the same challenge. We are concerned more than anybody else. That is why we did analysis in details. Well, some said that we were too optimistic, but increase of card charges would increase not just point expenses, but transaction expenses also went up.
It took more time than we thought. That's a lesson we learned to identify that. So again, transaction is now going up to JPY 4 trillion. We are aiming at JPY 5 trillion or to JPY 6 trillion. Now that we are JPY 4 trillion level, 0.1% change would impact a lot on our business, so we have to really be cautious. But again, we scrutinized our business, and the conclusion that we have reached is that our basic profit structure has not changed. We have not identified any structural changes. And again, about cards tailored to each individual's interest. So we had idea for some time. We decided to execute our strategy earlier. We can do that, so there are more opportunities that we can tap, although we have not been able to cover everything today.
But, in terms of profit structure, we are excited about what's to come next. So at a later date, we would like to share results and, explain what we are capable of. That's all.
Thank you for sharing details.
Thank you.
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