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May 1, 2007

Promise Co., Ltd.

Initiatives to Reform the Cost Structure and Start of New business Strategy

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Promise Co., Ltd. is taking numerous actions aimed at dealing with the rapid changes in its operating environment due to amendments to laws involving the money-lending business. There are two central objectives. First is to reform the cost structure in the unsecured consumer loan business so that this business remains profitable. Second is to set the stage for growth by developing a new business model.

1. Purpose of Reform
Promise pursues its financial services that offer customers greater convenience and satisfaction based on the corporate philosophy of "Support affluent lifestyles and aim to be a trusted corporate citizen"; "Target appropriate profit levels through efficient management and seek to achieve sustainable growth"; and "Be appreciated by customers and cooperate with society to realize mutual harmony and benefit together with employees."
  Amendments to Japan's money-lending business laws are causing rapid changes in the operating environment. To better position operations to pursue the corporate philosophy outlined above, Promise is reexamining its cost structure across the entire group with the aim of keeping its businesses profitable. While executing these reforms, we will also develop a new business model that allows us to directly target the transaction settlement needs of consumers. Serving a broad spectrum of consumer needs will allow us to build a more powerful base for our next stage of growth.

2. Reforms of Cost Structure and the Promise Group Strategy
To prepare for the full enforcement of the amended Money-lending Business Law, our medium-term goal is to use cut annual expenses by about 40 billion yen, excluding financial expenses and credit loss expenses, by using all types of expenses more productively. As the first step in this direction, we will take the following actions during the fiscal 2008.

1) Consolidate customer service centers
During the fiscal year ending March 31, 2008, we will consolidate eight nationwide ST Centers (a center of automated contract machines and loan processing machines), which is located in each blocks at two locations in east and west. Also, we will combine the eastern and western contact centers (a center of call center and application via internet) at one location.
2) Integrate and eliminate marketing channels
During fiscal 2008, we will integrate and eliminate staffed and unstaffed branches and loan processing machines. Integrations and eliminations will be based on the level of use at each branch and loan processing machine, nearby service channels of alliance partners and other factors so that we do not inconvenience our customers. Based on this stance, we plan to take the following actions by the end of March 2008.

1. Integrate and eliminate staffed branches and convert to unstaffed branches
Reduce staffed branches from 413 to 286 locations by converting 103 to unstaffed branches and closing 24 branches.

2.Reduce unstaffed branches and loan processing machines
· Reduce 201 unstaffed branches to 959 locations from 1,057 (including conversions of staffed branches)
· Reduce loan processing machines from 983 to 350 units

3) Reorganize consumer finance subsidiaries
We plan to complete the following actions by October 2007.
1. Terminate loan business and transfer loans
QUOQLOAN Co., Ltd. and Sun Life Co., Ltd. will stop extending new consumer loans as well as additional loans to current customers. The loans of these two companies will be transferred to Promise and group member PAL Servicer Co., Ltd. depending on the characteristics of each loan. Both companies will continue to operate solely for the purpose of collecting certain loans that are not suitable to be transferred.
2. Marketing channels
QUOQLOAN and Sun Life will close all staffed branches (23 at QUOQLOAN and eight at Sun Life) and Sun Life will close all 50 unstaffed branches. In addition, both companies will close six centralized customer service centers (that are loan processing machine administrative centers, call centers and loan management centers), four at QUOQLOAN and two at Sun Life. Both companies will reduce their administrative departments to the smallest possible size.

 Note:QUOQLOAN has no unstaffed branches because this company uses the loan processing machines of Promise.

3. Employees
QUOQLOAN and Sun Life will retain only employees for management and collection of the remaining loans. All other employees will be reassigned to other Promise Group companies.

4) Use human resources in the optimal manner
Consolidation of the above centralized customer service centers, the integration and closing of branches and the reorganization of consumer finance subsidiaries will eliminate the positions of many employees. All these individuals will be reassigned to other businesses within the Promise Group, including the new automotive services business and the Internet shopping mall. Our medium-term goal is to reduce our workforce by about 1,000.

5) Other initiatives
In addition to reducing branch and personnel expenses as outlined above, we plan to cut advertising and marketing expenses, such as by reviewing the use of outdoor signs and other advertising media, IT system development and maintenance expenses, and all other expense categories at the group.

3. The start of a new business model (new strategy)
We will use knowledge gained from our unsecured consumer loan business to build a base for the next stage of our growth. To accomplish this, we are now developing a business model that directly targets the transaction settlement needs of consumers. We have already started assembling this model. We have started a real estate leasing service, an Internet shopping mall and an automotive services business, which we announced today in a separate press release.
  As part of our new business strategy, we will establish a comprehensive finance company called Do Finance Service Co., Ltd. This company will offer a diverse lineup of financial services with the aim of meeting transaction settlement needs across a broad range of consumer segments.

1) Outline of New Businesses Strategy
The Promise Group will establish a presence in business fields that produce consumer transaction settlement needs. In each business, we will focus on the transaction settlement needs spawned by our products and services. Do Financial Service will be a platform for offering settlement services that match these consumer needs.
[Summary of New Business Strategy]

2) Outline of New Finance Company
1. Trade name:Do Financial Service Co., Ltd.
2. Principal business activities:Installment loans and consumer finance business
3. Establishment:February 22, 2007
4. Start of business:July 2007 (Planned)
5. Location of head office:26th Floor, Shiodome Sumitomo Bldg., Higashi-Shimbashi, Minato-ku, Tokyo
6. Representative:President: Yukihiro Suzuki
7. Paid-in Capital:2 billion yen (Capital: 1billion yen, capital surplus: 1 billion yen)
8. Number of Employees:33 (At the start of business)
9. Principal shareholder and ownership of shares outstanding:Promise, 100%

3) Timetable for provision of services by Do Financial Service
Do Financial Service plans to start operations in July 2007 by offering loans to customers who use the Car-ichi network auction for used cars. The company will then develop financial services for other types of businesses.

4) Business Plan
1. Loan balance
By the end of March 2011, which will be Do Financial Service's fourth year of operations, this company plans to raise its loans and other receivables, including unsecured loans, to 120 billion yen.
2. Earnings plan
In the fiscal year ending March 2010, the third year of operations, Do Financial Service plans to have operating income of 6 billion yen and to be profitable on a stand-alone basis with an operating profit of 0.5 billion yen.

This news release has been translated from the original Japanese document released on May 1, 2007, for reference only.
  In the event of any discrepancy between this translated document and the original Japanese document, the original document shall prevail.

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