■Financial Overview
1. Progress and performance trends of “Group Federation Management” so far
Looking back on the performance up to before the COVID-19 pandemic (fiscal year ending 2020/2), the expansion in the number of stores due to new store openings and M&A has driven the growth in the performance of Create Restaurants Holdings ＜3387＞. In particular, the turning point was the shift to a new growth strategy through “group federal management” from the 2013/2 fiscal year. Various business categories with potential for growth have been grouped, and while achieving high growth potential by backing up further store openings, we have been working to expand the diversity of locations and specialty brands. However, for the fiscal year ending 2021/2, unprofitable stores were drastically reorganized due to the effects of the COVID-19 pandemic, so the number of stores has temporarily plateaued. Meanwhile, looking at the composition ratio of the number of stores by location, commercial facilities (total of suburban SC and urban SC) accounted for 78.4% at the end of the 2012/2 fiscal year, but while commercial facilities shrunk to 49.8% at the end of the 2024/2 fiscal year, they are scattered across train stations/downtown areas (20.6%), roadside (14.0%), and sports & leisure (7.9%), and a balanced location portfolio has been established.
On the financial side, the equity ratio (equivalent to equity ratio) attributable to parent company owners, which indicates the stability of the financial base, had secured a level of over 35% until the 2012/2 fiscal year, but at the end of the 2013/2 fiscal year, shares held by Mitsubishi Corporation were acquired by TOB, and about 80% of them were written off, which dropped to 19.7%. Equity attributable to owners of the parent company was enhanced through the sale of treasury shares in the 2014/2 fiscal year, and at the end of the 2015/2 fiscal year, the shareholding ratio attributable to parent company owners improved once to 32.4% due to SFP Dining's stock listing (subsidiary listing), but it dropped again to 24.1% due to M&A of “KR Food Service” at the end of the 2016/2 fiscal year, and “Iccho” and “Il Fornaio (America)” even after that Due to the implementation of large-scale M&A, etc., and the effects of IFRS application (change in lease accounting standards), etc., the equity ratio attributable to parent company owners at the end of the 2020/2 fiscal year dropped to 10.8%. Although the 2021/2 fiscal year was affected by the COVID-19 pandemic, in addition to raising funds through permanent subordinate loans and implementing public offering capital increases (repayment of permanent subordinated loans), the equity ratio attributable to parent company owners at the end of the 2024/2 fiscal year has improved to 27.5% due to a recovery in business performance (accumulation of internal reserves).
Looking at cash flow, it can be said that from the 2014/2 fiscal year to the 2016/2 fiscal year, investment cash flow (negative) continued to exceed operating cash flow (positive) due to aggressive new store openings and M&A, and this has driven growth in business performance. From the fiscal year ending 2018/2 to the fiscal year ending 2019/2, although investment cash flow was temporarily suppressed due to suppression of new store openings, etc., investment cash flow greatly expanded in the fiscal year ending 2020/2 due to the realization of successive M&A. Both operating cash flow and investment cash flow have shrunk in the fiscal year ending 2021/2 due to the effects of the COVID-19 pandemic, but “cash and cash equivalents” increased significantly through fund raising through permanent subordinated loans. Since the fiscal year ending 2022/2, free cash flow* has continued to be positive due to the recording of cooperation funds, cost control, recovery in profitability, etc.
※Operating Cash Flow - Investment Cash Flow
(Written by FISCO Visiting Analyst Ikuo Shibata)