Performance Trend 1. Overview of performance for FY3/2024 Consolidated performance for FY3/2024 of G-7 Holdings <7508> was 192,992 million yen in increased operating income of 9.1% over the previous year, and increased ordinary income of 7.4% to 7,318 million yen, and attributed to the parent company's net income of 5,175 million yen, an increase of 35.3% over the previous year. Sales were driven by the Business Supermarket Business and the Meat Business, and continued to set a new record high, exceeding the company's plan by 4.3%. However, in terms of profits, the automobile-related business was affected by a decrease in profits due to poor sales of winter tires due to a warm winter, and could not reach the company's plan, it turned to a profit increase for the second time due to the growth of other businesses centered on the Business Supermarket business. The sales cost ratio has increased by 0.8 points over the previous year due to changes in the sales composition ratio; however, the selling, general and administrative expense ratio decreased by 0.7 points due to the effect of increased earnings, and the operating margin decreased by 0.1 points to 3.6%. The main reasons for the increase/decrease of selling, general and administrative expenses were a decrease of 600 million yen in energy costs due to subsidies from rising electricity prices, and an increase of 1 billion yen in labor costs due to improvements in employee treatment and increased education costs. In addition to this, depreciation expenses increased by nearly 600 million yen due to rising construction material costs and rising costs of opening stores etc. The EBITDA margin has increased by 0.1 points from the previous year. Also, the reason for the large increase in the net income of the parent company's shareholders attributable to the current period is due to the elimination of 500 million yen in retirement benefits paid to executives that were recorded as special losses in the previous year, a decrease of 455 million yen in impairment losses, and a gain of 127 million yen on the sale of investment securities in FY3/2024.

1. Performance for the fiscal year ending March 2024.

NEC Capital Solution <8793> reported revenue of Y255.857 billion (-0.9% YoY), operating profit of Y11.694 billion (-0.2% YoY), ordinary profit of Y11.818 billion (-5.0% YoY), and net income attributable to parent company shareholders of Y7.034 billion (+9.6% YoY) for the fiscal year ending March 2024. Although operating profit and ordinary profit both declined YoY, net income increased, resulting in the highest profit in company history. This was mainly due to the backlash from the previous fiscal year's investment business, in which a large sales property was sold, and the recording of an allowance for doubtful accounts due to an increase in credit-related expenses in the leasing business. The projections for FY 2024 were missed slightly, with a 1.6% decrease in revenue, a 2.6% decrease in operating profit, a 5.5% decrease in ordinary profit, and a 6.2% decrease in net income attributable to parent company shareholders. However, net income increased to reach an all-time high. While this was mainly due to a decrease in non-controlling interests for fund income in the investment business compared to the previous year, the company attributes it to its thorough strengthening of earnings in each business, steadily building up gross profit.

In the leasing industry to which the company belongs, leasing handling performance increased steadily to Y4.5709 trillion (+7.6% YoY) under the influence of the full resumption of economic activities after the coronavirus epidemic in FY 2023. Under these circumstances, although the leasing business, the company's core business, saw a decline of 4.3% in executed contracts due in part to the end of a large-scale government project from the previous year, the sales activities at the current stage continued to make progress, and the company continued to succeed in large-scale government projects and also in steady sales of civilian demand, with a contract volume increase of 10.3% YoY. ※ (Japan) The lease business association "Lease statistics (as of March 2024)"

From the Lease Business Association's 'Statistics on Leasing (March 2024).'

2. Performance trends by industry

The leasing business secured an increase in sales of 1.8% YoY to Y228.437 billion despite the sale of a large rental asset in the previous year, thanks to steady sales activities. However, the gross profit decreased by 0.5% YoY to Y16.521 billion, and the operating profit decreased by 14.2% YoY to Y5.464 billion. The decline in operating profit was due to the backlash from the sale of a large rental asset from the previous year and the recording of an allowance for doubtful accounts as a credit-related cost. According to the company, the basic earnings of the leasing business are improving, and the net profit margin, which deducts the cost of sales from the revenue, improved by 0.27% to 8.76% compared to 8.49% in the previous year, confirming the improvement. Although the executed contract amount decreased by 4.3% to Y206.1 billion, the contract volume increased by 10.3% to Y243.2 billion. The decrease in the executed contract amount was due to the end of a large-scale government project as previously stated, while civilian demand continued to remain strong, increasing by 3.8% in service, distribution, manufacturing and other sectors.

The ratio of executed contracts by industry in the leasing business was 50.5% (down 4.3% YoY) for government agencies and 49.5% (up 45.7% YoY) for civilian demand (service, distribution, manufacturing, and others), with the ratio of civilian demand increasing compared to the previous year. As a result of the backlash from the previous year's large project for government agencies, the ratio for government agencies decreased by 11.1% YoY, while civilian demand remained strong with a 7.6% increase in service, a 10.9% increase in distribution, and an 8.4% increase in manufacturing, but a 10.3% decrease in other industries. The ratio of information and communication equipment (computers and related devices, software, communication equipment and related devices) was 76.3% (down from 77.1% in the previous year), and that of office equipment and other devices was 23.7% (up from 22.9% in the previous year), with the ratio of information and communication equipment slightly decreasing due to an increase in communication equipment and related devices and a decrease in software, which has a high weight.

In terms of contract amount by industry, the government sector achieved a significant growth of 20.5% compared to the previous period, thanks to the acquisition of new large-scale projects. However, private demand decreased slightly by 1.6%. Among different industries, the distribution industry increased by 8.7%, and the manufacturing industry increased by 6.0%. On the contrary, the service industry decreased by 3.9%, and other industries decreased by 11.3%.

(Writer: FISCO analyst Tomoichi Murase)