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.

2. Financial situation. When looking at the financial situation of Inaboholdings <7539> as of the end of the second quarter of the fiscal year ending September 2024, the current assets increased by 1,954 million yen compared to the previous period end, reaching 32,121 million yen. In major subjects, cash and deposits decreased by 33 million yen, while the receivables from bills and unfinished construction work and other unearned income increased by 1,946 million yen, and construction costs of incomplete construction increased by 28 million yen. Fixed assets decreased by 700 million yen to 13,134 million yen. The breakdown is that tangible fixed assets decreased by 30 million yen to 6,575 million yen, intangible fixed assets increased by 231 million yen to 449 million yen (including goodwill increased by 223 million yen), and investment and other assets decreased by 901 million yen to 6,109 million yen. As a result of these, the total assets increased by 1,253 million yen to 45,255 million yen.

At the end of March 2024, the financial situation of Sanji Kogyo <1961> showed current assets increasing to ¥131,564 million (up ¥16,051 million from the previous year-end). The main factors of the increase were a decrease of ¥1,449 million in cash and deposits, a decrease of ¥3,000 million in securities, and an increase of ¥20,407 million in accounts receivable (including promissory notes, electronic record receivables, uncollected revenue from completed work, and contract assets). Fixed assets increased to ¥70,596 million (up ¥13,803 million). The main factors of increase and decrease were a decrease of ¥71 million in tangible fixed assets due to depreciation, a decrease of ¥257 million in intangible fixed assets, and an increase of ¥14,131 million in investments and other assets mainly due to an increase in investment securities. As a result, the total assets at the end of March 2024 were ¥202,161 million (up ¥29,856 million from the previous year-end).

Current liabilities increased to ¥81,597 million (up ¥11,947 million from the previous year-end). The main factors of increase and decrease were an increase of ¥7,698 million in accounts payable (including electronic record debts, unpaid work-in-progress, etc.), an increase of ¥3,505 million in accrued corporate taxes, a decrease of ¥288 million in short-term borrowing, and a decrease of ¥969 million in contract liabilities. Fixed liabilities increased to ¥15,941 million (up ¥4,199 million). The main factors of increase and decrease were an increase of ¥974 million in long-term borrowing, a decrease of ¥504 million in liabilities related to retirement benefits, and an increase of ¥4,033 million in deferred tax liabilities. As a result, the total liabilities increased to ¥97,539 million (up ¥16,147 million). Total net assets increased to ¥104,621 million (up ¥13,707 million). The main factors of increase were an increase of ¥2,718 million in retained earnings due to net income for the current period, a decrease of ¥295 million in treasury stock due to depreciation, and an increase of ¥9,063 million in the fair value of other securities. This resulted in a self-owned capital ratio of 51.7% (compared to 52.6% at the end of the previous fiscal year).

3. Cash flow situation - In the fiscal year ending March 2024, cash flow from operating activities amounted to a revenue of ¥1,285 million. The main revenue sources were ¥13,157 million for net income before tax adjustments, ¥1,919 million for depreciation expenses, and an increase of ¥7,671 million in accounts payable. The main expenses were an increase of ¥20,326 million in accounts receivable and contract assets. Cash flow from investing activities had a revenue of ¥3,174 million, mainly from a net revenue of ¥3,000 million from the redemption of securities. Cash flow from financing activities had an expenditure of ¥6,069 million, mainly from an income of ¥674 million from short- and long-term borrowings, an expenditure of ¥2,549 million for the acquisition of treasury stock, and ¥4,083 million for the payment of dividends. As a result, cash and cash equivalents increased by ¥1,449 million, and the balance at the end of the period was ¥23,500 million.

The cash flow from operating activities in March 2024 was an income of 1,285 million yen. The main income was due to the recording of net income before tax adjustments for the current period of 13,157 million yen, depreciation expense of 1,919 million yen, and increase in accounts payable of 7,671 million yen. The main expenses were an increase of 20,326 million yen in accounts receivable and contract assets. The cash flow from investment activities was an income of 3,174 million yen, but the main income was due to the redemption of securities (net) of 3,000 million yen. The cash flow from financing activities was an expenditure of 6,069 million yen, but the main income was an income of 674 million yen from short-term and long-term borrowings, while the main expenses were the acquisition of treasury stock of 2,549 million yen and dividend payments of 4,083 million yen.

As a result, at the end of March 2024, cash and cash equivalents increased by ¥1,449 million, and the balance was ¥23,500 million.

(Written by FISCO guest analyst Noboru Terashima)