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.

3. Progress of Business Strategy.

Prodireight <5580> aims to improve further profitability and has been working on developing services that prioritize customer convenience, strengthening partnerships with other companies, and expanding partners in line with its medium-term management plan for business strategy in Q2 of the fiscal year ending August 2024. Already, some results seem to have been achieved.

As for service development, in October 2023, the company started offering 'INNOVERA SMS,' which sends an SMS after an automatic phone response as an option service for 'INNOVERA.' Currently, even with 24-hour operation, processing by phone response is often insufficient, causing many missed opportunities due to bottlenecks of time and personnel. Therefore, the company has developed a service that sends an address by SMS after an automatic response by phone to guide users to the website, and it is convenient for people who are not familiar with IT tools to use it by combining business phone and SMS. It has already been introduced by major apparel companies and contracts with several major companies, including March 2024.

In January 2024, Aeye <4388> announced a collaboration in the field of speech synthesis. Then, in March 2024, 'Telful (Telful) powered by INNOVERA,' a new service that combines Aeye's voice synthesis technology with 'INNOVERA' to improve customer response quality and streamline telephone operations, has started providing. It is a service that eliminates unnecessary telephone response by a small cost without changing the current telephone environment with the concept 'only answering the calls you want.'

Regarding the reinforcement of cooperation with other companies, Prodireight started collaboration with 'LANdeVOICE' and 'INNOVERA' provided by A2 Co., Ltd. in October 2023, and started offering a solution 'iPad Receptionist Internal Pack' that streamlines reception duties by collaborating 'INNOVERA' with iPad through collaboration with Otsuka-shokai <4768> in November 2023. Also, by partnering with Pasco-na Panasonic Business Services Co., Ltd. (currently Pasco-na Japan Personnel and General Affairs Department Co., Ltd.), it announced a service that efficiently manages customers by combining the business application development cloud service 'kintone' and 'INNOVERA' for telephone correspondence. Although Prodireight is advancing cooperation with other companies, as for the collaboration with 'LANdeVoice,' it is only for Prodireight other than NTT Communications Corp. and SoftBank <9434> in terms of cloud PBX, and the high presence and brand power of 'INNOVERA' are thought to be a great factor in the industry.

To strengthen the sales network of 'INNOVERA,' it is expanding partners such as new partner contracts with major sales agents with a large customer base and strong sales networks. Since September 2023, it has introduced ranking by sales volume to motivate such partners. On the other hand, aiming to expand sales in the regions from the conventional bases of Osaka headquarters, Tokyo, Fukuoka, Nagoya, and Sapporo, it is also accelerating partner development in the regions. While nurturing companies that can be expected to expand sales channels by being closely related to each area, partner development in weak regional cities such as Hiroshima and Sendai is progressing well and is leading to the activation of the partner system as a whole. In addition, although about 20% of customers directly request to Prodireight from web advertisements and exhibitions, it intends to maintain the ratio of 'direct:partner=2:8' in the future. Also, it is actively deploying events to improve the recognition of 'INNOVERA' and activate the partner system. In December 2023, it held a self-organized event 'INNOVERA Fes 2023 Thank You Festival' with partnering companies to raise awareness of 'INNOVERA.' As a result, sales expansion by expanding partners is moving forward at the moment, and there seems to be an increase in small business transactions in addition to large-scale projects.

(Author: FISCO guest analyst Nobumitsu Miyata)