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 condition and performance indicators.

As of the end of March 2024, J-Lease's total assets increased by ¥183 million from the previous period to ¥1,158.6 billion. Of this, current assets were ¥937.3 billion, an increase of ¥168.8 million, mainly due to an increase in substitution money for sureties of ¥1,170 million, an increase in outstanding guarantee fees of ¥363 million, and an increase in collection agency cash advances of ¥302 million. Fixed assets were ¥2,212 million, an increase of ¥141 million, mainly due to an increase in investment and other assets.

Total liabilities increased by ¥66.3 million from the previous period to ¥695.9 million. Of this, current liabilities were ¥681.7 million, an increase of ¥69.0 million, mainly due to an increase in advances received of ¥401 million. Fixed liabilities remained almost unchanged. Balance of interest-bearing debt was restrained at ¥1,267 million, a decrease of ¥144 million.

In terms of performance indicators, J-Lease's equity ratio is 39.9% (compared with 35.5% at the end of the previous period) and current ratio is 137.5% (compared with 125.4% at the end of the previous period), both showing significant improvements in safety. ROE (net margin on equity) was 44.3% (compared with 57.2% in the previous period) and ROA (management efficiency ratio on total assets) was 24.5% (compared with 26.5% in the previous period), both showing high efficiency and profitability. J-Lease is expanding its earnings while maintaining stable growth, and its financial base is expected to be further strengthened in the future. In the new three-year management plan, an equity ratio of over 50%, and an ROE of around 20-35% were shown as targets.

(Written by FISCO Guest Analyst, Hideo Kakuta)