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. Financial Condition and Management Indicators

As of the end of the second quarter of the 2024 fiscal year, the total assets of System D <3804> amounted to 67.14 million yen, an increase of 468 million yen from the previous quarter. Looking at the main factors of increase and decrease, current assets decreased by 285 million yen due to a decrease in accounts receivable, while cash and deposits increased by 892 million yen. The decrease in accounts receivable was due to the company taking measures to avoid unreasonable delivery to secure sales towards the end of the period. In addition, fixed assets decreased by 20 million yen for software and software accounts, tangible fixed assets by 12 million yen, and deferred tax assets by 30 million yen. Regarding software assets, the company aims not to increase them as much as possible in the future (expenses are amortized in a single fiscal year).

Total liabilities amounted to 24.17 billion yen, an increase of 265 million yen from the previous quarter. Looking at the main factors of increase and decrease, unpaid expenses decreased by 134 million yen, while interest-bearing liabilities decreased by 59 million yen, but future receivable revenue increased by 525 million yen. The majority of the increase was due to the new operation projects in the public education solutions division. Net assets amounted to 42.97 billion yen, an increase of 203 million yen. The quarterly net profit attributable to the parent company shareholders was 342 million yen against a dividend payment of 146 million yen, resulting in the retained earnings increasing by 198 million yen. In addition, at the shareholder meeting in January 2024, the company decided to abolish the retirement allowance system for executives and introduce a restricted stock compensation system with transfer restrictions, disposing of 6,131 of its own shares (granted to executives) and reducing its own shares by 9 million yen.

Looking at the management indicators, the equity ratio that indicates the safety of management decreased by 1.5 percentage points from the end of the previous quarter to 64.0%, but the soundness of the financial position is maintained as the expansion of future receivable revenue is the main reason, and the interest-bearing debt ratio decreased from 10.6% to 8.7%.

(Written by FISCO guest analyst, Jo Sato)