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. Overview of the full-year results for the fiscal year ending May 2024.

For the fiscal year ending May 2024, the consolidated results of G-DEP Advance <5885> achieved a significant increase in sales and profit, with revenue increasing by 17.0% from the previous period to 4,421 million yen, operating profit increasing by 19.0% to 662 million yen, ordinary profit increasing by 14.7% to 652 million yen, and net income increasing by 14.3% to 432 million yen.

Revenue updated to a record high due to strong equipment investment demand related to generative AI. The demand from major clients such as universities and research institutions remains robust, and trades with startups and the medical industry have also expanded. The gross profit margin decreased by 0.6 percentage points from the previous period to 23.3%. Although there were factors increasing selling, general and administrative expenses such as outer standard taxation and the move of the Tokyo office, most of these are fixed costs. As a result of increased revenue, the SG&A expense ratio decreased by 0.8 percentage points to 8.3%. Consequently, operating profit increased by 19.0% from the previous period, marking the ninth consecutive increase in profit.

2. Overview of the first quarter results for the fiscal year ending May 2025.

In the first quarter of the fiscal year ending May 2025, revenue was 1,249 million yen, a 73.8% increase compared to the same period last year, operating profit was 176 million yen, a 57.7% increase, ordinary profit was 164 million yen, a 68.7% increase, and quarterly net income was 113 million yen, a 68.5% increase, continuing the rapid growth in revenue and all profits.

Revenue significantly increased by 73.8% compared to the same period last year due to the rising equipment investment demand for generative AI, including LLM (Large Language Models), and the expansion of project scale. The gross profit margin decreased by 4.8 percentage points compared to the same period last year to 22.4% due to the increase in project scale. Selling, general and administrative expenses increased in absolute terms due to rising personnel costs and depreciation, but the ratio decreased to 8.3% due to the effect of increased revenue, a decrease of 3.3 percentage points. As a result, operating profit saw a significant increase of 57.7%. Although the performance is smooth, the lead time until orders due to the increase in project size tends to be prolonged.

A highly safe financial structure due to debt-free management. With an ROE of 22.1% and an ROA of 18.5%, profitability and efficiency are also high.

3. Financial Condition and Management Indicators

As of the end of the first quarter of May 2025, the total assets amounted to 4,072 million yen (an increase of 1,341 million yen compared to the end of May 2023), indicating a significant expansion of asset size over one year and three months. Current assets were 3,953 million yen (an increase of 1,290 million yen), with the main factor being an increase of 1,921 million yen in commodity etf. Fixed assets were 118 million yen (an increase of 51 million yen), showing no substantial change.

Total liabilities amounted to 1,657 million yen (an increase of 449 million yen), primarily due to increases in advance payments, promissory notes, and accounts payable. Fixed liabilities amounted to 748 million yen (an increase of 213 million yen), mainly due to the increase in long-term advance payments. Total net assets amounted to 2,415 million yen (an increase of 892 million yen), primarily due to the increase in capital and capital reserves from listing on the Tokyo Stock Exchange Standard market, and the increase in retained earnings from net income for the period. Interest-bearing debt is zero.

Regarding safety management indicators, the current ratio is 435.0% (end of Q1, May 2025) and the equity ratio is 59.3% (same), indicating extremely high financial safety. The roe is 22.1% (May 2024), the roa is 18.5% (same), and the ros is 15.0% (same), showing also high profitability and efficiency.

(Written by FISCO Guest Analyst, Hideo Kakuta)