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 Position

As of the end of the second quarter of the fiscal year ending December 2024, J-Trust's total assets were 1,331,442 billion yen, an increase of 116,727 billion yen compared to the end of the previous year. This is mainly due to an increase in cash and cash equivalents of 29,986 billion yen, securities in the banking industry of 31,381 billion yen, and loans in the banking industry of 63,466 billion yen, while other financial assets decreased by 18,099 billion yen. Total liabilities increased by 106,350 billion yen to 1,152,850 billion yen. This is mainly due to an increase in deposits in the banking industry by 101,308 billion yen. Total capital increased by 10,377 billion yen to 178,592 billion yen, mainly due to an increase in the components of other capital by 7,336 billion yen, and an increase in non-controlling interests related to J-Trust Royal Bank and others by 2,677 billion yen. As a result, the equity attributable to owners of the parent company ratio, a safety indicator, was 12.0% as of the end of the second quarter of the fiscal year ending December 2024, surpassing the safety of 4.5% for banking industry listed on the Tokyo Stock Exchange Prime Standard Growth Market in March 2024 and 6.8% for other financial sectors. It is also expected that profitability indicators such as ROA and ROE for the fiscal year ending December 2024 will increase along with the accumulation of profits.

The cash flow situation in the second quarter of the fiscal year ending December 2024 shows an increase of 42,755 billion yen in funds from operating activities. This is mainly due to an increase in deposits in the banking industry of 30,904 billion yen, a decrease in other financial assets of 13,037 billion yen, and a decrease in restricted deposits of 6,288 billion yen, while the increase in loans in the banking industry was 10,891 billion yen and the funds decreased. Funds from investment activities decreased by 21,727 billion yen. This is mainly due to an expenditure of 93,679 billion yen for the acquisition of securities in the banking industry, which exceeded the income of 69,836 billion yen from the sale and redemption of securities in the banking industry, resulting in a decrease in funds. Funds from financing activities decreased by 1,229 billion yen. This is mainly due to an increase in long-term borrowings of 1,229 billion yen and an increase in funds, while dividend payments decreased by 1,784 billion yen and funds decreased. As a result, the free cash flow, which represents funds available for use, was 21,028 billion yen, indicating that the company has sufficient funds on hand and the stability of the company group is high.

(Written by FISCO guest analyst Nozomi Kokushige).