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.

a) Corporate training business

Aoba-BBT <2464>'s revenue from the corporate training business increased by 16% compared to the previous year to 149 billion yen, marking the second consecutive year of growth and achieving a record high revenue. Although the number of corporate transactions decreased slightly, amid increased efforts in human capital management focused on large enterprises, there was an expansion in demand for next-generation management talent development (Succession Plan), as well as an increase in the number of trading companies for VIP companies (annual transaction amount of 10 million yen or more), leading to an increase in average revenue per company. The number of new customers has also steadily increased to about 130 companies, and efforts will continue to deepen transactions with these customers in the future.

b) University business

Revenue from the University business decreased by 5% to 94 billion yen compared to the previous year. Due to the resolution of the COVID-19 pandemic, the decrease in the number of new admissions for the BBT University/Graduate School in 2023 was a contributing factor to the revenue decrease as demand shifted from online education to real (face-to-face) education. In order to cover the decrease in revenue from the primary courses, the Intensive Courses were initiated, including the "Digital First Camp" (a 3-month short intensive course to acquire digital skills, priced at 0.33 million yen including tax) which performed well due to the increasing demand for digital talent development in companies. In addition, the "Finance-Driven Camp" focused on finance also progressed well, generating nearly 10 billion yen in revenue.

c) English education business

Revenue from the English education business increased by 5% to 46 billion yen compared to the previous year. Services for business professionals thrived with a 20% increase in corporate sales due to the growing demand for business English, in addition to the increased need for customer companies' global management talent training. The corporate sales ratio also rose to about 80%. On the other hand, services for young children and junior high school students offered by a subsidiary also saw increased revenue. Particularly, the bilingual international student development program "GO School," launched in March 2023, achieved profitability in its second year of operation due to an increase in the number of students enrolled.

d) IT management business

The revenue of the IT management business increased by 9% compared to the previous year to 52 billion yen, performing steadily. The ITIL(R) certified training business, boasting the largest market share in Japan, also expanded steadily with a 45% increase. Amid the growing importance of DX in management, the increasing need for cultivating digital talent is a contributing factor even for non-IT companies.

Furthermore, to promote the cultivation of key "agile" talents for DX, new initiatives were taken to expand the certified training business and hold new services like "Scrum Sunrise" through collaboration with Scrum.org, an international Agile/Scrum certification body. A workshop named "Agile Restaurant", allowing participants to experience agile without using IT terminology, was also established.

(2) Platform Services Business

The revenue of the platform services business increased by 4.7% compared to the previous year to 38.27 billion yen, while the segment profit decreased by 16.2% to 252 million yen. With the opening of a new campus (AJB Yoga Campus) in April 2023, the total number of students increased from slightly over 1,500 in the previous year to approximately 1,600, leading to a continuous increase in revenue over the past 10 fiscal years since the subsidiary AJIS was established in March 2014. However, due to changes in the school year at some locations in 2023, profits were artificially inflated, and increased personnel expenses from talent investment contributed to the profit decline. AJB Nakano Campus and Shimomeguro Campus have been certified as IB PYP schools, while Yoga Campus is a candidate for certification.

Regarding "AJIS", with an increase in the maximum capacity due to the renovation of the Ogi Campus and an increase in the number of students at the Bunkyo Campus for high school students established in January 2022, the year-end student number reached a record high of 743, an increase of 25 students from the same period last year. Resulting from excellent performance in IBDP test results every year, surpassing the world average score, AJIS has been producing successful university admissions to top universities domestically and internationally, contributing to the increase in student numbers.

In addition, the school became the first school in Asia to be certified for the complete online implementation of the IBDP by the IBO in April 2023. To prepare for the new semester starting in August 2024, online course student recruitment has begun in East Asia, including Japan, as well as the Southeast Asia and Oceania regions. While each country has local IB certified schools, it is believed that certain students find it difficult to commute to local schools due to distance or other reasons, which has created demand for online schools. The certification of the online school this time is expected to further contribute to AJIS's growth, recognizing the active participation in online classes and the accumulation of teaching know-how during the COVID-19 pandemic, resulting in high academic performance.

On the other hand, the bilingual preschool AJB opened its 7th campus in April 2023, establishing the Yoga Campus. The year-end student number reached a record high of over 580 students. While the occupancy rate is around 70% of the total capacity of 869 students, campuses opened before 2019 have an occupancy rate of over 80% and are already profitable. Bilingual preschools generally achieve full capacity and profitability by the third year of operation. The Cambridge University International Education Organization's MIST program, recognized as an IB school for elementary, middle, and high school programs, has maintained a situation close to the full capacity of approximately 200 students, generating stable profits.

(Written by FISCO guest analyst, Jo Sato)