Company Research and Analysis Report
FISCO Ltd.
http://www.fisco.co.jp

G-7 HOLDINGS INC.
7508 Tokyo Stock ExchangeFirst Section

14-Dec.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato伪伪Booked all-time high earnings on a half-year basis
for the second straight period, led by growth in theBusiness Supermarket and quality food business
G-7 HOLDINGS INC. <7508> (hereafter, “G-7” or “the Group”) is a holding company that owns
subsidiaries operating the largest franchises of AUTOBACS stores and Business Supermarket in
Japan. It excels at store profitability with emphasis on productivity per employee and other indicators.
It is also promoting development of agricultural, foodstuffs and restaurant businesses, as well as
overseas businesses.
In consolidated 1H FY3/17 (Apr-Sep 2016) results announced on October 31, net sales increased
7.9% year on year (YoY) to ¥52,964mn and ordinary income rose 31.3% to ¥1,591mn. G-7 posted
new all-time highs on a half-year basis for the second straight period. Although AUTOBACS andcar-related business was sluggish, the Business Supermarket and quality food business was upbeat.
The Group’s FY3/17 consolidated forecasts call for sales and profit gains, including 10.7% YoY to¥115,000mn in sales and 24.2% to ¥4,000mn in ordinary income. Fulfillment rates through 2Q were46.1% for net sales and 39.8% for ordinary income. A key point is the amount of snowfall during thewinter season that strongly affects the tire sales trend. Income in the AUTOBACS and car-related
business, which slumped in 1H, should recover if snowfall is at a normal level considering weak tire
sales a year ago because of historically warm winter conditions.
In other business, the Group started launderette as part of efforts to accommodate a wide range
of demand. It launched service at one site in August 2016, and business is going well thus far. It
also plans to add service at other AUTOBACS sites too. In Business Supermarket and quality foodbusiness, the Group is following an expansion strategy of opening TERABAYASHI meat stores alongwith Business Supermarket openings and plans to open 10 new sites in FY3/17. The Group’s BAKECHEESE TART cheese-tart shops, which it launched after concluding an area license contract with
BAKE Inc. in FY3/16, are performing well too, and this business currently has three stores locatedin the Kansai area. The Group plans to expand to about 10 stores as it identifies tenant locations.
The Group is currently implementing a new medium-term business plan that lasts through FY3/21
with goals of ¥170,000mn in net sales and ¥7,000mn in ordinary income. For AUTOBACS and carrelated business, it intends to focus on services business, such as car inspections, body repair, andauto insurance, and cultivate new products and services in other areas besides automotive. For
overseas businesses, it plans to continue rollout of AUTOBACS, BIKE WORLD, restaurants, andfood supermarket businesses with a target of ¥10,000mn in sales. While losses are likely to continue
in the near term during the upfront investment period, the Group hopes to develop this area as a corebusiness in the future by leveraging anticipated economic growth in Southeast Asia.

伪伪Check Point• Reported steep sales and profit gains of 7.9% to ¥52,964mn in net sales and 15.9% to¥1,441mn in operating profit• Likely to set all-time highs again in FY3/17• Medium-term plan’s final-year (FY3/21) goals are ¥170,000mn in net sales and ¥7,000mn
in ordinary income

We encourage readers to review our complete legal statement on “Disclaimer” page.
1

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G-7 HOLDINGS INC.

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14-Dec.-16㻣㻢㻘㻝㻟㻜

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㻲㼅㻟㻛㻝㻟FISCO Ltd. Analyst
Yuzuru Sato

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Important disclosuresand disclaimers appear
at the end of this document.

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7508 Tokyo Stock ExchangeFirst Section

(¥mn)
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伪伪Business Overview
Primarily generates income from AUTOBACS and car-related
business and Business Supermarket and quality food business
The Group’s operations consist of three operating segments: AUTOBACS and car-related business,
Business Supermarket and quality food business, and other businesses. Looking at the 1H FY3/17
composition of net sales by business segment, we see that AUTOBACS and car-related business
represented 29.3% and Business Supermarket and quality food business 65.1%, with these twobusiness segments accounting for more than 90% of overall operations.

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We encourage readers to review our complete legal statement on “Disclaimer” page.
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■■Business Overview○ AUTOBACS and Car-related Business
The Group’s AUTOBACS franchise business mainly consists of activities including car productsales and maintenance handled by G-7 AUTO SERVICE CO., LTD., motorcycle product sales andmaintenance handled by G-7 BIKE WORLD CO., LTD. and overseas car-related business.

G-7 HOLDINGS INC.
7508 Tokyo Stock ExchangeFirst Section

14-Dec.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

AUTOBACS-related sales represent approximately 90% of segment sales, with 73 AUTOBACSrelated stores in Japan (61 AUTOBACS stores, seven AUTOBACS Express stores, two SuperAUTOBACS stores, two AUTOBACS Secohan Ichiba stores, and one AUTOBACS Cars) and two
AUTOBACS stores in Malaysia as of the end of March 2016, giving it the largest scale within the
597 AUTOBACS Group stores. Store rollouts are centered predominantly in Hyogo, Kyoto, Fukui,
Okayama, Hiroshima, Chiba, and Ibaraki prefectures. Hyogo is particularly important with 40 stores,
or just under 60% of the Group’s entire network. Store management places strong emphasis on
productivity per employee and inventory turnover rates, and the franchise business is notable formaintaining the highest profitability within the AUTOBACS Group.
Other car-related businesses (the Group’s own initiatives) include eight CRYSTAL SEVEN stores
offering carwash and coating services, one TIRE SENMONKAN tire specialty store, six body repair
BP centers, and one Suzuki Cars Osaka store.
Additionally, BIKE WORLD, which engages in direct sales of motorcycle products, operates a totalof 15 stores with 12 stores in Japan, two stores in Malaysia, and one store in Thailand as of the endof September 2016.
○ Business Supermarket and Quality Food BusinessThis segment consists of Business Supermarket franchise operations developed by G-7 SUPERMART CO., LTD., food product and restaurant operations developed by G7 JAPAN FOOD SERVICE
CO., LTD., and G-7 MEAT TERABAYASHI CO., LTD., a meat retailer, which was consolidated as a
subsidiary in June 2015.
G-7 SUPER MART represents roughly 80% of segment sales, with its 123 supermarket outlets asof the end of September 2016 giving it the largest scale among the 743 Business Supermarket
Group stores. Store rollouts are predominantly centered in the Kanto, Chubu, Kansai, Kyushu, andHokkaido regions.
G7 JAPAN FOOD SERVICE, which accounts for just under 10% of sales, discovers local delicacies
and unique local products and handles wholesale supply to department stores and other retailers as
quality foods. It also develops, manufactures, and sells private-brand foods, manages wholesale andretail supply of agricultural goods in Japan, handles export/import business, and engages in online
sales and other businesses.
G-7 MEAT TERABAYASHI, which provides just over 10% of sales, had 93 retail butcher shops asof the end of September 2016, the majority of which are set up as tenants at Business Supermarket
and Megumi no Sato sites.
○ Other Businesses
The Group’s other businesses consist of G-7 AGRI JAPAN CO., LTD., which operates the Megumi
no Sato farmers’ market chain, G-7 RETAIL JAPAN CO., LTD., which manages real estate leasing,
DAISO discount stores (100 yen shops), recycling stores, fitness clubs, golf schools, and retail stores,
and G7 INTERNATIONAL PTE. LTD. (Singapore), which handles overseas operations (except for
AUTOBACS and BIKE WORLD).
For Megumi no Sato, there are 23 stores (13 in Hyogo, three in Osaka, four in Nara, one in Kyoto,
one in Mie, and one in Chiba) as of the end of September 2016. This business changed the sales
format from consignment sales (booking about 20% of the sales price as fee income under sales) topurchase-based sales from June 2015.

We encourage readers to review our complete legal statement on “Disclaimer” page.
3

■■Business Overview

G-7 HOLDINGS INC.
7508 Tokyo Stock ExchangeFirst Section

G-7 is also steadily developing overseas business in Southeast Asia and Taiwan. The overseas
agricultural business involves cultivation of chrysanthemums in Vietnam for sales at Megumi no
Sato stores and production of strawberries in Myanmar for sale at City Mart stores operated by amajor local distributor. In the restaurant business, the Group has one Ramen KANBE store each inIndonesia and Malaysia and operates a Kushikatsu Daruma store in Taiwan. It is using a fundamental
strategy of opening one direct-operation store in each country to establish the income model and thenproceeding to licensing contracts. The Group also opened one store each for Business Supermarket
and Megumi no Sato in Singapore through a joint venture created with a local company (G-7 holds a
30% stake) in April 2016. It plans to export all food items from Japan and book export sales of these
items (under the Business Supermarket and quality food business).
The Group has established overseas subsidiaries in Singapore, Malaysia, Vietnam, Indonesia,
Myanmar, Thailand, Cambodia, Taiwan, and Hong Kong.

14-Dec.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

Major Subsidiaries
Businesssegment

Company name

AUTOBACS
G-7 AUTO SERVICE CO., LTD.
and Car-related
G-7 BIKE WORLD CO., LTD.
Business
G-7 SUPER MART CO., LTD.
Business
Supermarket
G7 JAPAN FOOD SERVICE CO., LTD.
and Quality
Food Business G-7 MEAT TERABAYASHI CO., LTD.

Other
Businesses

Capitalcontribution
Business description
ratio
100.0% Operator of AUTOBACS, etc.
100.0%

Operator of BIKE WORLD, etc.

100.0%

Operator of Business Supermarket, etc.
Manufacturing, sales and import andexport of food products and beverages
Retail sales of meats and processed
livestock products
Handles real estate development for theGroup and operates recycling shops, 100
Yen shops, fitness clubs, and indoor golf
schools
Operator of Megumi no Sato, etc.
Holding company for overseas subsidiaries

100.0%
85.58%

G-7 RETAIL JAPAN CO., LTD.

100.0%

G-7 AGRI JAPAN CO., LTD.
G7 INTERNATIONAL PTE. LTD.

100.0%
100.0%

伪伪Business Trends
Reported steep sales and profit gains of 7.9% to ¥52,964mn in
net sales and 15.9% to ¥1,441mn in operating profit(1) Overview of results in 1H FY3/17
The consolidated results G-7 Holdings announced on October 31, 2016 for 1H FY3/17 were a 7.9%
increase YoY in net sales to ¥52,964mn, a 15.9% increase in operating income to ¥1,441mn, a
31.3% gain in ordinary income to ¥1,591mn, and a 1.8% rise in net income attributable to ownersof parent to ¥856mn. The Group booked all-time high earnings on a half-year basis for a second
straight time.
Consolidated Results for 1H FY3/17
1H FY3/16
Resultsvs. Net Sales
Results
Net sales
49,06652,964
Cost of sales
36,59774.6%
39,504
SG&A expenses
11,22422.9%
12,017
Operating income
1,243
2.5%
1,441
Ordinary income
1,211
2.5%
1,591
Extraordinary gains/losses
202
0.4%
-39
Net income
841
1.7%
856
Note: Net income shows net income attributable to owners of parent

1H FY3/17
vs. Net Sales
74.6%
22.7%
2.7%
3.0%
-0.1%
1.6%

(Unit: ¥mn)
YoY
7.9%
7.9%
7.1%
15.9%
31.3%
1.8%

While the AUTOBACS and car-related business was sluggish, the Business Supermarket and quality
food business was strong and led overall results. Absence of a ¥143mn in exchange loss booked ayear ago provided the boost to non-operating income. Net income only increased slightly because of
non-recurrence of ¥209mn in gain on bargain purchase booked a year ago as extraordinary profit.

We encourage readers to review our complete legal statement on “Disclaimer” page.
4

■■Other Businesses(2) Segment trends○ AUTOBACS and Car-related BusinessNet sales dropped 2.1% YoY to ¥15,536mn and operating income fell 33.8% to ¥148mn. For
openings, the Group only added one BIKE WORLD site during the period and AUTOBACS store
volume was flat versus the end of the previous period.

G-7 HOLDINGS INC.
7508 Tokyo Stock ExchangeFirst Section

14-Dec.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

G-7 AUTO SERVICE, which mainly operates AUTOBACS-related stores, booked lower sales andprofit with a 2.4% decline in net sales and 46% drop in operating profit. Category sales growth rates
were a 7.9% decline in tires, a 7.7% drop in car electronics products, a 3.2% decline in services (carinspections, body repair, and coating), and a 0.9% increase in maintenance products. Car productsales generally weakened because of sluggish sales of light vehicles, and lower demand for tirechanges to normal tires due to slow sales of snow tires during the winter season weighed on 1Q
business. Sales decline in the tires and services business with relatively high profitability reduced
profit margin too. By region, western Japan results were weak because of the large impact of lighterthan-normal snowfall, but stores in the Kanto area recorded higher sales and profits. Additionally, thebusiness restored sales and profit gains (YoY) in just 2Q with increases of 0.2% in sales and 36.6%
in operating income.
We think the Group sustained its strength in sales capabilities with just a 2.4% drop in net sales for
1H versus the 4.3% decline in existing store sales in Japan for the overall AUTOBACS Group.
G-7 BIKE WORLD, meanwhile, reported lower sales and profits in 1H because of continuation of
the downward trend in customer volume from the previous period under pressure from rivals. Sales
have started growing at a healthy pace for AUTOBACS (two stores) and BIKE WORLD (two stores)in Malaysia, and income is improving too and headed for a profit in FY3/18. The BIKE WORLD store
opened in Thailand in March 2016 is still ramping up.

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We encourage readers to review our complete legal statement on “Disclaimer” page.
5

■■Other Businesses○ Business Supermarket and Quality Food BusinessNet sales increased 12.6% YoY to ¥34,470mn and operating income rose 17.9% to ¥1,223mn,
achieving double-digit gains in sales and profit. While results benefited from a full-year contributionby G-7 MEAT TERABAYASHI (vs. four months in FY3/16), sales and profit still improved even without
the additions.

G-7 HOLDINGS INC.
7508 Tokyo Stock ExchangeFirst Section

14-Dec.-16

Important disclosuresand disclaimers appear
at the end of this document.

G-7 SUPER MART, which mainly operates Business Supermarket sites, expanded net sales by 7.4%
YoY. The Business Supermarket business received support from restaurant operators struggling withrising food costs as well as growth in ordinary consumers amid strengthening deflation sentiment,with revenue steadily increasing by 1.9% YoY on an existing store basis. New store openings also
had a positive effect, increasing by eight YoY to 123 stores at the end of September. BusinessSupermarket opened four new stores during 1H with one in Hyogo, two in Saitama, and one in Chiba.
G-7 MEAT TERABAYASHI delivered a solid 2.2% increase in sales compared to the same period(Apr-Sep) in the previous year. It added four new joint openings at Business Supermarket sites,
lifting store volume to 93 sites at the end of September. G7 JAPAN FOOD SERVICE also performed
soundly, with sales rising 5.9% YoY. This was due to the sales growth in the quality food business,
as efforts to develop customers, mainly in the eastern Japan area, and expansion of product volume
progressed smoothly.

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Yuzuru Sato(¥mn)

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Net sales climbed 14.6% YoY to ¥2,956mn while recording operating loss of ¥17mn (from a profit of¥2mn in the previous fiscal year). Net sales increased by double digits due to the switch in June 2015
from consignment to purchase-based sales of agricultural goods for the Megumi no Sato business,but only rose at a single-digit pace in real terms.
The Group opened two new Megumi no Sato stores with one each in Hyogo and Chiba and had
23 stores at the end of September 2016 (up four stores YoY). While sales modestly increased in
a comparison on the same standard, operating income still had a slight loss. The BAKE CHEESETART cheese-tart shop business, which started operations in FY3/16, opened one store in Kyoto inJune and one store in Osaka in September, total of three stores. This is a popular take-out store that
attracts lines of customers, and all three stores are posting robust sales. Monthly sales total ¥2030mn per store.
In overseas business, initiatives other than AUTOBACS and car-related business in Malaysia
struggled relative to initial expectations. Agricultural businesses in Vietnam and Myanmar have not
improved much from FY3/16 levels, and restaurant businesses in Malaysia, Indonesia, and Taiwan
face weak customer volume. The Business Supermarket opened as a joint venture with a local firmin Singapore in April has been sluggish too as food import regulations hinder sufficient supply of
product items from Japan. This is an issue that needs to be resolved.

We encourage readers to review our complete legal statement on “Disclaimer” page.
6

■■Other Businesses㻻㼠㼔㼑㼞㻌㻮㼡㼟㼕㼚㼑㼟㼟㼑㼟㻌㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕(¥mn)

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G-7 HOLDINGS INC.

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7508 Tokyo Stock ExchangeFirst Section

(¥mn)

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Important disclosuresand disclaimers appear
at the end of this document.

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FISCO Ltd. Analyst
Yuzuru Sato

伪伪Business Outlook
Likely to set all-time highs again in FY3/17(1) Company forecast for FY3/17
The Group’s FY3/17 consolidated forecasts call for sales and profit gains, including 10.7% increase
YoY in net sales to ¥115,000mn, 22.2% increase in operating income to ¥3,700mn, 24.2% increasein ordinary income to ¥4,000mn, and 12.5% increase in net income attributable to owners of parent
to ¥2,100mn. Fulfillment rates in 1H were net sales at 46.1% and ordinary income at 39.8%, roughly
on par with average for the past five years and keeping the Group within reach of full-year targets.
Weather conditions in the winter season, a peak time for AUTOBACS and car-related business, are a
key point for realization of plan targets. While snow tire sales slumped last year due to the impact ofa historically warm winter, AUTOBACS and car-related business income should recover and thereby
put the Group on track to fulfilling the plan if snowfall returns to a normal level and increasing tire
sales. The Group retains its stance of increasing sales and profits through steady expansion of store
volume, mainly for AUTOBACS and Business Supermarket, and bolstering profitability per store withenhanced productivity and progress in inventory and spending controls. Below we review the outlook
for business segments.

We encourage readers to review our complete legal statement on “Disclaimer” page.
7

■■Business Outlook○ AUTOBACS and Car-related Business
The Group expects to increase sales and profit for the AUTOBACS and car-related business in
FY3/17. It projects a 13.0% YoY rise in sales at mainstay G-7 AUTO SERVICE to ¥35,000mn byboosting sales at existing stores and adding about 15 new stores, including through M&A. However,it trailed the plan in 1H with no openings and sluggish existing store sales and needs over 20% YoY
sales growth in 2H to reach the target.

G-7 HOLDINGS INC.
7508 Tokyo Stock ExchangeFirst Section

14-Dec.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

For new sites, the Group largely saturated the existing areas and has little room for new openings. It
already plans to relaunch the AUTOBACS CARS (car sales) in Narashinodai, Chiba as an AUTOBACS,
but has not made decisions on other locations. The Group intends to focus on expanding sales atexisting sites and improving profitability in light of this situation. Car electronics products, which havebeen slumping, are starting to show signs of a sales recovery thanks to efforts to offer pricing appeal
with package sales of drive recorders, car navigation devices, and radar detectors. The Group also
aims to improve profitability through sales expansion by holding G-7 Mall Festivals and other eventsand lifting the sales ratio of high value-added services (body repair and painting, car inspections, andothers) that is currently at 24%.
For G-7 BIKE WORLD, the Group intends to bolster profitability by reviewing store operations andother management methods. It plans to add overseas sites with openings in Malaysia, Thailand, andother Southeast Asian countries.
○ Business Supermarket and Quality Food Business
The Group intends to maintain healthy momentum for the Business Supermarket and quality foodbusiness in 2H. It expects a 5.6% YoY increase in sales at G-7 SUPER MART, which operates theBusiness Supermarket business, to ¥55,000mn. The plan calls for opening 10 new stores (including
five renewal moves) to lift total store volume to 125 stores, a net addition of five stores from the endof FY3/16. It opened one store in October and is currently at 124 stores. Store count could rise evenhigher if the Group discovers sites with suitable conditions. Just as in FY3/16, the Group plans tojointly open TERABAYASHI and Megumi no Sato stores as tenants at new sites in order to improvecustomer draw and boost profitability in its various businesses.
The Group’s outlook factors in about ¥10,000mn in G-7 MEAT TERABAYASHI sales based on afull-year contribution, a 20% YoY increase. It will continue to open stores as tenants at BusinessSupermarket sites and also pursue openings at other commercial facilities. The Group forecasts
sales and profit gains at G7 JAPAN FOOD SERVICE through discovery of quality foods anddevelopment of sales partners.
○ Other Businesses
The Group expects to continue sales gains and aims to achieve an operating profit for otherbusinesses. For Megumi no Sato, it plans to realize profit by improving income through optimizationof the procurement sales system and lifting profitability per store via tenant openings at BusinessSupermarket sites and openings at commercial facilities with robust customer draw. Additionally,
sales are upbeat at the Group’s three cheese tart shops, a business started in FY3/16, and thisbusiness should contribute to higher sales and profits. While the licensing contract presents a planfor opening up to 11 stores in Keihanshin, Nagoya, Okayama, Hiroshima, and Fukuoka, the Groupintends to launch additional stores as it identifies suitable locations in prime sites by train stations
with large customer draw.

We encourage readers to review our complete legal statement on “Disclaimer” page.
8

■■Business Outlook

BAKE store at Abeno Harukas

G-7 HOLDINGS INC.
7508 Tokyo Stock ExchangeFirst Section

14-Dec.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

Source: From company materials

The Group has also started launderette as a new service and plans to expand this business. It
concluded a licensing contract with mammaciao Co., Ltd., a franchise operator for large mammaciao
coin laundry shops, and opened the first shop on the same site as AUTOBACS Kameoka (Kyoto)in August 2016. The shops attract many customers because they have machines for washing anddrying not only clothes, but also futons, carpets, and other items that cannot be easily washed athome, and this business is having a strong start. The initial investment in washing machines, dryers,
and other facilities is roughly ¥20mn, but this is a profitable business model once depreciation costs
are recovered because of low cost of sales. Monthly sales total around ¥0.6mn, though prosperous
shops can reach ¥1mn. The Group plans to open five stores jointly located at AUTOBACS sites
during FY3/17 and is ultimately aiming for a network of 100 coin laundry shops with co-locations at
Business Supermarket, restaurant, and other Group sites, in addition to AUTOBACS stores.
Mammaciao Kameoka Store

Source: From company materials

In overseas agricultural and restaurant businesses, meanwhile, the Group expects losses to continue
because of ongoing upfront investment burden. Yet it aims to narrow the loss margin by increasing
sales. Annual overseas business sales are slated to range in a few hundred million yen.

We encourage readers to review our complete legal statement on “Disclaimer” page.
9

■■Business Outlook

The goals for the final year (FY3/21) of the Medium-term planare ¥170,000mn in sales and ¥7,000mn in ordinary income(2) Medium-term business plan

G-7 HOLDINGS INC.
7508 Tokyo Stock ExchangeFirst Section

14-Dec.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

The Group’s medium-term business plan that lasts through FY3/21 presents final-year goals of¥170,000mn in net sales and ¥7,000mn in ordinary income. These goals represent a roughly 60%
rise in net sales and almost doubling of ordinary income compared to FY3/16 results, and the Groupintends to expand all businesses. For AUTOBACS business (G-7 AUTO SERVICE), it expects a
sharp gain with sales roughly doubling from the FY3/16 level to ¥60,000mn. This goal works out toa 14% average annual growth rate. The Group believes it can attain the goal through expansion ofdomestic store volume, including M&A, and efforts to broaden new products and services.
For the Business Supermarket business (G-7 SUPER MART), it targets a 25% increase in sales fromthe FY3/16 level to ¥65,000mn. The goal corresponds to a 5% increase pace as an annual average,
and the Group should be able to reach its target by expanding store volume at a pace of 5-10
stores per year. The Group also intends to achieve goals for BIKE WORLD, meat, and agriculturalbusinesses by steadily increasing store volume. For G7 JAPAN FOOD SERVICE, it aims for a 40%
increase from the FY3/16 level to ¥8,500mn, led by expansion of quality food business and foodexports as well as gains in development and sales of private-brand products through collaboration
with Megumi no Sato.
The Group hopes to rapidly expand overseas business from a few hundred million yen in FY3/16 to¥10,000mn by FY3/21. The breakdown of that ¥10,000mn is expected to be split about half-and-half
between AUTOBACS and BIKE WORLD businesses and restaurant, food products, and agriculturalbusinesses. The Group intends to aggressively open stores mainly in Southeast Asian countries
including through M&A to achieve the goal and is thus likely to continue to incur upfront investment
costs for the time being. However, these countries have a strong potential in economic growth rates
and overseas business could drive overall earnings growth as a core area in the future once theincome model is solidified.

㻿㼍㼘㼑㼟㻌㼀㼍㼞㼓㼑㼠㼟㻌㼎㼥㻌㻮㼡㼟㼕㼚㼑㼟㼟㼑㼟㻌(¥100mn)㻝㻤㻜㻜㻭㼁㼀㻻㻮㻭㻯㻿㻌㼎㼡㼟㼕㼚㼑㼟㼟㻮㼡㼟㼕㼚㼑㼟㼟㻌㻿㼡㼜㼑㼞㼙㼍㼞㼗㼑㼠㻌㼎㼡㼟㼕㼚㼑㼟㼟㻲㼛㼛㼐㼟㻛㼞㼑㼟㼠㼍㼡㼞㼍㼚㼠㻌㼎㼡㼟㼕㼚㼑㼟㼟㻾㼑㼍㼘㻌㼑㼟㼠㼍㼠㼑㻌㼐㼑㼢㼑㼘㼛㼜㼙㼑㼚㼠㻌㼍㼚㼐㻌㼚㼑㼣㻌㼎㼡㼟㼕㼚㼑㼟㼟

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We encourage readers to review our complete legal statement on “Disclaimer” page.
10

伪伪Financial Status and Shareholder Returns Policy
Steady improving the equity ratio and interest-bearing debt
ratio, making progress in enhancement of financial standing

G-7 HOLDINGS INC.
7508 Tokyo Stock ExchangeFirst Section

14-Dec.-16

Important disclosuresand disclaimers appear
at the end of this document.

(1) Financial status
Looking at the Group’s financial status at the end of September 2016, total assets were down
¥1,054mn from the end of the previous fiscal year to ¥35,100mn, based on increases of ¥618mn inmerchandise and finished goods and ¥313mn in tangible fixed assets and decreases of ¥1,672mn incash and deposits and ¥256mn in accounts receivable.
Liabilities dropped by ¥1,540mn from the end of the previous fiscal year to ¥20,431mn, mainly due todeclines of ¥269mn in interest-bearing debt, ¥378mn in income taxes payable, and ¥393mn in othercurrent liabilities. Net assets rose by ¥485mn to ¥14,668mn, primarily because of a ¥492mn increase
in retained earnings accompanying quarterly net income.
Looking at management indicators, the equity ratio, which reflects soundness, and the Group’s
interest-bearing debt ratio continued improvement trends to 41.0% and 56.1% respectively. We think
the Group is making progress in enhancement of financial standing.

FISCO Ltd. Analyst
Yuzuru Sato

Consolidated Balance Sheet

Current assets(Cash and deposits)(Merchandise and finished goods)
Fixed assets
Total assets
Total liabilities(Interest-bearing debt)
Net assets
Management indicators(Financial strength)
Equity ratio
Interest-bearing debt ratio

FY3/1415,0897,183
4,492
16,96832,057
20,4588,700
11,599FY3/1515,018
6,952
5,198
17,32132,33919,934
8,458
12,404

FY3/16
17,111
8,242
5,341
19,04236,154
21,971
8,342
14,183

1H FY3/17
15,773
6,570
5,959
19,32635,10020,431
8,073
14,668

36.2%
75.0%

38.4%
68.2%

38.1%
60.5%

41.0%
56.1%

(Unit: ¥mn)
Change-1,338-1,672618
284-1,054-1,540-269
485(2) Shareholder returns policy
G-7 is paying out dividends as a measure for returning profits to shareholders. The Group’s underlying
policy is to return profits to shareholders in accordance with business performance, premised on
maintaining stable dividends, making a comprehensive determination, while taking into consideration
factors including capital required for future business expansion and its financial condition. It generally
aims to maintain a dividend payout ratio of around 30%.
G-7 paid a ¥47 dividend (30.5% payout ratio) in FY3/16 that included a ¥13 commemorative dividend
for the 40th anniversary. For FY3/17, the dividend has been set at ¥40.0 per share yielding a 23.1%
dividend payout ratio, and expectations exist for an even higher level at around the 30% target
through payment of a special dividend if earnings meet the target.

We encourage readers to review our complete legal statement on “Disclaimer” page.
11

■■Financial Status and Shareholder Returns Policy㻰㼕㼢㼕㼐㼑㼚㼐㻌㻼㼑㼞㻌㻿㼔㼍㼞㼑㻌㼍㼚㼐㻌㻰㼕㼢㼕㼐㼑㼚㼐㻌㻼㼍㼥㼛㼡㼠㻌㻾㼍㼠㼕㼛
(¥)
㻡㻜㻚㻜

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G-7 HOLDINGS INC.
7508 Tokyo Stock ExchangeFirst Section

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（㻑）
㻟㻡㻚㻜
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㻞㻝㻚㻜

㻠㻣㻚㻜
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14-Dec.-16

㻠㻜㻚㻜

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㻟㻜㻚㻜

㻝㻜㻚㻜

㻣㻚㻜

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Important disclosuresand disclaimers appear
at the end of this document.

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㻜㻚㻜
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㻲㼅㻟㻛㻝㻠

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㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣㻌㻱FISCO Ltd. Analyst
Yuzuru Sato

We encourage readers to review our complete legal statement on “Disclaimer” page.
12

Disclaimer
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