Zensho : 41th Annual Securities Report

About this update from Zensho Holdings Co., Ltd.

Annual Securities Report (Report pursuant to Article 24, Paragraph 1 of the Financial Instruments and Exchange Act of Japan) The 41st Fiscal Year (April 1, 2022 to March 31, 2023) Zensho Holdings Co., Ltd. This document is a translation of part of the Japanese original. The Japanese original has been disclosed in Japan in accordance with Japanese accounting standards and the Financial Instruments and Exchange Act of Japan. This document does not contain or constitute any guarantee and the Company will not compensate any losses and/or damage stemming from actions taken based on this document. In the case that there is any discrepancy between the Japanese original and this document, the Japanese original shall prevail. ―1― Contents Annual Securities Report (41st Fiscal Year) [Cover page] 3 PART I: COMPANY INFORMATION 4 I. OVERVIEW OF COMPANY 4 1. Summary of Business Results 4 2. History 6 3. Description of Business 9 4. Subsidiaries and Associates 11 5. Employees 14 II. BUSINESS OVERVIEW 16 1. Management Policy, Business Environment and Issues to Be Addressed, etc 16 2. Philosophy and Initiatives for Sustainability 19 3. Business Risks, etc 24 4. Management's Analysis on the Company's Financial Condition, Results of Operations and Cash Flow Conditions 27 5. Material Contracts 33 6. Research and Development 33 III. STATUS OF EQUIPMENT 34 1. Overview of Capital Investments, etc 34 2. Principal Facilities 34 3. Plans for New Additions or Disposals, etc. of Facilities 37 IV. INFORMATION ON THE COMPANY 38 1. Information on the Company's Share, etc 38 2. Acquisitions of Treasury Shares 42 3. Dividend Policy 43 4. Corporate Governance, etc 44 V. FINANCIAL INFORMATION 73 1. Consolidated Financial Statements, etc 74 2. Non-Consolidated Financial Statements, etc 124 VI: STOCK-RELATED ADMINISTRATION FOR THE COMPANY 137 VII. CORPORATE REFERENCE DATA 138 1. Information on the Parent Company, etc 138 2. Other Reference Information 138 PART II: INFORMATION ON CORPORATE GUARANTORS, ETC., FOR THE COMPANY 139 ―2― [Cover page] [Document title] Annual Securities Report [Clause of stipulation] Article 24, Paragraph 1 of the Financial Instruments and Exchange Act of Japan [Place of filing] Director-General, Kanto Local Finance Bureau [Filing date] June 26, 2023 [Fiscal year] The 41st term (from April 1, 2022 to March 31, 2023) [Company name] Kabushiki Kaisha Zensho Holdings [Company name in English] Zensho Holdings Co., Ltd. [Title and name of representative] Kentaro Ogawa, Representative Director, Chairman, President & CEO [Address of head office] 18-1, Konan 2-chome,Minato-ku, Tokyo, Japan [Telephone number] +81-3-6833-1600 [Name of contact person] Kiyohiko Niwa, Executive Officer, Senior General Manager of Group Finance and Accounting Division [Nearest place of contact] 18-1, Konan 2-chome,Minato-ku, Tokyo, Japan [Telephone number] +81-3-6833-1600 [Name of contact person] Kiyohiko Niwa, Executive Officer, Senior General Manager of Group Finance and Accounting Division [Place for public inspection] Tokyo Stock Exchange, Inc. (2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo, Japan) ―3― PART I: COMPANY INFORMATION I. OVERVIEW OF COMPANY 1. Summary of Business Results Business results of group (Million yen, unless otherwise stated) Term 37th 38th 39th 40th 41st Fiscal year ended March 2019 March 2020 March 2021 March 2022 March 2023 Net sales 607,679 630,435 595,048 658,503 779,964 Ordinary profit 18,211 19,903 12,215 23,117 28,081 Profit attributable to owners of 9,924 11,978 2,259 13,869 13,265 parent Comprehensive income 9,739 8,594 5,324 22,080 18,180 Net assets 87,083 86,793 85,430 104,486 115,837 Total assets 377,779 365,853 396,023 427,172 469,563 Net assets per share (yen) 496.34 563.30 560.87 679.19 761.63 Basic earnings per share (yen) 67.93 80.31 14.82 91.17 87.30 Diluted earnings per share (yen) － － － － － Shareholders' equity ratio (%) 19.1 23.7 21.5 24.2 24.6 Return on equity (%) 14.2 15.1 2.6 14.7 12.1 Price-earnings ratio (times) 37.7 25.7 191.1 31.4 45.0 Cash flows from operating 33,129 33,575 29,686 45,430 53,078 activities Cash flows from investing (52,143) (35,188) (23,519) (31,550) (35,200) activities Cash flows from financing 50,300 (25,753) 1,753 (11,986) 1,844 activities Ending balance of cash and cash 57,240 28,928 37,643 42,414 64,690 equivalents Number of employees 12,521 14,402 16,253 15,929 17,324 [average number of part-time [52,682] [50,148] [51,125] [51,118] [56,313] employees] (persons) Notes: 1.Diluted earnings per share are not stated, as there are no potential shares with dilutive effects. 2.The Group has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020), etc., from the beginning of the 40th term. Figures for the summary of business results for the 40th term are presented after applying these accounting standards, etc. 3.The Company introduced Board Benefit Trust (BBT) in the 41st term. In the calculation of net assets per share, the Company shares held by Japan Custody Bank, Ltd. (Trust Account E) as trust assets for the BBT are included in the number of treasury shares deducted from the number of issued shares at the fiscal year-end, while in the calculation of basic earnings per share, those are included in the number of treasury shares deducted from the average number of shares outstanding during the period. ―4― (2) Business results of reporting company (Million yen, unless otherwise stated) Term 37th 38th 39th 40th 41st Fiscal year ended March 2019 March 2020 March 2021 March 2022 March 2023 Net sales 254,448 254,937 238,248 216,433 256,344 Ordinary profit 7,222 10,276 4,699 5,571 13,436 Profit 6,297 7,159 2,622 5,415 11,961 Share capital 23,470 26,996 26,996 26,996 26,996 Total number of issued shares 149,640,445 154,862,825 154,862,825 154,862,825 154,862,825 (shares) Net assets 55,342 79,891 75,884 78,095 86,248 Total assets 342,687 350,250 360,602 373,293 400,507 Net assets per share (yen) 380.65 519.58 498.83 513.38 568.08 Dividends per share (yen) 18.00 20.00 20.00 22.00 24.00 [Interim dividend per share] (9.00) (10.00) (10.00) (11.00) (12.00) Basic earnings per share (yen) 43.11 48.00 17.20 35.60 78.72 Diluted earnings per share (yen) － － － － － Shareholders' equity ratio (%) 16.1 22.8 21.0 20.9 21.5 Return on equity (%) 11.6 10.6 3.4 7.0 14.6 Price-earnings ratio (times) 59.5 42.9 164.6 80.4 49.9 Payout ratio (%) 41.8 41.7 116.3 61.8 30.5 Number of employees 622 600 627 655 684 [average number of part-time [158] [129] [146] [144] [109] employees] (persons) Total shareholder return (%) 106.6 86.7 119.3 121.4 166.4 [Benchmark: TOPIX Net Total (95.0) (85.9) (122.1) (124.6) (131. Return Index] Highest share price (yen) 2,934 2,608 3,125 3,005 4,150 Lowest share price (yen) 2,023 1,677 1,731 2,556 2,855 Notes: 1.Diluted earnings per share are not stated, as there are no potential shares with dilutive effects. 2.The highest and lowest share prices are those of the First Section of the Tokyo Stock Exchange before April 3, 2022 and of the Prime Market of the Tokyo Stock Exchange after April 4, 2022. 3.The Company has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020), etc., from the beginning of the 40th term. Figures for the summary of business results for the 40th term are presented after applying these accounting standards, etc. 4.The Company introduced Board Benefit Trust (BBT) in the 41st term. In the calculation of net assets per share, the Company shares held by Japan Custody Bank, Ltd. (Trust Account E) as trust assets for the BBT are included in the number of treasury shares deducted from the number of issued shares at the fiscal year-end, while in the calculation of basic earnings per share, those are included in the number of treasury shares deducted from the average number of shares outstanding during the period. ―5―

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