Zensho : 41th Annual Securities Report

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.

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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

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[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]	[phone]
[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]	[phone]
[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)

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PART I: COMPANY INFORMATION

I. OVERVIEW OF COMPANY

1. Summary of Business Results

1. 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.

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(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.

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