It's time, so we'd like to start the Marui Group 2024 March 2024 financial results presentation. Thank you very much for your participation out of your busy schedule. The documents is at our corporate site, you can download the information. March 2024, the financial results and the medium-term management plan progress, can be downloaded. We are going to have 20 minutes of presentation, and then we would like to accept and entertain questions from the participants. Now, it will be downloadable from, and you can view this at our site later on. CFO Kato is going to make a presentation, and then for the question and answers, Epos Card presenter Saito and Marui presenter Aono, head Kutsukake are going to participate, and four of us will be participating in this question and answer section. So this is the agenda items for today.
So March 2024 financial results and the status of the business will be covered first.
I'm Kato. Nice to see you all. First of all, I'd like to give you the financial results of March 2024 and the business results of each division. There are three points in the financial results that I would like to highlight. For the major three KPI, EPS improved by 20% to JPY 131, ROE 9.9%, ROIC was 3.6%, and we have exceeded all the plans, revised the plan in the first half. Now, operating income went up by 6% at JPY 41 billion, and it was less than the plan by JPY 1 billion. However, real operating income was improved, increase of JPY 3.8 billion in the second half from the decrease in the profit and the income JPY 1.2 billion in the first half.
In the retailing segment, was up JPY 0.8 billion, and the second half was JPY 2.6 billion, according to the plan. Fintech was down by JPY 1.3 billion, but in the second half, it improved by JPY 1.5 billion. Lastly, for the net income, because of the control and reduction of extraordinary losses, it went up by 15% at JPY 24.7 billion, which is JPY 700 million better than the plan. This is the changes of the major three KPI. EPS was a record higher at JPY 131. ROE was better than the equity capital cost, and ROIC was better than WACC. This is the differences of operating income. As I explained in the digest, excluding liquidated accounts receivable, in the first half, in the consolidated operating income was down, because of the one-time factors, but in the second half, it went up by JPY 3.8 billion at JPY 23.4 billion.
For the different segments, because of tenant revenue improvement, in Retailing, it improved by JPY 2.6 billion in the second half, which is a better improvement. Fintech was down in the first half, however, because of various actions, it improved in the second half. Now, this is the changes of the financial indicators. For the transactions as a whole, it was going very favorably, a record high. Operating income was JPY 41 billion, up by JPY 2.3 billion. It has not reached the pre-COVID level, but it's improving. The net income was JPY 24.7 billion, which is an improvement of JPY 3.2 billion. In operating income, the breakdown will be explained. Excluding liquidated accounts receivable, it was JPY 2.6 billion, Retailing JPY 3.3 billion, Fintech improved by JPY 200 million. The corporate eliminations, by giving those equities and other human resources capital investment, it was down by JPY 1 billion.
This is the changes of operating income separated for the first half and second half. In the first half, liquidating liquidation receivables, the Retailing went up, but the Fintech had a one-time cost, and therefore, it went down by JPY 1.2 billion. Second half, because improvement in the Retailing and also Fintech improved, and therefore, it went up and improved by JPY 3.8 billion. This is segment by segment revenue and operating income. Retailing, because of the tenant revenue improvement, it improved, and operating income was JPY 7 billion according to the plan. Fintech, the revenue went up by JPY 16.5 billion at JPY 167.1 billion. However, real operating income stayed only by improvement of JPY 200 million, which is less, JPY 600 million less than the plan. Now, for the Retailing, this is that factor analysis.
The fixed-term rental revenue as well as event revenue went up, and therefore, the operating income improved by JPY 3.3 billion at JPY 7 billion. In the breakdown of first half and second half, in the first half, it improved by JPY 800 million, but in the second half, tenant and event revenue improved, and also sales promotion expenses, no, was postponed, or utility, you know, cost went down, and also cost reduction went up, and therefore, improved at JPY 2.6 billion improvement. This is tenant revenue. Unoccupied area has gone down, and the monthly Tsubo rent went up, and therefore, tenant revenue improved by JPY 1.3 billion. This is an unoccupied, unoperational area. Tenant leasing was very favorable, and it's 8,400 Tsubo at the end of March 2024, which was a big reduction from 10,200 Tsubo at the end of the previous term.
This is sales that doesn't sell non-performing stores, and it is up by 5% at 60% for the non-retail business, and also the unit price also went up, because of the category conversions. This is the number of customers coming to the stores. It went up, you know, by 7% at 107%, and therefore, compared to 2019, before the COVID, it was 180 million or 93%.
This is the status of the e-commerce transactions. Transaction volume increased for the ninth consecutive quarters. Temporarily speaking, the underlying tone in the third quarter declined due to the impact of the search site algorithm changes and other factors, but although the market declined, the tone recovered, the underlying tone has recovered in the fourth quarter as a result of the countermeasure taken. Also, this is, I'll explain about the first half and second half of the fintech of the operating income and breakdown. In the first half, due to decline in the affiliate commission rate has declined, and also point expense has increased. Some temporary factors resulted in the income decline, but in the second half, due to those factors have been abated, so therefore, increase of the revenues have exceeded the increase of the expenses, JPY 1.5 billion income increase.
And also, the affiliate commission rate has declined due to the prepaid charge usage decline, as well as travel entertainment transactions have been turned over so that it therefore has been improved. Point expenses and also the transactions have declined due to the reviews on the point program for the charges, but the credit card transactions underlying tone three point lower compared to the first half. But the point expense has also declined. In terms of its impact on the income, it is + JPY 300 million. The cashing and also the interest half-year impact compared to the previous year, and also including financial charges on the installment payments. And due to the balance recovery, in the second quar— in the second half compared to the previous year, + JPY 2.8 billion.
It is the increase of the income compared to the COVID-19, after COVID-19 days. In the second half, and due to the leading real estate management corporations, new partnership has been contributed to the increase of the revenues, 15% increase compared to the previous year, to become JPY 9 billion. And for the bad debt status and bad debts increase and also suppression of the write-off the bad debts, 1.6% of the bad debt ratio, which is the lowest record low level. In the leading factors of the receipts of the payment, interest rate, interest rate payment has been declined, and we need to monitor the trend. And for the new membership, and that is the increase on the cards tailored to each individual interest at the 800— 810,000 new members, to the level of the pre-COVID-19 level.
For the card numbers of card members have increased, 7.59 million people, which is a record high, including those, cards tailored to each individual interest as a platinum and gold members. It increased the 57% ratio. In the from March 2017, the March 2024, the fund is JPY 700 million, investment on JPY 300 million in startup companies. In total, it's JPY 1 billion investment that are done, and it is that accumulated total investment became JPY 28 billion, from March 2017. And that is the for the co-creative, the profit investment, the profits is the JPY 1.5 billion increase compared to previous year to reach JPY 2.8 billion. That is the, was the IRR 13% and the hurdle rate 10% is exceeded. And also, this is the budget and the total assets.
There is a JPY 441.6 billion increase to reach JPY 1.35 trillion. And this is the asset allocations for the underlying core operating cash flow JPY 39.1 billion. It became JPY 36.5 billion with the growth investment and also redemption to the shareholders. And those return to shareholders have also for the growth investments of JPY 17.9 billion of the own buyback JPY 3.4 billion, dividend JPY 15.2 billion, and JPY 9.3 billion for the human resource investment. And the ratio of the human resource expense was 26%. And we have achieved in terms of ESG and the for the ESG indices, and carbon dioxide emission reduction is the 350,000 ton reduction compared to the 2017 March. And DJSI World index, we have been selected as the sixth year consecutively.
This is the outlook on the March 2025, and that is the ROE is 14— EPS is JPY 141.4 , 8% increase. ROE is 10.4%. ROIC is 3.7%, exceeding the previous year. That is the outlook. Group total transaction should exceed JPY 5 trillion, 10% increase of the operating income to reach JPY 45 billion. And the current income is 7% increase to reach JPY 26.5 billion. That is the outlook. And for the retailing, a 22% increase to reach JPY 8.5 billion. Fintech is 5% increase of JPY 44.5 billion . And then in the March 2025, operating income consists of the tenant revenue increase and also increase of the electricity bill, is to increase of profits income of JPY 1.5 billion.
Now, the unoccupied area is going to go down by 1,900 tsubo to reach 6,500 tsubo at the end of March 2025. Now, this is a tenant revenue outlook that decrease in the non-operational area and the rent increase is going to push up the revenue by JPY 1.9 billion. Now, this is the EC transaction outlook. We are going to have actions for SEO, and therefore, we are going to have more visitors to the site, and we are going to have a JPY 2 billion increase at JPY 25 billion at the March of 2025 compared to the previous year. This is the operating income at the end of March 2025.
Because of the one-time factors improved, the improvement, situation and trend is continuing of the second half of last year, and transaction linked and the non-linked revenues went up, and it exceeded the increase in the expenses, and therefore, it is going to improve by JPY 2.1 billion. Now, let me explain the outlook of the market, which is going to be the assumption of the plan of March 2025. In a cashless market, a credit card was a concern because it might be taken the market away from the payment, you know, services. However, credit card settlement has exceeded JPY 100 trillion in 2023, and it occupies 83% of the cashless payments. After 2019, the QR code settlement has increased, however, it is staying at 130% of the previous year, which is the same as the growth rate of credit card.
This is Epos Card, domestic credit card transactions compared to the previous year. In March 2024, we are not the only one who is suffering the decline, but all the entire market is down by 5% because of the repercussions from the recovery from the COVID. Now, for us, it is 4% down. Now, this is the transaction March 2025 assumptions. Now, last year, travel and entertainment transactions, you know, because of the reversal of the revenge consumptions, it went down by 2% for the entire transactions. This has recovered and travel, entertainment transactions compared to the previous year, and factors is going back to the pre-COVID level, and therefore, the transaction as a whole is only down by 1% compared to the previous year. Now, nextly, I would like to talk about the use of a prepaid charge.
Last fiscal year, in the second half, there was a review of the points policies, and therefore, it went down by 1% in the transaction. Because of the impact of the first half of previous year, it is the - 1% of the impact compared to the previous year. Now, this is a card credit transactions outlook for the March 2025 is as follows. It is going to be 112% at JPY 4.6 trillion.
Next, I'll talk about the outlook on the affiliate commission rate review outlook. Prepaid charge reduction usage has been declined, and the rate decline has been stopped, so therefore, they will + 0.01% improvement this year, this term. Point expense has outlook in the second first half, prepaid charge increase, so therefore, it is increased on a temporary basis, but this second half from the second half is the point programs in review, so therefore, the transaction it should increase to the level of the same transaction level increase. This is the dividend per share. With the introduction of a DOE since the previous term, the dividend per share JPY 101 at March 2024, and in March 2025, it should be increased by JPY 5 to reach JPY 106.
Also, if there's no further profitability or income can be expected for the future in the share price, we have the more agile own share buyback, so therefore, to reach to set the limit, upper limit of the share buyback of the maximum of JPY 20 billion in the first half. In the this is three KPI progress. In March 2024, which is the third year of the midterm management plan, the operating income as well as the net income did not reach the original plan due to that achievement ratio was between 93%-99%.
Due to COVID-19 recovery, has been delayed more than what we have expected, but in April 2022, it is expected to recover to the pre-COVID-19 level, but still, there was some infection increase, in a sporadic basis, so therefore, until it reached it continued until May 2023, so therefore, one-year delay in what is expected recovery from COVID-19. COVID-19 has impacted on the consumption expenditures. It was in recovered to the level in finally in FY 2023. However, if you look at the breakdown, due to the price increase, the essential expenditure have increased, however, it's from the optional or discretionary expenditure is still below the pre-COVID-19 level, and the real-term wages have not yet been back to the level of the pre-COVID-19, so therefore, it is expected to grow in the future, and when this changes, I think that phase will be shifted.
Under such circumstances in FinTech, there have given some partial impact on that due to the decline of the optional or discretionary spending, has impacted on the coming to the store as well as the transactions, so therefore, it has delayed in obtaining the new card members. And in the midterm management plan, in the two-year accumulation, the new card members were still -170,000 members, so in the credit card transactions as of March 2024 was below JPY 100 billion. From all of these things, in the March 2024, major three KPIs became below the plan, so therefore, in the second quarter financial earnings report, as we have explained, with the new strategy to be further done in a very steady manner for the remaining two years, we aim to achieve three KPIs.
Specifically speaking, in terms of the cards tailored to each individual's interest as well as the more productivity improvement of the human resource, with the card strategy enhancement and the operating income as well as the net income improvement and also co-creative investment, change so that the impairment amount should be decline, reduced, so the exit also decreases, and the EPS JPY 200, ROE 13%, ROIC 4% to be the target. Thank you very much.
Now, we would like to move on to the question and answer session. Thank you very much for your waiting. First question. Mizuho Securities, Takahashi-san, please. Mizuho Securities.
Takahashi, thank you very much for your presentation. I have three questions to make. Firstly, to Kato-san, and to this year's plan. The assumptions and the philosophy behind this plan is something I'd like to know. I think it's an error, or margin, but three months ago, you have explained very precisely, but you were short of the plan. Yet, why it has been the case? Because three months ago, it is going to be very visible what's going on, and can you look back on why it was short, and in a new year, new fiscal year, you think it's going to be, it seems quite conservative, but what's the assumption?
And today, I think you have explained that, you know, the recovery for the COVID is going to be was delayed by one year, but it was very visible. I think all the excuses and the reasons were added later on, and it was quite disappointing. So, for this fiscal year, what was the assumptions? That's something I'd like to know. That's my first question. Mr. Takahashi, maybe I can have your second question. Yes, please. And my question is Aono-san and Saito-san nextly. And for the retailing business, I think that has fared quite well, but tenants are coming, and also in the non-retailing, and also EC is also growing. But what is the specific area? What's the industry? What is the type of the, you know, goods, EC commerce? W hat is selling? Can you give us more details?
Now, based on that, for new fiscal year, is that going to continue with the same trend, or is that going to have a, a different business opportunities, coming to the surface? Now, with regards to fintech, this, fiscal year, it is going to be 5% improvement of the operating income, and I think you have transactions improvement, and according to Mr. Kato's presentations, all the KPIs are going very well. However, operating income is only improving by 5%, which is, not, you know, remarkable. Is there any, you know, background or factors that we don't, you know, realize? Because if it is going out and transaction going up as, you know, two digits, and it seems that operating income also should go up by a two-digit, but what's the reason why it's only 5%?
Now, Takahashi-san, thank you very much. So let me explain and respond to your first question. It was short of plan, and we are very sorry, and, as a factor behind that, in the fintech, it was down by JPY 1 billion. It was JPY 600 million in fintech and JPY 300 million in the corporate eliminations. For the fintech shortage, travel and entertainment was less than we expected in its transaction, and also, the commission of the merchants were less than we expected. And also, the cashing commission and the rent guarantee was short of plan, and in the each area, JPY 300 million short, respectively. Now, for the corporate elimination, digital human resources recruitment and hiring, there was a joint venture called Mutual, and the recruitment activities was done, and the recruitment and hiring was more than we originally expected.
As you have rightly pointed out, last fiscal year plan was a stretched goal and plan, and therefore, in preparing for this fiscal year from February, P&A was also ready, and therefore, you know, it was a, you know, we had a very detailed analysis why we were short of the plan, and we had the transaction of the merchants and also the fees and commissions were also analyzed, and we had very certain and secured numbers in a plan, and therefore, for this fiscal year, you know, we are not going to repeat the situations of last year and the two years ago of short of the plan. Thank you very much.
So why you think it's going to be accurate? Is that because of the macro environment, or is that the speed of the recovery? You said that it was a one-year delay, but you think that the real, you know, wages is going to be going up. Are you going to be more optimistic about the optimistic macro environment, or not only your situations, but what are the assumptions and what are the, you know, background?
As I stated before, for the macro environment, the real wages are going up. That's what they said. However, for this fiscal year, the actuals are the basis of our calculation, and the real wages are not reflected, and therefore, if the, you know, real, you know, wages are going up and if there are more discretionary consumptions is done, it's going to be upside for us. And also, in the second quarter, we have explained, for example, there is the enhancing the strategy to have the cards tailored to each individual's interest, and we can have improvement in the revenue, but those are not finalized, and we do not reflect any upside potential, and therefore, we believe that we can achieve a plan for this fiscal year.
Okay. I understand it very well. Thank you very much.
So let me explain. First of all, in terms of the tenant revenue, it has expanded because the new tenants have been increasing with the rent that we have to acquire those new tenants in by paying their rent. And in terms of the categories of its breakdown, for the non-retailing, in the non-retailing, those are the stores that does not sell and the online, more experiential type of the stores, and therefore, onlines as well as offlines. So for the onlines, those tenants, having the, in, placing the real, stores or physical stores, they wanted to work together with the Marui and the cosmetics and organic stores, and also in Namba, Galaxy, is that which is put their stores in Namba, and the those, type of stores are increasing. Also, in terms of services, compared to before, it is different from compared to type of the tenants are increasing.
For example, they want to learn. The customers who want to learn, there are schools. Schools have been increasing. More than 60 tenants are now in as a from school category, like English conversation or Japanese prep schools, but not only those type of schools, but also, like, margin, games or, drone schools, casino schools, and also animation, illustration, teaching schools, and those other things. In 10 years ago, it was only 18% of those schools, as you can see here. They are 61%, and it has been expanded to the 61%, and that is why our revenues are been increasing. And also, for the e-commerce, what kind of e-commerce are selling well?
In the fashion materials is 104%, so it has increased, but also, non-fashion items such as linked with the event type, non-linked with the animation materials, as well as before, pre-COVID-19, the fashion and apparel, shoes, and bag, with these three items have dominated 90% pre-COVID, but in the last year, in March 2024, it is 70-some percentage, and then more than other items have increased more than 120% increase compared to previous year. So in total, it is at 110% compared to the previous year.
Thank you very much.
This is Saito speaking. Well, in your question, as in , as you have asked your question, in the past half of the year, that you may have some concerns, but we have increased the JPY 1.5 billion of the increase of our income.
In the second half, increase of our income of JPY 1.5 billion, we want to continue this trend, and a JPY 3 billion income increase can be expected in the future, but there are various factors impacting, but in this fiscal year, the biggest difference compared to previous year is because we have made investment this year, on system investment, which we planned for this year because the fintech is JPY 7 trillion or JPY 8 trillion of transactions, and then system, we want to enhance our systems in the data centers and enhance infrastructures, and those costs, initially in the investment between JPY 500 million-JPY 1 billion infrastructure investment we need to make, and therefore, it would impact on the JPY 2 billion.
That's why it's still the income is still maintained at the level of the JPY 2 billion or so for this full year. In that sense, as Kato-san has explained, and the only looking at the cards tailored to each individual's interest, and from that position, in the second half of the year, it is somewhat maybe paused those efforts, but the very challenging past half, but compared to that, without such a cost increase for the fintech, you would be going, you're not coming back to the growth trend, growth track, correct? Yes. That next year target, as it has been explained, in the second half of this year, the market is still a little bit in the declining trend, but now those factors are already included in a very conservative topline plan is what we have today.
So based on that, the JPY 1 billion increase of our income is expected. And I would say it is okay, but now we have the sense that it's coming back now.
Thank you very much. You answered very well. Thank you.
Thank you very much. Now, I'll gladly entertain the next question. Okasan Securities, Kanamori-san, please. And I'm Kanamori of Okasan Securities. Can you hear me? Hello? Can you hear me?
Yes, we can hear you. I have two questions or two requests. It is going to be, oh, maybe some overlap with the previous question. In the third quarter, you had financial results, and for the outlook of the, this fiscal year, you stated that in the fourth quarter, it is going to be a leap year, and therefore, there are going to be, you know, more operating days, and therefore, the revenue is going to be solid, in the fintech. I think that's what you explained. And if, it doesn't go as expected, you can have the, cost control, and therefore, the, income, target, can be achieved sufficiently.
In the third quarter, you were quite confident in communicating, you know, everybody, you know, asked, you know, whether it's going to be okay or not, but Kato-san and all the executives and management said that it can be achieved. Now, this time, once again, in the third quarter, the, you know, up and down of operating income of the revenues as well as the cost compared in the fintech, I think, it is short, and I think the revenue was not achieving the target. I think cost was quite well controlled or maybe according to the plan. However, top line, it did not, you know, achieve the plan.
I think there are many factors behind that, but I think this is a topline shortage is the issue, but I think it is going to be a repetition of the previous questions, but COVID and some other reasons can be listed. What's the biggest reason? What's the biggest reason in the past three months? What was the, you know, differences? Why were you not able to achieve the plan? Can you repeat that point once again?
Thank you very much for your question. In the fintechs, the topline revenue after the third quarter was not expected achieving the plan, and you were looking for the explanations. Now, firstly, for the commission of the merchants, in the third quarter, compared to our expectation, it's down by JPY 400 million.
This was a leap year, and because of that, we expected that it's going to be an improvement in preparing a plan, and compared to January and March, February was better because of leap year, but the base number, as I explained, as an industry as a whole, was very sluggish. It was low level. We didn't really— we couldn't expect and forecast this low level, and that has been the major reasons why we did not forecast the merchant commissions right. In addition, rent guarantee service. In the PowerPoint presentations, the major alliance with the major players was explained, and with regard to this area, of course, the alliance and the cooperation has started. However, actually, you know, we going to have the business and starting the business was delayed by more than, you know, a half a month, 15 days.
We wanted to have it, you know, ready before the peak season of March. However, it was not offered in the March peak season. It was delayed, but it has already started, but starting from the beginning of this year, it has contributed, and we are going to have the positive benefit. However, because it was not ready before March, it had a negative impact from the forecast. Those are the two major reasons.
Based on that, I'd like to have a second question. Once again, with your new plan for new fiscal year, somewhat our environment is difficult, and that is reflected in your plan. If— I don't want to think about the if situations, but if the topline and revenue and transaction linked and transaction non-linked, I think it was short of the plan in the previous fiscal year, but if, because of some other events, if the revenue is not reaching your plan this year again, what is going to be done for the cost control? How much buffer and cushion do you have in controlling the cost?
In the previous year, the topline went down, and the revenue was short of the plan, and the cost was not reduced in proportion to the reduction of the topline revenue, and the balance of the reduction of the, you know, revenue and the cost control was not in proportional, but you are going to have JPY 1 billion or JPY 5 billion or, you know, JPY 1 billion or so half billion for the system IT system investment, but this is news to me. Every time, every quarter, I think you have a new event, and this is really troubling me. Maybe my intention is that for the revenue increase or decrease, the cost cannot be, you know, can be managed right in proportion to the revenue changes.
In the past one year, you know, I think cost control is not done in proportion to the changes of the revenue. So what is your ideas in doing the cost control?
Thank you very much. For this fiscal year, for example, if you look at the cost changes, point expenses. In the first half, it was more than we originally expected in expenses. In the first half, the prepaid charging points, we never expected that it is going to be such a big expansion of the prepaid points charge, but during the three months, point program review was done as account measures, and therefore, it has leveled off in the second half, and after that, I think it is now more linked to the transaction volume. Now, basically, no, whatever we control, we had a good control.
However, there was unexpected, you know, situations and events, and we are trying to have the quick counter measures and take actions. Now, with regards to the Kanamori-san's questions, I can say as follows. In the case of fintech, 70% is the variable cost. So the cost control-wise, the variable cost has to be changed structurally, to control the cost, and there's a difficulty in that, but as a point expenses, I think the variable cost, variable portion is going to be reduced on a continuous basis. So the SG&A control, you know, as in the past, is going to be done, with a good control, according to our understanding.
Thank you very much. Going forward, I would like to ask you, as a result, I mean, you are short of the plan, but you are also saying that in the long-term view, the, you know given, but the accumulation of a shorter term, you know, view is going to be the long-term, and if you continue to be short of plan on a short-term basis, I think the credibility of the medium-term management plans will be in question. So, that's what I would like to say. Thank you.
Next question, please. From Suda-san from Daiwa Securities, please.
Well, I've just participated from the middle, so may I have missed to hear the first part, but in my first question on the SG&A expenses, last fiscal year, in the third quarter last year, the SG&A is, well, JPY 63 billion, and then now JPY 1.1 billion improvement, so 8.4% increase, because of the JPY 1.1 billion increase of that. S o I'm sure there's been some natural decline for in terms of human resource expense, but in fintech, how the fintech transaction volume, because the larger population is large, so that would become less, but your increase 7.6% and 8.4% this time with the increase of the SG&A, so is it because of the other factors impacting on that increase?
So in the third quarter, the JPY 1.1 billion increase, what is the reason for such increase? That is my question in the third quarter. And also, in the second question, in the repayment of the interest rate, in there'll be some of the lawyer participation. For those provision balance, was the JPY 8.4 billion that's been declined by about, some decline JPY 4 billion decline of that in the middle, does it going to damage your operating income or not during the period? In the third quarter, in the fourth quarter, it has declined. Is it okay that you don't have to increase the provision amount?
In year not increasing, but if the payment speed of the return of the pay interest rate, if it declined, the pace of that repayment, then is it going to impact by that?
Well, I'd like to ask you a question. What you're saying, SG&A, are you talking about the consolidated basis SG&A expense? In the consolidated basis, rather than we are looking at this in a per segment by segment, so in terms of expense increase in the corporate eliminations in the digital human resource recruitment, since we found a good person, then we definitely have to hire that person, and that is why our cost of the HR resource has increased, but just you oh, I see.
So but JPY 1.1 billion per segment, you have done the explanation per segment and also budget for that, but even if you achieve in your segment, but if you have the corporate eliminations in the corporate wide, otherwise, you're not really increasing the income, ITs and services and accounting of course, the accounting, income of the consolidated income was not too bad, but what is happening on a consolidated basis is that you have been maybe impacted. So in consolidation of the other businesses that you put to be, so that you can fully cover all the consolidation. So how that's how do you analyze? My purpose of question is the on the consolidation basis.
In turn, there'll be little impact on the income, but from this year, Epos Short-Term has been— the company has been also a part of the consolidation, and its revenues and the expenses are also a part of the consolidation. On the income basis, there's no impact. That is why we have not included there, and I think so in the third quarter, it was not included. That is correct. That is a small amount, small petty amount, the securities, collateral securities in the name type— type of company called Epos Short-Term, and that is correct. That was nothing previously, not including the consolidation basis.
I see. In the [equity] side, is it net increase JPY 1.1 billion? That is why I was just wondering. I say now I understand. Thank you.
For the interest rate and repayment, as you just mentioned, last year, in the interest rate, the leading indicator, as we can see in this PowerPoint, in each quarter, the growth rate has been declining, and for the amount of the recovery or repayment, it is coming later point in time in the future, the 84% level in the previous year, but most likely, the receipt of that is maybe becoming a 70% level, so in the next year, it will reach the next year's repayment amount, and that is the growth that we may expect for next year.
So if there's about JPY 8.5 billion of the balance of the provisions for that, but then if you look at for the next year, from JPY 4 billion this year, it'll be further reduced, so at this point of time, in this flow, unless there's big change in this, so we don't need to make any additional provisions. In terms of, we cannot really add any more provisions. I think it is the judgment by the accountant, but it is if it's going to decline in the meantime, mid management plan, that if you add it in the final linkage, it would hit the bottom if you increase by JPY 5 billion or JPY 6 billion, so therefore, people may remember that.
So in the financial closing, each time, from the accounting auditors about the balance of the provisions, they have said it is appropriate level of the provision level. So even if there's a rapid change, then we have to address those situations if there's any significant change, but in the total flow, and this trend is likely to expected to continue, also from the past trend as well. Well, in that sense, for us, in each quarter, the information in terms of accounting, and it has been declining with this pace, then we don't really have to worry about that provisions.
That is correct. Okay, I understand. Thank you very much.
Thank you very much. Now, I would like to have the next question. SMBC Nikko's Kanamori-san, Mr. Kanamori, please— Ms. Kanamori-san.
I have three questions from Kanamori, and I also have a question about SG&A, and you know, if you look at the segment by segment, you might not have the answer, but the SG&A items are disclosed. There's an admin cost on the fourth quarter, it's about 20% increase, and it's quite high. Is that the one-time cost increase maybe included? If you know the reason of 20% increase, please let us know. That's my first question. Maybe you can have the second question, please. Yes? Let me have my second question. Data center-related cost is going to be JPY 0.5 billion-JPY 1 billion, which is going to be a negative on the income.
It was originally planned in a medium-term management plan or not? In the new fiscal year, it is going to be JPY 0.5 billion-JPY 1 billion in the new fiscal year, but how about March 2026? What is going to be the running cost and operation cost? I believe that you know what is going to be the you know not to be repeated but in March 2026 how much is there going to be the cost? Is it going to go down from JPY 0.5 billion-JPY 1 billion and therefore it's going to be positive for the March 2026? And my third question is related to the second questions.
For the March 2026 and JPY 80 billion of the operating income, the recovery from the COVID was delayed, and therefore, it is getting very difficult, getting difficult to achieve JPY 60 billion, but still, I think you are trying to achieve JPY 60 billion, then you have to have in March 2026, you have to have a jump of improvement in the income, but you had page 46 of unoccupied and operational area, and it's going to go down, and this year is going to have a bigger reduction than the March 2026 year, so the improvement in the income in the March 2026 might be smaller than the March 2025. So, you know, if you are trying to have a jump of improvement in the income, what are the factors that you are have in mind?
Now, let me respond to your first question. I don't know exactly, however, in the Suda-san's question, I am going to touch upon that ratio . We had consolidated the Epos, Shogaku Tanki Hoken, which is the small amount, short-term insurance company, and also, this is admin cost as well as human resources cost, and that was added on the third quarter, and therefore, it's not really impacting the operating income, but because of the consolidation of Epos, short-term for the small amount short-term insurance businesses, it had, some, you know, impact.
Now, going to the data center, let me respond. For the data center, it has been planned, from various, you know, aspects, with various options.
We have a data center in Toda, and with the BCP, in the locations, there is a risky area, and therefore, in order to have the expanded business of fintech, we are going to transfer the data centers, and we have been considering the possibility. You know, this is the initial idea, and we have not finalized, and this is going to be initial cost of JPY 0.5 billion-JPY 1 billion, and, this is the initial cost. That means that, as Kanamori-san pointed out, in March 2026, it is going to be less, and therefore, it's going to be a positive impact. I hope I answered your question.
Initial cost will go down, but you're going to have a running operational cost. It's going to be higher than Toda data center, right?
It's going to be a depreciation of the new equipment, which has to take place, but compared to the cost of the Toda, it's not going to be a big jump. It's not going to be a remarkable increase.
Okay, thank you very much.
For the non-operational unoccupied area, and also the operating income of the final year, I would like to respond. As you have rightly pointed out, in March 2024, it was 1,800 tsubos reduction of unoccupied area, and it is 1,900 tsubos, but in the final year, it is going to be a reduction of 1,000 tsubos. In terms of area, of course, the last year, the final year is going to be the smallest reduction.
However, the tenant revenue is the multiplication of the unit price as well in the multiplier area of unit area, and for March 2026, it is going to have a better improvement of the tenant revenue. Event revenue as well as the EC revenue is going to be expected to grow, and it was JPY 2.1 billion in March 2024, and it was JPY 2.3 billion this year, and March 2026 is going to be JPY 2.4 billion, and therefore, it is not going to be a difficult target to achieve or plan to be achieved.
For this year, for the March 2025 one-time cost, is incurred in the same way as in fintech, and there's an increase of the one-time cost increase, according to our forecast, and that is the increase in executions and also the replacement of the settlement and payment terminals, which is going to push up the cost. For the March 2026, it is going to have the less cost. We can reduce the cost and expenses, and therefore, it is going to be the same as at least for the March 2025, or it's going to be better, and I believe we can achieve the plan.
Thank you very much. In the retail area, this is the terminal cost and other one-time cost. How much is that going to be?
It is going to be JPY 300 million according to the progress, you know, of cost, and as for the execution cost, it is the you know, JPY 300 million of increase, and for the IT system, in March 2025, it is going to go up by JPY 400 million, but in March 2026, it's going to be down by JPY 200 million in terms of the cost, so we can reduce and control the cost and reduce the cost for March 2026.
Thank you very much. In the Kato-san's response, you talked about the Epos, the Shogaku Tanki Hoken, which is a small amount short-term insurance. When was it consolidated, starting from the fourth quarter? Third quarter, fourth quarter? Fourth quarter. So there might be more consolidations. Is it according to the plan? Is it included in the plan?
In the fourth quarter, it's going to be full year, so it is 1/4 each.
Thank you very much.
Thank you very much. Any other question? If no further question, we'd like to conclude question and answers. We'd like to conclude the March 2024 financial earnings report. So there'll be. I'd like to ask the questionnaire participants to give us feedback, and please move on to the questionnaire answering screen. Thank you very much for participating in this meeting. Thank you.