Financial Results for the Nine-Month Period Ended March 31, 2014
May 15, 2014
Company name: ZERO CO., LTD.
Tokyo Stock Exchange (Second Section)
Code No.: 9028
(URL: http://www.zero-group.co.jp/)
Representative:
Yoshi Iwashita, President and CEO
Contact for inquiries:
Takeo Kitamura, Director
Tel: 044-520-0106
Date of financial report submission
May 15, 2014
Date to begin payment of dividend:
Additional materials for the financial results for 3Q FY2013
None
Briefing session for the financial results for 3Q FY2013
None

1. Consolidated Financial Results for the Nine-Month Period Ended March 31, 2014
(From July 1, 2013 to March 31, 2014)(1) Consolidated Results(Figures less than one million yen are rounded down.)

Percentages shown below are the rates of increase or decrease compared with the same period of the previous year.
Sales%

Million yen
Nine Months
ended March 31,
2014
Nine Months
ended March 31,
2013

Operating income
Million yen

Ordinary income%

Million yen

Net income%

Million yen%

50,420

13.1

2,372

115.8

2,428

110.5

1,351

142.8

44,564

4.7

1.099

-39.9

1,153

-37.3

556

-28.8

(Note) Comprehensive income:

FY2013 Third quarter 1,413million yen ( 144.7%)
FY2012 Third quarter 577million yen ( -38.4%)
Earnings per share-basic

Earnings per share-diluted

Yen

Yen

Nine Month Period Ended March 31, 2014

79.10

Nine Month Period Ended March 31, 2013

32.58

32.47

(2）Consolidated Financial Position
Total assets

Net assets

Shareholders’ equity ratio

Million yen

Million yen％

Net assets per shareyen

As of March 31, 2014

32,46014,53444.8

850.35

As of Jun. 30, 2013

31,096

13,33342.9

780.07(Ref.)

Shareholders’ equity :As of Mar. 31, 2014: 14,534 million yen

1

As of Jun. 30, 2013: 13,333 million yen

2. Dividends
Dividend per share(Record date)

FY2012FY2013
Forecast for
FY2013At end of
1Q
Yen-

At end of
2Q
Yen
4.00
8.00

At end of
3Q
Yen-

At end of
4Q
Yen
4.40

Annual
total
Yen
8.40

7.80

15.80

*Revision from the latest dividend forecast: Yes

3. Consolidated Forecasts for FY2013 (July 1, 2013 through June 30, 2014)
Percentages shown below for whole FY2013 are the rates of increase or decrease compared with the previous year.

Sales
Millionyen
Whole FY2013

65,000%8.2

Operating income

Ordinary income

MillionMillion

yen
2,600

%

yen

62.4

2,700

%
62.6

Earnings

Net income
Million

%

Yen

88.4

78.98

yen
1,350

per share -basic(Note) Revision to the latest consolidated forecasts: None

4. Others(1) Changes in important subsidiaries during period (Transfer of particular subsidiary which involves the change of scopeof consolidation.): Yes
Newly obtained company:(Company’s name) WORLD WINDOWS CORPORATION(2) Application of particular accounting methods for quarterly consolidated financial statements:(3) Changes in accounting policies, accounting estimates and restatement of corrections① Changes in accordance with the revision of accounting standards and others: N/A② Changes other than above: N/A③ Changes in accounting estimates: N/A④ Restatement of corrections: N/A(4) Number of issued shares (common shares)① Number of issued shares (including treasury stock) at the end of each period:

As of March 31, 2014: 17,560,242

As of June 30, 2013: 17,560,242② Number of treasury stock:

As of March 31, 2014: 467,111

As of June 30, 2013: 467,111③ Average number of shares issued during the third quarter of the fiscal year

FY2013: 17,092,531

FY2012: 17,092,561

2

N/A※Implementation status review procedure

This financial report is exempt from the review procedure based upon the Financial Instruments and Exchange Act. The
financial statements are under the review procedure at the time of disclosure of this report.

※Explanation regarding appropriate use of forecasts
Statements in this report relating to future matters such as earnings forecasts are based on information presently available.
Actual results may differ from those forecasts depending on various factors.

1. Qualitative Information(1) Qualitative Information Regarding Consolidated Business Performance
The Japanese economy during the first nine month of fiscal 2013 (referred to as the “current term”) was on the gradual
recovery trend, partially stimulated by the last-minute demand before the consumption tax hike, when the employment andincoming situation were improved reflecting the corporate performance improvement. There are also some signs of
economic recovery in other countries, mainly in developed countries. On the other hand, as there are still negative impacts
from slowdowns of economic growth of emerging countries and associated resource-rich countries, and problems in
Ukraine, the global economic situation remains uncertain.

In the automobile industry, the domestic new car sales in the current term have been continuously strong, resulted in
114.1% compared to the corresponding term in the previous year (data from the Japan Automobile Manufacturers
Association).Especially the sales of third quarter, from January through March, marked large increase, 120.7 %compared to the corresponding term in the previous year, thanks to the last-minute demand before consumption tax hike.
The exporting new car sales also increased, thanks to the yen depreciation trend, resulted in 101.0% compared to thecorresponding term in the previous year. In the used car market, the total sales of used cars increased owing to theactivated used car market by the trade-in cars increase caused by new car sales increase, consisting of the steadyincrease by 104.2 % of registered domestic used cars, and the remarkable increase by 124.5% of exporting used cars,
compared to the corresponding term in the previous year.

Under these circumstances, in respect to sales of vehicle-related business, our Group’s major segment, in the current term,
the new vehicle transportation business increased year-on-year, thanks to the higher new car sales increase of Nissan
Motor Co., Ltd., our major customer, than the average sales increase of whole automobile companies. The used cartransportation business also increased owing to the packaged transportation-related services such as vehicle registrationand owner change procedures in addition to regional sales promotion activities. As a result, the sales of vehicle-related
business increased year on year. On the other hand, the sales of the general cargo transportation business decreased
compared to the corresponding term in the previous year, owing to the closure of unprofitable business and eliminations
and consolidations of business facilities as a result of thorough review of the business structure in the previous term. In the3human resources business, in the gradual economic recovery, sales increased compared to the corresponding term in theprevious year, thanks to steady efforts to develop new sales regions and customers through strong sales activities andenhanced sales operations, in addition to new business implementation, such as the dispatching business to light-duty
works, to newly developed areas.

【Trends in automobile domestic sales】
Domestic sales volume (in units):unitsFrom July 2012 to March 2013

From July 2013 to March 2014

Year-on-year

Domestic automakers *1

3,950,373

4,508,530114.1%(Nissan Motor)*1(506,360)(584,583)(115.4%)

190,491

236,060

123.9%

3,006,513

2,996,403

99.7%

2,224,310

2,453,338

110.3%

5,230,823

5,449,741

104.2%

252,897

244,434

96.7%

Export volume (in units)

From July 2012 to March 2013

From July 2013 to March 2014

New vehicles of domestic
automakers *1

3,436,024

3,471,702

101.0%(Nissan Motor)*1(444,272)(428,492)(94.2%)

Used passenger vehicles*5

869,919

1,083,425

124.5%New vehicles

Foreign automakers*2
Used vehicles
Passenger vehicles *3
Mini vehicles*4
Total of used vehicles
De-registered vehicles*3

Year-on-year*1: Figures calculated from the statistical data of the Japan Automobile Manufacturers Association*2: Figures calculated from the statistical data of the Japan Automobile Importers' Association*3: Figures calculated from the statistical data of the Japan Automobile Dealers Association*4: Figures calculated from the statistical data of the Japan Mini Vehicles Association*5: Figures calculated from the statistical data of de-registration units for exportation of the Japan Automobile Dealers Association

As a result, sales in the current term were 50,420 million yen (113.1% compared to the corresponding term in theprevious year). Operating income was 2,372 million yen (215.8% compared to the corresponding term in the previousyear). Ordinary income was 2,428 million yen (210.5 % compared to the corresponding term in the previous year). Net
income totaled 1,351 million yen (242.8% compared to the corresponding term in the previous year).

Business Performances by Each Segment(1) Vehicle-Related Business
Domestic new car sales of Nissan Motor Co., Ltd., our major customer, resulted in total sales of 584,583 units, 115.4%
compared to the corresponding term in the previous year, reflecting good sales of newly introduced mini-vehicles at the4beginning of the term and last-minute demand before consumption tax hike at the end of the term. Exporting vehicle
volume decreased, resulting in 418,492 units, 94.2 % compared to the corresponding term in the previous year. (Data fromthe Japan Automobile Manufacturers Association)
As a result, sales of the Company from Nissan new car transportation business increased. Non-Nissan new cars sales
increase, especially imported cars such as BMW and Mercedes-Benz, and used cars sales increase also contributed to theCompany’s transportation sales increase. The maintenance business sales increased as well owing to the capacity
strengthening of heavy- truck maintenance centers. As a result, total sales of vehicle-related business marked 38,989
million yen (117.8% compared to the corresponding term in the previous year). In regard to segment profit, although there
was negative impact from the transportation structural shift to down-sized vehicles and the lower unit price due toshort-distance transportation increase, 2,449 million yen, 141.8% compared to the corresponding term in the previous year,
was achieved by the transportation cost reduction. Although the vehicle transportation business is likely to be under thesevere circumstances owing to the possible stagnation period after the higher vehicle sales by the last-minute demand
before consumption tax hike and the shortage of drivers due to the population decrease, the Company is challenging to
make stable profits through solid activities for “transportation quality improvement by minimizing transportation relay
points, thus reduction of delivery period and transportation cost”.

(2) General Cargo Transportation BusinessIn this business segment, sales substantially decreased, 3,733 million yen (78.1% compared with the corresponding termin the previous year) owing to the closure of unprofitable business and eliminations and consolidations of businessfacilities as a result of a thorough review of the business structure in fiscal 2012, to deal with the prolonged economic
downturn in home electronics businesses, our major customer. On the other hand, segment profit was remarkably
improved, 616 million yen (244.1% compared to the corresponding term in the previous year). The Company achieved theimprovement of revenue structure by streamlining unprofitable businesses.
(3) Human Resources BusinessIn this business segment, although there are sings of recovery in the demand of dispatching and temporary contracted
businesses reflecting the economical upward trend, the severe business environment surroundings remain unchanged withthe request of contract price discount and reduction of working hours. Despite the difficulties, sales increased, resulted in
8,063 million yen (116.4 % compared to the corresponding term in the previous year) thanks to steady efforts to develop
new sales regions and customers through strong sales activities and enhanced sales operations, in addition to new business
implementation, such as the dispatching business to light-duty works, to newly developed areas. The segment profit
totaled 403 million yen (131.5 % compared to the corresponding term in the previous year), which was achieved byshifting the sales activities to higher-profitable businesses.
As for unclassifiable operating expenses (company-wide expenses of administrative departments) and the amortization of
goodwill, which are not included in the profit and loss by segment stated above, these were recorded as “elimination”,
which totaled 1,097 million yen.

5

2. Consolidated Financial Statements(1) Consolidated Balance Sheet(Unit: million yen)
FY13
As of March 31, 2014

FY12
As of June 30, 2013
AssetsCurrent assets
Cash and deposits

4,872

4,346

Notes and accounts receivable

6,868

8,826

Goods

53

292

Inventories

86

115

Deferred tax assets

271

269

Others985

1,086

Allowance for doubtful accounts

(41)

(87)

13,096

14,849

3,302

3,043

Machinery, equipment and vehicles, net

188

172

Tools, furniture and fixtures, net

66

74

Land

8,373

8,279

Lease assets, net

1,409

1,413

Construction in progress-

36

Total tangible fixed assets

13,341

13,020Goodwill

1,808

1,561

Others

427

549

2,236

2,111

763

939

Total current assets
Fixed assets
Tangible fixed assets
Buildings and structures, net

Intangible fixed assets

Total intangible fixed assets
Investments and other assets
Investment securities
Long-term loans receivable

105

80

Deferred tax assets

777

635

Others912

959

Allowance for doubtful accounts

(136)

(135)

Total investments and other assets

2,422

2,479

18,00017,61131,09632,460Total fixed assets
Total assets

6

FY12
As of June 30, 2013

FY13
As of March 31, 2014

Liabilities
Current liabilities
Notes and accounts payable

3,430

4,427

Short-term loans payable

750

600

1,607

1,206

Income taxes payable

574

560

Accrued consumption taxes

272

277

Allowance for bonus

406

217

-

15

Others

2,703

3,141

Total current liabilities

9,745

10,447Long-term loans payable

2,041

1,917

Allowance for retirement benefits

3,029

2,574

427

416

Allowance for re-lease loss-

48

Differed tax liabilities

76

78

1,088

1,088

Long-term loans payable within one year

Allowance for re-lease loss

Fixed liabilities

Allowance for retirement benefits for directors

Re-evaluation portion of differed tax liabilities
Asset retirement obligation

41

38

Others

1,311

1,316

Total fixed liabilities

8,016

7,479

17,762

17,926

Capital stock

3,390

3,390

Capital surplus

3,204

3,204

Retained earnings

7,571

8,711

Total liabilities
Net assets
Shareholders’ equity

Treasury stock

(152)

(152)

Total shareholders’ equity

14,01415,154

15

27

(705)

(705)

8

58

(681)

(619)

13,333

14,53431,09632,460

Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Revaluation reserve for land
Foreign currency translation adjustment
Total accumulated
incomeTotal net assets

othercomprehensive

Total liabilities and net assets

7

(2) Consolidated Income Statement and Consolidated Comprehensive Income Statement(Consolidated Income Statement)
First nine months of
FY12 (from July 1, 2012
to March 31, 2013)
44,564

Sales(Unit: million yen)First nine months of
FY13 (from July 1, 2013
to March 31, 2014)
50,420

Cost of sales

39,24043,371Gross profit

5,323

7,049

Selling, general and administrative expenses

4,224

4,677

Operating income

1,099

2,372

2

2

Non-operating income
Interest income
Dividend income

00Receivable commission

52

52

Equity in earnings of affiliates

28

12

Others45

74

Total non-operating income

130

143

Interest expenses

66

56

Others1030

Total non-operating expenses

76

87

1,153

2,428

Gain on sale of fixed assets

18

66

Total extraordinary income

18

66

0

0

Loss on disposal of fixed assets

112

Impairment loss

16-

Loss on cancellation of leasing contract-

69

Others5

3

Total extraordinary losses

33

75

Net income before tax adjustments

Non-operating expenses

Ordinary income
Extraordinary income

Extraordinary loss
Loss on sales of fixed assets

1,138

2,419

Income taxes

581

1,067

Net income before adjustment minority interests

556

1,351

Net income

556

1,351

8

(Consolidated Comprehensive Income Statement)

Net income before adjustment minority interests

First nine months of
FY12 (from July 1, 2012
to March 31, 2013)
556(Unit: million yen)First nine months of
FY13 (from July 1, 2013
to March 31, 2014)
1,351

Other comprehensive income
Valuationdifferenceonavailable-for-salesecurities
Equity of equity-method affiliate
Total other comprehensive income (loss)
Quarterly comprehensive income

19

11

0

49

20

61

577

1,413

577

1,413

(Breakdown)
Parent company portion of comprehensive income(3) Note for the assumption of going concern
Not applicable9Segment Information
1.

Sales and profit for each reportable segment for the first nine months of FY2012 (from July 1, 2012 to March 31, 2013)

Vehicletransportationrelated

Generalcargotransportation

Human
resources(Unit: million yen)
Elimination and Consolidated
corporate

Total

Sales
(1) Sales of
33,0664,749
6,749
44,56444,564
externalcustomers(2) Internal
21
28
177
227
(227)
sales between
business segments
or transfer
Total
33,0874,777
6,926
44,792(227)
44,564
Operating income
1,726
252
306
2,286
(1,187)
1,099(Notes)
1. Elimination of -1,187 million yen includes corporate expense of -942 million yen, goodwill amortization of -246
million yen and elimination among the segments of 1 million yen. The corporate expense is the expense of theadministrative departments which do not belong to any reported segment.
2. The segment profit is adjusted according to the operating profit in the quarterly consolidated profit and loss
statement.

2. Sales and profit for each reportable segment for the first nine months of FY2013 (from July 1, 2013 to March 31, 2014)

Vehicletransportationrelated
Sales(1) Sales forexternalcustomers(2) Internalsales between
business segments
or transfer
Total
Operating income

Generalcargotransportation

Human
resources(Unit: million yen)
Elimination and Consolidated
Corporate(Note 2)
(Note 1)

Total

38,958

3,701

7,760

50,420-50,420

31

31

302

365

(365)

-

38,989
2,449

3,733
616

8,063
403

50,7863,469(365)(1,097)50,4202,372(Notes)
1. Elimination of -1,097 million yen includes corporate expense of -852million yen, goodwill amortization of -247
million yen and elimination among the segments of 1 million yen. The corporate expense is the expense of theadministrative departments which do not belong to any reported segment.
2. The segment profit is adjusted according to the operating profit in the quarterly consolidated profit and loss
statement.

10Note for material changes in shareholders’ equity(Tender offer of the Company's common stock and conclusion of capital and business alliance agreement)
At the board meeting held on 15 May 2014, the Company resolved to announce its agreement for the tender offer of its
common stock (the "Company Stock"), where ZENITH LOGISTICS LIMITED (the “Offeror”) is to purchase theCompany Stock, (the "Tender Offer"), has and take a neutral position on whether to the shareholders should bid theTender Offer leaving the decision to its shareholders, as well as resolved to conclude a capital and business allianceagreement (hereinafter referred to as "Capital and Business Alliance Agreement") with Tan Chong International Limited("TCIL").
In addition, the Company and the Offeror share a common understanding on a policy to maintain the listing of Company
Stock after the Tender Offer.
1.

Overview of Tender Offeror
(1)
(2)
(3)

Company nameLocation
Position and name of

ZENITH LOGISTICS LIMITED
Unit 1211-14 Shui On Centre, 6-8 Harbour Road Wanchai, Hong Kong
Director Ong Yong Loke, Joseph

company representative(4)

Description of business

Acquire and hold Company Stock(5)

Share Capital

HKD100(6)Date of incorporation

8 April 2014

(7)

Major shareholder andAdvance Pacific Holdings Limited: 80%

share ownership ratio

Zenith Logistics Pte. Limited: 20%(8)

Relationship between listed company and Tender Offeror

Capital ties

The Tender Offeror's affiliate, Zenith Logistics Pte. Limited (hereinafterreferred to as "ZLPL"), holds 3,915,400 shares of Company Stock ((Note)
22.91% ownership ratio).

Personal relationshipOne board member of TCIL, the parent company of the Tender Offeror,
concurrently serves as a board member of the Company.
For the purpose of expanding transportation and automobile related
businesses in the ASEAN region, TCIL Group and the Company Group

Transaction relationshiphave established a joint venture company in Singapore, and have formed
business partnerships, including shareholders agreements, to launch vehicle
related businesses in ASEAN countries.

Status of related parties

Since ZLPL, an affiliate of TCIL, holds 3,915,400 shares of Company
Stock (22.91% ownership ratio), it qualifies as a related party.

Note:

Shareholder ownership ratio is based on (17,092,531 shares), in which the number of treasury shares(467,711 shares) is deducted from the total number of outstanding shares (17,560,242 shares), and isrounded off to the nearest hundredth.

11

2.

3.

Overview of Tender Offer(1)

Tender Offer period:

16 May (Friday) 2014 to 12 June (Wednesday) 2014 (20 business days)(2)

Offer price:

830 yen per share(3)

Number of shares to be purchased:

Proposed number of shares: 4,802,000 shares
Minimum number of shares: 1,896,000 shares(4)

Commencement date of Tender Offer:

Maximum number of shares: 4,802,000 shares
16 May (Friday) 2014

(5)

Tender offer agent:Tokai Tokyo Securities Co., Ltd.

Conclusion of Capital and Business Alliance Agreement
The Company concluded a Capital and Business Alliance Agreement with TCIL on 15 May 2014, and asummary of the main points of the agreement is as follows:(1)

Capital alliance
In order to expand business in the ASEAN region, TCIL and the Company group aim to establish acloser capital and business alliance. Based on this objective, TCIL appointed the Tender Offeror inaccordance with procedures based on Japanese law, and pursuant to conditions of the provisions under
the Capital and Business Alliance Agreement, to acquire majority of the Company's outstanding
common stock through the Tender Offer, together with ZLPL. Pursuant to the conditions of theprovisions under the Capital and Business Alliance Agreement, the Company will provide necessary
cooperation for the Tender Offer conducted by the Tender Offeror in order to achieve the objective
stated above.
TCIL confirms that, through the Tender Offer, Tender Offeror will not acquire Company Stockexceeding the maximum number of shares to be purchased and will maintain the Company's stocklisting on the Tokyo Stock Exchange Second Section, as well as upon completion of the Tender Offer,
will manage the Company's business operations to maximize the Company’s corporate value for the
benefit of all Company shareholders.

(2)Business alliance①

Proposed business alliance projects
The TCIL and the Company group contemplate the following proposed projects as part oftheir capital and business alliance:(a)Development of an automobile value chain aimed to support the automobile
industry from the manufacturing level and down to scrapping in the ASEAN
market;(b)

Promotion of the joint business regarding body repair, painting and transportationof automobiles, to contemplate an entry into the auction business, to plan theestablishment of the functions concerning the total after- sales of automobiles(c)Joint development of an education and fostering program in order to provide
talented personnel to Japan by utilizing the TCIL's broad business network in
ASEAN region(d)

The entering into of the truck body building business in Thailand

12②

Alliance committee
The parties intend to establish a committee which would comprise of the members of thesenior management of the TCIL and the Company group.

③

Board members
TCIL and the Company shall discuss the appropriate number of individuals to serve as
directors of the Company as nominated by TCIL and its group companies with the aim ofenhancing the corporate value of the Company.

End of document13