Financial Results for the Six-Month Period Ended December 31, 2014
February 12, 2015
Company name: ZERO CO., LTD.
Code No: 9028
Tokyo Stock Exchange (Second Section)(URL http://www.zero-group.co.jp/)
Representative:
Takeo Kitamura, President and COO
Contact for inquiries:
Mamoru Yoshida, Director,
Tel: 044-520-0106
General Manager, Corporate Planning Department
Date of financial report submission
Date to begin payment of dividend:
Additional materials for the financial results for 2Q FY2014
Briefing session for the financial results for 2Q FY2014

February 13, 2015
March 13, 2015
None
Yes (to analysts)

1. Consolidated Financial Results for the Six-Month Period Ended December 31, 2014
(From July 1, 2014 to December 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
Six Months
ended Dec.
31, 2014
Six Months
ended Dec.
31, 2013(Note)

Operating income%

Million yen

Ordinary income%

Million yen%

Net income
Million yen%

35,158

9.9

1,073

-28.1

1,174

-23.1

660

-18.4

31,981

11.0

1,493

152.6

1,526

141.1

810

176.3

Comprehensive income:  FY2014 Second quarter 642 million yen (-25.4%)
FY2013 Second quarter 861 million yen (184.6%)
Earnings per share-basic

Earnings per share-diluted

Yen

Yen

Six Month Period Ended Dec. 31, 2014

38.67

-

Six Month Period Ended Dec. 31, 2013

47.40

-

(2Consolidated Financial Position                      

As of Dec. 31, 2014
As of June 30, 2014
(Ref.) Shareholders’ equity:

Total assets

Net assets

Million yen

Million yen

33,362

15,28632,017

14,926

As of Dec. 31, 2014: 15,286 million yen

Shareholders’ equity ratio Net assets per share
%

Yen
45.8

894.3446.5

873.28

As of June 30, 2014: 14,926 million yen

2. Dividends
Dividend per share(Record date)At end of
1Q
Yen-

At end of
2Q
Yen
8.00
8.00

At end of3Q
Yen-

FY2013
FY2014
Forecast for
FY2014(Note) Revision from the latest dividend forecast: N/A

At end of
4Q
Yen
14.10

Annual
total
Yen
22.10

15.00

23.00

3. Consolidated Forecasts for FY2014 (From July 1, 2014 to June 30, 2015)
Percentages shown below for whole FY2014 are the rates of increase or decrease compared with the previous year.

Sales
Millionyen
Whole FY2014%

Operating income

Ordinary income

MillionMillionyen

69,5002.8
2,900(Note) Revision from the latest dividend forecast: N/A

%
1.6

yen
2,950

%
0.4

Earnings

Net income
Millionyen
1,570

per share -basic
%

Yen

3.9

91.85

*Remarks(1) Changes in important subsidiaries during period (Transfer of particular subsidiary which involves the change of scopeof consolidation): N/A(2) Changes in accounting policies, procedure or notation method for documenting consolidated financial statements
Changes in accordance with the revision of accounting standards and others: Yes
Changes other than above: Yes
Changes in accounting estimates: N/ARestatement of corrections: N/A(3) Number of issued shares (common shares)
Number of issued shares (including treasury stock) at the end of each period:
As of December 31, 2014: 17,560,242
As of June 30, 2014: 17,560,242
Number of treasury stock:
As of December 31, 2014: 467,732
As of June 30, 2014: 467,711
Average number of issued shares during the fiscal year (excluding treasury shares)
FY2014: 17,092,521
FY2013: 17,092,531
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 the information presently
available. Actual results may differ from those forecasts depending on various factors.

Table of Contents of Attachments
1. Qualitative Information ….…………..……………..……………..……………..………………….....

2(1) Analysis of business performance ……………..……………..……………..……………..……………...

2(2) Analysis of the financial condition ……………..……………..……………..……………..……………..

3(3) Forecast for the next consolidated fiscal year ...............................................................................................

4

2. Summary Information (Notes) ……………..……………..……………..……………..……………..

4(1) Changes in important subsidiaries during period ...................................................................................................

4(2) Application of particular accounting methods for quarterly consolidated financial statements…..…………….

4(3) Changes in accounting policies, accounting estimates and restatement of corrections……………………………

4

3. Consolidated Financial Statements .……………..……………..………………..…………………….

5(1) Consolidated Balance Sheet .……………..…………..……………..……………………………………

5(2) Consolidated Income Statement and Consolidated Comprehensive Income Statement………………………..

7(Consolidated Income Statement)
First six months …...…………………..……………..………………………….………..………….

7(Consolidated Comprehensive Income Statement)
First six months …..……………………..…………………………………………………………… 8(3) Consolidated Cash Flow Statement ………………………………………………………………………..

9(4) Notes to Consolidated Financial Statements ……………………………………………………………….. 11(Note for the assumption of going concern) …………………………………………………………….….. 11(Note concerning major changes in shareholders’ equity) ………………………………………………………… 11(Segment Information) ……………………………………………………………………………………………... 11-1-

1. Qualitative Information(1) Analysis of business performance
The nation’s economy during the first half of fiscal 2014 (referred to as the “current term”) maintained a weaker yen
and higher stock prices against the backdrop of the government’s economic policy and the Bank of Japan’squantitative and qualitative easy monetary policy, and continues to show improvements in corporate earnings andemployment situation. On the other hand, while the effect of the backlash of the last-minute rise in demand that
occurred before the consumption tax rate hike is decreasing, the progress of that recovery is slow for individual
consumption, being affected by concerns over increase in commodity prices from the weaker yen. As such, theeconomic prospect remains unclear.
In the automobile industry, Japanese automakers’ new vehicle sales in the domestic market turned out to be 95.8% ofthat in the corresponding quarter from the previous year (hereinafter referred as “year-on-year”) (Japan Automobile
Manufacturers Association’s statistical data), as performance continued to be affected by the chilling effect of theconsumption tax rate hike on consumer spending. The drop was slight immediately after the consumption tax rate
hike, helped by shipment of outstanding orders, but in the current term the drop became sharper as a result ofsluggishness in new orders. Exports to overseas markets upturned as the stronger yen was depreciated further, but
recorded 96.0% year-on-year, strongly affected by the decrease of exports to North America, the largest market. Used
car market also displayed a downward trend due to the chill in consumer spending. The breakdown indicates adownward trend in the registration of used cars which recorded a 94.6% year-on-year. On the other hand, the exportof used cars continued to grow, recording 103.6% year-on-year.
Under these circumstances, in the vehicle-related business, our Group’s major segment, sales from transportation
business related to Nissan Motor Co., Ltd., our major customer, fell due to a drop in sales of new cars by Nissan
Motor. However, we were successful in capturing new transportation demand and the overall sales of the vehiclerelated business increased year-on-year. In the human resources business, thanks to steady efforts to develop newsales regions and customers through strong sales activities and enhanced sales operations, sales increased year-onyear. Sales also increased year-on-year in the general cargo transportation business.
No. of Motor Vehicles Related to Domestic Distribution

UnitUnits

Domestic Sales
July 2013-December 2013
July 2014-December 2014
Year-on-year Change (%)
New VehiclesDomestic automakers*12,516,575
2,410,850
95.8%
Nissan Motor Co. only
*1(331,242)(283,150)(85.5%)
Foreign automakers*2147,293
146,231
99.3%
Used Cars
Passenger cars
*3
1,856,798
1,739,700
93.7%
Mini-cars*4
1,431,718
1,370,996
95.8%
Total used cars

3,288,516
3,110,696
94.6%
Deregistered vehicles*3
135,855
119,826
88.2%
Exports
July 2013-December 2013
July 2014-September December Year-on-year Change (%)
Domestic automakers’ new*1
2,392,279
2,297,764
96.0%
vehicles(311,483)(254,084)
Nissan Motor
*1(81.6%)
Used passenger cars
*5694,319
718,992
103.6%*1: Calculated using the Japan Automobile Manufacturers Association’s statistics*2: Calculated using the Japan Automobile Importers Association’s statistics*3: Calculated using the Japan Automobile Dealers Association’s statistics*4: Calculated using the Japan Light Motor Vehicle and Motorcycle Association’s statistics*5: Calculated using the number of deregistered used cars for export listed in the Japan Automobile Dealers Association’s statistics

As a result of these measures, our group’s financial results for the current fiscal year to December 31, 2014 recorded
sales of 35,158 million yen (109.9% year-on-year) and operating income of 1,073 million yen (71.9% year-on-year),thus posting year-on-year increase in sales but year-on-year decrease in operating income. Upon taking non-operating
gains and losses into account, ordinary income was 1,174 million yen (76.9% year-on-year), and net income was 660
million yen (81.6% year-on-year).

-2-

! Automobile-related BusinessIn this business segment, domestic sales of Nissan Motor Company, our major customer, continued to be affectedby the backlash of the last-minute rise in demand that occurred before the consumption tax rate hike, and posted
sales of 283,150 units (85.5% year-on-year) of new vehicles in Japan. Exports also fell, and recorded 254,084
units (81.6% year-on-year) (Japan Automobile Manufacturers Association’s statistical data). The effect of theforegoing was lower sales from transportation of new Nissan Motor cars, but on the other hand, transportation of
new and used cars other than new cars of Nissan Motor, and other transportation-related business increased yearon-year, and we increased the overall sale from our automobile-related businesses.
As a result, this segment’s sales rose to 26,969 million yen (109.8% year-on-year) but profit was 1,387 million
yen (89.5% year-on-year). The vehicle transportation business faces serious challenges, with future demand being
uncertain with the domestic automobile market having reached maturity, and the number of young job applicants
is shrinking, reflecting the falling birthrate and the rapid aging of the population. In pursuit of higher profitability,
we continue our effort to become a corporate group capable of steadily generating revenue by winning the trust of
our customers and to maintain and increase sales by improving the quality of transportation, and in addition bystrengthening and carrying out measures to reduce transportation costs.
" Human Resources BusinessIn this segment, while companies seeking human resources are on the increase as the nation’s economy is on arecovery trend, our corporate clients continue to be very strict in terms of dispatch and contract work fees. Under
these circumstances, we were able to increase sales in this segment, thanks to steady efforts to develop new sales
regions and customers through strong sales activities and enhanced sales operations in the employee dispatch
business, and posted sales of 5,969 million yen (113.8% year on year) but due to increase in recruitment costs,
etc., profits in this segment were 244 million yen (96.8% year-on-year).
# General Cargo Transportation Business
Strong sales of 2,459 million yen (105.3% year-on-year) was recorded in this business segment. However, due toincrease of outsourced work as a result of changes in the sales composition of port cargo handling, and increase in
the cost of using owner-operator vehicles, this segment posted profit of 327 million yen (79.3% year-on-year).
Incidentally, concerning unclassifiable group-wide expenses (expenses concerning the company’s administrative
departments) and the amortization of goodwill, etc., which are not included in the above profit and loss by segment,
they are recognized as “Adjustments” items as listed in “Segment Information” in “3. “Consolidated Financial
Statements” and amounted to 886 million yen.
(2) Analysis of the financial condition(Assets)
Compared to the end of the previous term, current assets increased by 409 million yen (2.9%) to 14,762 million yen.
This is chiefly due to the increase of merchandise by 238 million yen and cash and deposits by 42 million yen.
Compared to the end of the previous term, fixed assets increased by 845 million yen (4.8%) to 18,600 million yen.
This is chiefly due to the increase of investment securities by 448 million yen, and buildings and structures by 321
million yen.
As a result of the foregoing, compared to the end of the previous term, total assets increased by 1,254 million yen(3.9%) to 33,362 million yen.
(Liabilities)
Compared to the end of the previous term, current liabilities increased by 388 million yen (3.9%) to 10,455 million
yen. This is chiefly due, despite the decrease of notes and accounts payable by 351 million yen, to the increase of
short-term loans payable by 650 million yen.
Compared to the end of the previous term, long-term liabilities increased by 506 million yen (7.1%) to 7,620 million
yen. This is chiefly due to the increase of long-term loans payable by 254 million yen and provision for retirement
benefits by 194 million yen.

-3-As a result of the foregoing, compared to the end of the previous term, total liabilities increased by 894 million yen(5.2%) to 18,076 million yen.
(Net Assets)
Compared to the end of the previous term, net assets increased by 359 million yen (2.4%) to 15,286 million yen. Thisis chiefly due the increase of retained earnings by 365 million yen.

(3) Forecast for the next consolidated fiscal year
The forecast has not changed from the consolidated forecast published on August 8, 2014.

2. Summary Information (Notes)(1) Changes in important subsidiaries during period: N/A(2) Application of particular accounting methods for quarterly consolidated financial statements: N/A(3) Changes in accounting policies, accounting estimates and restatement of corrections(Application of the ASBJ Statement)
Provisions set forth in Section 35 of the ASBJ Statement No.26 of May 17, 2012 (hereinafter referred to as the“Accounting Standard”) and provisions set forth in Article 67 of the Guidance were applied from the current term.
The calculation method of the retirement benefit obligation cost was reviewed and the method of attributing expected
benefit to periods was also changed from straight-line attribution to benefit formula basis. In addition, the method ofdetermination of discount rate was changed from the method based on the period approximate to the expected
average remaining working lives of employees, to the method using a single weighted average discount rate reflecting
the estimated timing and amount of benefit payment.
Based on the transitional treatment prescribed in Section 37 of the Accounting Standard, in applying the Standards,
adjustments in retirement benefit obligation and service cost pursuant to changes in the calculation method have beenposted as gains/losses in retained earnings.
As a result, liabilities concerning retirement benefits at the start of the current term increased by 240 million yen, andretained earnings decreased by 155 million yen. This has no material effect on operating profits, ordinary profits andincome taxes – deferred of the current term.
(Changes in depreciation method of fixed assets)
The depreciation method that has been used in the past by our company and our domestic consolidated subsidiaries
was straight-line method, except for buildings acquired on and after April 1, 1998 (excluding building-related
equipment) and lease assets. This has been changed to declining-balance method from the previous term.
On May 15 2014, our company concluded a capital and business alliance agreement with Tan Chong International
Limited to enter into full-scale business in the market of ASEAN countries, and in the future we expect to engage infull-scale overseas investment, including establishment of new logistics centers.
Taking the opportunity of such changes in the business environment, the depreciation method of tangible fixed assets
was reviewed to unify accounting principles within our group, both domestic and overseas, and maintaincomparability of periodic earnings. As the tangible fixed assets of our company and our domestic subsidiaries arewithin their useful lives and running stably, we have determined to change the depreciation to declining-balancemethod to expense at a constant rate over the useful life in order to more appropriately reflect the actual business
operation.
This change has no material effect on operating profits, ordinary profits and income taxes – deferred of the current
term.

-4-

3. Consolidated Financial Statements(1) Consolidated Balance Sheet(Unit: million yen)
As of June 30, 2014

As of December 31, 2014

AssetsCurrent assets
Cash and deposits

5,236

5,278

Notes and accounts receivable - trade

7,492

7,461

Merchandise

324

562

Supplies

100

126

Deferred tax assets

269

257

Others

1,012

1,165

Allowance for doubtful accounts

(83)

(90)

14,353

14,762

3,083

3,405

Machinery, equipment and vehicles, net

172

282

Tools, furniture and fixtures, net

71

69

Land

8,279

8,288

Lease assets, net

1,592

1,734

25

9

13,224

13,789Goodwill

1,479

1,406

Others

566

519

2,045

1,925

Investment securities

989

1,438

Long-term loans receivable

75

65

Total current assets
Fixed assets
Property, plant and equipment
Buildings and structures, net

Construction in progress
Total property, plant and equipment
Intangible assets

Total intangible assets
Investments and other assets

Deferred tax assets

523

470

Others

1,031

1,032

Allowance for doubtful accounts

(136)

(121)

Total investments and other assets

2,483

2,884

17,75418,60032,10733,362

Total fixed assets
Total assets-5-

As of June 30, 2014

As of December 31, 2014

Liabilities
Current liabilities
Notes and accounts payable - trade

3,478

3,127

610

1,260

1,193

1,376

Income taxes payable

792

523

Accrued consumption taxes

441

540

Allowance for bonuses

410

440

Short-term loans payable
Current portion of long-term loans payable

15

15

Others

3,125

3,172

Total current liabilities

10,067

10,455

1,663

1,918

422

463

Allowance for sub-lease loss

Long-term liabilities
Long-term loans payable
Provision for retirement benefits for directors
Allowance for sub-lease loss

44

36

2,182

2,376

193

95

1,088

1,088

38

83

Others

1,480

1,556

Total long-term liabilities

7,113

7,620

17,181

18,076

Capital stock

3,390

3,390

Capital surplus

3,204

3,204

Retained earnings

8,870

9,236

Treasury stock

(152)

(152)

15,313

15,679

27

32

(705)

(705)

Foreign currency translation adjustment

88

121

Accumulated retirement benefits adjustment

202

158

Total accumulated other comprehensive income

(386)

(392)

Total net assets

14,926

15,286

Total liabilities and net assets

32,10733,362

Provision for retirement benefits
Deferred tax liabilities
Deferred tax liabilities for land revaluation
Asset retirement obligation

Total liabilities
Net assets
Shareholders’ equity

Total shareholders’ equity
Accumulated other comprehensive income
Unrealized gains (losses) on securities
Revaluation reserve for land-6-(2) Consolidated Income Statement and Consolidated Comprehensive Income Statement(Consolidated Income Statement)(First six months)(Unit: million yen)First six months of FY13
(from July 1, 2013
to Dec. 31, 2013)

First six months of FY14
(from July 1, 2014
to Dec. 31, 2014)

Sales

31,98135,158

Cost of sales

27,40030,621Gross profit

4,580

4,536

Selling, general and administrative expenses

3,087

3,462

Operating income

1,493

1,073

Interest income

1

1

Dividend income

01Commission fee

38

30

Equity in earnings of affiliates

7

19

Sales of inventories



29

Others39

54

Total non-operating income

87

137

Interest expenses

38

35

Others162

Total non-operating expenses

55

37

1,526

1,174

Gain on sale of fixed assets

11Compensation receivable

62

Total extraordinary income

164Loss on sales of fixed assets

00Loss on disposal of fixed assets

04Loss on cancellation of leasing contract69



Others3

Total extraordinary losses

73

5

Net income before tax adjustments

1,454

1,232

Income taxes

644

571

Income before minority interests

810

660

Net income

810

660

Non-operating income

Non-operating expenses

Ordinary income
Extraordinary income

Extraordinary loss

-7-

(Consolidated Comprehensive Income Statement)(First six months)(Unit: million yen)First six months of FY13
(from July 1, 2013 toDec. 31, 2013)
810

First six months of FY14
(from July 1, 2014 toDec. 31, 2014)
660

Unrealized gains (losses) on securities
Accumulated retirement benefits adjustment

2
-

6
(44)

Equity of equity-method affiliate

48

18

Income before minority interests
Other comprehensive income

Total other comprehensive income (loss)
Comprehensive income

50

(18)

861

642

861

642

(Breakdown)
Parent company portion of comprehensive income-8-(3) Consolidated Cash Flow Statement(Unit: million yen)First six months of FY13
(from July 1, 2013
to Dec. 31, 2013)

First six months of FY14
(from July 1, 2014
to Dec. 31, 2014)

Net cash provided by operating activities
Net income before tax adjustments

1,454

1,232

Depreciation

357

405

Depreciation of goodwill

164

169

Increase (decrease) in allowance for doubtful accounts

48

(7)

Increase (decrease) in allowance for bonuses

(4)

(5)

(310)

-

-

(139)

Increase (decrease) in provision for directors’ retirement
benefits(22)

35

Increase (decrease) in allowance for sub-lease loss

68

(7)

Interest and dividends

(2)

(2)

Interest expenses

38

35

Loss (gain) from sale of fixed assets(1)

4

Loss (gain) from equity in earnings of affiliates

(7)

(19)

Compensation receivable

-

(62)

Decrease (increase) in notes and accounts receivable

3211

Decrease (increase) in inventories

(29)

(264)

Decrease (increase) in other current assets

90

(158)

Increase (decrease) in trade payable

(24)

(361)

Decrease in other current liabilities

(451)

(169)

Increase (decrease) in accrued consumption taxes

(7)

79

Others, net

(22)

(8)

Subtotal

1,344

964

Increase (decrease) in provision for retirement benefits
Increase (decrease) in liabilities related to retirement
benefits-9-First six months of FY13
(from July 1, 2013
to Dec. 31, 2013)
Interest and dividends received

First six months of FY14
(from July 1, 2014
to Dec. 31, 2014)

1

2

Interest expenses paid

(38)

(35)

Income taxes (paid) or refunded

(520)

(803)

-

62

787

191

Payments into time deposits

(0)

(2)

Purchase of property, plant and equipment

(50)

(505)

7

3

Purchase of intangible assets

(187)

(26)

Purchase of investment securities

(101)

(391)

11

0

(175)

-

-

40

Payments of loans receivable

(60)

(141)

Proceeds from collection of loans receivable

85

160

Others

21

13

(448)

(848)

-

570

Proceeds from long-term loans payable

100

950

Repayment of long-term loans payable

(610)

(654)

Repayments of lease obligations

(158)

(157)

Purchase of treasury stock-(0)

Cash dividends paid

75

(241)

(744)

466

Compensation received
Net cash provided by operating activities
Net cash used in investing activities

Proceeds from sale of property, plant and equipment

Proceeds from sale and redemption of investment insecurities
Payment for acquisition of subsidiary associated withchange of scope of consolidation
Proceeds from acquisition of subsidiary associatedwith change of scope of consolidation

Net cash used in investing activities
Net cash used in financing activities
Increase (decrease) in short-term loans payable

Net cash used in by financing activities
Net increase (decrease) in cash and cash equivalents

(405)

(190)

Cash and cash equivalents at beginning of term

4,785

5,148

-

104

4,379

5,063

Increase (decrease) in cash and cash equivalents associatedwith change of scope of consolidation
Cash and cash equivalents at end of term

- 10 -

(4) Notes to Consolidated Financial Statements(Note for the assumption of going concern)
None.
(Note concerning major changes in shareholders’ equity)
None.
Segment Information
1. Sales and profit for each reportable segment for the first six months of FY2013 (from July 1, 2013 to
December 31, 2013)(Unit: million yen)
Automobiletransportationrelated
Sales(1) Sales ofexternalcustomers(2) Internalsales between
business segments
or transfer
Total
Operating income

Human
resources

General cargotransportation

Total

Elimination andcorporate(Note 1)

Consolidated(Note 2)

24,546

5,119

2,315

31,981-

31,981

14

127

20

162

(162)

-

24,561
1,549

5,247
252

2,336
413

32,144
2,216

(162)
(722)

31,981
1,493(Notes)
1. Elimination of -722 million yen includes corporate expense of -558 million yen, goodwill amortization of -164
million yen and elimination among the segments of 0 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 six months of FY2014 (from July 1, 2014 toDecember 31, 2014)(Unit: million yen)
Automobiletransportationrelated
Sales(1) Sales forexternalcustomers(2) Internalsales between
business segments
or transfer
Total
Operating income

Human
resources

General cargotransportation

Total

Elimination andcorporate(Note 1)

Consolidated(Note 2)

26,936

5,804

2,417

35,158-35,158

32

164

41

239

(239)

-

26,969
1,387

5,969
244

2,459
327

35,398
1,960

(239)
(886)

35,1581,073(Notes)
1. Elimination of -886 million yen includes corporate expense of -717 million yen, goodwill amortization of -169
million yen and elimination among the segments of 0 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.

- 11 -