Summary of Consolidated Financial Results for the 2nd quarter ending of the fiscal year June 30, 2018

[Based on IFRS]
February 9, 2018

Company name:ZERO CO., LTD.
Tokyo
Stock code:9028
http://www.zero-group.co.jp/
Representative:
President & CEO
Takeo Kitamura
Inquiries:
Director, General Manager Group Strategies
Toshihiro Takahashi
Scheduled Date of Submission of Quarterly Report:
February 13, 2018
Scheduled date to commence dividend payments:
Preparation of supplementary material on quarterly financial results:
No
Holding of quarterly financial results meeting:Yes (for analysts)

Stock Exchange Listing:

TEL 044-520-0106
March 12, 2018

(Amounts less than one million yen are rounded down)
1. Consolidated financial results for the 2nd quarter ending of the fiscal year June 30, 2018 (From July 1, 2017 to December 31, 2017)(1) Consolidated operating results (cumulative)(Percentages indicate year-on-year changes)
Profit attributable toTotal comprehensive
owners of parent
Sales revenue
Operating income
Profit before tax
Quarterly income
income of the quartercompany
2Q FY2017
2Q FY2016

Millions of yen
38,55938,088%1.2∆1.4

Millions of yen
1,929
2,677

Basic quarterly earnings per share

%
∆28.0
2.7

Millions of yen
1,923
2,664

%
∆27.8
∆0.2

Millions of yen
969
1,595

Millions of yen
972
1,595

% Millions of yen
∆39.0
1,201
∆8.4
1,615

%
∆25.6
∆0.3

Diluted quarterly earnings per share

Yen
58.59
95.83

2Q FY2017
2Q FY2016

%
∆39.2
∆8.4

Yen
58.51
95.73

(2) Consolidated financial position
Total assets
Millions of yen
38,12338,0072Q FY2017
FY2016Equity attributable to owners ofparent company

Total capitalMillions of yen
21,295
20,672Equity ratio attributable to ownersof parent company

Millions of yen
21,285
20,661

%
55.8
54.4

2. Cash dividends
1st quarter-end
Yen
FY2016FY2017

Annual dividends per share
3rd quarter-end

2nd quarter-end
Yen
15.00
15.00

-----

FY2017(forecast)Fiscal year-end

Yen

Total

---

Yen
36.90

Yen
51.90

---

35.00

50.00

(Note) Amendment from the most recently announced dividend forecast: None
3. Forecast of consolidated financial results for the year ending June 30, 2018 (From July 1, 2017 to June 30, 2018)
Sales revenue
Full year

Millions of yen
80,700Operating income%
2.0

Millions of yen
5,400(Note) Revisions from the most recently released business forecast: None

(Percentages indicate year-on-year changes)
Profit attributable to
Basic earnings per shareowners of parent company

Profit before tax%∆4.1

Millions of yen
5,330

%
∆4.3

Millions of yen
3,310

%
∆4.2

Yen
199.94

(Note)(1) Changes in significant subsidiary companies during the current quarter (Changes in the specific subsidiary companies following changes in the scope of
consolidation):No
New  Co. (Company name),
Exclusions  Co. (Company name)(2) Changes in accounting policies, changes in accounting estimates Changes in the accounting policies required by IFRS Changes in the accounting policies due to other reasons Changes in the accounting estimates(3) Number of issued shares (common shares)
 Total number of issued shares at the end of theperiod (including treasury shares)
 Number of treasury shares at the end of the period
 Average number of shares during the period(total up to this quarter)

:
:
:

No
No
No

2Q FY2017

17,560,242 shares

FY2016

17,560,242 shares

2Q FY2017

1,030,367 shares
16,595,875 shares

FY20162Q FY2016

1,030,367 shares
16,646,982 shares

2Q FY2017

Earnings summary is not within the scope of the quarterly review
Explanation of the proper use of financial results forecast and other notes
The earnings forecast, and other forward-looking statements herein are based on the information currently available to the Company and certain assumptions that theCompany considers reasonable. The actual results may differ significantly from these forecasts due to a wide range of factors such as economic status of the majordomestic and international markets or exchange rates fluctuation.

 Attached Documents – Table of Contents
1.

2.

Qualitative information on the quarterly financial results

2(1) Discussion on the business performance2(2) Discussion on the financial condition

3(3) Explanation on future forecast information, such as consolidated earnings forecast

4

Summary of the consolidated financial statements and major notes

5(1) Summary of the consolidated quarterly financial statement

5(2) Summary of the consolidated quarterly income statement

7(3) Summary of the consolidated quarterly comprehensive income statement

8(4) Summary of the consolidated quarterly statement of changes in equity

9(5) Summary of the consolidated quarterly statement of cash flows

10(6) Notes on summary consolidated quarterly financial statements

12(Notes on going concern assumption)

12(Segment information)

12

－

1 －

1. Qualitative information on the quarterly financial results.
(1)

Discussion on the business performance
During the second quarter of the current fiscal year, as a result of gradual recovery of Japan’s economy withimprovements in consumer confidence there has been a steady improvement in the employment and income environment.
In the automotive industry, the domestic manufacturers’ domestic new car sales have been increasing by 101.0%(Japan Automobile Manufacturers’ Association Statistical Data) as compared with the same quarter of the previous year
(hereinafter referred to as the same period of the previous year) however, growth has gradually slowed. In terms of theused car market, it is showing a trend of picking up from the same quarter of the previous year.
Under these circumstances, the Group has promoted strategic sales activities in response to changes in the market
environment in each segment, and has worked to develop new businesses and create highly value-added services. We arealso continuing to work on compliance with laws and regulations, activities to strengthen group synergies, transport
reforms, and work style reforms.
In the second quarter of the current fiscal year under review, the Group’s operating results were, sales revenue was38,559 million yen (101.2% compared with the previous year), and operating income was 1,929 million yen (72.1% of theprevious year). Income before income taxes was 1,923 million yen (72.2% compared with the previous year), and net
income attributable to the owner of the parent company was 972 million yen (61.0% compared with the previous year).
Unit sales data relating to domestically-distributed cars
Domestic sales

Unit sales

From July 2016 to December 2016 From July 2017 to December 2017

Compared to theprevious year

New cars
Domestic automakers(Nissan Motor)
Overseas automakers
Total New Cars

*1
*1
*2

2,273,298(254,561)
149,6132,422,911

2,296,535(247,049)
155,091101.0%(97.0%)
103.7%

2,451,626

101.2%

Used cars
Registered car*3

1,795,479

1,838,895

102.4%

Light vehicles*4

1,364,512

1,419,819

104.1%

3,159,991

3,258,714

103.1%

95,84979,747

83.2%

From July 2016 to December 2016 From July 2017 to December 2017

Compared to theprevious year

Total
Cars registered forpermanent deletion*3

Exports
Domestic automakers’
new cars
Used passenger vehicles*12,445,235

2,476,977

101.3%*5

641,643591,28192.2%*1 Calculated based on the statistics provided by the Japan Automobile Manufacturers Association*2 Calculated based on the statistics provided by the Japan Automobile Importers Association*3 Calculated based on the statistics provided by the Japan Automobile Dealers Association*4 Calculated based on the statistics provided by the Japan Light Motor Vehicle and Motorcycle Association*5 Estimated based on the number of used cars to be exported which have been registered for deletion, which is recorded in the statistics
provided by the Japan Automobile Dealers Association－

2 －The business performance of each segment is summarized below.
① Automobile-related businessIn vehicle transportation, which is the core business, the revenue increased, due to promoting customer development
activities to expand transactions of new cars and used car transports. On the other hand, in terms of used car exports, we arereviewing our strategy, and rebuilding our structure, resulting in a decline in revenue. In addition, we continue to strive tothoroughly manage cost, and we are reorganizing the transportation system including subsidiaries and cooperating companies
with the aim of optimal operation of the nationwide distribution network. However, labor cost increase due to the lack oftransportation drivers, to work on compliance of vehicle restriction ordinance, promoting work style reform, fuel cost rises,
depreciation increase due to the increase of transportation vehicles and cost increase related to the vehicle safety checking of
the car maker, made the negative impact on profit.
As a result, sales revenue amounted to 27,464 million yen (98.6% compared to the previous year), and segment profit was
2,117 million yen (76.8% compared to the previous year).
Human resources businessWith the trend of recovery in the economy, there is a trend toward increasing manpower demand for companies, but soaring
labor costs and human resources in metropolitan areas are getting worse. The Group has promoted regional shifts from large
cities with high labor costs to suburban cities, strengthened the sales structure, and has reviewed the product portfolio throughstrategic sales activities. In addition to the dispatch of drivers which firmly progressed, new business entry such as welfare,nursing care and housekeeping services became successful, however, increases in recruitment fees, and other initial cost mainly
due to opening the airport related business is increasing. As a result, sales revenue amounted to 8,267 million yen (111.5%
compared to the previous year), and segment profit was 275 million yen (93.0% compared to the previous year).
②

General cargo businessIn cargo handling and loading at the harbor, business performance has been steadily growing, In addition to steadilyacquiring orders from existing customers in warehouse and cargo transportation, resulting a increase in revenue. As a result,sales revenue was 2,827 million yen (100.2% compared to the previous year), segment profit was 536 million yen (95.4%
compared with the same quarter of the previous year).
③

Corporate expenses (expenses pertaining to the management department of the Company) not included in the segment
profit / loss are described in “2. Summary of quarterly Consolidated Financial Statements (Segment Information)”. As stated in“Adjustment amount”, it is recorded as 1,000 million yen.
(2)

Discussion on the financial condition① Status of assets, liabilities and capital(Assets)
Current assets decreased by 1,819 million yen (9.2%) from the end of the previous consolidated fiscal year to
17,926 million yen.
This was mainly due to a decrease of 925 million yen in cash and cash equivalents, and a decrease of 771 million
yen in operating receivables and other receivables, even though there was an increase of 92 million yen in inventory
assets.
Non-current assets increased by 1,935 million yen (10.6%) from the end of the previous consolidated fiscal year to
20,197 million yen.
This was mainly due to an increase of 976 million yen in the machinery and transportation equipment in fixed
assets and 380 million yen in goodwill and intangible assets.
As a result, total assets increased by 116 million yen (0.3%) from the end of the previous consolidated fiscal year
to 38,123 million yen.
(Liabilities)
Current liabilities decreased by 449 million yen (3.7%) from the end of the previous consolidated fiscal year to
11,669 million yen.
This is mainly due to a decrease of 332 million yen in trade and other payable, and other current liabilities
decreased by 298 million yen.
Non-current liabilities decreased by 56 million yen (1.1%) from the end of the previous consolidated fiscal year to
5,159 million yen.
As a result, total liabilities decreased by 506 million yen (2.9%) from the end of the previous consolidated fiscal
year to 16,828 million yen.
(Total Equity)
Total shareholders’ equity increased by 622 million yen (3.0%) from the end of the previous consolidated fiscal－

3 －year to 21,295 million yen.
This was mainly due to an increase of 412 million yen in retained earnings to the owner of the parent company,
mainly due to the recording of profit for the quarter under review.
② Overview of cash flow
Cash and cash equivalents (hereinafter referred to as “funds”) at the end of the second quarter consolidated fiscal year
under review amounted to 7,175 million yen, a decrease of 925 million yen from the end of the previous consolidated fiscal
year.
The status of each cash flow for the second quarter of the current consolidated fiscal year and their factors are as follows.
(Cash flows from operating activities)
Cash provided by operating activities was 1,905 million yen, (as compared to Cash income of 656 million yen in thesame quarter of the previous year).
The main breakdown of income is net income of 969 million yen and depreciation expenses of 667 million yen; themain breakdown of expenditure is 720 million yen in income tax payments.
(Cash flows from investing activities)
Net cash used in investing activities was 1,647million yen (as compared to 163 million yen in the same quarter of theprevious year).
The main components of expenditure are expenditure of 950 million yen for acquisition of tangible fixed assets andinvestment properties, and 697 million yen for transfer of business.
(Cash flows from financing activities)
Net cash used as a result of financing activities was 1,182 million yen (as compared to 1,201 million yen in the samequarter of the previous year).
The main components of expenditure are expenditure of 483 million yen for repayment of long-term borrowings andpayment of 609 million yen for dividends(3) Explanation on future forecast information, such as consolidated earnings forecast
We have not made any amendments to the consolidated earnings forecast announced on 10th August 2017.

－4 －2．Summary of the consolidated quarterly financial statements and main noting(1) Summary of the consolidated quarterly financial statement

End of previous consolidated
fiscal year
(30 June 2017)(Unit: Million yen)
End of 2 quarter of current
consolidated fiscal year
(31 December 2017)

8,101

7,175

10,195

9,423

532

625

195

170

719

530

19,745

17,926

9,064

10,355

2,499

2,879

3,628

3,572

927

961

1,837

2,113

83

90

222

224

18,262

20,19738,007

38,123ndAssetsCurrent assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Goodwill, Intangible assets
Investments properties
Investments accounted for using the equity
methodOther financial assets
Other non-current assets
Deferred tax assets
Total non-current assets
Total assets－

5 －(Unit: Million yen)
End of previous consolidated End of the 2nd quarter of the
fiscal year
current consolidated fiscal year
(30 June 2017)(31 December 2017)
Liabilities and equity
Liabilities
Current liabilities
Trade and other payables
Borrowings
Other financial liabilities
Income taxes payable etc.
Other current liabilities
Total current liabilities

6,320

5,988

1,851

1,823

555

577

885

1,072

2,505

2,207

12,118

11,669

358

371

2,339

2,327

2,078

1,892

331

346

107

220

5,215

5,159

17,334

16,828

3,390

3,390

3,271

3,300

△687

△687

283

466

14,403

14,815

20,661

21,28511

10

20,672

21,29538,007

38,123

Non-current liabilities
Borrowings
Other financial liabilities
Retirement benefits liabilities
Other non-current liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
EquityShare capital
Capital surplus
Treasury stock
Other components of equity
Retained earnings
Total equity attributable to owners of the parent
Non-controlling interest
Total equity
Total liabilities and equity－

6 －(2) Summary of the consolidated quarterly income statement（Unit: Million yen）
nd

Current 2nd quarter of theconsolidated fiscal year
(from 1 July 2017
to 31 December 2017)

Previous 2 quarter of theconsolidated fiscal year
(from 1 July 2016
to 31 December 2016)
Sales revenue

38,08838,559△31,612△32,444

6,476

6,115

△4,008△4,263

266

104

△56

△26

2,677

1,929

22

37

△36

△42

△0

△0

2,664

1,923

△1,068

△954

1,595

969

1,595

972

-

△3

1,595

969

Basic quarterly earnings per share (yen)

95.83

58.59

Diluted quarterly earnings per share (yen)

95.73

58.51

Cost of sales
Gross profit
Selling, general and administrative expenses
Other income
Other expenses
Operating profit
Finance income
Finance costs
Share of profit (loss) of investments accounted forusing the equity method
Profit before tax
Income tax expense
Quarterly profit
Quarterly profit attributable to
Owners of the parent company
Non-controlling interest:
Quarterly profit

Quarterly earnings per share－

7 －(3) Summary of the consolidated quarterly comprehensive income statement（Unit: Million yen）
nd

Previous 2 quarter of theconsolidated fiscal year
(from 1 July 2016
to 31 December 2016)

Current 2nd quarter of theconsolidated fiscal year
(from 1 July 2017
to 31 December 2017)

1,595

969

Re-measurement of defined benefit pension plans

78

49

Total items that will not be reclassified to profit and loss

78

49

50

148

△109

34

△58

182

20

232

1,615

1,201

1,615

1,204

－

△3

1,615

1,201

Quarterly profit
Other comprehensive income
Items that will not be reclassified to profit and loss

Items that may be reclassified to profit and loss
Assets measured at fair value through othercomprehensive income
Share of other comprehensive income of investments
accounted for using the equity method

Total items that may be reclassified to profit and loss
Other comprehensive income for the year, net of tax
Total quarterly comprehensive income
Total quarterly comprehensive income attributable to:
Owners of the parent company
Non-controlling interest
Quarterly Comprehensive income－

8 －(4) Summary of the consolidated quarterly statement of changes in equity
Second quarter of the previous fiscal year (from 1 July 2016 to 31 December 2016)(Unit: Million yen)
Equity attributable to the owner of the parent company
Components of other capital

Balance on July 1, 2016

CapitalCapitalsurplusTreasury
stock

3,390

3,249

△561

Total Equity
No
attributable
Changes into the owner controlling Total equity
ProfitConversion fair valueinterestof the parent
Remeasurement Total of
Surplusdifference of availablecompany
of definedother capitalof foreignfor-saleownerbenefit plan components
operations
financialassets
△53

75

―

21

Quarterly profit
Other comprehensive income
Comprehensive income
for the quarter

―

―

―

△109

50

78

20

△109

50

78

20

11,64017,741―

17,741

1,595

1,595

―

1,595

20

―

20

1,615

―

1,615

△0

―

△0

△620

―

△620

21

―

21

1,595

△0

Acquisition of treasury stock△620

Dividend of surplus
Stock compensation transaction

4

17

Transfer from other capitalcomponents to retained
earnings

△78

△78

78

―

―

―

Total transaction etc. with
owner

―

4

17

―

―

△78

△78

△542

△598

―

△598

Balance on 31, December, 2016

3,390

3,254

△544

△163

126

―

△36

12,69318,757―18,757For the consolidated cumulative second quarter (from 1 July, 2017 to 31 December, 2017)(Unit: Million yen)
Equity attributable to the owner of the parent company
Components of other capital

Balance on July 1, 2017

CapitalCapitalsurplusTreasury
stock

3,390

3,271

△687

Changes in
ProfitConversion
fair value Remeasurement Total of
Surplusdifferenceof availableof definedother capitalof foreignfor-salebenefit plan components
operations
financialassets

△81

364

__

283

Quarterly profit
Other comprehensive income
Comprehensive income forthe year

―

―

―

34

148

49

232

34

148

49

232

Other

14,403

20,661

11

20,672

972

972

△3

969

232

232
△3

972

1,204

△609

△609

△609

31

31

31

△1

△1

Dividend of surplus
Stock compensationtransaction.

Total Equity
No
attributable
to the owner controlling Total equity
interestof the parent
company
ownerTransfer from other capitalcomponents to retained earnings

△49

△49

49

―

1

1,201

―
―

Total transaction etc. with
owner

―

29

―

―

―

△49

△49

△560

△580

1

△578

Balance at 31 December, 2017

3,390

3,300

△687

△46

512

―

466

14,81521,285

10

21,295－9 －(5) Summary of the consolidated quarterly statement of cash flows(Unit: Million yen)Previous 2nd quarter of the Current 2nd quarter of theconsolidated fiscal year consolidated fiscal year
(from 1 July 2016
(from 1 July 2017
to 31 December2016)
to 31 December2017)
Cash flows from operating activities:
Quarterly profit
Depreciation and amortization

1,595
529

969
667

Interest income and dividends△8△6Interest expenses

32

36

0

0

1,068
△799
274
△3

954
696
△91
△561

△57

△104

△405
2,227
8
△32
△1,546
656

96
2,655
6
△36
△720
1,905

△189
62

△950
20

△161
△9
19
－
115

△128
△7
37
△697
76

△163

△1,647

Share of (profit) loss of investments accounted for using the equity
methodIncome tax expense(Increase) decrease in trade receivables (△ indicates increase)(Increase) decrease in inventories (△ indicates increase)
Increase (decrease) in trade payables (△ indicates decrease)
Increase (decrease) in retirement benefit liabilities (△ indicatesdecrease)Other
Sub totalInterest and dividend received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Payments for property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for intangible assets
Payments for loans receivable
Proceeds from collection of loans receivable
Expenditure for Acquisition of business
Other
Net cash provided by (used in) investing activities

－

10 －

(Unit: Million yen)Previous 2nd quarter of the Current 2nd quarter of theconsolidated fiscal year
consolidated fiscal year
(from 1 July 2016
(from 1 July 2017)
to 31 December 2016)
to 31 December 2017)
Cash flows from financing activities
Net change in short-term borrowings (△ indicates decrease)

280

230

Proceeds from long-term borrowings

50－

Repayment of long-term borrowings

△629

△483

Repayment of finance lease liabilities

△281

△319

Dividends paid

△620

△609

△0

－

△1,201△1,182

Repayment of treasury stock acquisition
Net cash provided by (used in) financing activities
Increase (decrease) in cash and cash equivalents, net (△ indicatesdecrease)△708

Cash and cash equivalents at the beginning of the quarter

7,924

8,101

Cash and cash equivalents at the end of the quarter

7,215

7,175

－

11 －

△925

(6) Notes on summary consolidated quarterly financial statements(Notes on going concern assumption)
N/A(Segment Information)
Segment information of the group is as follows:
2nd quarter of the previous consolidated fiscal year (from 1 July 2016 to 31 December 2016)(Unit: Million yen)

Generalcargobusiness

Adjustment
amount(Note)

Amountrecorded onquarterly
consolidated
financialstatements

Automotive
relatedbusiness

Human
resourcesbusiness

27,850

7,415

2,822

38,088－38,088

41

275

56

372

△372

－

27,891

7,691

2,878

38,461△372

38,088

2,756

296

561

3,614

△936

2,677

Total

Sales revenue
Revenue to external customers
Revenue between segments
Total
Segment Profit (Operating Income)(Note) Adjustment for segment profit △936 million includes corporate expenses △936 million yen and intersegment transaction
elimination 0 million yen. Corporate expenses are expenses related to the management department of the Company not
attributable to the reporting segments.
Current fiscal year (from 1 July 2017 to 31 December 2017)(Unit: Million yen)

Sales revenue
Revenue to external customers
Revenue between segments
Total
Segment Profit (Operating Income)

Adjustme

Amountrecorded on

Automotive

Human

Generalrelatedbusinessresourcesbusinesscargobusiness

27,464

8,267

2,827

38,559－38,559

37

398

202

639

△639

－

27,502

8,666

3,030

39,198△639

38,559

2,117

275

536

2,929

△1,000

1,929

Total

nt amount(Note)

quartely
consolidated
financialstatements(Note) Adjustment of segment profit △1,000 million includes corporate expenses △1,000 million yen and elimination ofintersegment transactions 0 million yen. Corporate expenses are expenses related to the management department of the Company
not attributable to the reporting segments.

－

12 －