Summary of Consolidated Financial Results for the First Quarter Ending of the Fiscal Year June 30, 2020 [Based on IFRS]
November 8, 2019
Company name: ZERO CO., LTD.
Stock code:
9028
URL: http://www.zero-group.co.jp/
Representative:
President & CEO
Inquiries:
Director and Manager of Group Strategies Headquarters
Scheduled Date of Submission of Quarterly Report:
November 11, 2019
Scheduled date to commence dividend payments:
Preparation of supplementary material on quarterly financial results:
No
Holding of quarterly financial results meeting:No

Stock Exchange Listing: Tokyo
Takeo Kitamura
Toshihiro Takahashi

TEL 044-520-0106(Amounts less than one million yen are rounded down)
1. Consolidated financial results for the first quarter ending of the fiscal year June 30, 2020 (From July 1, 2019 to September 30, 2019)(1) Consolidated operating results (cumulative)

Sales revenue

1Q FY2019
1Q FY2018

Operating income

Profit before tax(Percentages indicate year-on-year changes)
Profit attributable toTotal comprehensive
equity shareholders
income of the quarterof the company

Quarterly income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen

22,931
20,939

9.5
8.2

1,217
351

246.5
∆69.0

1,223
344

254.9
∆69.5

804
21

∆96.8

803
23

Basic quarterly earnings per share

∆96.5

%

786
∆37

-

Diluted quarterly earnings per share

Yen
48.15
1.39

1Q FY2019
1Q FY2018% Millions of yen

Yen
48.08
1.38

(Note) “-” is shown because the change in Quarterly profit and in profit attributable to equity shareholders for Q1 FY2019 of the company exceed 1,000%.

(2) Consolidated financial position
Total assets
Millions of yen
45,08639,554

1Q FY2019
FY2018Equity attributable to equity
shareholders of the company

Total capitalMillions of yen
23,527
23,072Equity ratio attributable to equity
shareholders of the company

Millions of yen
23,51023,056

%
52.1
58.3

2. Cash dividends
1st quarter-end

Annual dividends per share
3rd quarter-end

2nd quarter-end
Yen

FY2018FY2019

Yen
4.00

-----

Fiscal year-end

Yen
---

15.00

FY2019 (forecast)

Total
Yen
20.90

Yen
24.90

19.60

34.60

(Note) Amendment from the most recently announced dividend forecast: No
3. Forecast of consolidated financial results for the year ending June 30, 2020 (From July 1, 2019 to June 30, 2020)

Sales revenue

Full year

Millions of yen
95,000Operating income%
5.3

Millions of yen
4,000(Note) Revisions from the most recently released business forecast: No(Percentages indicate year-on-year changes)
Profit attributable toequity shareholders
Basic earnings per shareof the company

Profit before tax%
21.0

Millions of yen
3,980

%
20.8

Millions of yen
2,300

%
38.7

Yen
138.33

(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
: Yes
 Changes in the accounting policies due to other reasons: No Changes in the accounting estimates: Yes(Note) For details, please refer to the attached page. See “2. Summary of the Quarterly Consolidated Financial Statements and Major Notes, (6) Notes regarding
Summary Quarterly Consolidated Financial Statements (Changes in Accounting Policy), (Changes in Accounting Estimates)” on page 12-13.
(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)

1Q FY201917,560,242 shares

FY201817,560,242 shares

1Q FY2019
1Q FY2019

1,030,369 shares
16,685,873 shares

FY20173Q FY2017

1,030,369 shares
16,626,875 shares

Earnings summary is not within the scope of the quarterly review by a certified public accountant or auditor
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.

o Attached Documents – Table of Contents
1.

2.

Qualitative information on the quarterly financial results

2(1) Explanation regarding the operating results

2(2) Explanation regarding the financial position

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 quarterly consolidated financial position

5(2) Summary of the quarterly consolidated profit and loss statement

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

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

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

10(6) Notes regarding summary quarterly consolidated financial statements

12(Notes on going concern assumption)

12(Changes in accounting policy)

12(Changes in accounting estimate)13(Segment information)

14

－

1 －

1.

Qualitative information on the quarterly financial results(1) Explanation regarding the operating results
Japan’s economy during the consolidated cumulative period of the first quarter continued to recover gradually;
personal consumption also improved with a steady employment and income environment, but economic
environment remain unclear due to the uncertainty of the foreign economic situation, beginning with the trade
problem in the US and China.
In the domestic automotive market, the total number of new vehicles sales increased at 108.1% (statistical
data of the Japan Automobile Manufacturers Association) as compared to the consolidated cumulative period of
the same quarter from the previous year (hereinafter referred to as the same quarter from the previous year)
due to the last minute surge in demand before the consumption tax rate increase.. The number of registered
used cars, as with the number of new vehicle sales, increased compared to the same quarter from the previous
year.
On the other hand, the business environment of the logistics industry is in serious circumstances withinsufficient drivers due to the background of a strained supply and demand in the labor market as well as cost
increase factors such as increased wages, increased hiring costs, continued high fuel expenses, and complianceresponse.
Under such circumstances, our group devised a 3-year mid-term plan from July of 2018 until June of 2021,
and are proceeding with the following 5 topics: (1) development of new businesses in anticipation of a reductionof the domestic automobile market and next generation mobility society, (2) Expansion of human resourcesbusiness corresponding to the strained supply and demand in the labor market and decreasing working age
population, (3) Expansion of foreign business in anticipation of economic growth such as in ASEAN countries, (4)Maximization of effect to establish regional block companies through promotion of transportation reform in thevehicle transportation business, and (5) Creation of group synergy including subsidiaries and cooperatingcompanies and promotion of optimization.
As a result, the business results of our group are as follows: sales revenue of 22,931 million yen (109.5%
compared to the same quarter from the previous year) and operating profit of 1,217 million yen (346.6%
compared to the same quarter from the previous year). Also, the profit before taxes was 1,223 million yen(354.9% compared to the same quarter from the previous year), and the profit of the quarter attributable to theequity shareholders of the company was 803 million yen (34.86-fold compared to the same quarter from theprevious year).
Number of units related to domestic distribution of automobiles
July of 2019 to September of
2019

Compared to theprevious year*1

1,214,818

1,316,263

108.4%*1(154,836)(154,521)(99.8%)*2

76,31280,002104.8%

1,291,130

1,396,265

108.1%*3

898,707964,714107.3%*4

710,988755,558

106.3%

1,609,695

1,720,272

106.9%

44,18944,637101.0%

July of 2018 to September of
2018

July of 2019 to September of
2019

Compared to theprevious year*1

1,143,939

1,195,515

104.5%*5

358,472

372,681104.0%

Domestic
Number of newvehicles soldDomestic
manufacturer(out of this, Nissan
Motor)
Foreign manufacturer
Total of new vehicle
sales
Number of used vehicle
registrations
Registered vehicles
Light vehicles
Total number of used
vehicles registered
Number of vehicles
permanently deleted*3

ExportNew vehicles ofdomestic
manufacturers
Used vehicles(registered vehicles)

Units: vehicles

July of 2018 to September of
2018*1 Calculated from Japan Automobile Industry Association statistics*2 Calculated from Japan Automobile Importers’ Association
statistics*3 Calculated from Japan Automobile Dealers Association statistics*4 Calculated from Japan Mini Vehicles
Association statistics*5 Trial calculated from the number of export deleted registered vehicles in the Japan Automobile Dealers
Association statistics－

2 －The segment business results are as follows.
① Automobile related businesses
For vehicle transportation, which is the core business, the number of units for transportation contracts for new/ used vehicles increased due to the last minute surge in demand even with the smaller scale compared to theprevious consumption tax increase, and the start of Mitsubishi Motors’ vehicle transportation business in the
middle of August of 2019,which led to an increase in revenue. There was a decrease in revenue in the used
vehicle export business due to the delay in shipment resulting from the impact of Typhoon 15, but there was an
overall increase in revenue in the automotive related businesses.
The restructuring of the transportation system including cooperating companies has been accelerated with theimpetus of establishment of regional block companies in the vehicle transportation business, and thoroughimplementation of cost management is being continued while aiming to achieve a systematic allocation andoptimum distribution network throughout Japan. Profits increased in the automotive business due to the revision oftransportation charges from January of 2019, review of the depreciation period of car carriers to match the actual
life expectancy, and drop in unit price of fuel expenses compared to the same quarter of the previous year, in the
midst of business challenges such as promoting initiatives for work style reforms to create a rewarding company
and decrease the total work hours, increased labor costs and recruitment costs to deal with driver shortages, andincreased vehicle costs due to the increased number of vehicles and the measures against aging of car carriers.
As a result, the overall sales revenue in the automobile related businesses was 16,307 million yen (108.8%
compared to the same quarter from the previous year), and the segment profit was 1,618 million yen (278.6%
compared to the same quarter from the previous year).
② Human resource businessWith tightening of the labor demand accompanying the economic recovery, and increasing in personnel expenses,
the difficulty in employment in major cities have become serious matters; therefore, the Group has promoteda regional shift from the major cities to smaller cities and reinforcement of the sales system, and has reviewed its
product portfolio strategically and continuously. In addition to the fact that the existing pick up service and driverdispatch business have transitioned steadily, participation in the newly entered airport related business has
increased revenues; the profit increased with restructuring non-profitable business and cost reduction.
As a result, the sales revenue of the overall human resource business was 4,902 million yen (107.1% comparedto the same quarter from the previous year), and the segment profit was 247 million yen (159.4% compared to thesame quarter from the previous year).
③ General cargo business
Revenue in the transport / warehousing business increased due to the increased cargo volume from the lastminute surge in demand of the consumption tax rate increase in clients mainly handling household equipment, andthe revenue in the port cargo handling business increased due to increased coal cargo and automobile cargohandling. Furthermore, the CKD business was launched and contributed to the sales revenue increase, increasing
the revenue in the overall general cargo business as well.
Profit increased with the increased revenue in the transport / warehousing business and port cargo business, but
expenses related to the launch of the CKD business continued, and there was a significant decrease overall in profit
in the general cargo business.
As a result of the above, the sales revenue of the overall general cargo business was 1,721 million yen (125.3%
compared to the same quarter of the previous year), and the segment loss was 137 million yen (segment profit of
173 million yen in the same quarter of the previous year).
Furthermore, the company expenses not included in the abovementioned report segment (expenses affiliatedwith our company’s management division), etc. are allocated as an item in the “adjustment amount” as indicated in“2. (Segment information) in the summary of consolidated statements for the quarter,” and totaled 510 million yen.
(2) Explanation regarding financial position① Status of assets, liabilities, and equity(Assets)
Current assets decreased 766 million yen (4.2%) compared to the end of the previous consolidated
fiscal year and were 17,411 million yen.
This was mainly because, cash and cash equivalents decreased 474 million yen, the operatingreceivables and other receivables also decreased by 215 million yen.
Non-current assets increased by 6,298 million yen (29.5%) compared to the end of the previous
consolidated fiscal year to 27,675 million yen.
This was mainly due to an increase of tangible fixed assets of 6,334 million yen resulting from anincrease of assets of right to use, etc.
As a result, total assets increased by 5,531 million yen (14.0%) compared to the previous
consolidated fiscal year to 45,086 million yen.
(Liabilities)
Current liabilities increased 1,586 million yen (12.6%) compared to the end of the previous
consolidated fiscal year to 14,148 million yen.

－

3 －This was mainly due to other financial liabilities increasing by 2,356 million yen due to an increase oflease debts, while income tax payables decreased by 438 million yen.
Non-current liabilities increased by 3,490 million yen (89.0%) compared to the end of the previous
consolidated fiscal year to 7,411 million yen.
This was mainly due to an increase of 3,565 million yen in other financial liabilities due to lease debts,
etc.
As a result, total liabilities increased by 5,077 million yen (30.8%) compared to the end of theprevious consolidated fiscal year to 21,559 million yen.
(Equity)
Total equity increased by 454 million yen (2.0%) compared to the end of the previous consolidated
fiscal year to 23,527 million yen.
This is mainly because retained earnings increased by 477 million yen due to the recording ofquarterly profits attributable to equity shareholders of the company.
② Cash flow status
Cash and cash equivalents (hereinafter referred to as “funds”) at the end of the consolidated
accounting period of the first quarter decreased by 474 million yen compared to the end of the previous
consolidated accounting fiscal year to 2,991million yen.
Each cash flow status category during the consolidated cumulative period of the first quarter and theircauses are as follows.
(Cash flow through operating activities)
Funds obtained as a result of operating activities were 1,092 million yen (there was an income of
1,010 million yen during the same period of the previous year).
The main cause of the increase in funds were 804 million for profit from this period and 1.082 million
yen for depreciation and amortization expenses which are non-fund expenses; the main cause of thedecrease in funds was 832 million yen for payment of corporate income. To compere the same period of
the previous year cash flow, due to the adoption of IFRS16, depreciation and amortization increased.
(Cashflow through investment activities)
Net cash used in investment activities was 501 million yen (expenditures of 405 million yen during thesame period of the previous year).
The main itemization breakdown for expenditures was 461 million yen for acquisition of tangible fixed
assets and investment property.
(Cashflow through financial activities)
Funds used as a result of financing activities were 1,064 million yen (income of 92 million yen in theprevious year).
The main itemization breakdown for income was 115 million yen for short-term borrowings, and themain itemization breakdown for expenditures were 802 million yen lease liabilities payments and 345
million for dividends. To compere the same period of the previous year cash flow, due to the adoption of
IFRS16, lease liabilities payments increased.

(3) Explanation regarding the future forecast information such as consolidated business forecast
In the domestic vehicle market, the backlash against last-minute demand before consumption tax rate increase
will be expected, and still the other situation is uncertain, we have not made any amendments to theconsolidated earnings forecast announced on August 8, 2019.

－

4 －

2.

Summary of the consolidated financial statements and major notes(1) Summary of quarterly consolidated statement of financial position(Unit: million yen)
End of the previous consolidated
accounting year (June 30, 2019)

End of the consolidated accounting
period of the first quarter(September 30, 2019)

Cash and cash equivalents

3,465

2,991

Trade and other receivables

13,281

13,066922

1,004

Other financial assets

4

4

Other current assets

503

344

18,177

17,411

Tangible fixed assets

11,931

18,265

Goodwill and intangible assets

2,803

2,800

Investment properties

3,393

3,363

986

973

1,629

1,611

Other non-current assets

291

324

Deferred tax assets

341

335

Total non-current assets

21,377

27,675

Total assets

39,55445,086

AssetsCurrent assets

Inventories

Total current assets
Non-current assets

Investment accounting processed withequity method
Other financial assets－

5 －(Unit: million yen)
End of the previous consolidated
accounting year (June 30, 2019)

End of the consolidated accounting
period of the first quarter(September 30, 2019)

Trade and other payable

6,976

6,838

Loans

1,283

1,389

Other financial liabilities

720

3,077

Income taxes payable, etc.

901

463

2,679

2,378

12,56114,148154

130

Other financial liabilities

1,519

5,085

Retirement benefits liabilities

1,725

1,646

Other non-current liabilities

306

309

Deferred tax liabilities

214

238

Total non-current liabilities

3,920

7,411

Total liabilities

16,481

21,559

Capital

3,390

3,390

Capital surplus

3,362

3,376

Treasury stock

△687

△687

236

199

16,754

17,231

23,056

23,51016

17

Total Equity

23,072

23,527

Total liabilities and equity

39,55445,086

Liabilities and Equity
Liabilities
Current liabilities

Other current liabilities
Total current liabilities
Non-current liabilities
Loans

EquityOther component of funds
Retained earnings
Total equity attributable to the equity
shareholders of the company
Non-controlling interest

－

6 －

(2)

Summary of quarterly consolidated profit and loss statement(Unit: million yen)

Consolidated cumulative period Consolidated cumulative period
for the previous third quarterof this third quarter(from July 1, 2018(from July 1, 2019
to September 30, 2018)
to September 30, 2019)
Sales revenue

20,93922,931

Cost of sales△18,537△19,521

Gross Profit

2,401

3,409

△2,277△2,233

Other income

239

54

Other expenses

△12

△13

351

1,217

2

6

△13

△13

4

13

344

1,223

△323

△419

21

804

Equity shareholders of the company

23

803

Non-controlling interest△10Profits of the quarter

21

804

Basic quarterly earnings per share (yen)

1.39

48.15

Diluted quarterly earnings per share (yen)

1.38

48.08

Selling, general and administrative expenses

Operating profit
Financial profit
Financial expenses
Investment gain / loss through equity method
Profit before tax
Corporate income tax expenses
Profits of the quarter

Attribution of the profits of the quarter:

Quarterly earnings per share

－

7 －

(3)

Summary of quarterly consolidated statement of comprehensive income(Unit: million yen)
Consolidated cumulative period Consolidated cumulative period
for the previous first quarterof this first quarter(from July 1, 2018(from July 1, 2019
to September 30, 2018)
to September 30, 2019)

Profits for the quarter

21

804

32

19

△76

△11

△44

8

△14

△26

△14

△26

△59

△18

△37

786

Equity shareholders of the company

△36

785

Non-controlling interest△10Comprehensive income for the quarter

△37

786

Other comprehensive income
Items not transferring over to profit or loss:
Remeasurement of defined benefit system
Financial assets measured by fair value
through other comprehensive income
Total of the items not transferring over toprofit or loss
Items which may be transferred over to profit
or loss
Other comprehensive income equity ofaffiliated company accounted for by theequity method
Total of the items which may be transferredover to profit or loss
Other comprehensive income after tax
deduction
Comprehensive income for the quarter

Attribution of the comprehensive income for thequarter:

－

8 －

(4)

Summary of quarterly consolidated statement of changes in equity
Consolidated accounting period of the first quarter (from July 1, 2018 to September 30, 2018)(Unit: million yen)
Equity attributable to equity shareholders of the company
Other components of funds

Balance on July 1, 2018
Cumulative effect amountdue to change ofaccounting method
Carrying amount with thechange in accounting
method reflected

CapitalCapitalsurplusTreasury
stock

3,390

3,305

△687

3,390

3,305

Conversion
differenceof businessactivities
overseas

Fluctuationof fair valueof financial
assetswhich canbe sold

Financialassetsmeasuredby fairvaluethroughothercomprehensive
profits

△47

464

-

△464

464

-

464

△687

△47

Remeasurementofdefinedbenefitsystem-Total equity
Nonattributing to controlling
Retained the equity
interest
Total otherearnings shareholders
componentsof theof funds
company-

Profits of the quarter
Other comprehensive
income△14Comprehensive
income of thequarter

-

-

△14

-

-

416

15,682

22,10822,119

-

△18

△18

416

15,66422,08911

22,101

-

23

23

△1

21

△18

△76

32

△59

△76

32

△59

23

△36

-

△282

△282

△282

14

14

-

Dividends of surplus
Share-based paymenttransactions, etc.

11

Total
equity14△59-Transfer from othercapital component to
Retained earnings

△32

△32

32

-

△59
△1

△37

Total transactions,etc. with theowners

-

14

-

-

-

-

△32

△32

△250

△268

-

△268

Balance on September 30,
2018

3,390

3,320

△687

△62

-

387

-

325

15,436

21,785

921,795

Consolidated accounting period of the previous first quarter (from July 1, 2019 to September 30, 2019)(Unit: million yen)
Equity attributable to equity shareholders of the company
Other components of funds

Balance on July 1, 2019

CapitalCapitalsurplusTreasury
stock

3,390

3,362

△687

Conversion
differenceof businessactivities
overseas

Fluctuationof fair
value offinancialassetswhich canbe sold

Remeasurementofdefinedbenefitsystem

△50

286

-

Total equity
attributing to Non-controlling Total equity
interests
Retained the equity
Total otherearnings shareholders
componentsof theof funds
company

236

Profits of the quarter
Other comprehensive income
Comprehensive income ofthe quarter

-

-

-

23,05616

23,072

803

803

0

804

△26

△11

19

△18

△26

△11

19

△18

803

785

-

△345

△345

△345

14

14
-

Dividends of the surplus
Share-based paymenttransactions

16,75414△18-

Transfer from other capitalcomponent to retained
earnings

△19

△19

19

-

△18
0

786

Total of transactions, etc.,with the owners

-

14

-

-

-

△19

△19

△326

△331

-

△331

Balance on September 30, 2019

3,390

3,376

△687

△76

275

-

199

17,231

23,51017

23,527

Unit: million－

9 －(5) Summary of quarterly consolidated cash flow statements(Unit: million yen)

Consolidated cumulative period Consolidated cumulative period
for the previous first quarterof this first quarter(from July 1, 2018(from July 1, 2019
to September 30, 2018)
to September 30, 2019)
Cash flow from operating activities
Profits of the quarter

21

804

Depreciation and amortization costs

420

1,082

Interest income and dividend△5△6Interest expense

13

13

Investment gain / loss through equity method

△4

△13

Corporate income tax expenses

323

419

Increase / decrease of trade receivables (△ isan increase)

△25

204

Increase / decrease of inventories (△ is anincrease)

△335

△82

Increase / decrease of trade payables(△ is a decrease)

168

334

Increase / decrease in retirement benefits
liabilities (△ is a decrease)

△96

△65

Other

△252

△758

Subtotal

227

1,932

5

6

△13

△13

Corporate income tax paid

△1,230△832

Net cash provided by (used in) operating
activities△1,010

1,092

Payment for acquisition of tangible fixed assets
and investment properties

△387

△461

Proceed from sales of tangible fixed assets andinvestment properties

0

2

Payment for intangible assets

△77

△38

Payment for loans receivable△1△3

Proceed from loans receivable

4

3

55

△4

△405

△501

Interest and dividend received
Interest paid

Cash flow from investment activities

Other
Net cash provided by (used in) investment
activities

－

10 －

Consolidated cumulative period Consolidated cumulative period
for the previous first quarterof this first quarter(from July 1, 2018(from July 1, 2019
to September 30, 2018)
to September 30, 2019)
Cash flow from financing activities
Net increase or decrease of short-term loans (△is a decrease)

600

115

Repayment of long-term loans

△78

△32

Repayment of finance lease debts

△146

-

-

△802

△282

△345

92

△1,064△1,324

△474

5,273

3,465

3,949

2,991

Repayment of lease debts
Dividend paid
Cash flow through financing activities
Increase / decrease in of cash and cash
equivalents (△ is a decrease)
Cash and cash equivalents at the beginning of
the quarter
Balance of cash and cash equivalents at the endof the quarter

－

11 －

(6) Notes regarding summary of quarterly consolidated financial statements(Notes on going concern assumption)
There are no applicable matters.
(Changes in accounting policies)
The important company policies that our group applies to this quarterly consolidated financial
statement summary will be the same company policies applicable to the consolidated financial statementsof the previous consolidated accounting year excluding the below.
(1) Application of IFRS No. 16 (lease)
Our group has applied the following standards starting from this first quarter of the consolidated accounting
period.
Standard

Name of the standard

Summary

IFRS No. 16

Lease

Definition of lease and revision of accounting
process

In the application of IFRS No. 16 “Lease (announced in January of 2016, hereinafter referred to as
IFRS No. 16), retroactive revision approach is being applied. Therefore, revised comparison information is
not shown again, and the cumulative effect of the application of IFRS No. 16 is recognized on the initial
application date, which is July 1, 2019.
In the previous consolidated accounting year, our group has classified all substantial risks and lease contracts
with economic benefit as finance lease. Lease assets are initially recognized at the fair value or the current valueof the total amount of minimum payment lease fee. Lease contracts other than finance leases are classified as
operating leases and are not appropriated in the consolidated statement of affairs of our group. The payment
lease fee of operating leases is recognized as an expense throughout the lease period based on the straight-line
method.
During this consolidated accounting year, our group did not categorize borrower leases as financeleases or operating leases in accordance with IFRS No. 16, has introduced a single accounting model, andhas recognized lease debts which show the obligation to pay the right-of-use asset and lease fee whichshow the right to use the underlying assets as a general rule for all leases, excluding cases of short termleases with a lease period shorter than 12 months or small amount assets leases.
Accompanying the application of IFRS No. 16, for borrower lease transactions, our group has measured
the right to use asset at acquisition cost and the lease debt at the current value of the total amount of
unpaid lease fees at the lease commencement date. The acquisition cost of the right to use asset is initiallymeasured by adjusting the prepaid lease payment, etc. to the initial measured amount of the lease debt. In
the summary of consolidated financial status statement for the quarter, the right-of-use asset is shown as
included in the “tangible fixed assets,” and the lease debt is included in the “other financial debts.” Thedepreciation of the right-of-use assets and interest costs related to the lease debt are appropriated after
recognizing the right-of-use assets and the lease debts.
Our group estimates the lease period of the right-of-use asset by adding a reasonably certain time period
in which executing an option to extend the lease or executing an option to cancel the lease will not be
exercised during the irrevocability period of the lease. Also, the discount rate applied to the lease debts related
to the applicable right-of-use assets utilize the borrowing interest rate of the borrower. The right-of-use assets
are depreciated using the straight-line method over the shorter of either the useful life period or the lease
period.
Also, our group utilizes the following practical expedients in applying the IFRS No. 16.
 Regarding leases in which the lease period is to be concluded within 12 months of the application startdate, the same accounting process method of short-term leases
 Exclude the initial direct cost from the measurement of right-of use as of the date of initial application
 Carry over the past decision of whether the transaction is a lease or not for the contracts signed before
the previous consolidated accounting year
 Utilize ex post facto decisions in the case of calculating the lease period for contracts which include
extension or cancellation options(2) Effect on the summary of the consolidated financial statements of the quarter
When applying IFRS No. 16, a method of recognizing the cumulative effect from the application of thestandard on the application start date, which is the accepted transitional measure, is utilized. The revised
comparison information is not displayed again due to this,8,871million yen for right-of-use assets and
8,720 million yen for lease debts are appropriated in the summary of consolidated financial status statements
for this quarter on July 1, 2019. This is mainly an influence of the lease fee classified as an operating lease in
IAS No. 17 being appropriated as an asset and debt upon application of IFRS No. 16. Furthermore, there is noeffect on the accumulated earnings at the beginning of the term because right-of-use assets that is the sameamount as the lease debts (however, advance lease fee and unpaid lease fee are revised) is recognized when
the lease debt is recognized.
The average of the added borrowing interest applied to the lease debts at the time of the application
start date was 0.2%.
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12 －Also, the cash flow due to sales activities increased, and the cash flow due to financial activities
decreased in conjunction with the change of display in the operating lease cost.

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13 －

The difference between the total of the minimum lease fee of the operating leases at the last date of the
fiscal year immediately before the application start date, and the lease debt recognized in the summary of theconsolidated financial status statement for the quarter as of the application start date, is as follows.
(Million yen)AmountBalance of unpaid lease fees for operating lease contracts (June 30, 2019)
1,965
Balance of unpaid lease fees for operating lease contracts after discount (July 1, 2019)
1,946
Lease debts classified in the finance leases (June 30, 2019)
2,149
Effects, etc., from the review of lease period due to the application of IFRS No. 16
4,624
Lease debts recognized in the summary of the consolidated financial status statement as of the
8,720
application start date
(Change of accounting estimates)
In creating the summary of the consolidated financial statements for the quarter conforming to IFRS,
managers are required to apply the accounting policy as well as to determine, estimate, and presume the effectthereof on the assets, debts, profits, and cost amount. The actual business results may differ compared tothese estimates.
The estimate and the assumptions which become the base of the estimates will be continuously reviewed.
The effect from the accounting estimate review is recognized in the accounting period in which the estimate isreviewed as well as in the future accounting period thereafter.
Excluding the accounting estimate changes indicated below, the estimate and decisions significantly
affecting the amount in the summary of the consolidated financial statements in the quarter are the same as
the consolidated financial statements in the previous consolidated accounting year.
(Change in life expectancy)
Regarding some of the sales vehicles in the automobile related business possessed by our company, it
became clear that long-term usage can be expected through regular maintenance, etc. Due to this, the life
expectancy has been revised from the conventional 7 years to 10 years starting the first quarter of theconsolidated accounting period going forward.
Due to this, 75 million yen has been added to the sales profit and pre-tax profits for this first quarter of theconsolidated cumulative period. Also, the effect on the segment information is indicated in the applicableportions.

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14 －(Segment information)
The segment information of our group is as follows.
Consolidated cumulative period of the previous first quarter (from July 1, 2018 to September 30, 2018)(Unit: million yen)
Adjustment
amount(note)

Total amounton thequarterly
consolidated
financialstatements

20,939-20,939

98

331

△331

-

4,804

1,472

21,270△331

20,939

155

173

910

△558

351

Automobile
relatedbusinesses

Human
resourcebusinesses

Generalcargobusinesses

14,986

4,579

1,373

8

225

14,994580

Total

Sales revenue
Sales revenue from externalcustomers
Sales revenue between segments
Total
Segment profit (operating profit)(Note) The △558 million yen adjustment amount in the segment profits includes the total company cost △558 million yen
and 0 million yen of transaction elimination between segments. The total company cost is an expense related to the
management divisions of our company not belonging to the reporting segment.
Consolidated cumulative period of this first quarter (from July 1, 2019 to September 30, 2019)(Unit: million yen)
Adjustment
amount(note)

Total amounton thequarterly
consolidated
financialstatements

22,931-

22,931

116

406

△406

-

1,838

23,337△406

22,931

Automobile
relatedbusinesses

Human
resourcebusinesses

Generalcargobusinesses

16,307

4,902

1,721

9

280

16,316

5,182

Total

Sales revenue
Sales revenue from externalcustomers
Sales revenue between segments
Total

Segment profit (operating profit)(△is
△137
△510
1,618
247
1,728
1,217
loss)
(Note) 1. The △510 million yen adjustment amount in the segment profits includes the total company cost△510 million yen and 0 million yen of transaction elimination between segments. The total company cost is an
expense related to the management divisions of our company not belonging to the reporting segment.
2. As indicated in “2. Summarized quarterly consolidated statement’s (Change of estimates appropriated inaccounting),” the life expectancy has been changed starting from the consolidated cumulative period of thisfirst quarter for some of the vehicles for sales in our company’s automobile related businesses. Due tothis change, the segment profit during the consolidated cumulative period of this first quarter has increased
75 million yen in the automotive related businesses compared to that of the conventional method.

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15 －