ZERO : Financial Results for the First Quarter of FY2022

Summary of Consolidated Financial Results for the First Quarter Ending of the Fiscal Year June 30, 2023 [Based on IFRS]

						November 10, 2022
Company name:	ZERO CO., LTD.					Stock Exchange Listing: Tokyo
Stock code:	9028	URL: http://www.zero-group.co.jp/
Representative:	President & CEO				Takeo Kitamura
Inquiries:	Director and Manager of Group Strategies Headquarters	Toshihiro Takahashi	TEL [phone]
Scheduled Date of Submission of Quarterly Report:	November 11, 2022
Scheduled date to commence dividend payments:	-
Preparation of supplementary material on quarterly financial results:	No
Holding of quarterly financial results meeting:		No

(Amounts less than one million yen are rounded down)

1. Consolidated financial results for the first quarter ending of the fiscal year June 30, 2023 (From July 1, 2022 to September 30, 2022)

(1) Consolidated operating results (cumulative)

									(Percentages indicate year-on-year changes)
	Sales revenue	Operating income	Profit before tax	Quarterly income	Profit attributable to	Total comprehensive
									equity shareholders	income of the quarter
									of the company
	Millions of	%	Millions of	%	Millions of	%	Millions	%	Millions	%	Millions	%
	yen		yen		yen		of yen		of yen		of yen
1Q FY2022/2023	33,787	56.4	1,214	93.5	1,221	91.6	815	112.1	810	106.2	906	298.8
1Q FY2021/2022	21,596	0.8	627	∆59.9	637	∆59.4	384	∆65.1	392	∆64.3	227	∆79.4

	Basic quarterly earnings per share	Diluted quarterly earnings per share
	Yen		Yen
1Q FY2022/2023	48.13		48.13
1Q FY2021/2022	23.38		23.37
(2) Consolidated financial position
	Total assets	Total capital	Equity attributable to equity	Equity ratio attributable to equity
	shareholders of the company	shareholders of the company
	Millions of yen	Millions of yen	Millions of yen	%
1Q FY2022/2023	55,769	31,146	30,595	54.9
FY2021/2022	54,895	30,614	30,067	54.8

2. Cash dividends
					Annual dividends per share
	1st quarter-end		2nd quarter-end		3rd quarter-end		Fiscal year-end		Total
		Yen		Yen		Yen		Yen	Yen
FY2021/2022	---			15.00	---			22.70	37.70
FY2022/2023	---
FY2022/2023				15.00				25.20	40.20
(forecast)
(Note) Amendment from the most recently announced dividend forecast: No
3. Forecast of consolidated financial results for the year ending June 30, 2023 (From July 1, 2022 to June 30, 2023)	(Percentages indicate year-on-yearchanges)
							Profit attributable to
	Sales revenue		Operating income		Profit before tax		equity shareholders	Basic earnings per share
							of the company
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
Full year	109,000	1.8	4,200	7.3	4,200	6.4	2,700	6.5	160.67
(Note) Revisions from the most recently released business forecast: No

ø(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	:	No
' Changes in the accounting policies due to other reasons	:	No
ƒ Changes in the accounting estimates	:	No

(3) Number of issued shares (common shares)
Total number of issued shares at the end of the	1Q FY2022/2023	17,560,242 shares	FY2021/2022	17,560,242 shares
period (including treasury shares)
' Number of treasury shares at the end of the period	1Q FY2022/2023	994,982 shares	FY2021/2022	994,982 shares
ƒ Average number of shares during the period	1Q FY2022/2023	16,837,260 shares	1Q FY2021/2022	16,804,810 shares
(total up to this quarter)

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

øExplanation 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 the Company considers reasonable. The actual results may differ significantly from these forecasts due to a wide range of factors such as economic status of the major domestic and international markets or exchange rates fluctuation.

Attached Documents - Table of Contents

1. Qualitative information on the quarterly financial results	- 2 -
(1)	Explanation regarding the operating results	- 2 -
(2)	Explanation regarding financial position and cash flow	- 4 -
(3)	Explanation regarding the future forecast information such as consolidated business forecast	- 5 -
2. Summary of the consolidated financial statements and major notes	- 6 -
(1)	Summary of quarterly consolidated statement of financial position	- 6 -
(2)	Summary of quarterly consolidated profit and loss statement	- 8 -
(3)	Summary of quarterly consolidated statement of comprehensive income	- 9 -
(4)	Summary of quarterly consolidated statement of changes in equity	- 10 -
(5)	Summary of quarterly consolidated cash flow statements	- 11 -
(6)	Notes regarding summary of quarterly consolidated financial statements	- 13 -
(Notes on going concern assumption)	- 13 -
(Segment information)	- 13 -
(Business Combination)	- 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 has been recovering moderately as the impact of supply constraints on semiconductors has eased and efforts are being made to contain the spread of the COVID- 19 Pandemic and balance economic activities.

In the domestic automotive market, the total number of new vehicle sales increased to 101.9% (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), but it's still low at 86.8% compared to the year before last, mainly due to the sluggish domestic production. The number of used vehicle registrations also decreased to 95.0% compared to the same period of the previous year, due to the decline in the number of used vehicles purchased as a result of the rise in the market for used vehicles.

Sales revenue increased in all segments, mainly due to the strong performance of the used vehicle export business to Malaysia and an increase in the number of units for transportation contracts. Operating profit increased due to higher utilization rates resulting from increased sales in all segments, despite the impact of higher unit prices for fuel.

As a result, the business results of our group are as follows: sales revenue of 33,787 million yen (156.4% compared to the same quarter from the previous year) and operating profit of 1,214 million yen (193.5% compared to the same quarter from the previous year). Also, the profit before taxes was 1,221 million yen (191.6% compared to the same quarter from the previous year), and the profit of the quarter attributable to the equity shareholders of the company was 810 million yen (206.2% compared to the same quarter from the previous year).

Number of units related to domestic distribution of automobiles

Domestic		July of 2021 to September of 2021
Number of new vehicles
sold
Domestic manufacturer	*1	949,155
(out of this, Nissan	*1	(106,035)
Motor)
Foreign manufacturer	*2	66,361
Total of new vehicle sales		1,015,516
Number of registered
used vehicles
Registered vehicles	*3	879,665
Light vehicles	*4	686,875
Total number of used		1,566,540
vehicles registered
Export		July of 2021 to September of
	2021
New vehicles of domestic	*1	826,996
manufacturers
Used vehicles (registered	*5	332,956
vehicles)

	Units: vehicles
July of 2022 to September of 2022	Compared to the
previous year
975,680	102.8%
(116,463)	(109.8%)
58,860	88.7%
1,034,540	101.9%
841,488	95.7%
647,247	94.2%
1,488,735	95.0%
July of 2022 to September of	Compared to the
2022	previous year
1,019,817	123.3%
317,301	95.3%

*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) Domestic automotive related businesses

For vehicle transportation, which is the core business, the number of units for transportation contracts for new and used vehicles increased due to Nissan Motor and Mitsubishi Motors' vehicle transportation business, which led to an increase in revenue. In addition, there was an increase in revenue of Zero Plus IKEDA Co., Ltd., which became a consolidated subsidiary, and as a result, there was an overall increase in revenue in the domestic automotive related business.

Segment profit was affected by increases in unit fuel prices and fuel surcharges for marine transportation due to soaring crude oil prices and the rapid depreciation of the yen in terms of cost, but in terms of revenue, the introduction of the fuel surcharge system in September 2022 and the effect of higher utilization rates due to increased revenues outweighed the impact of higher fuel costs, resulting in an increase in segment profit.

As a result, the overall sales in the domestic automotive related businesses was 13,840 million yen (113.0% compared to the same quarter from the previous year), and the segment profit was 1,120 million yen (130.8% compared to the same quarter from the previous year).

In the vehicle transportation business, the Group will continue to implement the "Digitalization", "Greening", and "New normal" policies outlined in our mid-term management plan through June 30, 2024.

In the area of Digitalization, we have set up the Transportation "Digitalization" Promotion Office and are promoting the construction of a system to realize systematic allocation of vehicles. We have also launched and are promoting a new digitalization project in which crew members record the condition of vehicles entrusted to them by customers using tablets.

In the area of "Greening", we have completed the development of transportation equipment with an increased maximum loading capacity to cope with the increased weight of automobiles as they become more electrically powered, and we will sequentially introduce the equipment. In addition, with the rapid adoption of EVs, a new Sales Planning Department will be established to study the establishment of an infrastructure that includes the implementation of ancillary services in EV vehicle transportation.

In response to the "New Normal", as the direction of the Ministry of Health, Labour and Welfare's revision of the Improvement Standards Notice is being finalized, we will reduce indirect time other than operation hours by promoting a system of division of labor in cargo handling while maintaining the operation hours of crew members toward the so- called "Year 2024 Problems", and at the same time, we will promote new hiring of crew members and efficient operation of transportation equipment.

1. Human resource businesses

In the pickup service business, revenue increased due to the acquisition of new contracts and an increase in MaaS (Mobility as a Service) services for J:COM (JCOM Co., Ltd.). In the human resources business, revenue increased due to an increase in the number of dispatched drivers and menial workers mainly in eastern Japan, and in the airport-related business, revenue increased due to an increase in the number of dispatched personnel along with the recovery in the number of flights to and from Japan. Segment profit increased due to increased revenue in each business segment and cost reduction. As a result, the sales revenue of the overall human resource business was 5,099 million yen (108.9% compared to the same quarter from the previous year), and the segment profit was 216 million yen (159.8% compared to the same quarter from the previous year).

(3) General cargo business

Revenue in the port cargo handling business increased due to increased fuel cargo handling for biomass power plants, and the revenue in the transport / warehousing business increased due to the leasing of new warehouses and the launch of the third party logistics. For segment profit, the transport / warehousing business reported a decrease due to start-up expenses for the newly leased warehouses, but the port cargo handling business reported an increase due to increased fuel cargo handling for biomass power generation, increasing the revenue in the overall general cargo business as well. As a result, the sales revenue of the overall general cargo business was 1,706 million yen (116.7% compared to the same quarter from the previous year), and the segment profit was 264 million yen (138.1% compared to the same quarter from the previous year).

(4) Overseas Related Businesses

In the used vehicle export business, sales increased significantly due to an increase in the number of vehicles exported to Malaysia, a major export destination, as a result of an increase in local demand, partly due to the depreciation of the yen, while previous activities to improve customer satisfaction led to an increase in market share. In the CKD business, revenue decreased due to a decrease in packaging volume during the model changeover. In the vehicle transportation business in China, sales increased due to the recovery of the Chinese automobile market.

- 3 -