Zenrin : Financial Summary for Fiscal 2022

2. Dividends

3. Forecast for Consolidated Results of Operations in Fiscal 2023

ZENRIN's fiscal 2023 is the period from April 1, 2022 to March 31,2023

[% figures for the fiscal year represent the increase (decrease) compared to the previous fiscal year; % figures for the first 2 quarters [cumulative] represent the increase (decrease) compared to the same period of the previous fiscal year]

ZENRIN Co., Ltd. (9474) Financial Summary for Fiscal 2022

ATTACHMENT

1. Analysis of Business Performance

1. Overview of Business Performance for Fiscal 2022

1. Business Performance for Fiscal 2022

In fiscal 2022 (from April 1, 2021 to March 31, 2022), the effects of COVID-19 infection have been prolonged, and priority measures such as declarations of state of emergency and semi-emergency have been issued, and economic activities have continued to be restricted in the Japanese economy.

In such an environment, although net sales partially decreased mainly as a result of the change to the method of recognizing revenue as a net amount as an agent with the application of the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020), etc., sales of vehicles equipped with our data for in-car navigation systems were strong and the automotive-related business performed well, while sales of contracted services for corporations using residential map data and GIS packages for stock-type services remained firm. Additionally, sales related to marketing solutions business increased against the backdrop of a rebound in the demand for advertising and other factors.

In terms of profit and loss, although personnel expenses increased, operating income increased due to the increase in sales.

As a result, the ZENRIN Group reported business performance in fiscal 2022 as follows: net sales of 59,053 million yen ( 57,225 million yen in the same period of the previous year), operating income of 2,670 million yen ( 1,436 million yen in the same period of the previous year), ordinary income of 3,044 million yen (1,683 million yen in the same period of the previous year) and profit attributable to owners of parent was 3,658 million yen (1,248 million yen in the same period of the previous year) due to the recording of gain on sales of investment securities as extraordinary income with the sale of shares in C.E. INFO SYSTEMS LIMITED shares.

It should be noted that the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020), etc. have been applied from the beginning of fiscal 2022. Thus, the Explanation of Business Performance for fiscal 2022 does not include the increase (decrease) amounts and rates (%) compared to the same period of the previous fiscal year. Details are as described in "3. (5) Notes to Consolidated Financial Statements (Changes in Accounting Policies)."

Furthermore, from fiscal 2022, information by business segment is omitted because the ZENRIN Group's reportable segments have been aggregated to a single segment.

2. Forecast for Fiscal 2023

With regard to COVID-19 infection, it is expected that economic and social activities will be normalized by efforts to control the infection, but in addition to the global unrest caused by Russia's invasion of Ukraine, there are risks such as semiconductor shortages and soaring raw material prices, therefore, we predict that the Japanese economy will remain uncertain in the future.

Under these circumstances, the ZENRIN Group have decided on a rolling plan for the 2nd Stage (from fiscal 2023 to fiscal 2025) of the medium- to long-term business plan "ZENRIN GROWTH PLAN 2025 (hereinafter referred to as ZGP25)" that is currently underway, with the theme of "embodying business models" based on the results of the 1st Stage (from fiscal 2020 to fiscal 2022).

The policy of the ZENRIN Group is sustainable management, which aims for sustainable corporate growth by supporting the resolution of social issues through the provision of location information. In the 2nd Stage, we aim to recover the business performance that was sluggish due to the coronavirus pandemic as soon as possible in order to leap to the next growth stage. Furthermore, in order to solve social issues that have become apparent, we will optimize location and distribution information, and work on innovation of location information to create new value.

Please refer to "Rolling Plan of Medium- to Long-Term Management Plan 'ZENRIN GROWTH PLAN 2025'", which is announced separately today, for the efforts to achieve the goals of ZGP25 2nd Stage and the performance targets.

Based on the above, the forecast of consolidated results for fiscal 2023 expects net sales of 60,500 million yen, operating income of 3,000 million yen, ordinary income of 3,200 million yen, and profit attributable to owners of parent of 2,600 million yen.

ZENRIN Co., Ltd. (9474) Financial Summary for Fiscal 2022

1. Overview of Financial Position for Fiscal 2022

1. Overview of Fiscal 2022

Total assets at the end of fiscal 2022 amounted to 79,164 million yen (increased 7,843 million yen, or up 11.0%, compared to the end of the previous fiscal year). This was mainly attributable to an increase in investment securities resulting from the fair market value of shares of C.E. INFO SYSTEMS LIMITED following its listing on the Bombay Stock Exchange and the National Stock Exchange of India.

Liabilities amounted to 30,417 million yen (increased 3,820 million yen, or up 14.4%, compared to the end of the previous fiscal year). This was mainly attributable to an increase in accrued expenses due to the recording of accrued bonuses, etc., and an increase in advances received due to the opening adjustment accompanying the application of the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020).

Net assets amounted to 48,746 million yen (increased 4,022 million yen, or up 9.0%, compared to the end of the previous fiscal year), despite a decrease in non-controlling interests due to the additional acquisition of shares of consolidated subsidiaries. This was mainly due to an increase in valuation difference on available-for-sale securities resulting from the fair market value of shares of C.E. INFO SYSTEMS LIMITED following its listing on the Bombay Stock Exchange and the National Stock Exchange of India. As a result, the ratio of equity to total assets at the end of fiscal 2022 was 61.3% (up 0.8 points compared to at the end of fiscal 2021).

The following outlines the status of cash flows in fiscal 2022.

Cash and cash equivalents at the end of fiscal 2022 stood at 16,455 million yen (decreased 74 million yen, or down 0.5%, compared to at the end of fiscal 2021).

Cash Flows from Operating Activities

Net cash provided by operating activities stood at 8,201 million yen (increased 1,850 million yen compared to the previous fiscal year). This was attributable to profit before income taxes in the amount of 4,961 million yen, gain on sale of investment securities in the amount of 2,016 million yen and income taxes paid in the amount of 716 million yen and other factors of decrease, being offset by depreciation and amortization in the amount of 4,969 million yen, an increase in accrued expenses in the amounts of 1,052 million yen, and other factors of increase.

Cash Flows from Investing Activities

Net cash used in investing activities stood at 3,784 million yen (decreased 1,257 million yen compared to the previous fiscal year). This was attributable to proceeds from sale of investment securities in the amounts of 2,097 million yen, proceeds from sale of shares of subsidiaries and associates in the amounts of 686 million yen and other factors of increase, being offset by purchase of property, plant and equipment and intangible assets in the amounts of 5,608 million yen, purchase of investment securities in the amounts of 656 million yen and other factors of decrease.

Cash Flows from Financing Activities

Net cash used in financing activities stood at 4,629 million yen (increased 4,620 million yen compared to the previous fiscal year) , mainly due to purchase of shares of subsidiaries not resulting in change in scope of consolidation in the amount of 1,768 million yen, cash dividends paid in the amount of 1,376 million yen, purchase of treasury shares in the amount of 769 million yen, and repayments of long-term borrowings in the amount of 505 million yen.

ZENRIN Co., Ltd. (9474) Financial Summary for Fiscal 2022

2. Changes in Cash Flow Indicators

[Notes] Each indicator is calculated in accordance with the following formulas, using consolidated financial figures.

• Ratio of equity to total assets: Equity / Total assets
• Ratio of equity to total assets (market value basis): Market capitalization / Total assets

*Market capitalization is calculated by multiplying the number of shares issued and outstanding at the end of the fiscal year (excluding treasury shares) by the closing price per share at the end of the fiscal year.

• Ratio of interest-bearing liabilities to operating cash flows: Interest-bearing liabilities / Operating cash flows
  *Operating cash flows are the net cash provided by (used in) operating activities recorded on consolidated statement of cash flows.
  *Interest-bearing liabilities include all liabilities recorded on consolidated balance sheets on which interest is paid.
• Interest coverage ratio: Operating cash flows / Interest paid

*Interest paid is the interest expenses paid recorded on consolidated statement of cash flows.

(3) Basic Policy on Distribution of Income, and Payment of Dividends in Fiscal 2022 and 2023

Positioning the returning of income to shareholders as a top priority, ZENRIN adopts a basic policy of realizing stable, uninterrupted payments of dividends derived from income growth based on the medium- to long-term business plan on a consolidated basis. Under this policy, ZENRIN will aim for a dividend equity (DOE) [Note] on a consolidated basis of 3% or higher while maintaining dividends at the current level.

In addition, by continuing to consider purchasing treasury shares and other undertakings with the aim of ensuring an agile capital policy and enhancing capital efficiency, ZENRIN will return income to shareholders in accordance with the level of income on a consolidated basis while taking into account the maintaining of an adequate amount of internal reserves.

The internal reserves will be used for capital investment, research and development investment and other expenditures that are indispensable for business development in the future in order to keep pace with the rapid market changes.

Based on the policy above, ZENRIN plans to increase the year-end dividend for fiscal 2022 by 1 yen to 13.50 yen per share. As a result, including the interim dividend of 12.50 yen per share, which has already been implemented, the annual dividend is expected to be 26 yen per share.

Please note that this matter will be decided by resolution at ZENRIN's 62nd ordinary general meeting of shareholders that is scheduled to be held on June 17, 2022

ZENRIN expects 27 yen as the annual dividend per share for the next fiscal year, an increase by 1 yen from fiscal 2022, with 13.50 yen as both the interim dividend per share and year-end dividend per share.

[Note] Dividend on equity on a consolidated basis (DOE)

= Total amount of dividends / Shareholders' equity

Shareholders' equity is the amount arrived at when the amount of treasury shares is subtracted from the sum total of common stock, capital surplus and retained earnings.

2. Basic approach to the selection of accounting standards

As a basic policy, the ZENRIN Group will continue to prepare its consolidated financial statements under the Japanese standards, in consideration of the comparability of its consolidated financial statements between periods and corporations.

Meanwhile, we intend to address the future application of IFRS appropriately upon taking into careful consideration various circumstances both in Japan and abroad surrounding the ZENRIN Group.