Zenrin : Financial Summary for Fiscal 2023

2. Dividends

3. Forecast for Consolidated Results of Operations in Fiscal 2024

ZENRIN's fiscal 2024 is the period from April 1, 2023 to March 31,2024

[% figures for the fiscal year represent the increase (decrease) compared to the previous fiscal year]

*Disclaimer: This document has been translated from the Japanese original for reference purposes only.

In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

ZENRIN Co., Ltd. (9474)

Financial Summary for Fiscal 2023

ATTACHMENT

1. Analysis of Business Performance

1. Overview of Business Performance for Fiscal 2023

1. Business Performance for Fiscal 2023

In fiscal 2023 (from April 1, 2022 to March 31, 2023), the Japanese economy saw a return to normal conditions due to the easing of COVID-19 restrictions on behavior, enabling moves toward normalization of socioeconomic activity. However, the future outlook continued to be uncertain as a result of the worldwide shortfalls in the supply of semiconductors and the rising cost of living caused by high energy and raw-material prices.

In such an environment, in the automotive-related business, sales of data for in-car navigation systems declined, impacted by adjustments in automobile production, despite the increase in orders received in the marketing solutions-related and IoT-related business.

In terms of costs, there was an increase in cost of sales due to changes in the composition of sales, as well as an increase in expenses for developing map databases to improve the precision of location data. Moreover, factors such as the normalization of socioeconomic activity and the rising cost of energy and raw materials caused operating expenses to grow.

As a result, the ZENRIN Group reported business performance in fiscal 2023 as follows: net sales of 58,933 million yen (decreased 119 million yen, or down 0.2% compared to the previous fiscal year), operating income of 1,799 million yen (decreased 871 million yen, or down 32.6% compared to the previous fiscal year), and ordinary income of 2,104 million yen (decreased 939 million yen, or down 30.9% compared to the previous fiscal year). Profit attributable to owners of parent was 2,770 million yen (decreased 887 million yen, or down 24.3% compared to the previous fiscal year). Contributing factors include the appropriation of extraordinary income from gain on sales of investment securities and gain on sales of non-current assets.

Reasons for the decline in profit attributable to owners of parent in comparison with the previous fiscal year include appropriation of extraordinary income from sale of investment securities in the previous fiscal year.

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 2024

The forecast of consolidated results for fiscal 2024 expects net sales of 62,000 million yen (an increase of 3,066 million yen, or up 5.2% compared to the current fiscal year), operating income of 2,500 million yen (an increase of 700 million yen, or up 39.0% compared to the current fiscal year), ordinary income of 2,700 million yen (an increase of 595 million yen, or up 28.3% compared to the current fiscal year), and profit attributable to owners of parent of 1,800 million yen (a decrease of 970 million yen, or down 35.0% compared to the current fiscal year).

As for the outlook for fiscal 2024, while operating expenses will likely rise due to high energy and raw material prices and higher wages, the Group expects increased sales in the automotive-related business, in conjunction with the recovery trend in automobile production. Furthermore, the Group will make efforts to expand its stock-type services such as GIS packages and solutions services.

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ZENRIN Co., Ltd. (9474)

Financial Summary for Fiscal 2023

1. Overview of Financial Position for Fiscal 2023

1. Overview of Fiscal 2023

Total assets at the end of fiscal 2023 amounted to 70,130 million yen (decreased 9,033 million yen, or down 11.4% compared to the end of the previous fiscal year). Contributing factors include a decrease in investment securities due to declines in market valuation and sales, as well as declines in cash and deposits and net defined benefit asset.

Liabilities amounted to 24,167 million yen (decreased 6,249 million yen, or down 20.5% compared to the end of the previous fiscal year). This was mainly attributable to the redemption of bonds, despite an increase in loans payable.

Net assets amounted to 45,962 million yen (decreased 2,783 million yen, or down 5.7% compared to the end of the previous fiscal year). Although profit attributable to owners of parent was appropriated, dividends on earned surplus and loss on valuation of marketable securities from market valuation both declined.

As a result, the ratio of equity to total assets at the end of fiscal 2023 was 65.4% (up 4.1 points compared to at the end of the previous fiscal year).

The following outlines the status of cash flows in fiscal 2023.

Cash and cash equivalents at the end of fiscal 2023 stood at 13,965 million yen (decreased 2,489 million yen, or down 15.1%, compared to at the end of the previous fiscal year).

Cash Flows from Operating Activities

Net cash provided operating activities amounted to 6,541 million yen (decreased 1,660 million yen compared to the same period of the previous fiscal year). This was attributable to profit before income taxes in the amount of 4,109 million yen, income taxes paid in the amount of 1,634 million yen, gain on sale of investment securities in the amount of 1,294 million yen, and other factors of decrease, being offset by depreciation and amortization in the amount of 5,153 million yen and a decrease in net defined benefit asset in the amount of 934 million yen and other factors for increase.

Cash Flows from Investing Activities

Net cash used in investing activities amounted to 2,451 million yen (decreased 1,333 million yen compared to the same period of the previous fiscal year). This was attributable to proceeds from sale of investment securities in the amount of 1,389 million yen, proceeds from sale of property, plant and equipment in the amount of 1,232 million yen and other factors of increase, being offset by purchase of property, plant and equipment, and intangible assets in the amount of 5,254 million yen and other factors of decrease.

Cash Flows from Financing Activities

Net cash used in financing activities amounted to 6,744 million yen (increased 2,115 million yen compared to the same period of the previous fiscal year). This was mainly attributable to net increase in short-term borrowings in the amount of 2,556 million yen, proceeds from long-term borrowings in the amount of 2,000 million yen, and other factors of increase, being offset by redemption of bonds in the amount of 8,000 million yen, cash dividends paid in the amount of 1,463 million yen and other factors of decrease.

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ZENRIN Co., Ltd. (9474)

Financial Summary for Fiscal 2023

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 2023 and 2024

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 on 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 13.50 yen per share. As a result, including the interim dividend of 13.50 yen per share, which has already been implemented, the annual dividend is expected to be 27 yen per share.

Please note that this matter will be decided by resolution at ZENRIN's 63rd ordinary general meeting of shareholders that is scheduled to be held on June 16, 2023

ZENRIN expects 27 yen as the annual dividend per share for the next fiscal year 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.

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