Kyoritsu Maintenance Co., Ltd.
(Securities Code: 9616)

Third Quarter of Fiscal Year Ending March 2017
Consolidated Earnings Results Update
February 20171

Third Quarter of Fiscal Year Ending March 2017 Consolidated Earnings Announcement
February 9, 2017

Company Name: Kyoritsu Maintenance Co., Ltd.
Stock Code: 9616, URL: http://www.kyoritsugroup.co.jp/
Director: Mitsutaka Sato, President
Contact: Takumi Ueda, Vice President; Tel: +81-3-5295-7778
Quarterly Earnings Announcement Report Filing Date (Anticipated): February 10, 2017
Dividend Payment Date (Anticipated): ―Quarterly Earnings Presentation Document (Anticipated): None
Quarterly Earnings Presentation Meeting (Anticipated): None

Tokyo Stock Exchange(All figures of less than one million yen are rounded down to the nearest digit)
1. Third Quarter of Fiscal Year Ending March 2017 Consolidated Earnings (April 1, 2016 to December 31, 2016)(1) Consolidated Earnings (Aggregated)(% figures show year-on-year change)
Net Sales

Operating Income

Millions of yen%

101,112

1.4

Profit attributable to ownersof parent

Ordinary Income

Millions of yen

%

9,685
12.8
9,334
5,847
99,70223.7
29.8
3Q FY3/16
8,586
31.8
8,073
5,256
(Note) Comprehensive income: ¥5,887 million (18.4% YoY) in 3Q FY3/17; ¥4,973 million (4.3% YoY) in 3Q FY3/16

11.3

3Q FY3/17

Millions of yen%

Millions of yen

%

15.6

Profit attributable to owners ofparent per share
Yen

Profit attributable to owners ofparent per share (Diluted)
Yen

3Q FY3/17

302.21276.423Q FY3/16

278.60269.4531.4(2) Consolidated Financial Position
Total Assets

Net Assets

Equity Ratio

Book Value Per Share

Millions of yen

Millions of yen%

Yen

3Q FY3/17

163,949

62,90538.4

3,248.79

FY3/16

161,40257,97435.9

2,997.10

2. Dividend Conditions
Dividend Per Share
1Q-End2Q-EndYen

3Q-EndFY3/16

―

Yen
25.00

FY3/17―

26.00

4Q-EndYen――

FY3/17 (Projected)(Note) Recent changes in dividend projections: None

Total
Yen
27.00

Yen
52.00

26.00

52.00

3. Fiscal Year Ending March 2017 Consolidated Earnings Estimates (April 1, 2016 to March 31, 2017)(% figures show year-on-year change for the full year)
Net Sales

Ordinary Income

Profit attributable toowners of parent

EPS

Millions of yen% (YoY)

Millions of yen% (YoY)

Millions of yen% (YoY)

Yen

Full Year138,000
2.2
11,500(Note) Recent changes in earnings estimates: None

12.3

11,000

12.5

6,900

15.6

356.71Millions of yen% (YoY)

Operating Income2Notes(1) Important changes in our subsidiaries, including changes to the scope of our consolidation: None
(2) Application of special accounting procedures in the preparation of our quarterly consolidated financial statements: Yes(Note) Please refer to “2. Summary Information (Notes), (2) Application of special accounting procedures in the preparation of ourquarterly consolidated financial statements” on page 7 for further details.
(3) Changes in the accounting policies, procedures, and changes or revisions in the display of accounting estimates:
1. Changes accompanying revisions in accounting standards:
Yes
2. Other changes:
None
3. Changes in accounting estimates:
None
4. Redisplay of revisions:
None(Note) Please refer to “2. Summary Information (Notes), (3) Changes in the accounting policies, procedures, and changes orrevisions in the display of accounting estimates” on page 7 for further details.
(4) Shares issued (common stocks)
1. Shares issued as of term-end (including treasury shares)
2. Treasury stock as of term-end
3. Average during the term (first nine months)

3Q FY3/17
3Q FY3/17
3Q FY3/17

19,472,837
110,147
19,350,288

FY3/16
FY3/163Q FY3/16

19,452,173
108,573
18,866,190* Information Regarding Quarterly Review Practices:
The practices for review of quarterly consolidated earnings statements pursuant to the “Financial Instruments and Exchange Act” ofJapan have not been conducted for the disclosure of this document.
* Notes and explanations regarding the appropriate use of our earnings projections:(Notes on forecast results)
All projections provided within this document are based on the most accurate information available at the time of this writing.
However, our actual results may differ from our projections due to various unforeseen reasons.
Concerning qualitative information regarding our quarterly earnings, please refer to the segment of this document “1. Qualitative
Information about Quarterly Earnings, (3) Explanation of future forecasts including consolidated earnings estimates.”3

Kyoritsu Maintenance (9616), 3Q FYE March 2017 Earnings Announcement
Index
1. Qualitative Information about Quarterly Earnings

5(1) Explanation of business performance5(2) Explanation of financial position

6(3) Explanation of future forecasts including consolidated earnings estimates6

2. Summary Information (Notes)

7(1) Changes in important consolidated subsidiaries during the quarter

7(2) Application of special accounting procedures in the preparation of7

our quarterly consolidated financial statements(3) Changes in the accounting policies, procedures, and changes or revisions

7

in the display of accounting estimates(4) Additional information

7

3. Quarterly Consolidated Financial Statements

8(1) Quarterly consolidated balance sheet

8(2) Quarterly consolidated income statement and comprehensive income statement

10

Quarterly consolidated income statement
Consolidated third quarter
Quarterly consolidated comprehensive income statement

11

Consolidated third quarter(3) Quarterly consolidated financial statement notes

12(Notes regarding going concern assumptions)

12(Significant changes in shareholders’ equity notes)

12(Segment information)

124

Kyoritsu Maintenance (9616), 3Q FYE March 2017 Earnings Announcement
1. Qualitative Information about Quarterly Earnings(1) Explanation of business performance
During the first three quarters of the current fiscal year, personal spending seemed weak, but there were signs ofimprovement in the employment environment, including an increase in the effective opening-to-applications ratio. As
such, the Japanese economy continued to gradually recover. At the same time, the yen weakened and stocks strengthened
after the US presidential election, but the unreliability of these trends means that the outlook remains uncertain.
In this environment, the Group’s dormitory business saw growing needs, such as a rise in the university entrance rate, anincrease in study-abroad students from overseas, and more companies introducing dormitory programs. The hotel businesssegment benefited from several positive factors, such as an increase in the number of domestic travelers and a record-highnumber of foreign travelers in Japan.
In this environment, the Group accelerated development investment and reinforced profitability to achieve the Kyoritsu
Full Acceleration Plan, the medium-term management plan announced in May 2015. In addition, the Group endeavored toenhance its corporate brand image by co-sponsoring the university relay race in Hakone (Hakone Ekiden) and enteringvarious IR events.
As a result, during the third quarter of the current fiscal year, both revenues and earnings increased, with sales up 1.4%
year on year to ¥101,112 million, operating income up 12.8% to ¥9,685 million, ordinary income up 15.6% to ¥9,334
million, and profit attributable to owners of parent up 11.3% to ¥5,847 million.
We provide details of our earnings by business segment as follows.
Dormitory businessOur dormitory business got off to a solid start with the occupancy rate at the beginning of the fiscal term having gained by
1.0 percentage point year on year to 98.3%, and the total number of contracted residents rising by 863 year on year to32,515 residents as of the end of December. In addition, in the first three quarters, the student dormitories segment
performed well due to an increase in the number of affiliated universities and a growing number of students from overseas,
while corporate dormitories achieved substantial gains in the number of contracts due to an increase in new hires bycompanies and more companies now opting to offer employee dormitories. The impact of the Kumamoto Earthquake in
April was minimal, and revenue and earnings were up in the Kyushu area.
Consequently, sales and operating income rose significantly by 3.2% and 19.2% year on year to ¥33,251 million and ¥5,051
million, respectively.
Hotel businessWith respect to the Dormy Inn business hotels, this fiscal year we have opened six establishments: Natural Springs Tento
no Yu Dormy Inn Abashiri, global cabin Gotanda, Natural Springs Toyama Tsurugi no Yu Onyado Nono, Natural Springs
Zenkou no Yu Dormy Inn Nagano, Denma no Yu Dormy Inn PREMIUM Tokyo Kodenmacho, and Natural Springs Kafu
no Yu Onyado Nono Namba. Our existing hotels maintained occupancy rates and average daily rates exceeding levels in
the previous year due to solid demand from repeat customers and the ongoing increase in inbound demand. Moreover,
occupancy rates at Natural Springs Rokka no Yu Dormy Inn Kumamoto, which reopened in August, were even stronger
than levels prior to the Kumamoto Earthquake.
In the resort hotel business, we opened the Naruko Onsen Yumoto Kissho. Hotels in the Hakone region, which wereaffected by an increase in the level of the volcano threat alert in the previous fiscal period, restored their occupancy rates
to levels in line with typical years. Moreover, the overall occupancy rate at the end of the year was particularly strong. As
a result, both the occupancy rate and average daily rates exceeded levels in the previous year. In addition, costmanagement was thorough due to flexible personnel assignments tailored to individual occupancy conditions.
As a result, sales and operating income both increased significantly, up 13.1% year on year to ¥45,634 million and up
10.5% year on year to ¥6,301 million, respectively, succeeding in absorbing opening costs and repair costs.
Contracted services businessIn the contracted services business, both revenues and earnings increased due to an increase in building management andbuilding construction work. Consequently, sales and operating income rose by 10.6% and 4.6% year on year to ¥11,243
million and ¥267 million, respectively.
Food service business
Both revenues and earnings increased in the food service business as the number of contracted hotel restaurants rose.
Consequently, sales and operating income rose by 15.3% and 7.0% year on year to ¥4,862 million and ¥18 million,
respectively.

5

Kyoritsu Maintenance (9616), 3Q FYE March 2017 Earnings Announcement
Construction business
The construction business generated significant increases in revenue and earnings as a result of bringing in greaternumbers of orders for hotel development. Consequently, sales and operating income rose by 60.8% and 91.5% year on
year to ¥15,960 million and ¥708 million, respectively.
Other business
Our other business segments are the Senior Life business (management of senior citizen housing), the Public Kyoritsu
Partnership business (PKP: consigned services business provided to regional government bodies), single life support businessand insurance agency business, comprehensive human resource services business, and financing and administrative
outsourcing services. The other business segments posted total net sales of ¥8,390 million, a decrease of 4.4% year on year,
and incurred an operating loss of ¥251 million, in comparison with an operating loss of ¥98 million in the same period of theprevious fiscal year.
(2) Explanation of financial position(Assets)
Total consolidated assets increased by ¥2,546 million from the end of the previous fiscal year to ¥163,949 million at the endof the third quarter. The main factor behind this increase was an increase in construction in progress, etc.
(Liabilities)
Total consolidated liabilities declined by ¥2,383 million from the end of the previous fiscal year to ¥101,044 million at theend of the third quarter, due primarily to a decline in long-term loans payable.
(Net assets)
Net assets grew by ¥4,930 million from the end of the previous fiscal year to ¥62,905 million at the end of the third quarter,due mainly to a rise in retained earnings.
Consequently, equity ratio rose by 2.5 p.p. from the end of the previous fiscal year to 38.4% at the end of the third quarter.

(3) Explanation of future forecasts including consolidated earnings estimates
Our consolidated earnings estimates for the full fiscal year ending March 31, 2017, as provided in the “Fiscal Year Ending
March 2017 Consolidated Earnings Announcement” dated May 13, 2016, remain unchanged at this point in time.

6

Kyoritsu Maintenance (9616), 3Q FYE March 2017 Earnings Announcement
2. Summary Information (Notes)(1) Changes in important consolidated subsidiaries during the quarter
None(2) Application of special accounting procedures in the preparation of our quarterly consolidated financial statements(Calculation of tax expense)
The Company applies the method that reasonably estimates an effective tax rate to be assessed on income before income
taxes for the year ending March 31, 2017, including the nine months ended December 31, 2016, after accounting for the tax
effects, and multiplies income before income taxes during the nine months ended December 30, 2016, by this estimatedeffective tax rate. However, in the event that the estimate for the effective tax rate appears to lack logical rationale, then thelegally determined effective tax rate is used.
(3) Changes in the accounting policies, procedures, and changes or revisions in the display of accounting estimates
Changes in accounting policies(Application of Practical Solution on a Change in Depreciation Method due to Fiscal 2016 Tax Reforms)
Due to revisions in the Corporation Tax Act, the Company has adopted the “Practical Solution on a Change in Depreciation
Method due to Fiscal 2016 Tax Reforms” (ASBJ Practical Issue Task Force No. 32, issued on June 17, 2016) from the firstquarter of the current fiscal year, and changed the method for the depreciation of some facilities attached to buildings andstructures acquired on or after April 1, 2016 from the declining-balance method to the straight-line method.
The effect of this change on the Company’s operating income, ordinary income and income before income taxes for the third
quarter is insignificant.
(4) Additional information(Application of Implementation Guidance on Recoverability of Deferred Tax Assets)
The Company adopted the “Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No. 26,
March 28, 2016) from the first quarter of the current fiscal year.

7

Kyoritsu Maintenance (9616), 3Q FYE March 2017 Earnings Announcement
3. Quarterly Consolidated Financial Statements(1) Quarterly consolidated balance sheet
FY3/16(March 31, 2016)(Unit: Millions of yen)
3Q FY3/17(December 31, 2016)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Real estate for sale
Costs on uncompleted construction contracts
Other
Allowance for doubtful accounts

25,960
9,763
2,827
331
6,368
(19)
45,231

12,763
8,367
1,581
205
6,682
(26)
29,57436,33733,807
6,906
2,190
79,2401,710

38,73937,50813,891
2,468
92,608
2,913

Deferred assets

5,034
12,19910,103
7,978(212)
35,103116,054
116

5,106
13,773
11,2068,779(212)
38,654
134,176
198

Total assets

161,402

163,949

Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net
LandConstruction in progress
Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Guarantee deposits
Lease deposits
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets

8

Kyoritsu Maintenance (9616), 3Q FYE March 2017 Earnings Announcement(Unit: Millions of yen)
3Q FY3/17(December 31, 2016)

FY3/16(March 31, 2016)
Liabilities
Current liabilities
Notes and accounts payable–trade
Short-term loans payable
Current portion of bonds
Income taxes payable
Provision for bonuses
Provision for directors’ bonuses
Provision for warranties for completed construction
Provision for point card certificates
Other
Total current liabilities
Non-current liabilities
Bonds payable
Convertible bond-type bonds with subscription rights to shares
Long-term loans payable
Director retirement benefit reserve
Provision for point card certificates
Net defined benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

9

6,966
21,471
1,350
2,765
1,700
426
8
18
18,94153,648

5,688
20,977
2,150
1,380
1,026
294
8
18
19,66751,212

5,600
20,608
17,940
287
25
1,072
4,244
49,779103,428

11,80020,528
11,704
287
22
1,140
4,349
49,832
101,0447,654
12,50937,778(305)
57,637

7,694
12,55042,600(317)
62,528

736
(393)
(5)
336
57,974
161,402

848
(475)
3
376
62,905
163,949

Kyoritsu Maintenance (9616), 3Q FYE March 2017 Earnings Announcement(2) Quarterly consolidated income statement and comprehensive income statement(Quarterly consolidated income statement)(Consolidated third quarter)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Deposit redemption income
Other
Total non-operating income
Non-operating expenses
Interest payment
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on cancellation of leasehold contracts
Total extraordinary income
Extraordinary losses
Impairment loss
Loss on disaster
Settlement funds
Other
Total extraordinary losses

3Q FY3/16(April 1, 2015 to
December 31, 2015)
99,702
78,86020,842
12,255
8,586(Unit: Millions of yen)
3Q FY3/17(April 1, 2016 to
December 31, 2016)
101,11277,87323,23913,553
9,685

98
42
66
95
301

52
43
75
135
307

602
212
815
8,073

453
204
657
9,334

432
432

－
－

–
–
175
26
201
8,303
3,047
5,256
5,256

89
309
－
27
427
8,907
3,059
5,847
5,847

Income before income taxes
Income taxes
ProfitProfit attributable to owners of parent

10

Kyoritsu Maintenance (9616), 3Q FYE March 2017 Earnings Announcement
Quarterly consolidated comprehensive income statement
Consolidated third quarter

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income(Details)
Comprehensive income attributable to owners of parent

11

3Q FY3/16(April 1, 2015 to
December 31, 2015)
5,256(Unit: Millions of yen)
3Q FY3/17(April 1, 2016 to
December 31, 2016)
5,847

36
(302)
(17)
(283)
4,973

111
(81)
9
39
5,887

4,973

5,887

Kyoritsu Maintenance (9616), 3Q FYE March 2017 Earnings Announcement(3) Quarterly consolidated financial statement notes(Notes regarding going concern assumptions)
None(Significant changes in shareholders’ equity notes)
None(Segment information)
Segment information
I. Third quarter of fiscal year ended March 2016 (From April 1 to December 31, 2015)
1. Information pertaining to segment sales, profits and losses(Unit: Millions of yen)
Reporting segments
Other(Note 1)

Food
Services

Construction

Subtotal

Total

Adjustments(Note 2)

Consolidated(Note 3)

Dormitories

HotelsContracted
Services

32,05440,281

5,537

1,242

12,13091,247

8,455

99,702－

99,702

171

77

4,629

2,975

(2,204)

5,650

320

5,970

(5,970)－Total

32,22640,359

10,167

4,218

9,926

96,897

8,775

105,673(5,970)99,702

Segment profit/loss

4,237

5,700

255

16

370

10,580(98)

10,482(1,896)

8,586

Sales
External sales
Inter-segment sales
and transfers(Notes)1. Other is not considered as a reporting business segment and is comprised of the Senior Life business (management ofsenior citizen housing), PKP business (consigned services business provided to regional government bodies), single life
support services, insurance agency business, comprehensive human resources, financing services and other related
services.
2. Adjustment for segment profit and loss of ¥1,896 million includes ¥152 million for inter-segment transaction
eliminations, and ¥1,743 million in companywide expenses that cannot be allocated to specific reporting segments.
Companywide expenses are primarily those expenses arising from the finance and accounting, and management
divisions.
3. Segment profits or losses are derived by adjusting the operating income used in the quarterly consolidated income
statement.

2. Impairment accounting losses and goodwill amortization of fixed assets by reporting segments
None

12

Kyoritsu Maintenance (9616), 3Q FYE March 2017 Earnings Announcement
II. Third quarter of fiscal year ending March 2017 (From April 1 to December 31, 2016)
1. Information pertaining to segment sales, profits and losses(Unit: Millions of yen)
Reporting segments
Others(Note 1)

Food
Services

Construction

Subtotal

Total

Adjustments(Note 2)

Consolidated(Note 3)

Dormitories

HotelsContracted
Services

External sales

33,07445,535

5,523

1,300

7,619

93,055

8,057

101,112－101,112Inter-segment
sales andtransfers

176

98

5,720

3,561

8,340

17,898333

18,231(18,231)－

Total

33,251

45,634

11,243

4,862

15,960110,953

8,390

119,344(18,231)

101,112Segment
profit/loss

5,051

6,301

267

18

708

12,347(251)

12,095(2,410)

9,685

Sales

(Notes)1. Other is not considered as a reporting business segment and is comprised of the Senior Life business (management ofsenior citizen housing), PKP business (consigned services business provided to regional government bodies), single life
support services, insurance agency business, comprehensive human resources, financing services and other related
services.
2. Adjustment for segment profit and loss of ¥2,410 million includes ¥580 million for inter-segment transaction
eliminations, and ¥1,829 million in companywide expenses that cannot be allocated to specific reporting segments.
Companywide expenses are primarily those expenses arising from the accounting and management divisions.
3. Segment profits or losses are derived by adjusting the operating income used in the quarterly consolidated income
statements.

2. Impairment accounting losses and goodwill amortization of fixed assets by reporting segmentsNone13