Kyoritsu Maintenance (9616), FYE March 2018 Earnings Announcement

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

Fiscal Year Ended March 2018
Consolidated Earnings Results Update
May 2018

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Kyoritsu Maintenance (9616), FYE March 2018 Earnings Announcement

Fiscal Year Ended March 2018 Consolidated Earnings Announcement
May 15, 2018

Company Name: Kyoritsu Maintenance Co., Ltd.
Tokyo Stock Exchange
Stock Code: 9616, URL: http://www.kyoritsugroup.co.jp/
Director: Takumi Ueda, President
Contact: Koji Nakamura, Director, General Manager of Management Planning Department, Tel: +81-3-5295-7778
General Shareholders Meeting (Anticipated): June 27, 2018; Dividend Payment Date (Anticipated): June 29, 2018
Financial Accounts Filing Date (Anticipated): June 27, 2018
Earnings Presentation Document: Available
Earnings Presentation Meeting: Available (for institutional investors and analysts)(All figures of less than one million yen are rounded down to the nearest digit)
1. Fiscal Year Ended March 2018 Consolidated Earnings (April 1, 2017 to March 31, 2018)(1) Consolidated Earnings (Aggregated)
Profit attributable to owners
Net Sales
Operating Income
Ordinary Incomeof parent％

Million yen％

Million yen％

Million yen

FY3/18152,02111.9
13,087
10.8
12,92812.3
FY3/17
135,8280.6
11,815
15.3
11,51417.8(Note) Comprehensive income: ¥8,436 million (15.7% YoY) in FY3/18; ¥7,290 million (34.9% YoY) in FY3/17
EPS

Fully Diluted EPS
YenOrdinary Income toTotal Asset Ratio

ROE
％

Yen

Million yen

％

8,778
7,135

23.0
19.5

Operating Margin％％

225.86207.50
12.9
7.1
8.6
FY3/18184.35168.6611.7
6.9
8.7
FY3/17(Reference) Equity accounting method profit: ¥0 in FY3/18; ¥0 in FY3/17(Note) The Company carried out a stock split on April 1, 2017, at a ratio of two shares per one common share. Accordingly, EPS andfully diluted EPS have been calculated presuming that this stock split was carried out at the start of the previous consolidated fiscal
year.
(2) Consolidated Financial Position
Total Assets

Net Assets

Equity Ratio

Million yen

Book Value Per Share
％Million yen

Yen

190,996
71,839FY3/1837.6
1,842.79
173,609
64,320FY3/1737.0
1,660.61(Reference) Capital: ¥71,839 million in FY3/18; ¥64,320 million in FY3/17(Note) The Company carried out a stock split on April 1, 2017, at a ratio of two shares per one common share. Accordingly, book value
per share has been calculated presuming that this stock split was carried out at the start of the previous consolidated fiscal year.
(3) Consolidated Cash Flow Conditions
Operating Cash Flow

Investing Cash Flow

Financing Cash Flow

Cash and Equivalents at Term End

Million yen

Million yen

Million yen

Million yen

13,02914,412(16,676)(28,263)

5,804
3,139

16,972
14,853

Dividend Per Share
2Q-End3Q-End4Q-EndTotal Dividend
Payment(Annual)FY3/18
FY3/17
2. Dividend Conditions
1Q-EndYen

FY3/17
FY3/18

-

Yen

26.00
18.00

Yen

-

Total

Dividend Payout
Ratio(Consolidated)

Dividend to Net
Asset Ratio(Consolidated)

Yen

Yen

Million yen

％

％

36.00
22.00

62.00
40.00

1,200
1,556

16.8
17.7

2.0
2.3

FY3/19 (Forecast)
20.00
23.00
43.00
18.0
(Note) The Company carried out a stock split on April 1, 2017 at a ratio of two shares per one common share. The actual dividend amountprior to the stock split is noted here for the fiscal years ended in March 2016 and March 2017.
3. Fiscal Year Ending March 2019 Consolidated Earnings Estimates (April 1, 2018 to March 31, 2019)(% figures show year-on-year change for the full year)
Net SalesFirst Half
Full Year

Operating Income

Profit attributable to ownersof parent

Ordinary Income

EPS

Million yen％

Million yen％

Million yen％

Million yen％

Yen

78,500

10.7

7,500

3.9

7,200

2.0

4,800

3.6

123.13

164,600

8.3

14,0007.0

13,600

5.2

9,300

5.9

238.562

Kyoritsu Maintenance (9616), FYE March 2018 Earnings Announcement
Notes(1) Important changes in our subsidiaries, including changes to the scope of our consolidation: None
(2) Changes in the accounting policies, procedures, and changes or revisions in the display of accounting estimates:
1. Changes accompanying revisions in accounting standards:
None
2. Other changes:
None
3. Changes in accounting estimates:
None
4. Redisplay of revisions:
None(3) Shares Issued (Common Stocks)
1. Shares issued as of term-end (including treasury shares)
2. Treasury Shares as of term-end
3. Average during the term

FY3/18
FY3/18
FY3/1839,209,238
225,193
38,866,440

FY3/17
FY3/17
FY3/17

38,954,452
221,546
38,707,607(Note) The Company carried out a stock split on April 1, 2017, at a ratio of two shares per one common share. Accordingly, shares issued(common stock) has been calculated presuming that this stock split was carried out at the start of the previous consolidated fiscal
year.
(Reference) Outline of non-consolidated business results
1. Fiscal Year Ended March 2018 Parent Earnings (From April 1, 2017 to March 31, 2018)(1) Parent Earnings
Net Sales
For the fiscal year ended

Operating Income(% figures show year-on-year change)

Ordinary Income

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

March 31, 2018

124,58811.2

12,077

4.5

12,3655.4

5,669(28.0)March 31, 2017

112,078

6.8

11,55919.6

11,735

22.4

7,875

25.4

Book Value Per ShareNet Income Per Share–Diluted

For the fiscal year ended

March 31, 2018

Yen

Yen

145.87134.01March 31, 2017
203.46186.13(Note) The Company carried out a stock split on April 1, 2017, at a ratio of two shares per one common share. Accordingly, “Book Value
Per Share” and “Net Income Per Share–Diluted” have been calculated presuming that this stock split was carried out at the start ofthe previous consolidated fiscal year.
(2) Parent Financial Position
Total Assets
As of March 31, 2018

Net Assets

Equity Ratio

Book Value Per Share

Millions of yen

Millions of yen%

Yen

171,945

68,26239.7

1,751.03

As of March 31, 2017
(Reference) Shareholders’ equity:

161,600
63,82839.5
1,647.92
As of March 31, 2018: ¥68,262 million
As of March 31, 2017: ¥63,828 million(Note) The Company carried out a stock split on April 1, 2017, at a ratio of two shares per one common share. Accordingly, “Book Value
Per Share” has been calculated presuming that this stock split was carried out at the start of the previous consolidated fiscal year.
2. Fiscal Year Ending March 2019 Parent Earnings Estimates (April 1, 2018 to March 31, 2019)(% figures show year-on-year change for the full year)
Net Sales

Operating Income

Ordinary Income

EPS

Million yen%

Million yen%

Million yen%

Yen

First Half

67,500

10.5

7,200

1.4

5,000

2.7

128.26

Full Year

139,400

11.9

13,300

7.6

9,200

62.3

235.99*The earnings announcement is exempt from audit by certified public accountants and auditors.
*Notes and explanation of appropriate usage of earnings estimates:(Notes on forecast results)
All earnings estimates and forward-looking statements in this document are based on the best information available and rational decisions of management
at the time of its creation, and actual earnings may diverge largely from those estimates and forward-looking statements put forward in this document due
to various unforeseen factors. For information regarding earnings estimates and the assumptions upon which they are based, and the usages of theseearnings estimates, please refer to “(4) Forecasts” under “1. Overview of Operating Results” on page 9.
(Method for obtaining supplementary explanatory information on financial results and the briefing on financial results)
The Company will post supplementary explanatory information on financial results on its website.

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Kyoritsu Maintenance (9616), FYE March 2018 Earnings Announcement
Index
1. Overview of Operating Results

5(1) Overview of Operating Results in the Fiscal Period under Review

5(2) Overview of Financial Position in the Fiscal Period under Review

8(3) Overview of Cash Flows in the Fiscal Period under Review

8(4) Forecasts

9(5) Our Basic Policy Regarding the Distribution of Profits in the Current and Next Terms

10

2. Basic Approach to Selecting Accounting Standards

10

3. Consolidated Financial Statements and Important Notes

11(1) Consolidated Balance Sheets

11(2) Consolidated Income Statement and Comprehensive Income Statement

13

Consolidated Income Statement

13

Consolidated Comprehensive Income Statements

15(3) Consolidated Shareholders’ Equity Statements

16(4) Consolidated Cash Flow Statements

18(5) Consolidated Financial Statement Notes

20(Notes Regarding Going Concern Assumptions)20(Important Articles in the Assumption Used to Create Consolidated Financial Statements)

20(Segment Information)

20

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Kyoritsu Maintenance (9616), FYE March 2018 Earnings Announcement
1. Overview of Operating Results(1) Overview of Operating Results in the Fiscal Period under Review
1. Overview of Overall Earnings in Current Term
(Consolidated Earnings)(Unit: million yen)Previous Term
Current Term
% YoY Change
FY3/17
FY3/18Net Sales
135,828
152,021
11.9
Operating Income
11,815
13,087
10.8
Ordinary Income
11,514
12,928
12.3
Profit attributable to owners of parent
7,135
8,778
23.0
During the fiscal year ended March 31, 2018, Japan’s income environment recovered, but growth in personal spending was
limited and geopolitical risks also had an impact. However, there were some positive factors, such as an increase in thenumber of domestic travelers and a record-high number of foreign inbound travelers.
In this environment, the Group established the Kyoritsu Jump Up Plan, a five-year medium-term management plan thatbegan this fiscal year, under which we steadily promoted the two aims of improving customer satisfaction and pursuing
advanced developments, which together constitute the framework for the medium-term management plan. We also
updated our corporate slogan as a way of communicating our new branding message, and devised a corporate symbol. In
addition, the Group constantly endeavored to enhance its corporate brand image by co-sponsoring the university relay racein Hakone (Hakone Ekiden), which improved recognition of our business, and by participating in various IR events.
In this fiscal year, income steadily increased in the dormitory business, and although opening costs for the 13 newly
opened hotels amounted to about ¥1.8 billion in the hotel business, the occupancy rate and the average daily rate
significantly exceeded levels in the previous year. As a result, the opening costs were easily absorbed and income
increased.
As a result, sales rose 11.9% year on year to ¥152,021 million, operating income increased 10.8% to ¥13,087 million, andordinary income was up 12.3% to ¥12,928 million. Profit attributable to owners of parent climbed 23.0% over theprevious year to ¥8,778 million. These results exceeded the consolidated forecasts for the full fiscal year announced on
February 9. Moreover, ordinary income rose for the eighth fiscal year in a row, and set a record high for the sixth year in arow, making for a successful start to the medium-term management plan. Kyoritsu Maintenance Korea Co., Ltd., oursubsidiary in South Korea, succeeded in raising name recognition for the Dormy Inn brand in South Korea while alsosteadily improving revenue, despite geopolitical risks. However, in terms of the need to ensure financial soundness, theGroup absorbed a ¥448 million impairment loss on asset holdings.

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Kyoritsu Maintenance (9616), FYE March 2018 Earnings Announcement
2. Our Main Business Segment Performance
Dormitory Business (Student, Corporate, Domeal, Consigned Dormitories)
Previous Term
Current Term
% YoY Change
FY3/17
FY3/18Contracted Residents
36,47437,391
2.5
Sales (million yen)
45,64447,052
3.1
Operating Income (million yen)
7,243
7,579
4.6
The dormitory business got off to a solid start with a 98.3% occupancy rate at the beginning of the fiscal term, the same as
the previous year, while an increase of 917 year on year in the total number of contracted residents cumulated in 37,391
residents as of the end of March. In addition, cost optimization has been successful, resulting in a substantial increase inearnings.
The student dormitory business continued to benefit from a high need for dormitories due to the rise in university
attendance rates and an increase in students from abroad attending universities in Japan. In this fiscal year, we succeeded informing new 6 alliances. On the other hand, the decrease in the number of preparatory school students throughout Japan did
have an effect. As a result, the number of contracted residents in the student dormitories fell by 221 year on year to 20,199
residents, and sales fell by 0.0% year on year to ¥25,272 million. In the next fiscal year, we expect the number of contracts
for student dormitories to increase over the previous year and return to the customary upward trend.
The corporate dormitory business achieved substantial gains in the number of contracts mainly due to continuous
improvement of the employment environment and the rise in the number of corporations introducing employee dormitories.
As a result, the number of contracted residents rose by 1,066 year on year at the end of the fiscal year to 11,899, and salesrose by 8.2% year on year to ¥13,100 million.
In our Domeal business, we received support from client schools and companies through their introductions of newresidents seeking dormitories and also met demand from people looking to move out of dormitories providing meals by
providing studio-type dormitory facilities. Consequently, the number of contracted residents rose by 72 year on year to5,293, and sales grew by 0.8% year on year to ¥4,465 million.
In our consigned dormitory business, we manage corporate and school dormitory facilities on a consigned basis, and we
endeavor to differentiate our services by promoting our status as “Japan’s best dormitory operator.” Sales rose by 10.2%
year on year to ¥4,214 million.
As a result, the number of dormitory facilities increased by 8 over the previous year to 473 (excluding consigned facilities),
contracted residents grew by 1,085 to 38,125, and sales and operating income rose 3.1% and 4.6% year on year to ¥47,052
million and ¥7,579 million, respectively.
Hotel Business (Dormy Inn, Resort Hotels)(Unit: million yen)Previous Term
Current Term
% YoY Change
FY3/17
FY3/18
Sales
60,40870,16016.1
Operating Income
6,931
7,155
3.2
In the hotel business, domestic travelers and inbound demand continued to increase. In addition, our efforts to ensure that
customers were put first resulted in high occupancy rates and average daily rates exceeding levels in the previous year,
thanks to repeat customers. As a result, hotel opening costs were absorbed and both sales and income increased.
With respect to the Dormy Inn business hotels, this fiscal year we have opened nine establishments: “Myojin no Yu DormyInn PREMIUM Kanda,” “Natural Springs Hyuga no Yu Dormy Inn Miyazaki,” “Natural Springs Yakumo no Yu DormyInn Izumo,” “Natural Springs Kaijin no Yu Dormy Inn EXPRESS Sendai Seaside,” “Natural Springs Shoun no Yu Dormy
Inn Kofu Marunouchi,” “Natural Springs Yoshino-zakura no Yu Onyado Nono Nara,” and “Global Cabin Tokyo
Suidobashi,” “Natural Springs Ishite no Yu Dormy Inn Matsuyama,” “Natural Springs Kompeki no Yu Dormy Inn Kochi,”At the same time, in part because the percentage of inbound customers in the Dormy Inn business increased 6.6% over theprevious year to 27.1%, occupancy rates and average daily rates exceeded initial forecasts. As a result, sales rose 23.0%
over the previous year to ¥39,741 million.
In the resort hotel business, we opened two facilities first in the Chugoku / Shikoku area, namely the “Inishie no Yado
Keiun,” and “Oyado Tsukiyo no Usagi” hotels, both in the vicinity of the Izumo Taisha shrine. We also opened “Le Chien
Kyu-Karuizawa,” Kyoritsu Resort’s first resort to welcome pets, and the high-grade “Gora Onsen Setsugetsuka Bettei
Suiun,” our fourth resort in the Hakone region. In addition, existing hotels achieved year-on-year increases in both
occupancy rates and the average daily rate, despite the adverse effects of typhoons on business. As a result, sales were up
8.3 % year on year to ¥30,418 million. Moreover, we thoroughly implemented cost controls in part by means of flexible
personnel assignments tailored to occupancy conditions.
Due to these factors, the total number of facilities in operation rose to 98 (up by 12 from the previous year) and the numberof rooms to 14,144 (up 1,428 from the previous fiscal year) in the hotel business overall. Sales rose 16.1% to ¥70,160

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Kyoritsu Maintenance (9616), FYE March 2018 Earnings Announcement
million year on year, and operating income rose 3.2% year on year to ¥7,155 million, affected by about ¥1.8 billion in costs
for the opening of 13 new hotels.
Contracted Services Business(Unit: million yen)Previous Term
Current Term
% YoY Change
FY3/17
FY3/18
Sales
15,953
14,877(6.7)
Operating Income
518
504
(2.7)
Income and sales fell in the contracted business in comparison to the previous fiscal year, when large-scale construction
work was posted. As a result, sales fell 6.7% over the previous year to ¥14,877 million and operating income declined 2.7%
to ¥504 million.
Food Services Business(Unit: million yen)Previous Term
Current Term
% YoY Change
FY3/17
FY3/18
Sales
6,498
6,732
3.6
196.3
Operating Income
53
158
In the food service business, sales and income both increased due to growth in the management of contracted hotel
restaurants and the closure of unprofitable stores in the restaurant business. As a result, sales rose 3.6% to ¥6,732 million
and operating income climbed 196.3% to ¥158 million.
Construction Business(Unit: million yen)Previous Term
Current Term
% YoY Change
FY3/17
FY3/18
Sales
23,00722,450(2.4)
Operating Income
946
1,117
18.0
In the construction business, sales declined due to a reduction in built-for-sale condominium development, and income
increased as a result of real estate liquidation. As a result, sales decreased by 2.4% to ¥22,450 million and operating income
rose 18.0% over the previous year to ¥1,117 million.
Other Business(Unit: million yen)Previous Term
Current Term
% YoY Change
FY3/17
FY3/18Sales
11,172
11,845
6.0―
Operating Income
(404)
(290)
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
business and insurance agency business, comprehensive human resource services business, and financing andadministrative outsourcing services. The other business segments posted total net sales of ¥11,845 million, an increase of
6.0% year on year, and incurred an operating loss of ¥290 million, in comparison with an operating loss of ¥404 million in
the previous fiscal year

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Kyoritsu Maintenance (9616), FYE March 2018 Earnings Announcement(2) Overview of Financial Position in the Fiscal Period under Review(Assets)
During the current fiscal year, total consolidated assets increased by ¥17,387 million from the end of the previous fiscal
year to ¥190,996 million. The main factors behind this increase included rises in land and real estate for sale in process.
(Liabilities)
Over the same period, total liabilities increased by ¥9,868 million to ¥119,157 million, due primarily to an increase in bonds
and a decrease in loans.
(Net Assets)
Net assets increased by ¥7,518 million to ¥71,839 million over the same period due primarily to an increase in retained
earnings.
Consequently, equity ratio rose by 0.6 points from the end of the previous fiscal year to 37.6%.
(3) Overview of Cash Flows in the Fiscal Period under Review
Consolidated cash and equivalents increased by ¥2,118 million from the end of the previous term to ¥16,972 million at theend of the current term.
(Cash Flow from Operating Activities)
The net cash inflow from operating activities decreased by ¥1,382 million from the previous term to ¥13,029 million in thecurrent term, due to an increase in notes and accounts receivable – trade and inventories.
(Cash Flow from Investing Activities)
The purchase of property, plant and equipment, and proceeds from sales of property, plant and equipment led to a ¥11,587
million decrease in the net cash outflow year on year to ¥16,676 million in investing activities.
(Cash Flow from Financing Activities)
A net cash inflow in financing activities increased by ¥2,664 million from the previous term to ¥5,804 million reflecting
proceeds from the repayment of long-term loans payable and proceeds from the issuance of bonds.
(Reference) Trends in Our Cash Flow Indicators
FY3/14

FY3/15

FY3/16

FY3/17

FY3/18Equity Ratio (%)
26.2
33.6
35.9
37.0
37.6
Equity Ratio, Market Capital-Based (%)
34.4
72.6
116.4
74.0
103.9
Cash Flow to Interest-Bearing Liability Ratio (%)
8.8
7.5
8.2
5.0
6.1
Interest Coverage Ratio (x)
7.3
8.9
10.2
24.9
26.1
Equity Ratio: Capital / Total Assets
Equity Ratio, Market Capital-Based: Market Capitalization / Total Assets
Cash Flow to Interest-Bearing Liability Ratio: Interest-Bearing Liabilities / Operating Cash Flow
Interest Coverage Ratio: Operating Cash Flow / Interest Payments(Note) 1. Each indicator is based on consolidated financial data.
2. Market capitalization excludes treasury stock.
3. Cash flow is based on our operating cash flow.
4. Interest-bearing debt includes all of the liabilities that bear interest payments on our consolidated balance sheet.
5. We use interest payments from our consolidated cash flow statements.

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Kyoritsu Maintenance (9616), FYE March 2018 Earnings Announcement(4) Forecasts(Consolidated)

Net Sales
Operating Income
Ordinary Income
Profit Attributable to Owners of Parent(Unit: million yen)
Current Term
FY3/18152,02113,087
12,928
8,778(Parent Earnings)

Coming Term
FY3/19164,600
14,00013,6009,300% YoY Change
8.3
7.0
5.2
5.9

(Unit: million yen)
Current Term
Coming Term
% YoY Change
FY3/18
FY3/19Net Sales
124,588
139,400
11.9
Ordinary Income
12,365
13,300
7.6
Net Income
5,669
9,200
62.3
With regard to the future outlook, although the moderate economic recovery in the Japanese economy is expected tocontinue, uncertainties such as political risk in the US and Europe, and the slowdown of the Chinese and Asian economies
are forecast to continue. Furthermore, in the medium term, reflecting the increase in visitors in conjunction with the Tokyo
2020 Olympic and Paralympic Games, it is forecast that there will be significant environmental changes, including soaring
construction costs and personnel shortages, etc.
In the dormitory business, the occupancy rate declined slightly to 97.7% in April, down 0.6% over the previous year, but
this was due to temporary vacancies following the completion of new student dormitories and this rate should recover earlyin the next fiscal year. Overall, occupancy is stable, with the number of contracted student residents increasing, and we
expect solid numbers going forward. We plan to respond flexibly to the greater diversification of residents and theirneeds, while maintaining a stable revenue structure by optimizing costs.
In the Dormy Inn (business hotel) business, we plan to open a total of 11 facilities: the “Dormy Inn Honhachinohe,”“Dormy Inn Osaka Tanimachi Yonchome,” “Dormy Inn Ohita,” “Dormy Inn Korakuen,” “Global cabin Hamamatsu,”“Global cabin Yokohama China town,” “Dormy Inn Takamatsu Chuo-koen,” “Dormy Inn PREMIUM Namba ANNEX,”“Dormy Inn PREMIUM Osaka Kitahama,” “Dormy Inn Maebashi,” and “Dormy Inn Fukui” (tentative names). In the resort
hotel business, we plan to open a total of three facilities, namely “La Vista Kirishima Hills,” “Shirakawago Onyado Yui no
Sho” and “Echigoyuzawa Onsen Yukemuri Yuki no Hana” (tentative names). We intend to accelerate this development toachieve the medium-term management plan.
In the contracted services business, Kyoritsu will implement measures to increase our credibility with customers throughimprovements in our specialized technologies and product lineup. These measures will also allow us to aggressively
provide customers with high-quality building maintenance and other services that are highly competitive within the market
with our new enhanced organization.
In the food services business, Kyoritsu will develop products and services with high levels of customer satisfaction, andimplement strict management of variable costs as part of its earnings reform strategy.
In our construction business, we will continue to support the Kyoritsu Group development and new facility opening plans,in addition to cultivating external clients and strictly managing costs.
In our other business segment, we will focus on quickly establishing a business model to make the Senior Life business andthe Public Kyoritsu Partnership (PKP) next-generation businesses and realize higher levels of profitability.
As a consequence of the above, in the next fiscal year, net sales are expected to increase 8.3% to ¥164,600 million,
operating income to rise 7.0% to ¥14,000 million, ordinary income to grow 5.2% to ¥13,600 million and profit attributableowners of parent to increase 5.9% to ¥9,300 million on a consolidated basis. The forecast income growth rate is moremodest compared to this fiscal year because we expect opening costs of about ¥1.9 billion resulting from advancedevelopment, as in this fiscal year, as well as about ¥800 million in large-scale renovations to raise customer satisfaction.
On a parent basis, we forecast an 11.9% increase in net sales to ¥139,400 million, a 7.6% increase in ordinary income to¥13,300 million and a 62.3% increase in net income to ¥9,200 million. We expect net income to increase significantly overthe fiscal year under review because ¥3,465 million in subsidiary stock valuation losses for stock in Kyoritsu Maintenance
Korea, the Group’s subsidiary in South Korea, were posted as an extraordinary loss in this fiscal year, but this extraordinary
loss had no impact on consolidated earnings since it was eliminated in consolidation. For details on this extraordinary loss,
please refer to the press release issued today entitled “Notice of Differences between Non-consolidated Forecasts for the
Fiscal Year Ended March 31, 2018 and Actual Results and the Posting of an Extraordinary Loss.”
It should be noted that the forecasts above were created based on the information that could be obtained as of the
publication date of this document, and actual results may differ from the forecast values due to various factors in the future.

9

Kyoritsu Maintenance (9616), FYE March 2018 Earnings Announcement(5) Our Basic Policy Regarding the Distribution of Profits in the Current and Next Terms
We consider the capital contributed by shareholders to be invaluable, and place a high priority on the distribution of profits toour shareholders in line with our earnings performance. One of our goals is to maintain a stable level of dividends over thelong term and we have established a target dividend payout ratio of 20%. In the fiscal year under review, we will pay ¥22 in
year-end dividends for a total of ¥40 in annual dividends, and since we carried out a stock split at a ratio of one to two on
April 1, 2017, this is effectually a 29% increase for the full fiscal year. In the next fiscal year, we expect to increase dividendsby ¥3 to ¥43. We aim to reach a target dividend payout ratio of 20% during the period of our medium-term management plan.
In the future, we will endeavor to maintain a stable level of dividends while also responding flexibly to reflect changes in ourearnings. At the same time, we also seek to retain a level of earnings that will give our management the flexibility to makenecessary capital investments in response to changes in the market and to develop new businesses whenever appropriate.
2. Basic Approach to Selecting Accounting Standards
The Group prepares its consolidated financial statements using Japanese standards, in consideration of the ability tocompare periods in consolidated financial statements and make comparisons between companies.
The Group will respond appropriately to the adoption of IFRS in light of conditions in Japan and overseas.

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Kyoritsu Maintenance (9616), FYE March 2018 Earnings Announcement
3. Consolidated Financial Statements and Important Notes(1) Consolidated Balance Sheets

Previous Term
(March 31, 2017)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable – trade
Real estate for sale
Real estate for sale in process
Costs on uncompleted construction contracts
Deferred tax assets
Other
Allowance for loan losses
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
LandConstruction in progress
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Guarantee deposits
Lease deposits
Net defined benefit asset
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Deferred assets
Bond issuance cost
Total deferred assets
Total assets

11(Unit: million yen)
Current Term
(March 31, 2018)15,210
8,643
920
－
420
954
6,224
(23)
32,35017,298
10,603
217
2,652
360
1,088
7,247
(26)
39,44265,795(25,543)
40,251
37,77017,373
10,935(8,236)
2,698
98,094
2,957

69,763(27,069)
42,69440,846
16,335
12,179(9,091)
3,087
102,964
4,012

5,032
413
14,561
11,526
7
1,314
7,243
(206)
39,892140,9445,093
346
16,054
13,516
－
1,434
7,773
(203)
44,015150,992

313
313
173,609

562
562
190,996

Kyoritsu Maintenance (9616), FYE March 2018 Earnings Announcement

Previous Term
(March 31, 2017)
Liabilities
Current liabilities
Notes and accounts payable – trade
Short-term loans payable
Current portion of bonds
Income taxes payable
Advances received
Provision for bonuses
Provision for directors' bonuses
Provision for warranties for completed construction
Provision for point card certificates
Provision for loss on construction contracts
Other
Total current liabilities
Non-current liabilities
Bonds payable
Convertible bond-type bonds with subscription rights to shares
Long-term loans payable
Long-term guarantee deposited
Deferred tax liabilities
Net defined benefit liability
Director retirement benefit reserve
Provision for point card certificates
Asset retirement obligations
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

12(Unit: million yen)
Current Term
(March 31, 2018)

6,230
17,3982,950
2,175
11,431
1,829
486
8
18
30
9,920
52,477

7,998
12,915
4,638
2,597
11,191
2,071
388
9
3
2
10,47052,287

18,65020,511
11,842
3,104
448
1,102
287
28
399
437
56,811
109,289

32,23020,000
8,662
3,354
435
1,089
269
5
400
421
66,869119,157

7,703
12,55843,888(321)
63,8297,949
12,80551,270(336)
71,690

834
(356)
13
491
64,320173,609

515
(378)
12
149
71,839190,996

Kyoritsu Maintenance (9616), FYE March 2018 Earnings Announcement(2) Consolidated Income Statement and Comprehensive Income Statement(Consolidated Income Statement)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Salaries, allowances and bonuses
Welfare expenses
Provision for bonuses
Provision for directors' bonuses
Retirement benefit expenses
Director retirement reserve provisions
Promotion expenses
Commission fee
Provision of allowance for doubtful accounts
Provision for point card certificates
Business consignment expenses
Rent expenses
Depreciation
Other
Total selling, general and administrative expense
Operating income
Non-operating income
Interest income
Dividend income
Gain on investments in partnership
Deposit redemption income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Commission fee
Other
Total non-operating expenses
Ordinary income

13

Previous Term(April 1, 2016 to
March 31, 2017)
135,828
105,255
30,573(Unit: million yen)
Current Term(April 1, 2017 toMarch 31, 2018)
152,021118,21433,806

4,400
907
532
486
92
1
2,011
5,980
9
6
1,346
431
196
2,353
18,757
11,815

4,693
946
635
388
77
1
1,912
7,222
7
(32)
1,448
585
215
2,616
20,71913,087

67
127
59
115
189
559

107
100
148
120
144
621

587
103
168
859
11,514

495
98
187
781
12,928

Kyoritsu Maintenance (9616), FYE March 2018 Earnings Announcement(Unit: million yen)
Current Term(April 1, 2017 toMarch 31, 2018)

Previous Term(April 1, 2016 to
March 31, 2017)
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Other
Total extraordinary income
Extraordinary losses
Impairment loss
Loss on retirement of non-current assets
Dismantlement costs
Loss on disaster
Other
Total extraordinary losses
Income before income taxes
Income taxes – current
Income taxes – deferred
Total income taxes
ProfitProfit attributable to owners of parent

14

－
－
－
－

198
698
25
923

198
27
－
309
2
539
10,975
3,984
(144)
3,839
7,135
7,135

477
113
115
－
71
777
13,073
4,421
(126)
4,295
8,778
8,778

Kyoritsu Maintenance (9616), FYE March 2018 Earnings Announcement(Consolidated Comprehensive Income Statements)

7,135(Unit: million yen)
Current Term(April 1, 2017 toMarch 31, 2018)
8,778

97
37
18
154
7,290

(318)
(22)
(0)
(342)
8,436

7,290

8,436

Previous Term(April 1, 2016 to
March 31, 2017)
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

15

Kyoritsu Maintenance (9616), FYE March 2018 Earnings Announcement(3) Consolidated Shareholders’ Equity Statements
Consolidated Figures for Fiscal Year Ended March 2017 (April 1, 2016 to March 31, 2017)(Unit: million yen)
Shareholders’ equity
Capital surplus

Retained earnings

Treasury stock

Total shareholders’equity7,654

12,50937,778(305)

57,63748

48

Common stock
Balance as of start of current fiscal year
Increase (decrease) due to change
Issuance of new shares (exercise ofsubscription rights to shares)

97

Dividends from surplus(1,025)(1,025)

Profit attributable to owners of parent

7,135

7,135

Acquisition of treasury stock
Sales of treasury stock

0

(17)

(17)

0

1

Items other than changes in shareholders’equity, due to change (net)Total change during fiscal year
Balance as of end of current fiscal year

48

49

6,110

(16)

6,191

7,703

12,55843,888(321)

63,829

Accumulated other comprehensive income
Net unrealized gains
on other securities
Balance as of start of current fiscal year

Retirement
benefit-related
adjustments

Translation
adjustments

736

(393)

(5)

Total accumulated
other comprehensive
income336

Total net assets

57,974

Increase (decrease) due to change
Issuance of new shares (exercise ofsubscription rights to shares)

97

Dividends from surplus(1,025)

Profit attributable to owners of parent

7,135

Acquisition of treasury stock(17)

Sales of treasury stock
Items other than changes in shareholders’equity, due to change (net)

1
97

37

18

154

154

Total change during fiscal year

97

37

18

154

6,345

Balance as of end of current fiscal year

834

(356)

13

491

64,32016

Kyoritsu Maintenance (9616), FYE March 2018 Earnings Announcement
Consolidated Figures for Fiscal Year Ended March 2018 (April 1, 2017 to March 31, 2018)(Unit: million yen)
Shareholders’ equity
Capital surplus

Retained earnings

Treasury stock

Total shareholders’equity7,703

12,55843,888(321)

63,829246

246

Common stock
Balance as of start of current fiscal year
Cumulative impact of changes in theaccounting policy
Issuance of new shares (exercise ofsubscription rights to shares)

493

Dividends from surplus(1,396)(1,396)

Profit attributable to owners of parent

8,778

8,778

Acquisition of treasury stock
Sales of treasury stock

0

(14)

(14)

0

0

Items other than changes in shareholders’equity, due to change (net)Total change during fiscal year
Balance as of end of current fiscal year

246

246

7,382

(14)

7,861

7,949

12,80551,270(336)

71,690

Accumulated other comprehensive income
Net unrealized gains
on other securities
Balance as of start of current fiscal year

Translation
adjustments

834

(356)

Retirement
benefit-related
adjustments
13

Total accumulated
other comprehensive
income491

Total net assets

64,320

Increase (decrease) due to change
Issuance of new shares (exercise ofsubscription rights to shares)

493

Dividends from surplus(1,396)

Profit attributable to owners of parent

8,778

Acquisition of treasury stock(14)

Sales of treasury stock
Items other than changes in shareholders’equity, due to change (net)

0
(318)

(22)

(0)

(342)

(342)

Total change during fiscal year

(318)

(22)

(0)

(342)

7,518

Balance as of end of current fiscal year

515

(378)

12

149

71,83917

Kyoritsu Maintenance (9616), FYE March 2018 Earnings Announcement(4) Consolidated Cash Flow Statements(Unit: million yen)Previous Term FY3/17(April 1, 2016 to
March 31, 2017)
Cash flow from operating activities
Income before income taxes

Current Term FY3/18(April 1, 2017 toMarch 31, 2018)

10,975

13,073

3,945

4,429

Amortization of long-term prepaid expenses

441

414

Amortization of guarantee deposits

225

250

Increase (decrease) in provision for bonuses

128

242

Interest and dividend income

(194)

(208)

Interest expenses

587

495

Loss (gain) on investments in partnership

(59)

(148)

Loss (gain) on sales of property, plant and equipment

27

(84)

Impairment loss

198

477

Loss on disaster

309－

Dismantlement costs－

115

Loss (gain) on sales of investment securities

－

(698)
(1,960)Depreciation

Decrease (increase) in notes and accounts receivable – trade

1,122

Decrease (increase) in inventories

1,750

(446)

Increase (decrease) in notes and accounts payable – trade

(737)

1,768

Increase (decrease) in accrued expenses

62

(293)

Increase (decrease) in advances received

216

(103)

Increase (decrease) in accounts payable – other

156

(164)

Increase (decrease) in accrued consumption taxes

333

(135)

Increase (decrease) in deposits received

109

195

Increase (decrease) in guarantee deposits received

39

285

Other

(209)

(195)

Subtotal

19,431

17,307

Interest and dividend income received

274

146

Interest expenses paid

(579)

(499)

Income taxes refund

1

6

Income taxes paid

(4,715)(3,932)

Cash flow from operating activities

14,412

13,029(11)(1,382)

Cash flow from investing activities
Purchase of securities
Proceeds from sales of securities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment

352

1,501

(22,442)(19,711)

112

8,847

(1,401)(1,192)

(449)

(242)

0

505

Payments of loans receivable(509)(1,383)

Collection of loans receivable

672

1,323

(4,380)(4,028)Purchase of intangible assets
Purchase of long-term prepaid expenses
Proceeds from sales of long-term prepaid expenses

Payments for lease and guarantee deposits
Proceeds from collection of lease and guarantee deposits
Purchase of insurance funds

203

224

(1,001)(1,023)

Proceeds from cancellation of insurance funds

331

52

Other

260

(165)

(28,263)(16,676)

Cash flow from investing activities

18

Kyoritsu Maintenance (9616), FYE March 2018 Earnings Announcement(Unit: million yen)Previous Term FY3/17(April 1, 2016 to
March 31, 2017)
Cash flow from financing activities
Net increase (decrease) in short-term loans payable

Current Term FY3/18(April 1, 2017 toMarch 31, 2018)(1,400)(2,550)

Proceeds from long-term loans payable

2,600

3,800

Repayments of long-term loans payable(11,371)(8,912)

Proceeds from issuance of bonds

15,756

17,879

Redemption of bonds(1,350)(2,950)

(17)

(14)

Purchase of treasury shares
Cash dividends paid

(1,023)(1,394)

Other

(55)

(53)

Cash flow from financing activities

3,139

5,804

(38)

(38)

Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents(10,750)

2,118

Cash and cash equivalents at beginning of period

25,603

14,853

Cash and cash equivalents at end of period

14,853

16,97219

Kyoritsu Maintenance (9616), FYE March 2018 Earnings Announcement(5) Consolidated Financial Statement Notes(Notes Regarding Going Concern Assumptions)Not applicable(Important Articles in the Assumption Used to Create Consolidated Financial Statements)
1. Scope of Consolidation(1) Consolidated subsidiaries: 9 Companies
Kyoritsu Estate Co., Ltd.
Kyoritsu Trust Co., Ltd.
Kyoritsu Insurance Service Co., Ltd.
Kyoritsu Food Service Co., Ltd.
Japan Placement Center Co., Ltd.
Kyoritsu Financial Service Co., Ltd.
Builnet Co., Ltd.
Central BuilWork Co., Ltd.
Kyoritsu Maintenance Korea Co., Ltd.
(2) Non-Consolidated Subsidiaries: 6 Companies
Flat Co., Ltd.
Okinawa Kyoritsu Maintenance Co., Ltd.
Kyoritsu Assist Co., Ltd.
Ecofoods Co., Ltd.
Ryokan Okunobo
Kyoritsu Maintenance Taiwan Co.,Ltd
Kyoritsu Maintenance (Thailand) Co., Ltd.
KTDL HOSPITALITY CO., LTD.
(Reason for the exclusion from scope of consolidated accounts)
The assets, sales and net income of these non-consolidated companies only amount to a marginal amount of the total
consolidated accounts and are not considered to be important enough to be included in consolidated accounts.
(Segment Information)
1) Overview of Reported Segments
Financial information related to the individual divisions of our business segments is readily available, and ourmanagement considers the validity of these segments on a regular basis during their board of directors’ meetings inassessing segment earnings and the allocation of business resources in accordance with these segments.
Our divisions and subsidiaries responsible for the various services within our Group are also responsible fordeveloping both strategies and business activities for their respective businesses.
Therefore, our segments are defined by the basic services provided by each of the divisions and subsidiaries and are
divided into five main segments including “dormitories,” “hotels,” “contracted services,” “food services,” and“construction.”
We provide an overview of our reported business segments as follows:
Dormitories: Dormitories provided to students and corporate employees, Domeal, management of outsourced
dormitories
Hotels: Dormy Inn business hotels, resort hotels
Contracted Services: Office building and residential property management services
Food Services: Restaurant business, management of outsourced cafeterias, hotel restaurants and other facilities
Construction: Planning, design and construction, real estate brokerage business, condominiums for sale, real estateliquidation, and other related services2) Method of calculation for sales, income and losses, assets and other items of reported segments
Profits in the reported business segments are operating income.
Intersegment earnings and transfers are based on actual market pricing.

20

Kyoritsu Maintenance (9616), FYE March 2018 Earnings Announcement
3) Sales, profits, assets and other information regarding reporting segments
Consolidated Figures for Fiscal Year Ended March 2017 (April 1, 2016 to March 31, 2017)(Unit: million yen)
Adjustments(Note 2)

Values Used in
Consolidated
Financial
Statements(Note 3)

Reporting Segments
Other(Note 1)

Total

Contracted
Services

Food
Services

Construction

Subtotal

60,274

8,219

1,707

9,505

125,111

10,716

135,828－

135,828

239

134

7,733

4,791

13,501

26,400455

26,856(26,856)－

Total
Operatingincome45,64460,40815,953

6,498

23,007

151,512

11,172

162,684(26,856)

135,828

7,243

6,931

518

53

946

15,693(404)

15,289(3,474)

11,815

Assets

46,95889,37012,235

1,356

11,905

161,827

7,385

169,212

4,397

173,609

1,076

2,639

87

64

47

3,915

113

4,029

(83)

3,945

16

－

89

52

－

158

40

198

－

198

2,994

23,69477

43

626,81556

26,872(1,213)25,659Dormitories

HotelsExternal sales

45,404

Intersegment
sales andtransfers

Net sales

Other items
Depreciation
Impairment
loss
Change inproperty, plantand equipment
and intangible
assets(Notes)1. Other is not considered as a reporting business segment and is comprised of the Senior Life business (management of senior 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. Details of adjustments are provided below.
(Unit: million yen)
Operating Income(781)
Intersegment transaction cancellations
Companywide expenses (Note)(2,692)
Total(3,474)(Note) Companywide expenses represent the expenses associated primarily with finance and accounting, and other operations
associated with headquarters.
(Unit: million yen)Segment Assets(11,029)
15,426
4,397
Total(Note) Companywide assets represent cash and equivalents, investment securities, deferred tax assets and other assets associated with
headquarters.
Intersegment transaction cancellations
Companywide assets (Note)

3. Segment profits or losses are derived by adjusting the operating income used in the quarterly consolidated income statement.

21

Kyoritsu Maintenance (9616), FYE March 2018 Earnings Announcement
Consolidated Figures for Fiscal Year Ended March 2018 (April 1, 2017 to March 31, 2018)(Unit: million yen)
Reporting Segments
Other(Note 1)

Total

Adjustme
nts(Note 2)

Values Used in
Consolidated
Financial
Statements(Note 3)

Dormitories

HotelsContracted
Services

Food
Services

Construction

Subtotal

External sales

46,76069,984

7,846

1,437

14,631

140,659

11,361

152,021－152,021

Intersegment
sales andtransfers

292

175

7,031

5,294

7,819

20,613483

21,097(21,097)－

Total
Operatingincome47,05270,16014,877

6,732

22,450161,273

11,845

173,118(21,097)

152,021

7,579

7,155

504

158

1,117

16,515(290)

16,224(3,137)

13,087

Assets

48,415100,158

12,565

1,427

14,797

177,364

8,468

185,832

5,164

190,996

1,104

3,177

67

19

44

4,414

97

4,511

(81)

4,429

14

448

－

11

－

474

3

477

－

477

1,841

18,55060878

021,08059

21,139244

21,384

Sales

Other items
Depreciation
Impairment
loss
Change inproperty, plantand equipment
and intangible
assets(Notes)1. Other is not considered as a reporting business segment and is comprised of the Senior Life business (management of senior 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. Details of adjustments are provided below.
(Unit: million yen)
Operating Income(276)Intersegment transaction cancellations
Companywide expenses (Note)(2,861)
Total(3,137)(Note) Companywide expenses represent the expenses associated primarily with finance and accounting, and other operations
associated with the headquarters.
(Unit: million yen)Segment Assets(9,444)
14,6095,164Intersegment transaction cancellations
Companywide expenses (Note)
Total(Note) Companywide assets represent cash and equivalents, investment securities, deferred tax assets and other assets associated with
headquarters.
3. Segment operating income is derived from adjustments made to the operating income of the consolidated financial statements.

22