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

First Quarter of the Fiscal Year Ending March 2019
Consolidated Earnings Results Update
August 20181

First Quarter of the Fiscal Year Ending March 2019 Consolidated Earnings Announcement
August 9, 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
Quarterly Earnings Announcement Report Filing Date (Anticipated): August 10, 2018
Dividend Payment Date (Anticipated): ―Quarterly Earnings Presentation Document (Anticipated): Yes
Quarterly Earnings Presentation Meeting (Anticipated): None
(All figures of less than one million yen are rounded down to the nearest digit)
1. First Quarter of the Fiscal Year Ending March 2019 Consolidated Earnings (April 1, 2018 to June 30, 2018)(1) Consolidated Earnings (Aggregated)(% figures show year-on-year change)
Net Sales

Operating Income

Profit Attributable to Ownersof Parent

Ordinary Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen

36,880

7.5

2,549

1.7

2,419

(2.9)

1,572

2.7

1Q FY3/18
34,314
5.8
2,507
1.4
2,491
9.5
1,531
(Note) Comprehensive income: ¥1,591 million (2.3% YoY) in 1Q FY3/19; ¥1,555 million (103.1% YoY) in 1Q FY3/18

27.1

1Q FY3/19

EPS%

Fully Diluted EPS
Yen

Yen

1Q FY3/19

40.34

37.17

1Q FY3/18

39.49

36.19

(2) Consolidated Financial Position
Total Assets

Net Assets

Equity Ratio

Book Value Per Share

Millions of yen

Millions of yen%

Yen

193,439

72,55637.5

1,861.17

FY3/18
190,929
71,839(Reference) Capital: ¥72,556 million in 1Q FY3/19; ¥71,839 million in FY3/18

37.6

1,842.79

1Q FY3/19

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

FY3/18―

FY3/19―FY3/19 (Projected)(Note) Recent changes in dividend projections: None

3Q-End
Yen
18.00
20.00

4Q-End
Yen

Total

―

Yen
22.00

Yen
40.00

―

23.00

43.00

3. The 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 and quarter)
Net SalesFirst Half

Operating Income

Ordinary Income

Profit Attributable to
Owners of Parent

EPS

Millions of yen% (YoY)

Millions of yen% (YoY)

Millions of yen% (YoY)

Millions ofyen

78,500

10.7

7,500

3.9

7,200

2.0

4,800

3.6

123.1314,0007.0

13,600

5.2

9,300

5.9

238.56

Full Year
164,600
8.3(Note) Recent changes in earnings estimates: None2

% (YoY)

Yen

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: Applicable(Note) Please refer to “2. Quarterly Consolidated Financial Statements and Important Notes, (3) Quarterly consolidated financial
statement notes (Application of special accounting procedures in the preparation of our quarterly consolidated financial
statements)” on page 11 for more 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:
None
2. Other changes:
None
3. Changes in accounting estimates:
None
4. Redisplay of revisions:
None

(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 three months)

1Q FY3/19
1Q FY3/19
1Q FY3/19

39,210,435
226,161
38,983,766

FY3/18
FY3/18
1QFY3/18

39,209,238
225,193
38,772,463* Quarterly financial reports are not subject to review by certified public accountants or auditing firms* Notes and explanations regarding the appropriate use of our earnings projections:
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. Moreover, for information regarding earnings estimates
and the assumptions upon which they are based, and the usages of these earnings estimates, please refer to the section, “1. Qualitative
Information about Quarterly Earnings, (3) Explanation of future forecasts including consolidated earnings estimates” on page 6.
(Method for obtaining supplementary explanatory information on financial results)
The Company will post supplementary explanatory information on financial results on its website.

3

Kyoritsu Maintenance (9616), 1Q FYE March 2019 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. Quarterly Consolidated Financial Statements and Important Notes

7(1) Quarterly consolidated balance sheet

7(2) Quarterly consolidated income statement and comprehensive income statement

9

Quarterly consolidated income statement

9

Consolidated first quarter

9

Quarterly consolidated comprehensive income statements
Consolidated first quarter1010(3) Quarterly consolidated financial statement notes

10(Notes regarding going concern assumptions)11(Significant changes in shareholders’ equity notes)

11(Application of special accounting procedures in the preparation of11

our quarterly consolidated financial statements)

11(Additional information)(Segment information)

11
12

4

Kyoritsu Maintenance (9616), 1Q FYE March 2019 Earnings Announcement
1. Qualitative Information about Quarterly Earnings(1) Explanation of business performance
The environment in which the Group operated during the first quarter of the consolidated fiscal year under review wasrepresented by increases in the ratio of students going on to higher-level schools and growth in inbound traffic on the one
hand, and by labor shortages and the impact of the Residential Accommodation Business Act (the “Minpaku Act”) on theother hand. Under these conditions, the Group worked steadily to implement the two core components of the medium-term
management plan, namely improving customer satisfaction, and pursuing advanced developments.
As a result, operating results in the first quarter were characterized by growth in net sales of 7.5% year on year, to¥36,880 million. This was driven by our success in maintaining the high occupancy ratio that was obtained at the beginningof the fiscal year in the mainstay dormitory business, which, in addition to favorable reactions by customers to the hotelbusiness, resulted in year-on-year increases in RevPAR (the occupancy ratio multiplied by average daily rate) for both the
Dormy Inn (business hotel) and resort hotel operations. With regard to profit, we were able to absorb expenses related topreparations for development etc. of ¥520 million, as well as costs of ¥219 million associated with a major program ofrenewals to improve customer satisfaction, leading to operating income of ¥2,549 million (up 1.7% year on year), ordinary
income of ¥2,419 million (down 2.9% year on year), and profit attributable to owners of parent of ¥1,572 million (up 2.7%
year on year). In addition, the decline in ordinary income was caused by the ¥143 million in gains on investments inpartnership that was recorded in the previous fiscal year.
We provide details of our earnings by business segment as follows.
Dormitory businessIn the dormitory business, initial occupancy rates were 97.7% (down 0.6 percentage points from the previous fiscal year),but this was caused by the temporary occurrence of empty rooms resulting from the completion of a new dormitory for the
exclusive use of schools. In the first quarter, the number of contracts in the student dormitory business rose year on year ina return to the previous trend, in addition to which the corporate dormitory business also saw an increase in the number ofcontracts as a result of such factors as companies introducing dormitory systems. In terms of costs, the Company recorded¥133 million in expenses related to preparations for development, etc. as a result of opening new facilities as well as costsof ¥80 million in relation to a major program of renewals for existing facilities.
As a result, net sales reached ¥12,455 million (up 4.1% year on year) and operating income came to ¥1,993 million (down
0.4% year on year).
Hotel businessIn the Dormy Inn business, the “Natural Springs Nanbu no Yu Dormy Inn Honhachinohe” was opened. Also, as a resultof a significant increase in inbound customers as well as solid growth in domestic customers, occupancy rates and average
daily rates at existing facilities were both strong, and exceeded previous-year levels.
In the resort hotel business, we continued to promote the creation of resorts that will be loved by customers and become afamiliar part of their lives, under the aegis of the new brand logo unveiled during the period under review. At existing
facilities also, occupancy rates exceeded previous-year levels, but through such measures as the flexible assignment of
personnel in response to occupancy conditions, we succeeded in keeping tight control of costs.
The outcome was that the Company was able to absorb not only the ¥386 million in expenses related to preparations fordevelopment, etc. including the portion arising from new facilities scheduled to be opened in future, but also the ¥138
million related to the major program of renewal implemented for existing facilities. In addition, certain facilities wereaffected by natural disasters, such as the North Osaka earthquake, but net sales rose by 14.5% year on year to ¥17,704
million, while operating income rose 4.4% year on year to ¥1,341 million.
Contracted services businessIn the contracted services business, net sales rose due to an increase in construction projects, but profit fell due to the
expiry of certain contracts in the building management division. As a result, sales increased 17.3% to ¥3,516 million andoperating income fell by 85.3% year on year to ¥6 million.
Food service businessIn the food services business, both sales and profit rose due to growth in the number of contracted hotel restaurants
managed. Consequently, sales increased by 3.9% to ¥1,614 million and operating income was ¥8 million in comparison with
an operating loss of ¥6 million in the same quarter of the previous fiscal year.
Construction businessIn the construction business, net sales fell as a result of the decline in construction projects, but due to an increase in5

Kyoritsu Maintenance (9616), 1Q FYE March 2019 Earnings Announcement
high-margin design projects, profit increased. Consequently, sales fell by 34.5% to ¥3,476 million and operating income
rose 51.7 % year on year to ¥120 million.
Other business
Our other business segments are the Senior Life business (management of senior citizen housing), the PKP business(consigned services business provided to regional government bodies), single life support business and insurance agency
business, comprehensive human resource services business, and financing and administrative outsourcing services. The otherbusiness segments posted total net sales of ¥3,109 million, an increase of 4.1% year on year, and incurred an operating lossof ¥68 million, in comparison with an operating loss of ¥135 million in the same period of the previous fiscal year.
(2) Explanation of financial position(Assets)
Total consolidated assets increased by ¥2,509 million from the end of the previous fiscal year to ¥193,439 million at the end of
the first quarter. The main factors behind this increase were increases in land and construction in progress, etc.
(Liabilities)
Total consolidated liabilities increased by ¥1,792 million from the end of the previous fiscal year to ¥120,882 million at theend of the first quarter, due primarily to an increase in short-term loans payable.
(Net assets)
Net assets grew by ¥717 million from the end of the previous fiscal year to ¥72,556 million at the end of the first quarter, due
mainly to a rise in retained earnings.
Consequently, equity ratio fell by 0.1 p.p. from the end of the previous fiscal year to 37.5% at the end of the first quarter.
(3) Explanation of future forecasts including consolidated earnings estimates
Our consolidated earnings estimates for the first six months and the full fiscal year ending March 31, 2019, as provided in the“Fiscal Year Ending March 2019 Consolidated Earnings Announcement” dated May 15, 2018, remain unchanged at this point
in time.

6

Kyoritsu Maintenance (9616), 1Q FYE March 2019 Earnings Announcement
2. Quarterly Consolidated Financial Statements and Important Notes(1) Quarterly consolidated balance sheet
FY3/18(March 31, 2018)
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
Other
Allowance for loan losses
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
Deferred assets
Total assets

7(Unit: Millions of yen)
1Q FY3/19(June 30, 2018)17,298
10,603
217
2,652
360
7,247
(26)
38,353

13,96011,437
217
2,670
710
7,422
(30)
36,38842,69440,846
16,335
3,087
102,964
4,012

43,01842,03818,0393,239
106,336
4,035

5,093
16,054
13,516
10,575(203)
45,036
152,013562
190,929

5,153
16,20913,863
11,114(204)
46,135
156,507543
193,439

Kyoritsu Maintenance (9616), 1Q FYE March 2019 Earnings Announcement(Unit: Millions of yen)
1Q FY3/19(June 30, 2018)

FY3/18(March 31, 2018)
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
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

8

7,998
12,915
4,638
2,597
11,191
2,071
388
9
3
10,47252,287

7,715
18,013
4,636
933
10,252339
23
9
313,193
55,11932,23020,00031,50519,999

8,662
269
5
1,089
4,544
66,802
119,090

8,227
270
6
1,128
4,625
65,763
120,882

7,949
12,80551,270(336)
71,6907,951
12,80751,971(341)
72,388

515
(378)
12
149
71,839190,929

561
(404)
11
167
72,556
193,439

Kyoritsu Maintenance (9616), 1Q FYE March 2019 Earnings Announcement(2) Quarterly consolidated income statement and comprehensive income statement(Quarterly consolidated income statement)(Consolidated first quarter)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Gain on investments in partnership
Other
Total non-operating income
Non-operating expense
Interest payment
Sales discounts
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Surrender value of insurance
Total extraordinary income
Extraordinary losses
Dismantlement costs
Loss on sales of property, plant and equipment
Total extraordinary losses
Income before income taxes
Income taxes
ProfitProfit attributable to owners of parent

9

1Q FY3/18(April 1, 2017 toJune 30, 2017)34,314
26,660
7,654
5,147
2,507

(Unit: Millions of yen)
1Q FY3/19(April 1, 2018 toJune 30, 2018)36,88028,709
8,171
5,622
2,549

14
26
143
32
218

17
43
－
24
84

133
48
52
233
2,491

110
46
58
214
2,419

25
25

－
－

115
－
115
2,402
871
1,531
1,531

－
3
3
2,415
843
1,572
1,572

Kyoritsu Maintenance (9616), 1Q FYE March 2019 Earnings Announcement(Quarterly consolidated comprehensive income statements)(Consolidated first 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

10

1Q FY3/18(April 1, 2017 toJune 30, 2017)
1,531(Unit: Millions of yen)
1Q FY3/19(April 1, 2018 toJune 30, 2018)
1,572

112
(86)
(1)
24
1,555

45
(26)
(0)
18
1,591

1,555

1,591

Kyoritsu Maintenance (9616), 1Q FYE March 2019 Earnings Announcement(3) Quarterly consolidated financial statement notes(Notes regarding going concern assumptions)Not applicable(Significant changes in shareholders’ equity notes)
Not applicable(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, 2018, including this three months ended June 30, 2017, after accounting for the tax
effects, and multiplies income before income taxes during the three months ended June 30, 2017 by this estimated effective
tax rate. However, in the event that the estimate for the effective tax rate appears to lack logical rationale, then the legally
determined effective tax rate is employed.
(Additional information)(Application of “Partial Amendments to Accounting Standard for Tax Effect Accounting” etc.)
The Company has applied “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement
No. 28, February 16, 2018) from the beginning of the first quarter of the current fiscal year. Deferred tax assets arepresented in investments and other assets section, and deferred tax liabilities are presented in the non-current liability
section of the balance sheet respectively.

11

Kyoritsu Maintenance (9616), 1Q FYE March 2019 Earnings Announcement(Segment information)
Segment information
I. First quarter of the fiscal year ending March 2018 (From April 1 to June 30, 2017)
1. Information pertaining to segment sales, profits and losses(Unit: Millions of yen)
Reporting segments
Dormitories

HotelsContracted
Services

Food
Services

Construction

Subtotal

Other(Note 1)

Total

Adjustments(Note 2)

Consolidated(Note 3)

Sales
11,88815,419

1,674

447

2,022

31,452

2,862

34,314－34,314

71

44

1,324

1,105

3,282

5,828

125

5,954

(5,954)－

Total

11,96015,464

2,998

1,553

5,304

37,281

2,987

40,269(5,954)34,314

Segment profit/loss

2,002

1,284

42

(6)

79

3,401

(135)

3,266

(758)

2,507

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 (management of seniorcitizen housing), PKP business (consigned services business provided to regional government bodies), single life support
services, insurance agency business, comprehensive human resources, financing, administrative outsourcing services andother related services.
2. Adjustment for segment profit and loss of ¥758 million includes ¥31 million for inter-segment transaction eliminations,and ¥727 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
statement.

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

12

Kyoritsu Maintenance (9616), 1Q FYE March 2019 Earnings Announcement
II. First quarter of the fiscal year ended March 2019 (From April 1 to June 30, 2018)
1. Information pertaining to segment sales, profits and losses(Unit: Millions of yen)
Reporting segments
Other(Note 1)

Total

Adjustments(Note 2)

Consolidated(Note 3)

Dormitories

HotelsContracted
Services

External sales

12,371

17,664

1,729

323

1,818

33,9072,973

36,880－36,880Inter-segment
sales andtransfers

84

40

1,787

1,290

1,658

4,860

135

4,996

(4,996)－

Total

12,45517,704

3,516

1,614

3,476

38,7683,109

41,877(4,996)36,880

Segment
profit/loss

1,993

1,341

6

8

120

3,470

(68)

3,402

(852)

2,549

Food
Services

Construction

Subtotal

Sales(Notes) 1. Other is not considered as a reporting business segment and is comprised of the Senior Life (management of seniorcitizen housing), PKP business (consigned services business provided to regional government bodies), single life support
services, insurance agency business, comprehensive human resources, financing, administrative outsourcing services andother related services.
2. Adjustment for segment profit and loss of ¥852 million includes ¥71 million for inter-segment transaction eliminations,and ¥781 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