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

First Quarter of Fiscal Year Ending March 2017
Consolidated Earnings Results Update
August 20161

First quarter of Fiscal Year Ending March 2017 Consolidated Earnings Announcement
August 9, 2016

Company Name: Kyoritsu Maintenance Co., Ltd.
Tokyo Stock Exchange
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): August 10, 2016
Dividend Payment Date (Anticipated): ―Quarterly Earnings Presentation Document (Anticipated): None
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 Fiscal Year Ending March 2017 Consolidated Earnings (April 1, 2016 to June 30, 2016)(1) Consolidated Earnings (Aggregated)(% figures show year-on-year change)
Net Sales

1Q FY3/17

Operating Income

Profit Attributable to Ownersof Parent

Ordinary Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

32,442

12.9

2,472

33.3

2,275

39.5

1,204

27.5

944

71.1

28,744
12.7
1,854
68.2
1,630
78.4
1Q FY3/16(Note) Comprehensive income: ¥766 million (-23.5% YoY) in 1Q FY3/17; ¥1,001 million (59.0% YoY) in 1Q FY3/16
EPS

Fully Diluted EPS
Yen

Yen

1Q FY3/17

62.26

56.93

1Q FY3/16

52.10

48.41

(2) Consolidated Financial Position
Total Assets

Net Assets

Equity Ratio

Book Value Per Share

Millions of yen

Millions of yen%

Yen

154,881

58,22937.6

3,009.73

FY3/16
161,40257,974(Note) Capital: ¥58,229 million in 1Q FY3/17; ¥57,974 million in FY3/16

35.9

2,997.10

1Q FY3/17

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

FY3/16―

FY3/17―

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

3Q-End4Q-End
Yen

Total

Yen
25.00

―

Yen
27.00

Yen
52.00

26.00

―

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 and quarter)
Net Sales

Operating Income

Ordinary Income

Profit Attributable to
Owners of Parent

EPS

Millions of yen% (YoY)

Millions of yen% (YoY)

Millions of yen% (YoY)

Millions of yen% (YoY)Yen

69,800

4.4

7,100

15.4

6,700

16.2

4,200

10.5

217.13Full Year138,000
2.2
11,500(Note) Recent changes in earnings estimates: None

12.3

11,000

12.5

6,900

15.6

356.71First Half

2

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. Summary Information (Notes), (2) Application of special accounting procedures in the preparation of ourquarterly consolidated financial statements” on page 7 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:
Applicable
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 more details.

(4) Shares Issued (Common Stocks)
1. Shares issued as of term-end (including treasury shares)

1Q FY3/17
1Q FY3/17
1Q FY3/17

2. Treasury stock as of term-end
3. Average during the term (first three months)

19,456,046
109,115
19,345,336

FY3/16
FY3/16
1QFY3/16

19,452,173
108,573
18,127,057* 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:
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.

3

Kyoritsu Maintenance (9616), 1Q 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 first quarter

10

Quarterly consolidated comprehensive income statements
Consolidated first quarter11(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), 1Q FYE March 2017 Earnings Announcement
1. Qualitative Information about Quarterly Earnings(1) Explanation of business performance
During the first quarter of the consolidated fiscal year ending March 31, 2017, the Japanese economy continued toexperience a modest recovery trend, with improvements in employment environment and the income , but growth inpersonal consumption remained slow and the outlook remained uncertain in many respects, as indicated by a slowdown in
the overseas economy and fluctuations in exchange markets.
Against this backdrop, our dormitory business got off to a solid start with occupancy rates rising by 0.1 percentage point
year on year to 98.3% at the start of the fiscal year. In the hotel business segment, both the Dormy Inn business hotelbusiness and the resort hotel business benefited from strong demand from domestic travelers as well as ongoingyear-on-year growth in inbound demand. As a result, occupancy rates and Average Daily Rate were high.
As a result, during the first quarter of the current fiscal year, both revenues and earnings increased significantly, with sales
up 12.9% year on year to ¥32,442 million, operating income up 33.3% to ¥2,472 million, ordinary income up 39.5% to¥2,275 million, and profit attributable to owners of parent up 27.5% to ¥1,204 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 1,223 year on year to34,568 residents as of the end of June. In addition, student dormitories trended favorably during the first quarter of thecurrent fiscal year, while corporate dormitories achieved substantial gains in the number of contracts due to factors that
included a greater number of new company employees and more companies now opting to offer employee dormitories. The
impact of the Kumamoto Earthquake in April was minimal.
Consequently, sales rose by 2.9% year on year to ¥11,546 million, while operating income increased 31.9% to ¥1,963
million due to ongoing implementation of stringent cost controls on a facility-by-facility basis. Business commencement
expenses were concentrated in the first quarter of the previous fiscal year, which was a major factor behind the sharp
increase in operating income year on year, but operating income was up significantly even when excluding this impact.
Hotel businessIn the Dormy Inn business, the “Natural Springs Rokka no Yu Dormy Inn Kumamoto” closed temporarily as a result of the
Kumamoto Earthquake in April, while the “Natural Springs Tento no Yu Dormy Inn Abashiri” opened in June and got off
to a good start. Occupancy rates and Average Daily Rate exceeded levels in the previous year at existing hotels due to solid
demand from repeat customers in Japan and the ongoing increase in inbound demand.
In the resort hotel business, the occupancy rate was high, exceeding overall levels in the previous year, thanks in part to therecovery in the occupancy rate at hotels in the Hakone region to levels on par with typical years. In addition, costmanagement was thorough due to flexible personnel assignments tailored to occupancy conditions.
As a result, sales rose 14.1% year over year to ¥13,379 million and operating income climbed 26.7% to ¥1,184 million.
Contracted services businessIn the contracted services business, we generated increases in both revenue and earnings due to more business taken on by
the building management sector. As a result, sales increased 22.3% year on year to ¥3,309 million and operating income
increased by 162.9% year on year to ¥55 million.
Food service business
The food service business recorded higher sales due to an increase in the number of contracted hotel restaurants.
Consequently, sales increased by 17.5% to ¥1,529 million and operating loss was ¥16 million in comparison with anoperating loss of ¥21 million in the same quarter of the previous fiscal year.
Construction business
The construction business generated increases in revenue and earnings as a result of bringing in greater numbers of orders
for hotel development. Consequently, sales and operating income rose by 71.0% and 302.4% year on year to ¥5,042 millionand ¥233 million, respectively.

5

Kyoritsu Maintenance (9616), 1Q FYE March 2017 Earnings Announcement
Other business
Our other business segments are the Senior Life (former Wellness Life) business (management of senior citizen housing), thePublic 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 ¥2,808 million, a decrease of 2.1%
year on year, and incurred an operating loss of ¥87 million, in comparison with an operating loss of ¥23 million in the same
period of the previous fiscal year.
(2) Explanation of financial position(Assets)
Total consolidated assets declined by ¥6,520 million from the end of the previous fiscal year to ¥154,881 million at the end of
the first quarter. The main factor behind this decrease was a decrease in cash and deposits, etc.
(Liabilities)
Total consolidated liabilities declined by ¥6,775 million from the end of the previous fiscal year to ¥96,652 million at the endof the first quarter, due primarily to declines in short-term loans payable and long-term loans payable.
(Net assets)
Net assets grew by ¥254 million from the end of the previous fiscal year to ¥58,229 million at the end of the first quarter, due
mainly to a rise in retained earnings.
Consequently, equity ratio rose by 1.7p.p. from the end of the previous fiscal year to 37.6% 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, 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), 1Q FYE March 2017 Earnings Announcement
2. Summary Information (Notes)(1) Changes in important consolidated subsidiaries during the quarter
Not applicable(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 this three months ended June 30, 2016, after accounting for the tax
effects, and multiplies income before income taxes during the three months ended June 30, 2016 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.
(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 firstquarter is insignificant.
(4) Additional information(Application of Implementation Guidance on Recoverability of Deferred Tax Assets)
The Company has 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), 1Q FYE March 2017 Earnings Announcement
3. Quarterly Consolidated Financial Statements(1) Quarterly consolidated balance sheet
FY3/16(March 31, 2016)
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

8(Unit: Millions of yen)
1Q FY3/17(June 30, 2016)

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

16,008
8,433
1,907
46
706
7,386
(28)
34,46036,33733,807
6,906
2,190
79,2401,710

36,50833,683
10,153
2,274
82,619
1,697

5,034
12,19910,103
7,978(212)
35,103116,054
116
161,402

4,917
12,68010,4558,150(210)
35,993
120,310
110
154,881Kyoritsu Maintenance (9616), 1Q FYE March 2017 Earnings Announcement(Unit: Millions of yen)
1Q FY3/17(June 30, 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
Advances received
Provision for bonuses
Provision for directors’ bonuses
Provision for warranties for completed construction
Provision for point card certificates
Provision for loss on disaster
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
11,079
1,700
426
8
18
–
7,861
53,648

6,571
19,741
1,350
868
9,771
467
117
8
17
236
10,081
49,231

5,600

5,275

20,60820,593

17,940
287
25
1,072
4,244
49,779103,428

15,859
288
30
1,083
4,292
47,421
96,652

7,654
12,50937,778(305)
57,637

7,662
12,51738,460(309)
58,330

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

674
(772)
(2)
(101)
58,229154,881Kyoritsu Maintenance (9616), 1Q FYE March 2017 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
Other
Total non-operating income
Non-operating expense
Interest payment
Other
Total non-operating expenses
Ordinary income
Extraordinary losses
Impairment loss
Provision for loss on disaster
Other
Total extraordinary losses
Income before income taxes
Income taxes
ProfitProfit attributable to owners of parent

10

1Q FY3/16(April 1, 2015 toJune 30, 2015)
28,74422,789
5,955
4,100
1,854

(Unit: Millions of yen)
1Q FY3/17(April 1, 2016 toJune 30, 2016)
32,442
25,520
6,922
4,449
2,472

58
21
39
119

18
23
46
87

200
142
342
1,630

163
121
285
2,275

–
–
–
–
1,630
686
944
944

89
236
27
353
1,921
717
1,204
1,204

Kyoritsu Maintenance (9616), 1Q FYE March 2017 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

11

1Q FY3/16(April 1, 2015 toJune 30, 2015)
944(Unit: Millions of yen)
1Q FY3/17(April 1, 2016 toJune 30, 2016)
1,204

79
(16)
(5)
56
1,001

(62)
(378)
3
(438)
766

1,001

766

Kyoritsu Maintenance (9616), 1Q FYE March 2017 Earnings Announcement(3) Quarterly consolidated financial statement notes(Notes regarding going concern assumptions)Not applicable(Significant changes in shareholders’ equity notes)
Not applicable(Segment information)
Segment information
I. First quarter of fiscal year ended March 2016 (From April 1 to June 30, 2015)
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

11,166

11,706

1,594

415

1,111

25,9932,750

28,744–28,744

55

17

1,112

886

1,837

3,909

117

4,026

(4,026)–

Total

11,221

11,724

2,706

1,301

2,948

29,902

2,867

32,770(4,026)28,744

Segment profit/loss

1,489

934

21

(21)

58

2,481

(23)

2,457

(603)

1,854

Food
Services

Construction

Subtotal

Sales
External sales
Inter-segment sales
and transfers(Notes) 1. Other is not considered as a reporting business segment and is comprised of the wellness 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 and advertising agency services.
2. Adjustment for segment profit and loss of ¥603 million includes ¥23 million for inter-segment transaction eliminations,and ¥580 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), 1Q FYE March 2017 Earnings Announcement
II. First quarter of fiscal year ended March 2017 (From April 1 to June 30, 2016)
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

11,48813,346

1,755

453

2,709

29,7552,687

32,442–32,442

Inter-segment
sales andtransfers

57

32

1,553

1,075

2,333

5,051

120

5,172

(5,172)–

Total

11,546

13,379

3,309

1,529

5,042

34,806

2,808

37,615(5,172)32,442

Segment
profit/loss

1,963

1,184

55

(16)

233

3,420

(87)

3,332

(860)

2,472

Food
Services

Construction

Subtotal

Sales(Notes) 1. Other is not considered as a reporting business segment and is comprised of the Senior Life (former Wellness Life)(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 andother related services.
2. Adjustment for segment profit and loss of ¥860 million includes ¥216 million for inter-segment transaction eliminations,and ¥643 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 segments
In the building management segment, the Company lowered the book value amount to the recoverable amount for rental
properties whose recoverable amount decreased significantly as a result of changes in the range of use. This decrease
was recorded as an impairment loss under extraordinary losses.
An impairment loss of ¥89 million was posted in the first quarter of this fiscal year.

13