Financial Results for the First Quarter of the Year Ending March 31, 2018 (J-GAAP)(Consolidated)
August 9, 2017
Name of listed company: NICHIIGAKKAN CO., LTD.
Listed on:
Tokyo Stock Exchange 1st Section
Securities code:
9792
URL:
http://www.nichiigakkan.co.jp
Representative:(Title) Chairman, President and CEO(Name) Akihiko Terada
Contact:(Title) Executive Vice President(Name) Nobusuke Mori
Scheduled date for filing the quarterly financial report: August 10, 2017
Scheduled date to start dividends distribution: －Supplementary quarterly materials prepared: Yes
Quarterly results information meeting held: Yes(for institutional investors and financial analysts)

TEL: 03-3291-2121(Figures shown are rounded down to the nearest million yen.)
1. Consolidated financial results for the first quarter ended June 30, 2017 (April 1, 2017 – June 30, 2017)(1) Consolidated operating results (cumulative)(Percentage figures represent changes from the same period in the previous year.)
Profit attributable to owners
Net Sales
Operating Income
Ordinary Incomeof parent
Million yen%
Million yen%
Million yen%
Million yen%
Three months ended June 30, 201770,313
2.8
1,519
―
560
―
510
―
Three months ended June 30, 2016
68,4140.8(215)―(1,250)―(1,313)―(Note) Comprehensive income: Three months ended June 30, 2017: 395 million yen(-%);Three months ended June 30, 2016: minus 1,232 million yen(-%)
Net Income
Diluted Net Income
per Shareper Share
Yen
Yen
Three months ended June 30, 2017
7.96
7.95
Three months ended June 30, 2016
（20.46）－(2) Consolidated financial position

As of June 30, 2017
As of March 31, 2017
Reference: Shareholders’ equity:

Total Assets
Net Assets
Equity Ratio
Million yen
Million yen%
191,874
37,726
19.0
191,708
37,92419.1
As of June 30, 2017: 36,369 million yen; As of March 31, 2017: 36,592 million yen

2. Dividends

Year Ended March 31, 2017
Year Ending March 31, 2018

1Q-endYen——

Annual dividends
2Q-end3Q-endYear-end
Yen
Yen
Yen
11.00
—
11.00

Annual
Yen
22.00

—

22.00

Year Ending March 31, 2018 (forecast)
11.00(Note) Revisions to most recently announced dividend forecast: No

11.00

3. Forecast of consolidated financial results for the year ending March 31, 2018 (April 1, 2017 – March 31, 2018)(Percentage figures represent changes from the previous year for full year figures and from the same period in the previous year for second quarter figures.)
Profit attributable to
Net Income
Net Sales
Operating Income
Ordinary Income
owners of parent
per Share
Million yen%
Million yen%
Million yen%
Million yen%
Yen
Second quarter (cumulative)
145,900
5.9
3,000
267.9
1,100
—
200
—
3.12
Full year
300,000
8.4
9,300
121.1
6,000
319.9
3,000
113.8
46.73
(Note) Revisions to most recently announced financial results forecast: No

* Notes(1) Significant changes in subsidiaries during the term (Changes in specified subsidiaries resulting in changes in scope of consolidation): None
(1) New―(Company name) , Excluding―(Company name)(2) Application of specific accounting for preparing the quarterly consolidated financial statements: None
(3) Changes in accounting policies, changes of accounting estimates and restatement
1) Changes in accounting policies due to revisions of accounting standards, etc.: None
2) Changes in accounting policies due to reasons other than those stated in 1): None
3) Changes in accounting estimates: None
4) Restatement: None
(4) Number of shares outstanding (common stock)1) Number of shares issued and outstanding (including treasury stock)
As of June 30, 2017:
73,017,952
As of March 31, 2017:
73,017,952
2) Number of treasury stock
As of June 30, 2017:
8,824,719
As of March 31, 2017:
8,825,656
3) Average number of shares issued and outstanding in each period (quarterly consolidated cumulative period)
As of June 30, 2017:64,193,132
As of June 30, 2016: M a r c h64,192,077*Quarterly financial results are outside the scope of the quarterly review.
*Explanation concerning the appropriate use of financial result forecasts and other special notes
The above forecasts are based on information Nichii Gakkan had when this report was prepared and on certain assumptions judged to be reasonable. Various
factors may cause actual results to differ significantly from forecasts. Regarding the assumptions upon which forecasts are based and precautions in using
results forecasts, please refer to "(3) Information on the future outlook, including consolidated financial results forecasts" in "1. Qualitative information onquarterly financial results" on page 4 of the quarterly consolidated financial results (attached document).

○Table of Contents for the Attached Document
1.

Qualitative information on quarterly financial results……………………………………………………………………………………..

2(1) Details of business results………………………………………………………………………………………………………………..

2(2) Details of financial position……………………………………………………………………………………………………………...

4(3) Information on the future outlook, including consolidated financial results forecasts…………………………………………………..

4

2. Quarterly consolidated financial statements and key notes…………………………………………………………………………………..

5(1) Quarterly consolidated balance sheets…………………………………………………………………………………………………...

5(2) Quarterly consolidated statements of income and comprehensive income……………………………………………………………...

7

Quarterly consolidated statements of income
Three months ended June 30……………………………………………………………………………………………………...

7

Quarterly consolidated statements of comprehensive income
Three months ended June 30……………………………………………………………………………………………………...

8(3) Notes to quarterly consolidated financial statements……………………………………………………………………………………

9

Notes on the premise of a going concern………………………………………………………………………………………………

9

Notes on significant fluctuation in the amount of shareholders' equity……………………………………………………………….

9

1

1. Qualitative information on quarterly financial results(1) Details of business results
In an attempt to achieve the Nichii Group vision, "Contribution toward solving issues in society and steady progress of long-term profits,"
the Company promoted improvement of the strategic implementation stance initiated by the field force, aiming at further reinforcing area
management based on focused management execution stance through executive officer system established in the previous fiscal year.
By achieving the promotion project, "VIPRO (Vision Progress Project) activity," the Company also promoted management participation bybusiness field force, thereby establishing an integral plan formulation and plan implementation stance of the business field, branches and head
office. In an effort to penetrate the vision to each corner of more than 10,000 domestic business fields, through VIPRO activity, the Company
formed a strategic triangle consisting of the three business categories of "Core Business (Medical care related, Nursing care and Child care),""Strategic Business (Education, Health care and Therapy)" and "Globalization Business (Overseas development starting from China
Business)," that is, to promote mid- to long-term business strategies, and concentrated efforts to align vectors to achieve plans.
Looking at business results, sales increased, driven by the Long-term Care Segment, where users of residential-care services grew steadily
mainly in fee-charging elderly people's homes, and the Child Care Segment, where newly-opened facilities increased centering on corporaterun child care centers. Looking at income, operating and ordinary figures moved back into the black as a result of continuing promotion of
profit-focused strategy across the company, led by the Medical related and Nursing Care Segment where proper profit was generated by
improving the efficiency of business field management.
In the first quarter under review, the Group posted net sales of 70,313 million yen (68,414 million yen in the first quarter of the previous
fiscal year), an operating profit of 1,519 million yen (an operating loss of 215 million yen), an ordinary profit of 560 million yen (an ordinary
loss of 1,250 million yen), and a profit attributable to owners of the parent company of 510 million yen (a loss attributable to owners of theparent company of 1,313 million yen).
Results by business segment are as follows:
From the first quarter under review, classification of report segments was changed and Therapy Business and Grooming Business whichwere originally recorded in the Health Care Segment, are now included in the Therapy Segment.
To compare the results in the first quarter under review and the results in the first quarter of the previous fiscal year in the following resultsby business segment, the business segments for the previous fiscal year have been reclassified, as described above.
<Medical Support Segment>
In order to contribute to productivity improvement and revenue expansion in medical institutions, the Company made efforts of strategic
sales which catered to area characteristics as well as of proposing sales of high value added service utilizing many years of support knowhow
for medical business. The Company also attempted proposal reinforcement of versatile services for management support services and medical
exchange services, thereby attempting to enhance customer satisfaction.
While establishing a proper labor environment by aiming to acquire and retain staff members who support medical business management,
productivity improvement was promoted by reviewing personnel placement and necessary duties, all of which resulted in creating a foundation
for generating proper revenue.
As a result, although net sales in this segment were weak and fell slightly, profits were gained as improvement for proper profit standards
was promoted.
Net sales for the segment came to 26,905 million yen for the first quarter under review (compared with 27,008 million yen posted in thesame period of the previous fiscal year). Operating income for the segment was 2,190 million yen (compared with 1,672 million yen in thesame period of the previous fiscal year).
<Long-term Care Segment>
The Company has continued to establish a strong business base which has led to sustainable progress by strengthening service provision
capability through the following efforts; 1) establishment of a business model corresponding to system trends and area needs, 2) optimizationof staff placement, 3) improvement of work environment and benefits and 4) securing human resources by career step-up support (recruit
promotion and retaining human resources). In addition, thanks to new classification addition of long-term care staff treatment improvement
addition in long-term care fee revision by the central government in fiscal 2017, career paths due to experience and qualification acquisition
are now highly evaluated and therefore the Company has made efforts of promoting applications for obtaining such additional fees in all
operation sites.
Though the number of users of home care services was declining due to the shift of preventive care services to comprehensive projects,
system improvement was advanced by reinforcing response to the moderate-severe persons, thereby promoting return to the progress state bycreating new values. For residential-care services, the Company has attempted steady operation which has maintained a high working rate andcommunity-based facility development.
As a result, sales increased as the number of users of residential-care services steadily increased and sales of home care services andresidential-care services both increased thanks to the achievement of productivity improvement due to efficient placement of human resources2

in operation sites.
Regarding Technical Intern Training Program for Foreigners which is scheduled to revise the system (nursing care profession added) inautumn this year, the Company plans to advance preparation toward acceptance of human resources of foreigners including training
development and its preparation for language programs and care skills.
Net sales for the segment came to 37,102 million yen for the first quarter under review (compared with 35,811 million yen in the same
period of the previous fiscal year). Operating income for the segment was 3,602 million yen (compared with 2,073 million yen in the same
period of the previous fiscal year).
<Childcare Segment>
In an effort to contribute to lowering the number of children on waiting lists for schools and to female work promotion, the Company
pushed ahead with the opening of new child care centers nationwide as well as with versatile curriculum development and provision including
English learning by utilizing collaboration with affiliates. From April this year, the Company started nationwide development of "Corporaterun Child Care Centers" with the aim of improving child care centers for Nichii employees and those of partner companies. Currently, openingat 46 sites was completed and the total number of child care centers operated by Nichii Group is 190 sites (an increase of 76 sites compared tothe same period of the previous fiscal year).
As a result, sales increased by 57 percent compared to the same period in the previous fiscal year but profit decreased due to aggressive
investment impact in new opening. The Company plans to continue to make efforts in sales and public relations activities with an aggressive
approach to municipality offices and child care concierges as well as holding of regional exchange events, aiming at work rate improvement inexisting sites and early high work rate operation in new sites.
Net sales for the segment came to 1,815 million yen for the first quarter under review (compared with 1,153 million yen in the same periodof the previous fiscal year). Operating loss for the segment was 571 million yen (Operating loss was 262 million yen in the same period of theprevious fiscal year).
<Health Care Segment>
In response to growing demand of housekeeping support due to greater participation of women in society and the increase in the elderly
population, the Company concentrated its efforts to promote sales of "Nichii Life" that can widely respond to customers' needs including
housekeeping, child care and nursing services, thereby expanded the customer base for usage. Regarding private brand products, paper adultdiapers and bladder control pads, the establishment of sales scheme has been actively promoted through sales activity reinforcement by
maximizing the use of nationwide sales channels and persons in charge of sales promotion which were newly introduced.
As a result, by strengthening sales promotion through effective use of management resources, the number of users for "Nichii Life" and thenumber of sales of private brand products steadily increased, resulting in sales increase and profit increase.
The Company plans to advance acceptance preparation for foreigner human resources and service training preparation which aim atdeveloping the Housekeeping Support Foreigner Acceptance Business, "Sunny Maid Service,"that is scheduled to be launched in National
Strategic Special Zones in the second quarter of this fiscal year.
Net sales for the segment came to 675 million yen for the first quarter under review (compared with 650 million yen in the same period of
the previous fiscal year). Operating income for the segment was 130 million yen (compared with 117 million yen in the same period of theprevious fiscal year).
<Education Segment>
Regarding the COCO Juku brand (for adults and for children), efforts for steady revenue have been made by reinforcing school operation
system, developing effective promotion focused on regional approach, and reinforcing corporate sales. The business environment surrounding
foreign language services is showing a favorable trend by the following reasons; 1) Start of English education becomes earlier because English
learning will be mandatory from 3rd grade of elementary school in 2020, 2) English learning becomes more advanced due to college entrance
exam reform of four English skills evaluation, and 3) The increase of foreign tourist are raising English learning needs.

In an attempt toacquire new students, the Company made the best use of this business environment, reinforced counseling skill and improved quality oflessons and events. Though the number of child school students leveled off compared to the same quarter in the previous year, the number of
new adult students increased steadily, showing sales increase and profit increase (loss decreased). In this fiscal year, the Company will focus on
opening satellite schools in residential areas where it is easy to go to classrooms, further exploring "Easy to go to," "Easy to learn" and"Friendly" to attempt to raise the customer satisfaction rate in child schools.
Though Man-to-man English School GABA showed decreased sales and decreased profit, the number of students was returning to therecovery trend after hitting the bottom at the end of previous year (end of March).
As a result, the overall Educational Segment showed decreased sales and increased profit (loss decreased).
Net sales for the segment came to 3,138 million yen for the first quarter under review (compared with 3,213 million yen in the same periodof the previous fiscal year). Operating loss for the segment was 1,077 million yen (Operating loss was 1,110 million yen in the same period of
the previous fiscal year).

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<Therapy Segment>
Grooming Salons, "A-LOVE" whose concept is pet health were opened in Tokyo in February and June, this year.
Through the promotion of salon development, Nichii Group will activate recognition dissemination and breeding activity for a dog breed,"Australian Labradoodle," for which the Group is currently carrying out breeding activity, as well as activate dispatching activity of therapy
dogs to long-term care service facilities and plan to lead to creating a synergistic effect with other business in Japan and overseas.
This segment has newly been classified as a Segment from the first quarter under review. Business results showed sales increase and profit
decrease as opening preparation of salons proceeded and advance costs accompanied by the opening occurred.
Net sales for the segment came to 57 million yen for the first quarter under review (compared with 56 million yen in the same period of theprevious fiscal year). Operating loss for the segment was 83 million yen (Operating loss was 55 million yen in the same period of the previous
fiscal year).
<China Business Segment>
While the Company positioned the period up to the previous year as the penetration and dissemination activity period of "Japanese typenursing (self-reliance support)," it will operate full-fledged service development in China to attempt pursuit of progress which is a role of a
globalization company from this year. The Group plans to develop business from "a point to a line" and "a line to a plane," by using service
provision framework established by 18 local businesses and 7 educational institutions. By using the development of dementia-response
facilities which are planned to open in Beijing and Shanghai within this year as a core business, the Company will strengthen matchingefficiency enhancement between customer needs and services.
Sales showed an increase due to the increase of number of consolidated subsidiaries and educational institutions. Profit showed a decreaseas advance investment occurred accompanied by dissemination and education activities of nursing as well as management systemreinforcement although investment required for starting up business bases almost completed.
In addition, based on the adoption of "Medical Technology and Service Base Promotion Project" by the Ministry of Economy, Trade andIndustry, the Company decided to develop nursing education and the human resources training dissemination business in order to promote
foundation establishment for nursing dissemination in China from July of this year.
Net sales for the segment came to 552 million yen for the first quarter under review (compared with 482 million yen in the same period of
the previous fiscal year). Operating loss for the segment was 407 million yen (Operating loss was 365 million yen in the same period of theprevious fiscal year).
<Other Businesses>
The Group has attempted to strengthen management capability, to improve profits as well as to reinforce the creation of a synergistic effectwith the operation of the NICHIIGAKKAN head office in each group company in Japan and overseas and has made efforts of enhancing theunified group power.
Net sales for the segment came to 63 million yen for the first quarter under review (compared with 38 million yen in the same period of theprevious fiscal year). Operating income for the segment was 47 million

yen (compared with 96 million yen in the same period of theprevious fiscal year).
(2) Details of financial position
Total assets at the end of the first quarter under review increased by 166 million yen from the end of the previous fiscal year, rising to
191,874 million yen. The main reasons for the increase were a 743 million yen rise in fixed assets, mainly reflecting an increase in lease assets,
and a 576 million yen decrease in current assets primarily due to the decline in cash and deposits.
Liabilities increased by 364 million yen from the end of the previous fiscal year, rising to 154,147 million yen. The key factors contributing
to this results are a 766 million yen decrease in current liabilities primarily due to decrease of provision for bonuses and a 1,130 million yen
increase in non-current liabilities, primarily attributable to an increase in lease obligations.
Net assets decreased by 197 million yen from the end of the previous fiscal year, to 37,726 million yen.
(3) Information on the future outlook, including consolidated financial results forecasts
The forecast of consolidated financial results for the year ending March 31, 2018 that was announced on May 12, 2017 remains unchanged.

4

2. Quarterly consolidated financial statements and key notes(1) Quarterly consolidated balance sheets(Thousand yen)
Fiscal 2017
(As of March 31, 2017)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Short-term investment securities
Merchandise and finished goods
Work in progress
Raw materials and supplies
Deferred tax assets
Other
Less: allowance for doubtful accounts
Total current assets
Fixed assets
Property, plant and equipment
Buildings and structures—net
Lease assets—net
Other—net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investment and other asset
Other
Less: allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets

Q1 of Fiscal 2018
(As of June 30, 2017)16,357,197
32,855,836
200,416
1,076,922
8,570
232,5882,314,021
11,687,703(9,802)

14,616,751
33,245,925
200,194
1,051,422
21,143
301,1192,264,933
12,452,300(7,164)64,723,455

64,146,625

23,088,252
46,903,144
10,614,144

23,209,640
48,280,779
9,389,164

80,605,541

80,879,585

14,225,873
5,447,292

13,638,321
6,099,942

19,673,166

19,738,263

27,085,011(379,098)

27,418,634(308,838)

26,705,912

27,109,795

126,984,620

127,727,643

191,708,076

191,874,269

Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Income taxes payable
Accrued expenses
Provision for bonuses
Provision for directors' bonuses
Other840,286
20,269,380
1,990,593
15,914,778
4,990,083
38,00024,487,658

686,752
20,919,482
651,572
17,212,715
2,794,072
22,10025,477,512

Total current liabilities

68,530,780

67,764,207

Non-current liabilities
Long-term loans payable
Lease obligations
Net defined benefit liability
Asset retirement obligations
Other

17,563,057
52,192,808
7,311,817
2,378,419
5,806,811

16,594,436
53,881,055
7,395,306
2,395,945
6,116,846

Total non-current liabilities

85,252,913

86,383,590

153,783,694

154,147,798

Total liabilities

5

(Thousand yen)
Fiscal 2017
(As of March 31, 2017)
Net assets
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury stock, at cost
Total shareholders' equity

Q1 of Fiscal 2018
(As of June 30, 2017)

11,933,790
17,277,876
20,006,631(11,376,929)

11,933,790
17,287,891
19,810,518(11,375,585)

37,841,369

37,656,615

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency exchange adjustments
Remeasurements of defined benefit plans

20,543(457,572)(811,515)

22,071(548,236)(760,508)

Total accumulated other comprehensive income(1,248,544)(1,286,673)

531,839799,717531,969
824,560

Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets

6

37,924,381

37,726,470

191,708,076

191,874,269

(2) Quarterly consolidated statements of income and comprehensive income(Quarterly consolidated statements of income)(Three months ended June 30)(Thousand yen)
Q1 of Fiscal 2017(from April 1, 2016
to June 30, 2016

Q1 of Fiscal 2018(from April 1, 2017
to June 30, 2017)

Net Sales
Cost of sales

68,414,741
56,036,130

70,313,364
56,795,338

Gross profit

12,378,611

13,518,025

Selling, general and administrative expenses

12,593,834

11,998,932

Operating income (loss)(215,223)

1,519,093

Non-operating income
Interest income
Rent income
Subsidy income
Equity method investment gain
Other

33,582
48,195
124,327
153,011

41,291
61,10337,022
2,192
118,629

Total non-operating income

359,118

260,239

Non-operating expenses
Interest expenses
Rent expenses
Foreign exchange losses
Equity method investment loss
Other

973,192
9,186
349,4982,989
59,843

1,143,213
9,059
66,982

Total non-operating expenses
Ordinary income (loss)
Extraordinary income
Gain on reversal of subscription rights to shares
Total extraordinary income
Extraordinary losses
Loss on retirement of property, plant and equipment, net
Loss on cancellation of leases
Total extraordinary losses
Net income (loss) before income taxes
Income taxes—current
Income taxes—deferred

1,394,710

1,219,255(1,250,815)

560,077

8,158

5,310

8,158

5,310

1,089
206

477
531

1,295

1,008

(1,243,951)

564,379

251,769(158,404)

221,620(103,525)

Total income taxes

93,364

118,095

Net income (loss)(1,337,316)

446,284(23,975)(64,626)(1,313,341)

510,910

Profit (loss) attributable to non-controlling interests
Profit (loss) attributable to owners of the parent company

7

(Quarterly consolidated statements of comprehensive income)(Three months ended June 30)(Thousand yen)
Q1 of Fiscal 2017(from April 1, 2016
to June 30, 2016
Net income (loss)
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency exchange adjustments
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners of the parent
company
Comprehensive income attributable to non-controllinginterests

8

Q1 of Fiscal 2018(from April 1, 2017
to June 30, 2017)(1,337,316)

446,284(3,025)54,15253,828

1,521(102,957)
51,006104,955(50,428)(1,232,361)

395,855(1,188,070)

472,781(44,290)(76,926)

(3) Notes to quarterly consolidated financial statements(Notes on the premise of a going concern)
There are no applicable matters.
Notes on significant fluctuation in the amount of shareholders' equity
There are no applicable matters.

9