Financial Results for the Second Quarter of the Year Ending March 31, 2018 (J-GAAP) (Consolidated)
November 8, 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: November 10, 2017
Scheduled date to start dividends distribution: December 6, 2017
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 Second quarter ended September 30, 2017 (April 1, 2017 – September 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%
Six months ended September 30, 2017
141,426
2.7
3,753
360.4
1,815
―
918
―
Six months ended September 30, 2016
137,7510.9
815―(1,110)―(1,240)―(Note)Comprehensive income: Six months ended September 30, 2017: 799million yen (-%);Six months ended September 30, 2016: minus 1,547 million yen(-%)

Net Income
per Share
Six months ended September 30, 2017
Six months ended September 30, 2016

Diluted Net Income
per Share
Yen
Yen
14.32
14.29
（19.32）－(2) Consolidated financial position

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

Total Assets
Net Assets
Equity Ratio
Million yen
Million yen%
191,125
37,926
19.2
191,708
37,92419.1
As of September 30, 2017: 36,613 million yen ; As of March 31, 2016: 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
11.00

Annual
Yen
22.00

—

22.00

Year Ending March 31, 2018 (forecast)(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
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 September 30, 2017:
73,017,952
As of March 31, 2017:
73,017,952
2) Number of treasury stock
As of September 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 September 30, 2017:64,193,132
As of September 30, 2016: M a r c h64,192,337*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 5 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……………………………………………………………………………………………………………

5(3) Information on the future outlook, including consolidated financial results forecasts………………………………………………..

5

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

6(1) Quarterly consolidated balance sheets………………………………………………………………………………………………..

6(2) Quarterly consolidated statements of income and comprehensive income…………………………………………………………..

8

Quarterly consolidated statements of income
Consolidated cumulative second quarter……………………………………………………………………………………..

8

Quarterly consolidated statements of comprehensive income
Consolidated cumulative second quarter……………………………………………………………………………………..

9(3) Notes on quarterly consolidated financial statements………………………………………………………………………..............

9Notes 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[Consolidated management performance]

Consolidated management performance

Net Sales

Previous consolidated cumulative
second quarter(from April 1, 2016
to September 30, 2016)(in million yen)

Current consolidated cumulative
second quarter(from April 1, 2017
to September 30, 2017)(in million yen)

Year-over-year
inc/dec rate (%)

137,751

141,426

2.7

Medical Support Segment

54,06553,738(0.6)

Long-term Care Segment

72,24874,591

3.2

Childcare Segment

2,557

3,922

53.4

Health Care Segment

1,409

1,464

3.9

Education Segment

6,347

6,383

0.6

Therapy Segment

94

108

14.9

China Business Segment

949

1,136

19.8

Other Segments

78

80

2.4

Operating Income

815

3,753

360.4

Medical Support Segment

3,641

4,499

23.5

Long-term Care Segment

5,007

7,378

47.3

Childcare Segment

(497)

(728)

-

Health Care Segment

276

166

(40.0)

Education Segment(2,405)(2,125)-

Therapy Segment

(130)

(202)

-

China Business Segment

(722)

(753)

-

Other Segments

139

96

(31.0)(4,494)(4,576)-

Ordinary Income(1,110)1,815-

Profit attributable to owners of parent(1,240)918-

Elimination or corporate expenses(General Summary)In this consolidated cumulative second quarter, the company focused on the establishment of firm strategy implementation preparedness torealize the stable growth of long run profits through strengthening management execution preparedness by upgrading and expanding theexecutive officer system; promotion of management participation for business field sites through the vision realization promotion project, also
known as "VIPRO (Vision Progress Project) activity;" and by striving to strengthen the area management capability (business promotion
capability and execution capability) of the offices, branches and business field sites through the step-by-step implementation of these twoorganization reforms.
Business results are as follows.
Sales were 141,426 million yen (137,751 million yen in the same period last year).
Operating profit was 3,753 million yen (815 million yen in the same period last year).
The increase in net sales was led by the Nursing Care Business, which maintained a high utilization rate supported by the steadily grown user
numbers of residence type care services, and by the Childcare Business that contributed to the community child care support expanding its new
facilities focusing on the "corporate-run childcare centers" which the national government advances as a countermeasure against children on- 2 -nursery school waiting lists.
The increase in operating profit was led by the Medical Support Business and Nursing Care Business which continued the contract
optimization and business operation streamlining promotion based on the appropriate profit emphasizing strategy.
(Overviews by business segment)
Overviews by business segment are as follows.
We changed the reporting segment classification from the consolidated first quarter, and Therapy Business and Grooming Business, whichwere previously grouped in the Health Care Segment, are now separately segmented in the Therapy Segment.
To compare the results in the first quarter under review with the results in the first quarter of the previous fiscal year in the following results bybusiness segment, the business segments for the previous fiscal year have been reclassified, as described above.
<Medical Support Segment>
Sales were 53,738 million yen (54,065 million yen in the same period last year).
Operating profit was 4,499 million yen (3,641 million yen in the same period last year).
Aiming at improving partnerships with contracted medical institutions, we have been discussing the personnel structure required to meetcustomer needs and contract details. In addition, we strove to reinforce the foundation for sustainable growth by focusing on the productivity
improvement of our staff and optimization of their work environment.
Although Hospital Segment sales showed an upward trend as a result of our enhanced sales promotion activities of high-added value services
and operations, total sales decreased due to weak Clinic Department sales and growing at a sluggish pace in number of students of medical
office work course. Profit increased due to the improvement of on-site operational capability improvement for appropriate profit level
preservation.
<Long-term Care Segment>
Sales were 74,591 million yen (72,248 million yen in the same period last year).
Operating profit was 7,378 million yen (5,007 million yen in the same period last year).
As for the at-home type care services, although the number of preventive care service users is showing a decreasing trend due to the transition
to general comprehensive life support mainly run by local governments, the spending per customer increased due to increased subsidy for thecare staff in April and the strengthened response for moderately and heavily handicapped person. As for the residence type care service, wehave been promoting high utilization rate maintenance per existing facility, and higher utilization of the brand-new facilities as early as
possible.
Sales increased due to stable number of users of residence type care services, and profit increased due to the productivity improvement bystreamlining promotion of on-site operations such as personnel distribution.
<Childcare Segment>
Sales were 3,922 million yen (2,557 million yen in the same period last year).
Operating loss was 728 million yen (497 million yen of loss in the same period last year).
The company moved aggressively to build facilities for countermeasures against children on nursery school waiting lists, the "corporate-run
childcare centers" according to the national government policy, to complete 48 facilities by the end of the first half. Increase reached around200 facilities including other childcare related facilities, which contributed to both the elimination of children on nursery school waiting lists
for the community and promotion of women's participation in the workplace.
Sales increased by 53.4% through facility expansion, but profit decreased due to up-front expenditures to establish the brand-new facilities.
However, the loss amount of this second half (July to September) decreased compared to that of the first half (April to June) due to theimproved utilization rate.
<Health Care Segment>
Sales were 1,464 million yen (1,409 million yen in the same period last year).

Operating profit was 166 million yen (276 million yen in thesame period last year).
We strove to develop the housekeeping service, also known as "Nichii Life," as a measure of the livelihood support other than the careinsurance application and to promote the sales of various private brand products.
Sales increased due to the steady growth in number of service users and product sales quantities driven by sales promotion activities utilizing
our nationwide sales network. As for the profit, it decreased due to the increase in up-front expenditures for preparing the foreign
housekeeper program, also known as "Sunny Maid Service," in the National Strategic Special Zone.

- 3 -<Education Segment>
Sales were 6,383 million yen (6,347 million yen in the same period last year).
Operating loss was 2,125 million yen (2,405 million yen of loss in the same period last year).
We contributed to the trainings for people who wish to play an active role in the world through nationwide deployment of the language school
COCOJUKU (for adults), COCOJUKU Jr. (for children), and the strategic deployment of the GABA schools for English conversation on a
one-to-one basis.
As for the number of students of COCOJUKU (for adults), the number of commuting students decreased, but there was an increase in on-line
students, while the number of students of COCOJUKU Jr. (for children) increased in both due to the efficient promotion deployment focusing
on the local community-oriented approach and satellites' expansion. Although GABA's sales and profit decreased, the number of students hit
the bottom at the end of previous fiscal year (end of March) and is on track to recover by conducting strengthening of the enterprise sales
activities and marketing activity reviews with the aim of stable, continuous sales increase.
As a result, the Education Segment as a whole was able to increase both sales and profit (loss amount decreased).
<Therapy Segment>
Sales were 108 million yen (94 million yen in the same period last year).
Operating loss was 202 million yen (130 million yen of loss in the same period last year).
The Therapy Business Segment expanded its facilities to 4 by the end of September as a result of opening brand-new 3 grooming salons, also
known as "A-LOVE," featuring a concept of promoting pet health care. Sales increased, but profit decreased since what came first was thesalon establishment preparation, such as the area marketing utilizing our nationwide branch network and recruitment activities, resulting in
the up-front expenditures for new establishment.
<China Business Segment>
Sales were 1,136 million yen (949 million yen in the same period last year).
Operating loss was 753 million yen (722 million yen of loss in the same period last year).
We are developing Japanese style services and training human resources throughout China focusing on the nursing care by establishing theservice providing structure consisting of 19 regional operating companies and 7 educational corporations.
Sales increased due to the increased number of users and our consolidated companies, but profit slightly decreased. However, the loss amountof this second half (July to September) decreased compared to that of the first half (April to June) due to the investment completion forestablishing new facilities.
<Other Businesses>
Sales were 80 million yen (78 million yen in the same period last year).
Operating profit was 96 million yen (139 million yen in the same period last year).
The company strove to improve the indirect operation efficiency between business segments and between group companies to improve thewhole Nichii Gakkan group's profitability.
[Individual operating results (Reference)]
Previous cumulative second quarter(from April 1, 2016
to September 30, 2016)(in million yen)
Net Sales

Current cumulative second quarter(from April 1, 2017
to September 30, 2017)(in million yen)

Year-over-year
Inc/dec rate (%)

119,775

121,644

1.6

Operating Income

697

3,023

333.2

Ordinary Income

40

2,678

-

Current Net Income

95

1,925

-

- 4 -

(2) Details of financial position
Total assets of the current second quarter were 191,125 million yen, a decrease of 582 million yen compared to the end of the previous fiscal
year. The decrease resulted from a combination of an increased current asset of 932 million yen due to an increase of deferred tax assets, and adecreased fixed asset by 1,514 million yen due to a decrease in goodwill.
Total liabilities of the current second quarter were 153,199 million yen, a decrease of 584 million yen compared to the end of the previous
fiscal year. The decrease resulted from a combination of a decreased total current liability of 6,731 million yen due to a decrease of short-termloans payable, and an increased total non-current liability by 6,146 million yen due to an increase in long-term loans payable.
Net assets of the current second quarter were 37,926 million yen, an increase of 2 million yen compared to the end of the previous fiscal year.
(3) Information on the future outlook, including consolidated financial results forecasts
As for the consolidated result forecasts for the period ending March 2018, there are no changes from the forecasts of May 12, 2017.

- 5 -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 Segments
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 Segments
Total intangible assets
Investment and other asset
Other Segments
Less: allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets

Current consolidated second quarter(As of September 30, 2017)16,357,197
32,855,836
200,416
1,076,922
8,570
232,5882,314,021
11,687,703(9,802)

15,759,945
33,517,169
991,026
29,319274,331
3,109,844
12,001,206(27,041)

64,723,455

65,655,802

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

22,960,425
47,664,624
9,382,340

80,605,541

80,007,390

14,225,873
5,447,292

13,105,979
6,047,425

19,673,166

19,153,405

27,085,011(379,098)

26,588,177(278,833)

26,705,912

26,309,344

126,984,620

125,470,140

191,708,076

191,125,942

Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Income taxes payable
Accrued expenses
Provision for bonuses
Provision for directors' bonuses
Provision for loss on store closing
Other Segments

840,286
20,269,380
1,990,593
15,914,778
4,990,083
38,00024,487,658

705,079
6,079,724
2,609,931
18,824,419
5,985,522
22,1002,337
27,570,608

Total current liabilities

68,530,780

61,799,723

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

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

21,630,550
53,557,955
7,490,005
2,425,208
6,295,588

Total non-current liabilities
Total liabilities- 6 -85,252,913

91,399,308

153,783,694

153,199,032

(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

Current consolidated second quarter(As of September 30, 2017)

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

11,933,790
17,087,114
20,218,595(11,375,869)

37,841,369

37,863,630

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)

20,793(561,370)(709,501)

Total accumulated other comprehensive income(1,248,544)(1,250,078)

531,839799,717541,544771,814

Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets- 7 -37,924,381

37,926,910

191,708,076

191,125,942

(2) Quarterly consolidated statements of income and comprehensive income(Quarterly consolidated statements of income)(Consolidated cumulative second quarter)(Thousand yen)Previous consolidated cumulative
Current consolidated cumulative
second quartersecond quarter(from April 1, 2016 to September 30, (from April 1, 2017 to September 30,
2016)
2017)
Net Sales
Cost of sales

137,751,166
112,306,182

141,426,981
113,946,536

Gross profit

25,444,983

27,480,445

Selling, general and administrative expenses

24,629,642

23,726,633

Operating Income

815,341

3,753,812

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

75,311
100,978
130,519
16,858286,085

76,259116,923
32,14930,542
263,938

Total non-operating income

609,752

519,812

1,975,120
18,372542,3622,305,801
18,208
133,667

Non-operating expenses
Interest expenses
Rent expenses
Other Segments
Total non-operating expenses
Ordinary income (loss)
Extraordinary income
Gain on reversal of subscription rights to shares
Other Segments
Total extraordinary income
Extraordinary losses
Loss on retirement of property, plant and equipment, net
Impairment losses
Other Segments
Total extraordinary losses

2,535,855

2,457,678(1,110,761)

1,815,946

8,158
783

5,310
-

8,942

5,310

1,124
24,464
463

4,516
759

26,052

5,275(1,127,871)

1,815,982

Income taxes—current
Income taxes—deferred

762,751(561,271)

1,829,910(810,914)

Total income taxes

201,480

1,018,995

Net income (loss)(1,329,351)

796,986(88,891)(122,000)(1,240,460)

918,987

Net income (loss) before income taxes

Profit (loss) attributable to non-controlling interests
Profit (loss) attributable to owners of the parent company- 8 -(Quarterly consolidated statements of comprehensive income)(Consolidated cumulative second quarter)(Thousand yen)Previous consolidated cumulative
Current consolidated cumulative
second quartersecond quarter(from April 1, 2016 to September 30, (from April 1, 2017 to September 30,
2016)
2017)
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(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 -(1,329,351)

796,986(295)(325,768)
107,656

248(99,747)
102,013(218,407)

2,514(1,547,758)

799,500(1,392,958)

929,172(154,800)(129,672)