Financial Results for the First Half of the Year Ending March 31, 2014 (J-GAAP)
November 7, 2013
Name of listed company: Nichii Gakkan Company
Listed on: Tokyo Stock Exchange 1st Section
Securities code:
9792
URL:
http://www.nichiigakkan.co.jp
Representative:
Masatoshi Saito, President and Representative Director
Contact:
Koichi Terada, Director, Manager of Accounting and Finance Division
TEL: 03-3291-2121
Scheduled date for filing the quarterly financial report: November 13, 2013
Scheduled date to start dividends distribution:
December 9, 2013
Supplementary quarterly materials prepared:
Yes
Quarterly results information meeting held:
Yes (for institutional investors and financial analysts)(Figures shown are rounded down to the nearest million yen.)

1. Consolidated financial results for the first half ended September 30, 2013 (April 1, 2013 – September 30, 2013)(1) Consolidated operating results(Percentage figures represent changes year on year.)
Net Sales
Operating Income
Ordinary Income
Net Income
Million yen

Six months ended
September 30, 2013
Six months ended
September 30, 2012
(Note) Comprehensive income:%Million yen%

Million yen%

Million yen%

136,049

3.0

3,229

(17.3)

2,502(28.3)

1,660

15.9

132,132

7.1

3,903

(20.4)

3,491(28.1)

1,432(35.1)

Six months ended September 30, 2013: 1,537 million yen (14.4%);
Six months ended September 30, 2012: 1,344 million yen (-39.8%)

Net Income per Share

Diluted Net Income per ShareYen

Six months ended
September 30, 2013
Six months ended
September 30, 2012

Yen

23.76

—

20.63

—

(2) Consolidated financial position
Total Assets

Net Assets
Million yen

As of September 30, 2013
As of March 31, 2013
Reference: Shareholders’ equity:

Equity Ratio
Million yen

166,818
166,619%

62,17061,25537.1
36.6

As of September 30, 2013: 61,853 million yen; As of March 31, 2013: 60,952 million yen

2. Dividends
1Q-endAnnual dividends
3Q-end2Q-endYen

Year ended March 31, 2013
Year ending March 31, 2014
Year ending March 31, 2014
(forecast)

—
—

Yen

Year-end

Yen

9.00
10.00

Annual
Yen

Yen

—

9.00

18.00

—

10.00

20.00

(Note) Revisions to most recently announced dividend forecast: No

3. Forecast of consolidated financial results for the year ending March 31, 2014 (April 1, 2013 – March 31, 2014)(Percentage figures represent changes from previous year for full year figures.)

Net Sales

Operating Income

Million yen

Full year

273,200%

2.2

Million yen

6,600

Ordinary Income%(24.5)(Note) Revisions to most recently announced financial results forecast: Yes

Million yen

5,000

Net Income
per Share

Net Income%(39.9)

Million yen

2,800

%

(36.1)Yen

40.07

* Notes(1) Significant changes in subsidiaries during the term (Changes in specified subsidiaries resulting in changes in scope of
consolidation): None
(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, 2013:
73,017,952
As of March 31, 2013:
73,017,952
2) Number of treasury stock
As of September 30, 2013:
3,132,459
As of March 31, 2013:
3,131,669
3) Average number of shares issued and outstanding in each period (quarterly consolidated cumulative period)
As of September 30, 2013:
69,885,908
As of September 30, 2012:
69,443,291* Implementation status of quarterly review procedures
The quarterly review procedure based on the Financial Instruments and Exchange Act does not apply to these quarterly financial statements,
and the procedure based on the Financial Instruments and Exchange Act is in operation as of the release of these quarterly financial
statements.

* Explanation concerning the appropriate use of financial result forecasts and other special notes(Forward looking statements)
The above forecasts are based on information Nichii Gakkan had as of the time this report was prepared and on certain assumptions judged tobe reasonable. Various factors may cause actual results to differ significantly from forecasts. Please refer to the disclaimers, provided under“(3) Information on the future outlook, including consolidated financial results forecasts” of “1. Qualitative information on quarterly
financial results” on page 5 of the quarterly consolidated financial results (attached document), regarding the assumptions upon which
forecasts are based and the use of forecasts.

Nichii Gakkan Company (9792) Financial Results for the First Half of the Year Ending March 31, 2014

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······································ 5
2. Summary information (notes)······························································································································ 5(1) Significant changes to subsidiaries during the term························································································· 5(2) Application of specific accounting for preparing the quarterly consolidated financial statements···················· 5(3) Changes in accounting policies, accounting estimates and restatement ··························································· 5
3. Quarterly consolidated financial statements ········································································································ 6(1) Quarterly consolidated balance sheets············································································································· 6(2) Quarterly consolidated statements of income and comprehensive income······················································· 8
Quarterly consolidated statements of income
Six months ended September 30 ·················································································································· 8
Quarterly consolidated statements of comprehensive income
Six months ended September 30 ·················································································································· 9(3) Notes to quarterly consolidated financial statements ····················································································· 10
Notes on the premise of a going concern······································································································· 10
Notes on significant fluctuation in the amount of shareholders’ equity·························································· 10

1Nichii Gakkan Company (9792) Financial Results for the First Half of the Year Ending March 31, 2014

1. Qualitative information on quarterly financial results(1) Details of business results
In the interim period of the fiscal year under review, the outline of a draft bill for a social security reform program
was approved in a Cabinet meeting (the Cabinet approved the bill for the program in October 2013) based on theReport on the National Council on Social Security System Reform, compiled in August 2013. The draft bill
established a path for social security reform that aims to, among other things, establish systems to ensure the securityof each generation. Concrete measures to enhance, focus more closely on, and streamline social security functions
will be considered and implemented in the future. These measures will include support for children and child-rearing,and the main financial resources for the public spending necessary for social security benefits will be secured bycurtailing medical expenses and elder care insurance payments and consumption tax increases.
In the Japanese government’s growth strategy, called the Japan Revitalization Strategy, it presented strategic goals
including the globalization of the medical and welfare industries, support for students who want to study abroad, andthe improvement of English education in educational institutions, with a view toward fostering internationallycompetitive skills. The market for these fields, which the Nichii Gakkan Company (hereinafter the “Company”) is
closely affiliated with, is expected to be revived in tandem with the progress of the government’s initiatives.
In this business environment, the Nichii Gakkan Group (hereinafter the “Group”) launched its medium-term
management strategy and is expanding the scope of its operations based on the two elements of “diversification ofsegment categories” and “geographical diversification” to achieve stable long-term profit growth by enhancing the
growth, stability, and profitability of its business.
As part of its initiatives for the “diversification of segment categories,” the Group has endeavored to develop a
consistent language education system by promoting the launch of COCO Juku Junior, a new brand of English
conversation schools to come after COCO Juke, improving its system to help students who aim to study abroad, andby opening the New York University School of Continuing and Professional Studies (NYU-SCPS) American
Language Institute (ALI) Tokyo Center through a business alliance with New York University. In addition, in aneffort to improve the quality of its services and develop solid management systems, the Group established an
Instructor Training Division in its head office to improve the training of instructors, who play a central role in theGroup’s language education business.
In its Health Care Business segment, the Group reorganized the former Health Care Business segment into theLong-term Care Business segment, which is in charge of promoting services covered by the long-term care insurance
system, and a new Health Care Business segment, which is in charge of promoting services not covered by thelong-term care insurance system, in an effort to promote services that aren’t covered by the long-term care insurance
system.
In its Child Care Business, the Group is aggressively developing child care centers and is striving to provide
high-value-added services by taking advantage of the synergies among its businesses, mainly by offering English
conversation lessons at child care centers and holding forums to allow communication among nursing home residents.
As part of its initiatives for “geographical diversification,” the Group has developed a language education business inAustralia and Canada, and established a medical clinic in Singapore. The Group has also promoted marketing
activities and developed organizational structures in preparation for full-fledged business development in China,
mainly in Beijing.
Looking at operating results, the Group posted an increase in sales, supported by factors including an increase in thenumber of users of long-term care services, new contracts with large hospitals, and contributions from the earnings of
GABA Corporation and Nichii Care Palace Company. Earnings declined from a year ago, mainly due to strategic
investments in the Group’s language education business and the impact of the changeover from the Home Helper
Level 2 Course to a basic training course for care workers.
As a result, the Group posted net sales of 136,049 million yen for the interim period under review (compared with the132,132 million yen posted in the same period of the previous fiscal year), operating income of 3,229 million yen(compared with 3,903 million a year ago), and ordinary income of 2,502 million yen (compared with 3,491 million
yen a year ago). Net income was 1,660 million yen (compared with 1,432 million yen a year ago).
Results by business segment are as follows:2

Nichii Gakkan Company (9792) Financial Results for the First Half of the Year Ending March 31, 2014

<Medical Support Business>
Sales increased in the Medical Support Business segment due to factors including expanded operations at hospitals
where the Group is offering services on a commissioned basis and the new contracts acquired from large hospitals.
Earnings for the segment fell due to temporary preliminary expenses associated with the launch of services at newly
acquired hospitals.
As part of its personnel strategy, the Group is striving to develop a virtuous cycle in which expanding and improving
its training programs and strengthening support systems for its staff leads to improved rates of employee satisfaction,
turnover, and customer satisfaction.
In its management support services, the Group started a clinic business in Singapore with the opening of the NICHIIINTERNATIONAL CLINIC, aimed at acquiring knowledge in health service management and international healthservice cooperation.
Sales in this segment stood at 52,769 million yen (compared with 51,869 million yen in the same period of theprevious fiscal year), and operating income was 3,900 million yen (compared with 4,100 million yen a year ago).
<Long-term Care Business>
The Group ambitiously opened new long-term care facilities, rendering comprehensive, continuous services in
response to local and customer needs. As a result, the number of users continued to steadily increase, both for
at-home services and services at health care facilities, boosting both sales and profits.
In an effort to improve customer satisfaction rates, the Group endeavored to offer high-value-added services throughits service networks, mainly by holding forums for nursery school children in cooperation with the Group’s child carebusiness and implementing evacuation drills based on its Life Preservation Plan (LPP) at all Nichii homes facilities.
Looking at the status of the new operating bases that were established, for its home care services, the Group opened
14 care plan facilities (bringing the total number of these facilities to 788), 10 home-visit care facilities (increasing
the total number of these facilities, including home-visit bathing facilities, to 1,111), 7 day-care facilities (for a totalof 360), 6 home nursing care facilities (for a total of 65), and 1 welfare equipment leasing facility (for a total of 138).
For its facility care services, the Group established 6 Nichii no Hohoemi group homes (for a total of 253).
As a result, net sales for the segment reached 71,385 million yen (compared with the 67,985 million yen posted in thesame period of the previous fiscal year). Operating income for the segment was 6,555 million yen (compared with
5,314 million yen a year ago).
(Note) The major services offered in this segment based on the new segment classifications were as follows: homecare services, facility care services, welfare services for the disabled, and childcare services (excluding these
services at hospitals).
<Health Care Business>
To establish a balance in its business portfolio free from institutional risks, such as the risk of revisions to its
long-term care insurance system and nursing care benefits, the Group switched to a new business promotion system,and promoted initiatives to expand and strengthen its services that aren’t covered by the long-term care insurance
system, such as the development and sale of health care products, housekeeping services, meal home delivery, and its
care staff dispatching service.
To expand its operations in China, in May 2013 the Group gave a presentation on the health care business at theSecond China International Senior Services Expo, one of the largest international welfare exhibitions to be held in
China. Taking further steps, the Group rolled out its marketing activities and developed business promotion systems
in China by dispatching representatives to Beijing and establishing a Chinese business headquarters.
As a result, net sales for the Health Care Business segment came to 1,759 million yen (compared with the 1,948
million yen posted in the same period of the previous fiscal year). Operating income for the segment was 49 million
yen (compared with 273 million yen a year ago).
(Note) The major services offered in this segment based on the new segment classifications were as follows: sales ofhealth care products, housekeeping services, meal home delivery, and care staff dispatching service.

3

Nichii Gakkan Company (9792) Financial Results for the First Half of the Year Ending March 31, 2014

<Education Business>
In the Education Business segment, COCO Juku Junior, launched in April 2013, was aggressively developed by being
established next to COCO Juku classrooms as well as through franchises. In September 2013, the New York
University School of Continuing and Professional Studies (NYU-SCPS) American Language Institute (ALI) Tokyo
Center was opened. In addition to the above, the Group developed a system to help students who plan to study abroad
through alliances with SELC AUSTRALIA PTY LTD. and the YORK Global Study Center, thereby building aconsistent language education system to meet the diverse needs for language education found in a broad range of age
groups.
In its business related to COCO Juku and COCO Juku Junior, the Group continued its aggressive promotion efforts
associated with the launch of COCO Juku Junior schools. The Group is currently making progress in improving its
instructor training as well as strengthening its sales activities to attract students for the purpose of providing quality
lessons and improving customer satisfaction rates.
GABA Corporation, which offers individual lessons, has been attracting and maintaining a significant number ofstudents, as well as sustaining sales and earnings growth, with net sales rising 8.6% from the same period of theprevious fiscal year and operating income before amortization of goodwill climbing 22.5% year on year. These results
greatly contributed to the earnings of the Group’s Education Business.
In the social education business, earnings were lower than the Group’s forecasts at the beginning of the fiscal year
under review, partly due to the impact of the changeover from the Home Helper Level 2 Course to a basic training
course for care workers in response to the nursing care qualification reviews in April 2013.
Basic training courses for care workers are considered to be the first step to becoming a Certified Care Worker.
Compared to Home Helper courses, these are better courses for people looking for job opportunities for workers withcertified qualifications.
To meet this need, the Group started aggressively developing free care experience seminars in July 2013, and a basic
course of practical care for those taking care of family members at home and volunteers. Through these initiatives, theGroup aims to expand its social education courses by offering information and skills in nursing care and uncovering
potential needs among job seekers.
As a result, net sales for the Education Business segment totaled 9,870 million yen (compared with the 10,148 million
yen posted in the same period of the previous fiscal year). Operating loss for the segment was 3,208 million yen(compared with a loss of 1,978 million yen a year ago).
<Other Businesses>
As part of its measures to strengthen its operating foundation, the Group expanded and improved its functions forsupporting its respective businesses.
During the first half under review, the Company changed the settlement period for Tokyo Marunouchi Publishing Co.,
Ltd. from January to March, and the settlement period for Nihon Support Service Co., Ltd. from February to March.
Net sales for the Other Businesses segment amounted to 264 million yen (compared with 180 million yen posted in
the first half of the previous fiscal year). Operating loss for the segment was 30 million yen (compared with operating
income of 26 million yen posted in the first half of the previous fiscal year).

(2) Details of financial position
Total assets at the end of the interim period under review increased 198 million yen from the end of the previous
fiscal year, to 166,818 million yen. The main reasons for the increase were a 534 million yen rise in current assets,
primarily due to an increase in deferred tax assets, and a 335 million yen decrease in property, plant and equipment,
mainly reflecting a decline in goodwill.
Liabilities shrank 716 million yen from the end of the previous fiscal year, to 104,647 million yen. The key factors
contributing to this decrease were a 915 million yen rise in current liabilities, mainly due to an increase in short-termloans payable, and a 1,632 million yen drop in non-current liabilities, primarily attributable to a reduction in
long-term loans payable.
Net assets increased 915 million yen from the end of the previous fiscal year, to 62,170 million yen.

4

Nichii Gakkan Company (9792) Financial Results for the First Half of the Year Ending March 31, 2014(3) Information on the future outlook, including consolidated financial results forecasts
The Group revised its consolidated financial results forecast for the year ending March 31, 2014, which was releasedon May 14, 2013. For details, please refer to the “Notice of Revision of Consolidated Financial Results Forecast”
announced on November 7, 2013.
The differences between the consolidated financial results forecast for the year ending March 31, 2014, which wasannounced in the financial results released on May 14, 2013, and the forecast after the revision are as follows.
Operating
Ordinary
Net Income
Net Sales
Net Income
IncomeIncomeper Share
Million yen

Previously announced
forecast (A)Revised forecast (B)Change (B – A)
Change (%)(Reference) Actual results(fiscal year ended March
31, 2013)

Million yen

Million yen

Million yen

277,600

9,000

8,000

4,500

64.39

273,200(4,400)
(1.6)

6,600
(2,400)(26.7)

5,000(3,000)(37.5)

2,800(1,700)(37.8)

40.07——

267,191

8,741

8,326

4,383

62.95

2. Summary information (notes)(1) Significant changes to subsidiaries during the term
No related information.

(2) Application of specific accounting for preparing the quarterly consolidated financial statements
No related information.

(3) Changes in accounting policies, accounting estimates, and restatement
No related information.

5

YenNichii Gakkan Company (9792) Financial Results for the First Half of the Year Ending March 31, 2014

3. Quarterly consolidated financial statements(1) Quarterly consolidated balance sheets
Fiscal 2013
(As of March 31, 2013)
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
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
Investments and other assets
Other
Less: Allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets

6(Thousand yen)
H1 of Fiscal 2014
(As of September 30, 2013)

8,686,050
32,200,612
2,398,857
589,186
31,546
394,759
11,947,652(45,765)
56,202,899

8,783,484
32,106,076
2,599,176
599,960
54,281
328,754
12,295,851(30,137)
56,737,448

29,669,321
20,286,491
9,573,455
59,529,268

29,471,604
21,501,779
9,707,928
60,681,313

20,311,644
4,075,938
24,387,582

19,342,893
3,902,077
23,244,970

27,467,468(967,518)
26,499,950
110,416,801
166,619,700

26,594,843(440,119)
26,154,723
110,081,008
166,818,457

Nichii Gakkan Company (9792) Financial Results for the First Half of the Year Ending March 31, 2014

Fiscal 2013
(As of March 31, 2013)
Liabilities
Current liabilities
Notes and accounts payable—trade
Short-term loans payable
Income taxes payable
Accrued expenses
Provision for bonuses
Provision for directors’ bonuses
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Lease obligations
Provision for retirement benefits
Provision for directors’ retirement benefits
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustments
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets

7(Thousand yen)
H1 of Fiscal 2014
(As of September 30, 2013)

827,506
982,562
1,472,751
16,678,253
4,998,197
39,70027,298,064
52,297,036

700,011
4,122,221
2,509,562
15,934,881
5,544,189
24,85024,377,117
53,212,834

21,021,495
20,693,301
4,991,263
167,319
1,714,930
4,479,039
53,067,349
105,364,385

17,879,208
22,145,681
5,210,315
163,868
1,736,730
4,298,837
51,434,641
104,647,475

11,933,790
17,354,214
36,818,238(5,372,812)
60,733,430

11,933,790
17,354,214
37,863,330(5,373,539)
61,777,795

146,927

26,76872,190219,118
302,765
61,255,314
166,619,700

49,11675,885317,300
62,170,981
166,818,457

Nichii Gakkan Company (9792) Financial Results for the First Half of the Year Ending March 31, 2014

(2) Quarterly consolidated statements of income and comprehensive income(Quarterly consolidated statements of income)(Six months ended September 30)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Rent income
Commission on consignment for job creation
businesses
Subsidy income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Rent expenses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities
Other
Total extraordinary income
Extraordinary losses
Loss on retirement of property, plant and equipment,
net
Loss on sales of property, plant and equipment, net
Loss on valuation of investment securities
Provision of allowance for doubtful accounts
Other
Total extraordinary losses
Income before income taxes and minority interests
Income taxes—current
Income taxes—deferred
Total income taxes
Income before minority interests
Minority interests in income
Net income

Fiscal 2013
(from April 1, 2012
to September 30, 2012)
132,132,032
104,145,674
27,986,358
24,082,847
3,903,510(Thousand yen)
Fiscal 2014
(from April 1, 2013
to September 30, 2013)
136,049,979
107,630,440
28,419,539
25,190,219
3,229,319

69,519101,063

70,18197,098104,618

7,236

112,957
140,765
528,923

53,379129,945
357,841

837,823
25,13477,717
940,676
3,491,757

980,832
30,72672,655
1,084,214
2,502,946———

1,030,370
850
1,031,220

15,291

29,213

2,082
199,980
50,00024,895292,248
3,199,508
1,994,398(241,769)
1,752,629
1,446,879
14,2191,432,660—
49,99925,000966
105,179
3,428,987
2,220,900(472,909)
1,747,991
1,680,995
20,534
1,660,461

8

Nichii Gakkan Company (9792) Financial Results for the First Half of the Year Ending March 31, 2014

(Quarterly consolidated statements of comprehensive income)(Six months ended September 30)

Income before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustments
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of the parent
Minority interests

Fiscal 2013
(from April 1, 2012
to September 30, 2012)
1,446,879(Thousand yen)
Fiscal 2014
(from April 1, 2013
to September 30, 2013)
1,680,995(104,463)
2,202(102,260)
1,344,619(120,158)(23,074)(143,232)
1,537,762

1,330,400
14,2191,517,228
20,5349

Nichii Gakkan Company (9792) Financial Results for the First Half of the Year Ending March 31, 2014

(3) Notes to quarterly consolidated financial statements(Notes on the premise of a going concern)
No related information.
(Notes on significant fluctuations in the amount of shareholders’ equity)
No related information.

10