Third Quarter Financial Report for the Fiscal Year Ending March 31, 2020 [Japan GAAP] (Consolidated)
February 7, 2020
Name of listed company: NICHIIGAKKAN CO., LTD.

Listed on:

Tokyo Stock Exchange 1st Section

Securities code:

9792

URL:

https://www.nichiigakkan.co.jp

Representative:

Nobusuke Mori, President

Contact:

Kazuya Shiiya, Executive Officer, Acting Division Director for Accounting Division

Scheduled date for filing the quarterly financial report:

TEL: 03-3291-2121

February 10, 2020

Scheduled date to start dividends distribution:-

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 third quarter ended December 31, 2019 (April 1, 2019 – December 31, 2019)(1) Consolidated operating results）(Percentage figures represent changes from same period of previous year.)
Profit attributable to
Net sales
Operating income
Ordinary income
owners of parent
Million yen%
Million yen%
Million yen%
Million yen%
Nine months ended
223,471
3.6
9,444
28.7
6,083
50.4
3,378
60.3
December 31, 2019
Nine months ended
215,723
1.3
7,336
23.0
4,043
34.1
2,107
23.7
December 31, 2018
(Note) Comprehensive income: Nine months ended December 31, 2019 3,576millionyen（62.0％）

Nine months ended December 31, 2017

Net income per share

Diluted net income per share

Yen

Yen

52.48

52.00

32.79

32.71

Nine months ended
December 31, 2019
Nine months ended
December 31, 2018

2,208million yen（31.3％）(2) Consolidated financial position

As of December 31, 2019
As of March 2019
(Reference) Shareholders’ equity:

Total assets
Million yen
193,989
193,640
As of December 31, 2019

Net assets
Million yen
42,234
41,07741,019million yen

Equity ratio
%
21.1
20.6

As of March 31, 2019

39,986million yen

2. Dividends
Annual dividends

Year ended March 31, 2019Year ending March 31, 2020
Year ending March 31, 2020
(forecast)

1Q-endYen－－

2Q-end
Yen
15.00
20.00

3Q-endYen－－

Year-end
Yen
20.00
20.00

Annual
Yen
35.00
40.00

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

3. Forecast of consolidated financial results for the year ending March 31, 2020 (April 1, 2019 – March 31, 2020)(Percentage figures represent changes from previous year)
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
298,600
3.7
13,300
32.6
8,700
52.5
4,700 △23.1
73.02(Note) Revisions to most recently announced financial results forecast: No－

1 －* 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)2) Number of treasury stock3) Average number of shares issued andoutstanding in each period

As of December 31,
2018
As of December 31,
2018
As of December 31,
2018

73,017,952

8,600,202

64,381,984

As of December 31,
2019
As of December 31,
2019
As of December 31,
2019

73,017,952

8,671,247

64,270,038* Quarterly financial results are outside the scope of the quarterly review by certified public accountants or audit corporations.
* Explanation concerning the appropriate use of financial result forecasts and other special notes
The above forecasts are based on information Nichii Gakkan had as of the time this report was prepared and on certain
assumptions judged to be reasonable. Various factors may cause actual results to differ significantly from forecasts. Please referto 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 8 of the attached document, regarding the assumptions upon which
forecasts are based and the use of forecasts.

－

2 －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 ……………………………………………………………………………………………

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

3

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

4(1) Quarterly consolidated balance sheets…………………………………………………………………………………

4(2) Quarterly consolidated statements of income and comprehensive income ………………………………………………

6

Quarterly consolidated statements of income
Consolidated cumulative third quarter……………………………………………………………………………

6

Quarterly consolidated statements of comprehensive income
Consolidated cumulative third quarter……………………………………………………………………………

7(3) Notes to quarterly consolidated financial statements ……………………………………………………………………

8(Notes on the premise of a going concern) ……………………………………………………………………………

8(Notes on significant fluctuation in the amount of shareholders’ equity) ………………………………………………

8

－

3 －

1. Qualitative information on quarterly financial results(1) Details of business results
The Nichii Group (the “Group”) is working to achieve sustainable growth under the vision of becoming an excellent
company that contributes to the resolution for social issues and establishes stable long-term profit growth, and makes a global
contribution.
During the consolidated cumulative third quarter under review, the Group implemented business reforms carried out by all
members from on-site employees to the management working in cooperation through the vision progress project, VIPRO,
improved the current business model of supporting “from education to employment,” and conducted structural reforms of theeducation business and the global (China) business. The Group also implemented growth strategies in view of its future,including investment in the growth of the Long-Term Care segment, the improvement of employee treatment, and humanresources investment related to the acceptance of foreign workers.
Net sales increased as a result of contract rationalization in the medical support business and continuous efforts to raise
facility operating rates in the long-term care and childcare businesses.
Regarding operating income, an increase in efficiency achieved through the “selection and concentration” of business areasand services in the education and China businesses and higher productivity in the medical support business contributed to a risein profitability.
As a result, net sales totaled 223,471 million yen (up 3.6% year on year), operating income amounted to 9,444 million yen(up 28.7% year on year), ordinary income came to 6,083 million yen (up 50.4% year on year), and profit attributable to ownersof parent stood at 3,378 million yen (up 60.3% year on year) for the first nine months of the fiscal year under review.
The business results by segment are as shown below.

<Medical Support Segment>
Net sales were 85,593 million yen (compared with 80,729 million yen in the same period of the previous fiscal year).
Operating income was 7,190 million yen (compared with 6,693 million yen in the same period of the previous fiscal year).
The Group continued its negotiations for contract rationalization in addition to increasing operation efficiency andrationalizing working hours based on workload investigations and analysis in medical institutions by which the Group iscontracted. The Group improved its proposal skills based on extensive information acquired through its nationwide network
and worked to win new contracts during the period under review.
The number of students taking the medical administration course increased steadily, and the Group continued to support
their employment more effectively.
Consequently, revenue and profit increased thanks to a rise in sales per user through negotiations for contract rationalization.

<Long-Term Care Segment>
Net sales were 115,606 million yen (compared with 114,148 million yen in the same period of the previous fiscal year).
Operating income was 12,183 million yen (compared with 12,474 million yen in the same period of the previous fiscal year).
The in-home care service segment is restructuring its system of delivering services by splitting home-visit care service
offices as a growth strategy that contributes to the development of the community-based integrated care system. A total of 380
new offices had been established as of the end of December, 2019, and the segment is organizing the operation system andimproving the management system based on the home-visit care service organization that has 1,383 offices.
The residential care service segment established one fee-based nursing home in October 2019 and one group home in
November 2019 and worked to shorten the vacant period after occupants moved out to raise the occupancy rate.
The long-term care education segment focused on acquiring students using promotional campaigns, and the number oftrainees in the training for new members of long-term care service stuff increased 16.0% year on year.
As a result, net sales grew based on a further increase in the operating rate of residential care service facilities. Operating
income decreased due to expenses incurred for the split of home-visit care service offices that preceded profit.

<Childcare Segment>
Net sales were 10,709 million yen (compared with 8,739 million yen in the same period of the previous fiscal year).
Operating loss was 393 million yen (compared with an operating loss of 229 million yen in the same period of the previous
fiscal year).
－

4 －The Group has been actively expanding childcare facilities to contribute to women’s social advancement and to reduce thenumber of children on waiting lists in each region. Four new childcare centers were established in the three months underreview (October through December), making a total of 303 across Japan. The segment has been preparing for the start ofoperation in April 2020 and carrying out sales activities to win contracts for corporate-run childcare centers.
This led to an increase in net sales derived from improved marketing that was rooted in local communities and growth in thenumber of children using the facilities thanks to the increase in locations. The segment turned a profit after growth in operating
income for the three months under review thanks to increased facility operation, which more than offset a rise in operating loss
caused by higher personnel expenses.

<Health Care Segment>
Net sales were 1,299 million yen (compared with 1,228 million yen in the same period of the previous fiscal year).
Operating loss was 1,488 million yen (compared with an operating loss of 707 million yen in the same period of the previous
fiscal year).
The segment operates two brands, including Nichii Life, which offers housekeeping, childcare, and family long-term careservices, and the Sunny Maid Service, which provides housekeeping services in Japan’s National Strategic Special Zones. The
segment worked to acquire new customers, taking advantage of demand for year-end housecleaning, improve its service quality,and enhance its ability to encourage a shift to fixed-term plans.
The segment is also making human resource investments related to the acceptance of foreign workers in order to shift fromthe system under which personnel qualified as long-term care service providers concurrently provide housekeeping services toa system that allows such personnel to concentrate on long-term care services.
Consequently, net sales rose thanks to an increase in customers generated by actively taking advantage of seasonal demand.
Operating loss increased due to expenses incurred for human resource investments that preceded profit.

<Education Segment>
Net sales were 8,326 million yen (compared with 8,911 million yen in the same period of the previous fiscal year).
Operating loss was 323 million yen (compared with an operating loss of 2,761 million yen in the same period of the previous
fiscal year).
The withdrawal from the COCO Juku business as part of the structural reforms implemented since the previous fiscal year
was completed, and preparations for the closure of franchise schools and the New York University School of Professional
Studies Tokyo (March 31, 2020) are currently underway.
Gaba Corporation worked to improve the quality of lessons and the student support system, ran promotions using TV ads
and other media, and worked to strengthen corporate sales with the aim of increasing student numbers in its one-to-one English
conversation lessons.
While net sales fell due to a decrease in the number of students after the closure of the former COCO Juku classes, operating
loss was reduced by cutting fixed costs and increasing profit from Gaba.

<Therapy Segment>
Net sales were 450 million yen (compared with 304 million yen in the same period of the previous fiscal year). Operating
loss was 121 million yen (compared with an operating loss of 276 million yen in the same period of the previous fiscal year).
The segment operates the A-LOVE dog salon and hotel brand. It ran promotional campaigns, offered special courses, andused other means, taking advantage of year-end and New-Year demand, in an effort to increase customer numbers. The salonsstrove to increase sales per customer by serving the needs of each customer and offering optimal optional services.
This resulted in sales growth and a reduction in operating loss thanks to an increase in customers through the year-end and
New-Year sales promotions and sales per customer.

<Global Segment>
Net sales were 1,245 million yen (compared with 1,437 million yen in the same period of the previous fiscal year).
Operating loss was 406 million yen (compared with an operating loss of 1,107 million yen in the same period of the previous
fiscal year).
The segment is strengthening sales promotion for contract operation of facilities for dementia patients and Japanese-style
caregiver training by concentrating business in northern China, the center of the Chinese economy. In the expansion of the－

5 －long-term care business in China, the segment began to see effects such as receiving contracts for designing care facilities andconsulting services for facility operation.
While a fall in the number of offices through the reorganization implemented in the previous fiscal year led to a decline insales, operation efficiency was successfully increased through the selection and concentration of offices, resulting in reduced
operating loss.
<Other Segments>
Net sales were 239 million yen (compared with 223 million yen in the same period of the previous fiscal year). Operating
income was 151 million yen (compared with 173 million yen in the same period of the previous fiscal year).
Operation efficiency and revenue were raised using the synergy of companies in the Nichii Group, which resulted in growthin sales and but a decline in profit.
(2) Details of financial position
Total assets at the end of the third quarter of the fiscal year under review stood at 193,989 million yen, an increase of 348
million yen from the end of the previous fiscal year. Major factors included an increase of 2,655 million yen in current assets,
caused mainly by an increase in notes and accounts receivable—trade, and a decrease of 2,307 million yen in fixed assets,largely due to a decrease in goodwill.
Liabilities decreased 808 million yen from the end of the previous fiscal year, to 151,754 million yen. Major factors included
an increase of 2,128 million yen in current liabilities, mainly as a result of growth in short-term loans payable, and a decreaseof 2,937 million yen in non-current liabilities, owing largely to a fall in long-term loans payable.
Net assets increased 1,157 million yen from the end of the previous fiscal year, to 42,234 million yen.
(3) Information on the future outlook, including consolidated financial results forecasts
There is no change in the consolidated financial results forecasts that were announced on November 12, 2019 concerning the
fiscal year ending March 31, 2020.

－

6 －2. Quarterly consolidated financial statements and major notes(1) Quarterly consolidated balance sheets(Thousand yen)
Fiscal 2019
(As of March 31, 2019)
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
Investment and other asset
Other
Less: allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets
Liabilities
Current liabilities
Notes and accounts payable—trade
Short-term loans payable
Income taxes payable
Accrued expenses
Provision for bonuses
Provision for directors’ bonuses
Allowance for structural reform
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Lease obligations
Net defined benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities－

7 －Current consolidated third quarter(As of December 31, 2019)18,255,916
33,434,278
256,310364,426
11,159175,533
13,291,468△104,166
65,684,926

17,580,179
36,559,658
241,007511,277
40,966
181,076
13,306,451△80,390
68,340,225

21,950,524
49,992,221
10,369,489
82,312,235

21,419,858
51,359,069
9,857,713
82,636,642

9,120,932
3,977,138
13,098,071

7,818,983
4,055,072
11,874,055

32,790,254△244,715
32,545,539
127,955,845
193,640,771

31,368,556△230,449
31,138,106
125,648,804
193,989,030

747,5712,512,273
2,941,364
17,914,622
5,937,697
36,000486,086
30,088,847
60,664,463

2,303,592
5,360,272
627,240
20,332,255
3,024,339
5,810－
31,139,452
62,792,963

15,998,372
57,113,991
7,742,022
3,582,707
7,461,436
91,898,531
152,562,995

10,678,412
59,098,223
8,023,454
3,696,843
7,464,301
88,961,234
151,754,197

(Thousand yen)
Fiscal 2019
(As of March 31, 2019)
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 exchange adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets－

8 －Current consolidated third quarter(As of December 31, 2019)11,933,790
17,009,418
22,867,282△11,177,438
40,633,052

11,933,790
17,066,109
23,467,655△10,980,538
41,487,016

12,481

13,880△244,124△414,813△646,456
605,781
485,398
41,077,776
193,640,771△205,115△275,782△467,017
637,136
577,696
42,234,832
193,989,030

(2) Quarterly consolidated statements of income and comprehensive income(Quarterly consolidated statements of income)(Consolidated cumulative third quarter)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Rent income
Subsidy income
Foreign exchange gains
Equity method investment gain
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 investments in capital of subsidiaries
and associates
Gain on reversal of subscription rights to shares
Other
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Loss on sales of non-current assets
Loss on sales of investment securities
Loss on sales of investments in capital of subsidiaries
and associates
Structural reform expenses
Other
Total extraordinary losses
Net income before income taxes
Income taxes—current
Income taxes—deferred
Total income taxes
Net income
Profit (loss) attributable to non-controlling interests
Profit attributable to owners of parent(Thousand yen)Previous consolidated cumulative Current consolidated cumulative
third quarter
third quarter(from April 1, 2018(from April 1, 2019
to December 31, 2018)
to December 31, 2019)
215,723,471
223,471,719
172,805,016
179,013,283
42,918,455
44,458,435
35,581,463
35,014,249
7,336,991
9,444,185－

9 －

107,395
149,219
15,23640,477279,256
591,586

102,689
143,50235,932
77,646295,567
655,3393,654,759
19,181
210,7443,884,685
4,043,892

3,778,254
24,238
213,960
4,016,453
6,083,071－

68

137,114

－

1,691
652
139,458－－

63,643
1,787
149,705

101,000－－

305,191－－
1,035
521,3633,661,987
1,569,089
8,475
1,577,565
2,084,421△23,001
2,107,423

734,791
53,959889,751
5,193,388
1,431,899
361,242
1,793,142
3,400,246
21,5403,378,706

68

(Quarterly consolidated statements of comprehensive income)(Consolidated cumulative third quarter)

Net income
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 ofparentComprehensive income attributable to non-controllinginterests(Thousand yen)Previous consolidated cumulative Current consolidated cumulative
third quarter
third quarter(from April 1, 2018(from April 1, 2019
to December 31, 2018)
to December 31, 2019)2,084,421
3,400,246－

10 －△6,859△14,333
144,862
123,668
2,208,090

1,258
35,574139,030
175,863
3,576,109

2,243,955

3,557,944△35,864

18,165

(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.

－

11 －