Financial Results for the First Half of the Year Ending March 31, 2020 (J-GAAP)
November 12, 2019
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

November 13, 2019

Scheduled date to start dividends distribution:

December 9, 2019

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 of the year ending March 31, 2020 (April 1, 2019 – September 30, 2019)(1) Consolidated operating results(Percentage figures represent changes from same period of previous year.)Net sales

Operating income
%
3.7
0.8

Million yen

147,882
142,596Six months ended September 30, 2019
Six months ended September 30, 2018

(Note) Comprehensive income:

%
53.1
10.7

Million yen

6,360
4,154

First six months of FY2020 1,794million yen (475.8%)

Net income per share

Profit attributable toowners of parent

Ordinary income
Million yen

4,055
1,947

%
108.2
7.2

Million yen

1,603
251

%
536.8
(72.6)First six months of FY2019:311million yen(-61.0%)

Diluted net income per share
Yen
24.91
3.92

Six months ended September 30, 2019
Six months ended September 30, 2018

Yen
24.70
3.91

(2) Consolidated financial position
Total assets

Net assets

Million yen
193,629
193,640

As of September 30, 2019
As of March 31, 2019
(Reference) Shareholders’ equity:

Equity ratio

Million yen
41,68041,077

As of September 30, 2019: 40,479 million yen

%
20.9
20.6

As of March 31, 2019: 39,986 million yen

2. Dividends
Annual dividends
1Q-end2Q-endYen――

Year ended March 31, 2019Year ending March 31, 2020

3Q-end

Yen
15.00
20.00

Year ending March 31, 2020 (forecast)Year-end

Annual

Yen
―

Yen
20.00

Yen
35.00

―

20.00

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)
Net sales

Full year

Million yen
298,600%
3.7

Operating income

Ordinary income

Million yen
13,300Million yen%
8,700 52.5%
32.6

(Note) Revisions to most recently announced financial results forecast: Yes

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1

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Profit attributable to owners
Net income per shareof parent
Million yen
4,700%(23.1)Yen
73.02

* 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, 2019

73,017,952

As of March 31, 2019

73,017,952

2) Number of treasury stock

As of September 30, 2019

8,599,982

As of March 31, 2019

8,671,247

3) Average number of shares issued andoutstanding in each period

Six months ended
September 30, 2019

64,366,639

Six months ended
September 30, 2018

64,237,050* 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 refer tothe disclaimers, provided under “(3) Information on the future outlook, including consolidated financial results forecasts” of “1.
Qualitative information on quarterly financial results” on page 7 of the attached document, regarding the assumptions upon which
forecasts are based and the use of forecasts.

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2

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Table of Contents for the Attached Document
1. Qualitative information on quarterly financial results………………………………………………………………………

4(1) Details of business results ……………………………………………………………………………………………

4(2) Details of financial position ……………………………………………………………………………………………

6(3) Information on the future outlook, including consolidated financial results forecasts …………………………………

7

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

8(1) Quarterly consolidated balance sheets…………………………………………………………………………………

8(2) Quarterly consolidated statements of income and comprehensive income ………………………………………………

10

Quarterly consolidated statements of income
Six months ended September 30 …………………………………………………………………………………

10

Quarterly consolidated statements of comprehensive income
Six months ended September 30 …………………………………………………………………………………

11(3) Notes to quarterly consolidated financial statements ……………………………………………………………………

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

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

12

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3

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1. Qualitative information on quarterly financial results
The forward-looking statements contained in the descriptions below are forecasts determined at the end of the current quarter.
(1) Details of business results
The Nichii Group is working to strengthen its business foundations by restructuring its business portfolio and organizations
to “return to its roots,” a time when it was a stronger Nichii. The Group is bolstering its earnings foundation, centered on its
core businesses—the medical support business and long-term care business—as well as strengthening the talent infrastructure
which forms the bedrock of that initiative and restructuring the language education business and China business.
During the first half of the consolidated fiscal year under review, job site-led business restructuring including the vision
progress project (VIPRO; now in its third year) and efforts to strengthen area management though the assignment of executive
officers helped shore up the foundations of the Group’s business models. The Group’s core businesses—the medical support
business and long-term care business—continued to be revenue and profit drivers. On July 1, 2019, the Company set up anorganization dedicated to promoting talent development and recruitment, as a way to strengthen the Company’s talentinfrastructure. The Company consolidated systems to strengthen the business scheme that remains one of the Company’s
greatest advantages: from education through to employment.
Restructuring the language education and China businesses not only allowed the Company to reduce operation costs for bothbusinesses, but also greatly contributed to improved earnings capacity by facilitating healthy growth in student numbers for
Gaba, a Nichii Group subsidiary which provides one-on-one English conversation lessons.
As a result, net sales for the first half of the consolidated fiscal year under review totaled 147,882 million yen (up 3.7% year
on year), operating income amounted to 6,360 million yen (up 53.1% year on year), and ordinary income came to 4,055 million
yen (up 108.2% year on year). The Company recorded 741 million yen in extraordinary loss due to costs associated with returningclassrooms to their original state as we restructured the language education business (withdrawing from the COCO Juku business),but recovery for our major businesses still boosted profit attributable to owners of parent to 1,603 million yen (a 536.8% increase
year on year).
The business results by segment are as shown below.
<Medical Support Segment>
Net sales were 56,840 million yen (compared with 53,667 million yen in the same period of the previous fiscal year).
Operating income was 4,949 million yen (compared with 4,448 million yen in the same period of the previous fiscal year).
For the hospital segment, the company continued working to better respond to customer needs and improve work precision by
conducting customer satisfaction surveys and making other efforts to raise the level of service at medical institutions with which
the Group is under contract. Additionally, the Company continued negotiations to optimize contracts and focused on securing
new contracts. These included contracts concerning work that supports medical office administration, a market for which demand
continues to grow as style reform progresses in the medical industry.
Student numbers for the medical administration education segment’s medical administration course grew 18% year on year,
an achievement which helps improve the Nichii Group’s capacity to supply medical admin personnel.
This resulted in all segments—hospital, clinic, and medical administration education—recording an increase in net sales andincome.
<Long-Term Care Segment>
Net sales were 76,566 million yen (compared with 75,509 million yen in the same period of the previous fiscal year). Operating
income was 8,518 million yen (compared with 8,019 million yen in the same period of the previous fiscal year).
For the in-home care service segment, the Group worked to enhance operating frameworks with a focus on future initiatives,
such as by acquiring and retaining long-term care service personnel and shoring up measures for patients in a moderate or severe
condition.
Meanwhile, for the residential care service segment, the Group strengthened collaboration between facilities to reduce
vacancies after users move out, as well as worked to increase user numbers and improve occupancy rates.
This resulted in increased net sales and income owing to higher sales per customer (due to more patients in a moderate orsevere condition in the in-home care service segment) and better occupancy rates at residential care facilities.
<Childcare Segment>
Net sales were 6,684 million yen (compared with 5,433 million yen in the same period of the previous fiscal year). Operating
loss was 711 million yen (compared with operating loss of 477 million yen in the same period of the previous fiscal year).
In the three months under review, the Group opened 14 new childcare facilities, coming to a total of 299 facilities nationwide.
By promoting corporate-run childcare centers and the expansion of regional usage limits, the Group also helped to expand supply－ 4 －of childcare resources and take a step towards solving Japan’s nursery waitlisting problem.
The opening of new facilities and increased recognition from local communities brought more nursery enrollments andincreased net sales. Operating loss also increased, however, due to increased upfront expenses and nursery staff recruitment costs
accompanying the opening of new facilities.
<Health Care Segment>
Net sales were 853 million yen (compared with 779 million yen in the same period of the previous fiscal year). Operating loss
was 977 million yen (compared with operating loss of 309 million yen in the same period of the previous fiscal year).
The Group focused on campaign-based sales promotions and corporate sales for the Nichii Life housekeeping service and theSunny Maid Service housekeeping support business, a business which services Japan’s National Strategic Special Zones. In
September 2019, the Group started offering Sunny Maid Service in Aichi Prefecture. Now, the Group is constructing a system
where long-term care staff, who previously had to cover both long-term care service and housekeeping duties, can instead becharged with providing long-term care services exclusively. The Group is also conducting human resources investment to bringin foreign staff with an eye towards the expansion of the housekeeping market.
Net sales rose thanks to the Group’s active sales promotion driving up service user and corporate contract numbers. However,an increase in expenses associated with human resources investment for Sunny Maid Service led to an increase in operating loss.
<Education Segment>
Net sales were 5,650 million yen (compared with 5,926 million yen in the same period of the previous fiscal year). Operating
loss was 104 million yen (compared with operating loss of 2,041 million yen in the same period of the previous fiscal year).
Restructuring (withdrawal from the COCO Juku business) brought the closure of 15 schools at the end of June 2019, thereby
completing the closure of all 72 COCO Juku schools. The Group passed a resolution to close the 185 franchised schools as well,by the end of March 2020.
The Group worked to increase the number of new students for subsidiary Gaba Corporation’s one-on-one English conversation
classes, by strengthening corporate sales and augmenting the measures to acquire contracts with customers who took trial lessons
at its 50 Learning Studios.
Restructuring (withdrawal from the COCO Juku business) led to lower net sales, but operating loss was minimized by closing
schools to reduce labor costs, rents, and advertising expenses.
<Therapy Segment>
Net sales were 288 million yen (compared with 182 million yen in the same period of the previous fiscal year). Operating
loss was 164 million yen (compared with operating loss of 288 million yen in the same period of the previous fiscal year).
In July, the Group opened one new salon under its A-LOVE dog salon and hotel brand, bringing the total to 25 salonsnationwide as of the end of September 2019. The Group focused on creating repeat customers by improving service quality andraising regional brand recognition. The Group also aimed to improve the optional services on offer, increasing sales per customer.
The increase in regional patrons due to higher recognition and increase in sales per customer led to higher net sales andminimized operating loss.
<Global Segment>
Net sales were 811 million yen (compared with 966 million yen in the same period of the previous fiscal year). Operating loss
was 291 million yen (compared with operating loss of 694 million yen in the same period of the previous fiscal year).
The Group continued to focus on acquiring contracts for operation of long-term care facilities in China, as well as new
projects consulting on Japanese-style caregiver training and the establishment of care facilities. In terms of contracts received
for operation of long-term care facilities, the Group has four outstanding contracts as of the end of September 2019 andcontinued working to receive more contracts. For training-related business, the number of contracts steadily increased
alongside a greater number of repeat customers, and the Group worked on promoting the Japanese style of nursing care.
Net sales fell due to the dissolution of an underperforming joint venture in China which the Group launched last year, but
operating loss was minimized by streamlining operations through organizational restructuring.
<Other Segments>
Net sales were 187 million yen (compared with 130 million yen in the same period of the previous fiscal year). Operating
income was 96 million yen (compared with 126 million yen in the same period of the previous fiscal year).
The Group helped streamline and improve profitability for every service through product control and telephone reception
services between Nichii Group companies.
As a result, net sales grew while income decreased.
－5－(2) Details of financial position
At the end of the first half of the consolidated fiscal year under review, total assets decreased 11 million yen as compared tothe end of the previous consolidated fiscal year, to 193,629 million yen. The major causes were an increase of 1,313 million
yen in current assets, mainly due to an increase in notes and accounts receivable—trade, and a decrease of 1,324 million yen in
fixed assets, mainly due to a decrease in goodwill.
Liabilities decreased 613 million yen as compared to the end of the previous consolidated fiscal year, to 151,949 million
yen. Major factors included an increase of 1,585 million yen in current liabilities, mainly as a result of growth in short-termloans payable and a decrease of 2,198 million yen in non-current liabilities, owing largely to a fall in long-term loans payable.
Net assets increased 602 million yen from the end of the previous fiscal year, to 41,680 million yen.

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(3) Information on the future outlook, including consolidated financial results forecasts
The Group formally amends the year-end results forecast for the current consolidated fiscal year announced on May 10,
2019, as below, based on progress as of the second quarter and investment plans for the long-term care segment going forward.
The long-term care segment and health care segment have fallen behind in securing new users, leading the Group to believe
net sales will fall short of the original target.
The Group believes operating income will fall below the estimate as well, due to increased expenses associated withenhancing long-term care service infrastructure and installation of IT infrastructure, increased taxes and dues accompanying
Japan’s consumption tax hike, and other factors.
Given both the reasons above and having completed large-scale renovation of the nursing care centers (day service centers)
ahead of schedule, thereby increasing interest expenses related to lease repayment, the Group predicts ordinary income will fall
below target.
Profit attributable to owners of parent has been revised given both the aforementioned reasons and the fact that the Group
recorded 741 million yen in extraordinary loss from language education business restructuring the first half.

(Consolidated financial forecasts)
Revision of full-year consolidated financial forecasts for the fiscal year ending March 31, 2020 (April 1, 2019 throughMarch 31, 2020)
Net sales
Previously announced
forecasts (A)Revised forecasts thistime (B)
Difference (B – A)
Percentage increase(decrease) %(Reference)
Full-year results for theprevious fiscal year
(FY ended March 31,
2019)

OperatingincomeOrdinary income

Profit attributableto owners ofparent

Net income pershare

Million yen
303,000

Million yen
15,200Million yen
11,000Million yen
6,700

Yen
104.12

298,600

13,300

8,700

4,700

73.02

(4,400)(1,900)(2,300)(2,000)(1.5)(12.5)(20.9)(29.9)

287,882

10,032

5,703

6,108

95.01

(Non-consolidated earnings forecasts)
Revision of full-year non-consolidated financial forecasts for the fiscal year ending March 31, 2020 (April 1, 2019 throughMarch 31, 2020)
Net sales
Previously announced
forecasts (A)Revised forecasts thistime (B)
Difference (B – A)
Percentage increase(decrease) %(Reference)
Full-year results for theprevious fiscal year
(FY ended March 31,
2019)

Operating

Ordinary income

incomeNet income

Net income pershare

Million yen
256,700

Million yen
12,500Million yen
10,900Million yen
7,100

Yen
110.34

252,400

10,800

8,800

4,750

73.80

(4,300)(1,700)(2,100)(2,350)(1.7)(13.6)(19.3)(33.1)

246,560

8,687

7,084

503

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7

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7.83

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

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8

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H1 of Fiscal 2020
(As of September 30, 2019)18,255,916
33,434,278
256,310364,426
11,159175,533
13,291,468(104,166)
65,684,926

17,665,981
35,018,429
268,774
459,80933,426
181,465
13,459,221(89,044)
66,998,064

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

21,940,786
50,742,296
9,794,025
82,477,108

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

8,253,335
3,960,644
12,213,980

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

32,179,393(238,996)
31,940,397
126,631,486
193,629,550

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

2,253,453
6,029,505
2,565,581
17,095,512
6,645,700
19,9407,416
27,632,386
62,249,496

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

12,350,929
58,255,107
7,896,528
3,659,421
7,537,589
89,699,576
151,949,073

(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

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9

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H1 of Fiscal 2020
(As of September 30, 2019)11,933,790
17,009,418
22,867,282(11,177,438)
40,633,052

11,933,790
17,066,075
22,927,399(10,980,102)
40,947,163

12,481

12,201(244,124)(414,813)(646,456)
605,781
485,398
41,077,776
193,640,771(157,629)(322,126)(467,554)
628,987
571,880
41,680,476
193,629,550

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

142,596,669
114,557,464
28,039,205
23,884,305
4,154,899

1st Half of Fiscal Year under
Review(from April 1, 2019
to September 30, 2019)
147,882,887
118,110,697
29,772,189
23,411,256
6,360,932

72,458104,663
19,79024,133
205,288426,334

71,920100,164
33,13535,552
166,863407,6362,416,896
13,121
203,666
2,633,685
1,947,548

2,515,424
16,270181,174
2,712,869
4,055,699－

6

128,950

－

1,691
535
131,177

－
－
6

3,532

55,553

149,705－

305,191－－620
459,049
1,619,676
1,890,419(501,716)
1,388,703
230,973(20,790)
251,764

633,657
52,759741,970
3,313,734
1,698,293(1,539)1,696,753
1,616,981
13,825
1,603,155

1st Half of Previous Fiscal Year(from April 1, 2018
to September 30, 2018)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Rent income
Subsidy income
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 property, plant and equipment, net
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 property, plant and equipment,
net
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

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10

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

230,973

1st Half of Fiscal Year under
Review(from April 1, 2019
to September 30, 2019)
1,616,981

481(16,439)
96,57480,616
311,590(420)
84,97892,687
177,245
1,794,226

343,700

1,781,938(32,109)12,288

1st Half of Previous Fiscal Year(from April 1, 2018
to September 30, 2018)
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

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11

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(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.

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