Financial Results for the First Quarter of the Year Ending March 31, 2021 (J-GAAP)
August 7, 2020
Listed on : Tokyo Stock Exchange 1st Section
URL https://www.nichiigakkan.co.jp

Name of listed company: NICHIIGAKKAN CO., LTD.
Securities code: 9792
Representative: Nobusuke Mori, Representative Director and President
Contact: Kazuya Shiiya, Executive Officer and General Manager-Accounting
Scheduled date for filing the quarterly financial report: August 13, 2020
Supplementary quarterly materials prepared: Yes
Results information meeting held: NoneTEL 03-3291-2121
Scheduled date to start dividends distribution: –(Figures shown are rounded down to the nearest million yen.)
1. Consolidated financial results for the first quarter of the year ending March 31, 2021 (April 1, 2020 – June 30, 2020)(1) Consolidated operating results(Percentage figures represent changes from the previous year.)
Profit attributable to
Net sales
Operating income
Ordinary income
owners of parent％％％％
Million yen
Million yen
Million yen
Million yen
Three months ended June
72,736
△1.1
353
△87.0
△767
－
△1,081－30, 2020
Three months ended June－－
73,523
3.8
2,723
115.5
1,574
927
30, 2019(Note) Comprehensive income: First three months of FY2020:△1,064million yen（－％）

Net income per share
Three months ended June30, 2020
Three months ended June30, 2019

First three months of FY2020:1,022million yen（－％）

Diluted net income per share

Yen

Yen

△16.56

－

14.42

14.32

(2) Consolidated financial position

As of June 30, 2020
As of March 31, 2020

Total assets
Million yen
188,539
192,804

Net assets
Million yen
38,91544,025

Reference: Shareholders’ equity: As of June 30, 2019: 38,088million yen

Equity ratio
％
20.2
22.4

As of March 31, 2019: 43,180 million yen

2. Dividends
Annual dividends

Year ended March 31, 2020
Year ending March 31, 2021
Year ending March 31, 2021
(forecast)

1Q-endYen－－

2Q-endYen
20.00

3Q-endYen－

Year-end
Yen
20.00

－

－

－

AnnualYen
40.00－(Note) Revisions to most recently announced dividend forecast: No(Note) As announced in the press release “Notice Regarding Implementation of Management Buyout and Recommendation to Tender
Shares” on May 8, 2020, the Company is scheduled to become a wholly owned subsidiary of K.K. BCJ-44 (hereinafter the“Tender Offeror”) as a result of a tender offer by the Tender Offeror for common shares outstanding (hereinafter the“Company’s Shares”) and share acquisition rights of the Company (hereinafter the “Tender Offer”) and a series of subsequenttransactions, and the Company’s Shares are scheduled to be delisted. Therefore, the forecast of dividends for the fiscal year
ending March 31, 2021 is not stated. If the disclosure of a dividend forecast becomes necessary in the future as a result of theTender Offer, etc., the Company will promptly disclose it.
3. Forecast of consolidated financial results for the fiscal year ending March 31, 2021 (April 1, 2020 to March 31, 2021)
As announced in the press release “Notice Regarding Implementation of Management Buyout and Recommendation to Tender
Shares” on May 8, 2020, the Company is scheduled to become a wholly-owned subsidiary of the Tender Offeror as a result of theTender Offer by the Tender Offeror and a series of subsequent transactions, and the Company’s Shares are scheduled to be delisted.
Therefore, the forecast of consolidated financial results for the fiscal year ending March 31, 2021 is not stated.
－

1 －* Notes(1) Changes in subsidiaries during the fiscal year (Changes in specified subsidiaries resulting in changes in scope of consolidation): Yes

New: None
Exclusion:(2) Applications of special accounting Methods for the Preparation of Consolidated Quarterly 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): Yes
3) Changes in accounting estimates: None
4) Restatement: None

(Note) The details appear in P.12 [consolidated financial statements and major notes (3)] [Notes to quarterly consolidated
financial statements (change in accounting policy)](4) Number of shares outstanding (common stock)1) Number of shares issued and outstanding(including treasury stock)

As of June 30, 2020

73,017,952

As of June 30, 2019

73,017,952

2) Number of treasury stock

As of June 30, 2020

7,690,517

As of June 30, 2019

7,682,005

3) Average number of shares issued andoutstanding in each period

As of June 30, 2020

65,333,082

As of June 30, 2019

64,346,210* Financial reports are not subject to audits by a certified public accountant or an audit corporation.
* Explanation concerning the appropriate use of financial result forecasts and other special notes
As announced in the press release “Notice Regarding Implementation of Management Buyout and Recommendation to
Tender Shares” on May 8, 2020, the Company is scheduled to become a wholly-owned subsidiary of the Tender Offeror as aresult of the Tender Offer by the Tender Offeror and a series of subsequent transactions, and the Company’s Shares arescheduled to be delisted. Therefore, the forecast of consolidated financial results for the fiscal year ending March 31, 2021 is
not stated.

－

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

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

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

7(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
Three months ended June 30…………………………………………………………………………………………

10

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

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

12(explanatory notes regarding the going concern assumption) …………………………………………………………

12(Notes when there in significant changes in amounts of equity) ………………………………………………………

12(change in accounting policy) …………………………………………………………………………………………

12(additional information) ………………………………………………………………………………………………

12

－

3 －

1. Qualitative information on quarterly financial results(1) Overview of business results
During the first quarter of the fiscal year under review, the Japanese economy decelerated sharply due to the state and local
governments’ requests for the voluntary suspension of business to business operators and the continuation of the voluntary
restraint on leaving home by individuals associated with the worldwide spread of the COVID-19 coronavirus.
In this environment, the Nichii Group was engaged in business activities, with ensuring the safety and security of customers
and employees as the top priority mission for the Group.
The Group worked to maintain the provision of services by implementing measures to prevent the spread of infections basedon the state government’s policies and the guidance of local governments, given that the Company’s mainstay businesses (themedical support, long-term care and childcare businesses) are social infrastructure indispensable for people’s lives.
Meanwhile, the education business cancelled classes at all Learning Studios (“LSs”) of one-to-one English conversation
lessons operated by GABA Corporation, a subsidiary of the Company. The Group also decided to close lessons at 10 LSs whererevenue improvement was delayed until November 30, 2020 in light of the uncertain future outlook for economic activities andan improvement in the economy.
As a result, net sales decreased to 72,736 million yen (73,523 million yen in the same period of the previous fiscal year)
because an increase in sales in the medical support, long-term care and childcare businesses due to the maintained provision ofservices and the expanded base to provide services was unable to offset a fall in sales attributable to the cancellation of lessons
in the education business.
In terms of profits, operating income fell to 353 million yen (2,723 million yen in the same period of the previous fiscal year)
and an ordinary loss was 767 million yen (ordinary income of 1,574 million yen in the same period of the previous fiscal year)
mainly due to a rise in personnel expenses as a result of paying special service bonus to local staff engaging in the three corebusinesses and employees in branch offices who supervised job sites, in addition to the cancellation of lessons in the education
business.
In addition, loss attributable to owners of parent was 1,081 million yen (profit attributable to owners of parent of 927 million
yen in the same period of the previous fiscal year) due to the fall in operating income and the posting of extraordinary losses of
249 million yen associated with the closure of lessons at 10 LSs of one-to-one English conversation lessons in the first quarter
under review.
Business results for the fiscal year under review are as follows.
<Medical Support Segment>
Net sales were 29,294 million yen (compared with 28,467 million yen in the previous fiscal year). Operating income was2,139 million yen (compared with 2,359 million yen in the previous fiscal year).
In the first quarter under review, the Group enhanced its basic strength through negotiations for contract rationalization, on
which the Group had been working continuously.
In the hospital segment, the Group sought to ensure the safety of local staff and focused on support activities to maintain the
medical care delivery system at contract medical institutions amid the spread of novel coronavirus infections.
In the clinic and medical education segments, sales decreased affected by suspended consultation at some clinics, a fall in thenumber of patients and the cancellation of medical work processing courses.
As a result, sales decreased in the clinic and medical education segments, but sales in the medical support segment as a wholeincreased due to a rise in the unit price of users thanks to negotiations for contract rationalization. Operating income declined
given a rise in personnel expenses as a result of paying a special service bonus to staff, in addition to the fall in sales in the clinicand medical education segments.
<Long-Term Care Segment>
Net sales were 38,319 million yen (compared with 38,059 million yen in the previous fiscal year). Operating income was3,633 million yen (compared with 4,191 million yen in the previous fiscal year).
The long-term care segment focused on the continuation of operation by fully enforcing measures to prevent infections andpaying a special service bonus to staff.
In the in-home care service segment, users refrained from using day-care service offices for fear of infection, but the Group
responded flexibly to needs for long-term care services by proposing the use of home-visit care services as an alternative, taking
advantage of its strength in providing comprehensive long-term care services.
In addition, the number of home-visit care offices increased by about 400 from the end of June 2019 due to the reorganizationof the service supply system through the division and the new establishment of home-visit care service offices, which the Group
had been working on since September 2019.
－4 －In the residential care service segment, the Group newly established two group homes in the first quarter under review.
As a result, sales increased due to a rise in the number of users of residential care services as a result of the new establishmentof group homes, but profits decreased due to a rise in costs such as rents, reflecting an increase in the number of home-visit careservice offices.
<Childcare Segment>
Net sales were 3,701 million yen (compared with 3,153 million yen in the previous fiscal year). Operating loss was 309
million yen (compared with an operating loss of 546 million yen in the previous fiscal year).
In the first quarter under review, the Group opened 24 new childcare facilities including licensed childcare centers. In thechildcare segment, the Group also focused on the continuation of operations by fully enforcing measures to prevent infections.
As a result, sales increased due to a rise in the number of children using the facilities associated with the establishment of newchildcare facilities, and the operating loss was reduced by controlling recruitment costs associated with progress in the retentionof human resources.
<Health Care Segment>
Net sales were 374 million yen (compared with 423 million yen in the previous fiscal year). Operating loss was 597 million
yen (compared with an operating loss of 493 million yen in the previous fiscal year).
Nichii Life, which offers housekeeping and family long-term care services, and the Sunny Maid Service, which provides
housekeeping services by foreign housekeepers in Japan’s National Strategic Special Zones, also continued to provide services
by fully enforcing measures to prevent infections. However, demand for the use of housekeeping services declined temporarily
because customers spent more time at home in April and May when a state of emergency was declared.
As a result, the number of service users decreased, and sales and profits declined.
<Education Segment>
Net sales were 457 million yen (compared with 2,784 million yen in the previous fiscal year). Operating loss was 1,749
million yen (compared with an operating loss of 56 million yen in the previous fiscal year).
GABA Corporation, a subsidiary of the Company, temporarily cancelled classes at all 50 LSs of one-to-one English
conversation lessons from March to May to prevent the spread of infections.
While all LSs resumed business in June, GABA Corporation decided to close 10 LSs (JR Tower Sapporo LS NEXT, Sendai
LS NEXT, Shimokitazawa LS, Roppongi LS, Omotesando LS, Aobadai LS, Tsukuba LS NEXT, Kyoto Station-front LS,
Hiroshima LS NEXT and Fukuoka-Tenjin LS) where revenue improvement was delayed until November 30, 2020, given thatthe future outlook for economic activities and the economy remained uncertain.
As a result, sales and profits declined due to stagnation in the acquisition of new students and a fall in the number of students
associated with the decline in the number of business days. In addition, the segment posted extraordinary losses of 249 million
yen in the first quarter under review associated with the closure of 10 LSs.
<Therapy Segment>
Net sales were 135 million yen (compared with 145 million yen in the previous fiscal year). Operating loss was 66 million
yen (compared with an operating loss of 85 million yen in the previous fiscal year).
The number of A-LOVE dog salon users decreased due to the temporary suspension of business in April and May. In addition,
Lakewoods Garden Himeharu-no Sato, a theme park operated by Nichii Green Farm Company, a subsidiary, was also closed in
April and May.
Meanwhile, sales of Australian Labradoodle, a therapy dog sold by the Company, remained firm.
As a result, the operating loss was reduced due to a fall in operating costs associated with the closure of the theme park and arise in the number of therapy dogs sold, although sales declined due to the temporary suspension of business at the dog salon.
<Global Segment>
Net sales were 324 million yen (compared with 411 million yen in the previous fiscal year). Operating loss was 96 million
yen (compared with an operating loss of 149 million yen in the previous fiscal year).
The segment developed the long-term care business (contracts for the operation of facilities and outside sales training andconsulting business, etc.) mainly in northern China. The segment made efforts in reorganization which it had been working on
since the fiscal year before last, and in the continuation of the operation of contracted long-term care facilities , although thesegment was unable to carry out business activities to acquire new projects due to the spread of the novel coronavirus.
The segment also commenced online outside sales training in the first quarter under review to diversify the styles of course
participation. In the consulting business, services were cancelled or postponed because client companies suspended business.
－

5 －This resulted in a fall in sales, reflecting stagnation in acquiring new projects and the suspension of some services, but an
operating loss was reduced due to the concentration of management resources.
<Other Segments>
Net sales were 129 million yen (compared with 77 million yen in the previous fiscal year). Operating income was 72 million
yen (compared with 47 million yen in the previous fiscal year).
Sales and profits increased due to goods management for the Nichii Group companies and the provision of auxiliary services for themainstay businesses.

－

6 －(2) Overview of financial position
Total assets at the end of the fiscal year under review stood at 188,539 million yen, a decrease of 4,264 million yen fromthe end of the previous fiscal year. The major causes were a decrease of 2,095 million yen in current assets, mainly due to afall in cash and deposits, and a decrease of 2,169 million yen in fixed assets, mainly due to a fall in property, plant andequipment. Liabilities decreased 845 million yen from the end of the previous fiscal year, to 149,624 million yen. Major factors
included a decrease of 1,501 million yen in non-current liabilities mainly due to a fall in long-term loans payable and anincrease of 656 million yen in current liabilities mainly as a result of growth in short-term loans payable.
Net assets increased 5,110 million yen from the end of the previous fiscal year, to 38,915 million yen.
(3) Explanation of future forecast information such as consolidated earnings forecast
As announced in the press release “Notice Regarding Implementation of Management Buyout and Recommendation to
Tender Shares” on May 8, 2020, the Company is scheduled to become a wholly owned subsidiary of K.K. BCJ-44(hereinafter the “Tender Offeror”) as a result of a tender offer by the Tender Offeror for common shares outstanding(hereinafter the “Company’s Shares”) and share acquisition rights of the Company (hereinafter the “Tender Offer”) and a seriesof subsequent transactions, and the Company’s Shares are scheduled to be delisted. Therefore, the forecast of dividends for the
fiscal year ending March 31, 2021 is not stated.

－

7 －2. Quarterly consolidated financial statements and major notes(1) Quarterly consolidated balance sheets(million yen)
Fiscal 2020
(As of March 31, 2020)
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
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－

8 －Q1 of Fiscal 2021
(As of June 30, 2020)

18,52035,556
317
407
11
164
12,870△98
67,74915,27736,544
282
439
20
400
12,761△72
65,654

21,03751,214
10,94883,201

20,94450,574
9,494
81,013

7,423
4,199
11,623

7,009
4,681
11,69030,456△226
30,229125,054
192,804

30,380△199
30,180122,885
188,539

1,948
5,658
1,754
16,9306,206
35
28,981
61,515

2,798
8,521
622
18,0873,285
23
29,67763,016

8,962
59,161
8,001
3,740
7,396
87,263
148,778

7,108
59,119
8,080
3,729
8,568
86,607
149,624

(million yen)
Fiscal 2020
(As of March 31, 2020)
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－

9 －Q1 of Fiscal 2021
(As of June 30, 2020)11,933
17,23324,166△9,734
43,598

11,933
17,233
18,575△9,74737,995

5

8

△66
△357
△417
252
591
44,025
192,804

403
△319
93
259
567
38,915
188,539

(2) Quarterly consolidated statements of income and comprehensive income(Quarterly consolidated statements of income)(Three months ended June 30)

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
Other
Total non-operating income
Non-operating expenses
Interest expenses
Rent expenses
Foreign exchange losses
Share of loss of entities accounted for using equity
methodOther
Total non-operating expenses
Ordinary profit (loss)
Extraordinary income
Gain on sales of investments in capital of subsidiaries
and associates
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Impairment loss
Structural reform expenses
Other
Total extraordinary losses
net income (loss) before income taxes
Income taxes—current
Income taxes—deferred
Total income taxes
Net income(loss)
Profit (loss) attributable to non-controlling interests
Profit (loss) attributable to owners of parent(million yen)Previous consolidated cumulative Current consolidated cumulative
first quarterfirstr quarter(from April 1, 2019 to June(from April 1, 2019 to June
30,2019)
30,2019)
73,52372,73658,88260,781
14,641
11,955
11,917
11,601
2,723
353

－

10 －

35
48
30
－
78
192

32
83
16
21
98
251

1,253
8
30

1,277
7
－

5

12

44
1,341
1,574

74
1,373
△767

0

0

0

0

8
－
224
15
248
1,325
166
218
385
940
12
927

6
208
－
40
255
△1,022108△48
60△1,083△1△1,081

(Quarterly consolidated statements of comprehensive income)(Three months ended June 30)

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 ofparentComprehensive income attributable to non-controllinginterests(million yen)Previous consolidated cumulative Current consolidated cumulative
first quarterfirst quarter(from April 1, 2019 to June(from April 1, 2019 to June
30,2019)
30,2019)940△1,083

－

11 －

△1
37
46
82
1,022

2
△22
38
18
△1,064

1,009△1,06213△2

(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.
(change in accounting policy)(Application of the Accounting Standard for Revenue Recognition, etc.)
Applying the “Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan (ASBJ) Statement
No. 29 issued on March 30, 2018), etc. from the beginning of the first quarter under review, the Company has decided torecognize promised goods or services at an amount expected to receive in exchange for the goods or services at the time
when control over the goods or services has transferred to the customer. As such, the Company has decided to recognize
lump-sum payments upon admission , which the Company had recognized in the contract commencement month in the pastin the plan of lump-sum payment upon admission for fee-based nursing homes, over a certain period based on the degree ofprogress by estimating a reasonable period to satisfy the performance obligation. In addition, the Company posts the lumpsum payments upon admission as advances received.
The Company handles the application of the Accounting Standard for Revenue Recognition, etc. according to thetransitional measure stipulated in the proviso of Paragraph 84 of the Accounting Standard for Revenue Recognition, andapplies the new accounting policy to the beginning balance of retained earnings in the first quarter under review by adding
and subtracting the cumulative effect of retroactive application of the new accounting policy before the beginning of the firstquarter under review to and from retained earnings at the beginning of the first quarter under review. However, the Company
does not apply the new accounting policy retroactively to contracts for which the Company had recognized the amount ofalmost all revenues before the beginning of the first quarter under review according to the previous handling by applying themethod stipulated in Paragraph 86 of the Accounting Standard for Revenue Recognition. In addition, applying the method
stipulated in the in-addition clause (1) of Paragraph 86 of the Accounting Standard for Revenue Recognition, the Company
accounted for changes in contracts that had been entered into before the beginning of the first quarter under review based on
the terms of the contracts after reflecting all the changes in contracts and adds and subtracts their cumulative effects to andfrom retained earnings at the beginning of the first quarter under review.
As a result, in comparison with cases where the previous accounting standards are applied, net sales and operating income
for the first quarter under review increased 205 million yen, respectively, and ordinary loss and net loss before income taxes
decreased 205 million yen, respectively. In addition, the beginning balance of retained earnings decreased 2,621 million yen.
At the end of the first quarter under review, other (advances received) in current liabilities increased 770 million yen whileother (long-term advances received) in non-current liabilities increased 1,645 million yen.
(Additional information)(Tender offer for the Company’s shares, etc. by K.K. BCJ - 44)
At a meeting of the Board of Directors held on May 8, 2020, the Company expressed an opinion to agree on a tender offer
by K.K. BCJ-44 (hereinafter the “Tender Offeror”) for common shares outstanding (hereinafter the “Company’s Shares”)
and share acquisition rights (Note 2) of the Company, which would be conducted as part of the so-called managementbuyout (MBO) (Note1), and resolved to recommend that the Company’s shareholders and share acquisition right holders
subscribe to the Tender Offer.
The resolution at the Board of Directors meeting was passed on the assumption that the Tender Offeror intended to makethe Company a wholly owned subsidiary through the Tender Offer and a series of subsequent transactions and that theCompany’s shares was scheduled to be delisted.
For details, please refer to the “Notice Regarding Implementation of Management Buyout and Recommendation to Tender
Shares” released on May 8, 2020 and the “Partial Amendment of ‘Notice Regarding Implementation of Management Buyout
and Recommendation to Tender Shares’ [Amendment]” released on July 31, 2020.
(Note 1) “Management buyout (MBO)” is a tender offer to be made based on an agreement between the Tender Offeror
and the officers of the Company and a transaction that has a common interest with the officers of the Company.
(Note 2) “Share subscription rights” is a collective term for share subscription rights (ordinary-type) issued based on the
resolution at the Company’s Board of Directors meeting held on June 30, 2015, share subscription rights (stockcompensation-type) issued based on the resolution at the Company’s Board of Directors meeting held on June30, 2015, share subscription rights (stock compensation-type) issued based on a resolution at the Company’s－

12 －Board of Directors meeting held on June 28, 2016, share subscription rights (stock compensation-type) issued
based on a resolution at the Company’s Board of Directors meeting held on June 27, 2017, share subscription
rights (stock compensation-type) issued based on a resolution at the Company’s Board of Directors meeting
held on June 26, 2018 and share subscription rights (stock compensation-type) issued based on a resolution at
the Company’s Board of Directors meeting held on June 25, 2019.

－13 －