Financial Results for the Year Ended March 31, 2016 (J-GAAP)May 13, 2016
Name of listed company: Nichii Gakkan Company
Listed on: Tokyo Stock Exchange 1st Section
Securities code:
9792
URL:
http://www.nichiigakkan.co.jp
Representative:
Akihiko Terada, Chairman, President and CEO
Contact:
Koichi Terada, Director
TEL: 03-3291-2121
Scheduled date to hold the ordinary general meeting of shareholders: June 28, 2016
Scheduled date to start dividends distribution:
June 29, 2016
Scheduled date of filing annual securities report:
June 29, 2016
Supplementary materials prepared: Yes
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 year ended March 31, 2016(April 1, 2015 – March 31, 2016)(1) Consolidated operating results(Percentage figures represent changes from the previous year.)
Net Sales
Operating Income
Ordinary Income
Net Income
Million yen

Year ended March 31, 2016
Year ended March 31, 2015%

273,583
271,868

Million yen

0.6
0.2

%

(Note) Comprehensive income: Year ended March 31, 2016: -16,371 million yen (－%)

Net Income
per Share%

Million yen%(15,995)416―(36.3)―(85.3)

Year ended March 31, 2015: 264 million yen (-90.3%)

Diluted Net
Ordinary Income Operating Income
Return on Equity
Income per Shareto Total Assets
to Net Sales
Yen

Yen

(248.83)
6.03

Year ended March 31, 2016
Year ended March 31, 2015

Million yen(3,629)3,144―(18.2)

(785)
5,173

%

%

(34.3)
0.7

—
—

%

(2.0)
1.7

(0.3)
1.9

Reference: Equity-method investment profit (loss): Year ended March 31, 2016: 41 million yen Year ended March 31, 2015: 10 million yen(2) Consolidated financial position
Total Assets

Net Assets

Million yen

As of March 31, 2016
As of March 31, 2015
Reference: Shareholders’ equity:

Equity Ratio

Net Assets per Share

Million yen

184,170
184,554%

38,101
56,685

Yen

20.0
30.5

574.35860.09As of March 31, 2016: 36,863 million yen As of March 31, 2015: 56,333 million yen(3) Consolidated cash flows
Cash Flows fromOperating Activities

Cash Flows from
Investing Activities

Million yen

Year ended March 31, 2016
Year ended March 31, 2015

Cash Flows from
Financing Activities

Million yen

2,546
10,629Cash and Cash
Equivalents at
End of Year

Million yen(6,250)(8,085)

Million yen

5,381(3,198)14,3739,821

2. Dividends
Annual dividends
1Q-endYen

2Q-end3Q-endYen

Year-end

Yen

AnnualYen

Total
Dividends
Paid (annual)

Payout Ratio(consolidated)

Dividends to
Net Assets(consolidated)

Million yen

%

%

Yen

Year ended March 31, 2015

—

10.00

—

10.00

20.00

1,353

331.7

2.3

Year ending March 31, 2016

—

11.00

—

11.00

22.00

1,412

―

3.1

Year ending March 31, 2017
(forecast)

—

11.00

—

11.00

22.00

282.4

3. Forecast of consolidated financial results for the year ending March 31, 2017 (April 1, 2016 – March 31, 2017)(Percentage figures represent changes from previous year for full year figures and from same period of previous year for interim period figures.)

Net Sales

Operating Income

Million yen

First six months
Full year

144,000
294,700

%

5.4
7.7

Million yen

600
4,800

%

—
—

Profit attributable toowners of parent

Ordinary Income
Million yen（1,100）
1,300

%

—
—

Million yen（1,500）500

Net Income
per Share
%

—
—

Yen

（23.37）7.79

* Notes(1) Changes in subsidiaries during the fiscal year (Changes in specified subsidiaries resulting in changes in scope of
consolidation): None
(2) Changes in accounting policies, changes of accounting estimates and restatement
1) Changes in accounting policies due to revisions of accounting standards, etc.: Yes
2) Changes in accounting policies due to reasons other than those stated in 1): None
3) Changes in accounting estimates: None
4) Restatement: None
(3) Number of shares outstanding (common stock)1) Number of shares issued and outstanding (including treasury stock)
Year ended March 31, 2016: 73,017,952
Year ended March 31, 2015:
2) Number of treasury stockYear ended March 31, 2016:
8,825,918
Year ended March 31, 2015:
3) Average number of shares issued and outstanding in each period
Year ended March 31, 2016: 64,284,296
Year ended March 31, 2015:

73,017,952
7,521,206
69,011,405(Reference) Overview of the non-consolidated business results
1. Non-consolidated financial results for the year ended March 31, 2016 (April 1, 2015 – March 31, 2016)(1) Non-consolidated operating results(Percentage figures represent changes from previous year.)
Net Sales
Operating Income
Ordinary Income
Net Income
Million yen

Year ended March 31, 2016
Year ended March 31, 2015%

238,885
238,835

0.0
0.2

Net Income
per Share

Million yen%―(22.4)(1,696)
2,705

Million yen(15,910)272%―(81.5)

Yen——(247.51)
3.94(2) Non-consolidated financial position
Total Assets

Net Assets

Million yen

As of March 31, 2016
As of March 31, 2015%―(41.8)

Diluted Net Income
per Share
Yen

Year ended March 31, 2015
Year ended March 31, 2015

Million yen(2,772)
1,699

Equity Ratio

Million yen

149,486
153,910Net Assets per Share%

39,261
57,486

Yen

25.9
37.4

603.66877.70

Reference: Shareholders’ equity: As of March 31, 2016: 38,749 million yen As of March 31, 2015: 57,486million yen

2. Forecast of non-consolidated financial results for the year ending March 31, 2017 (April 1, 2016– March 31, 2017)(Percentage figures represent changes from previous year for full year figures and from same period of previous year for interim period figures.)

Net Sales

Operating Income

Million yen

First six months
Full year

125,350
245,000

%

4.9
6.3

Million yen

350
2,900

Ordinary Income%――

Million yen

200
1,700

%

―
―

Net Income
per Share

Net Income
Million yen

50
1,700

%

―
―

Yen

0.78
26.48

* Implementation status of audit procedures
The audit procedure based on the Financial Instruments and Exchange Act does not apply to this Financial Report, and the audit procedure forthe consolidated financial statements and the non-consolidated financial statements based on the Financial Instruments and Exchange Act has
not been completed as of the release of this Financial Report.
* 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 tobe reasonable. Various factors may cause actual results to differ significantly from forecasts. Please refer to the disclaimers, provided
under“(1) Analysis of business results” of “1.Analysis of business results and financial position” on page 4 of the attached document,
regarding the assumptions upon which forecasts are based and the use of forecasts.

 Table of Contents for the Attached Document
1. Analysis of business results and financial position ········································································ 2(1) Analysis of business results ······························································································· 2(2) Analysis of financial position ····························································································· 6(3) Basic principles of profit distribution and dividends for the fiscal year under review and next fiscal years ··· 6(4) Business and other risks ··································································································· 7
2. Overview of Nichii Group ··································································································· 10
3. Management principles ······································································································ 15(1) Basic philosophy ·········································································································· 15(2) Management goals ········································································································ 15(3) Mid- to long-term strategies and issued to be addressed ····························································· 15(4) Issues to be addressed····································································································· 15(5) Other significant matters for management ············································································· 16
4. Basic Approach to Selection of Accounting Standards ·································································· 16
5. Consolidated financial statements ·························································································· 17(1) Consolidated balance sheets ····························································································· 17(2) Consolidated statements of income and comprehensive income ···················································· 20(3) Consolidated statements of changes in net assets ····································································· 23(4) Consolidated statements of cash flows ················································································· 25

11. Analysis of business results and financial position(1) Analysis of business results1) Overview of business results
During the fiscal year under review, the Japanese economy was on a modest recovery track, mainly owing to thegovernment’s economy policies, despite weak consumer spending. With all industries experiencing challenges
with recruiting due to a decline in the working population and improvement in the employment environment,
discussions on the enhancement of childcare support measures and social security were held, to promote theemployment of women with children and the elderly under the growth strategy set out by the Abe Administration.
In China, while the slowdown in economic growth gives cause for concern, domestic demand-oriented industries
account for more than half of total domestic production and further growth in demand for domestic
demand-oriented industries is expected, mainly due to rapid aging and abolition of the one-child policy.
In this business environment, the Nichii Gakkan Group promoted its medium-term management strategy that
focuses on the establishment of five main domestic businesses and globalization strategy with a view to breaking
away from institutional risks and achieving stable growth of long-term profits. In April 2015, the Groupdecisively implemented reforms of organizations and the business operation structure to establish structures inline with the strategies, in a bid to strengthen its ability to push ahead with strategies.
In the Medical Support and Long-term Care Segments, the Group transformed the business model adopted since
the Group’s foundation into a more efficient scheme for strengthening human resources, and translated this into
an increase in the number of students attending courses, with a view to securing human resources which are thesource of sustainable growth.
In addition, the Group strengthened cooperation between businesses, and also
focused on providing comprehensive services.
In the Education and Child Care Segments, the Group pushed ahead with aggressive business expansion, aiming
to turn these domestic businesses into new engines of growth, including the enhancement of services for practicalEnglish for juniors and the opening of new child care centers in line with the Support System for Children andChildrearing and regional needs.
In the China business, which is the first stage of its globalization strategy, the Group pushed ahead with theformation of the Nichii Business Model, which integrates the entire process from the cultivation of humanresources to the provision of services, through cooperation with local community service providers.
Administrative procedures and unification of the Group’s operation management structure took time, but theGroup gradually began providing services starting in areas that were prepared for rollout. Alongside businessexpansion, the Group also worked to expand the service menu and areas of operation, and sought to make homecare and the Nichii brand more popular.
Looking at the operating results, overall sales increased, mainly due to an increase in the number of attending
students and children in the Education and Child Care Segments and the acquisition of new contracts andexpansion in operations in the Medical Support Segment, despite decrease in the number of service users due todelays in securing human resources in the Long-term Care Segment. Income declined, reflecting the impact of areduction in long-term care basic rates in the revised compensation for long-term care workers, decline in thenumber of users, and the investment strategy in the Education business (language education) and China business.
Turning to the calculation of net income, the Group recorded extraordinary losses totaling 7,202 million yen,comprising 5,718 million yen in impairment losses for fixed assets as a result of the delayed achievement of
profitability in new businesses such as the long-term care, language education and therapy businesses, and 1,484
million yen in valuation losses, provisions, etc. for investments in and loans to affiliated companies, etc. The
Group also reversed 4,318 million yen in deferred tax assets.
In the fiscal year under review, the Group posted net sales of 273,583 million yen (271,868 million yen in theprevious fiscal year), an operating loss of 785 million yen (operating income of 5,173 million yen), an ordinary
loss of 3,629 million yen (ordinary income of 3,144 million yen), and a loss attributable to owners of parent of
15,995 million yen (profit attributable to owners of parent of 416 million yen).
Results by business segment are as follows:
The reported segments have been changed from the fiscal year under review, and in the comparisons with thesame period of the previous year below, results for the same period of the previous fiscal year have been restatedto match the new segment classifications following this change.
<Medical Support Segment>
Sales in this segment rose, reflecting the winning of new contracts and expansion of operations related to medical
2

institutions that were already under contract as a result of efforts to enhance diverse management support
services, including home rehabilitation support in cooperation with the Long-term Care segment, and the holdingof seminars on the revision of medical fees for medical institution managers.
However, profits declined due to upfront expenses related to the start of operations at hospitals with which newcontracts were concluded and higher personnel expenses associated with the implementation of measures tocreate a stable human resources base (turning contracted staff into regular employees, improvement in treatment,
etc.)
Net sales for the segment came to 108,788 million yen for the fiscal year under review (compared with 108,372
million yen in the previous fiscal year). Operating income for the segment was 7,605 million yen (8,039 million
yen in the previous fiscal year).
<Long-Term Care Segment>
Both sales and profits decreased due to decline in the number of users of home care services, which was
attributable to the impact of revision of compensation for long-term care workers and slower-than-planned
acquisition of human resources. As a result of transformation of the business model into a scheme integrating
everything from the operation of qualification courses to hiring, numbers of students attending courses wereabove year-ago levels. However, since the process from course completion to work placement takes time, theeffects are expected to become apparent from next fiscal year. The Group will continue promoting staff
retention and the acquisition of human resources and seek to expand the number of service users. At the sametime, the Group will also keep up efforts to acquire users with moderate to severe conditions throughcollaboration with the Medical Support Segment, promote specialist care, including dementia care and home visit
nursing, and promote the use of short stays at specific facilities, and will seek to reconstruct its business profit
model in response to system trends.
Net sales for the segment came to 142,897 million yen for the fiscal year under review (compared with 144,759
million yen in the previous fiscal year). Operating income for the segment was 6,694 million yen (11,546 million
yen in the previous fiscal year).
<Health Care Segment>
In Nichii Life housekeeping services, the Group conducted aggressive marketing activities in line with growing
demand due to greater participation of women in society. In private brand product sales, the Group strengthened
sales activities targeting medical institutions and corporations and sought to expand sales channels, while at thesame time working to enhance the product line-up to meet customer needs. As a result, both the number of usersof Nichii Life services and private brand product sales grew. However, segment sales were down due to thedownscaling of helper dispatch services and discontinuation of the food service business. Meanwhile, profits
increased due to lower SG&A expenses associated with the downscaling of helper dispatch services.
As a result, sales in this segment came to 3,726 million yen in the fiscal year under review (compared with 3,947
million yen in the previous fiscal year), and operating income was 556 million yen (234 million yen in theprevious fiscal year).
<Education Segment>
The Group focused on areas such as the development of new services using the Nichii Group’s language
education network, revision of the curriculum, and enhancement of support services for overseas students, in abid to provide practical language learning opportunities. In October, three courses including the general business
English conversation course were designated by MHLW to be covered by the payment of educational training
benefits and, in December, the Group ranked No. 1 in the English conversation school category of the 2015
Oricon Japan customer satisfaction ranking. As a result, the number of students attending courses at the end of
the fiscal year (total of COCO Juku, COCO Juku Junior and franchise classrooms) remained firm at 11,811 (anincrease of 4,099 year on year) and both sales and profits increased (operating loss narrowed).
Net sales for the Education segment totaled 13,053 million yen (compared with 12,265 million yen in theprevious fiscal year). Operating loss for the segment was 5,667 million yen (compared with a loss of 6,169
million yen in the previous fiscal year).
＜Child Care Segment＞
The Group pushed ahead with the opening of new child care centers, especially registered child care centers, tohelp increase the availability of child care in the community under the Support System for Children andChildrearing introduced in April. At the same time, the Group reviewed service management systems, worked to3

develop a safe and secure child care environment, and also put effort into increasing the quality of child care. As
a result, the number of children attending child care centers increased, driven up by new centers that opened in
April 2015, and sales increased. Profits declined (the operating loss expanded) due to upfront investment andother costs for child care centers to be newly opened in April 2016.
Net sales for the Child Care Segment totaled 3,382 million yen (compared with 2,228 million yen in the previous
fiscal year). Operating loss for the segment was 954 million yen (compared with a loss of 706 million yen in theprevious fiscal year).
<Other>
The results for this segment include the operating results of pre-existing services (post-natal care, housekeeping
business) at 10 local community service providers which the Group decided to make into Group companies in the
China business.
Net sales for the Other businesses segment amounted to 1,735 million yen (compared with 295 million yen in theprevious fiscal year). Operating loss for the segment was 124 million yen (compared with operating income of
457 million yen in the previous fiscal year).
2) Outlook for the year ending March 31, 2017
【Earnings forecast for the fiscal year ending March 31, 2017】

Net sales
Fiscal year ending
March 31, 2017
(Forecast)
Actual results forthe previous fiscal
year

Operating income(Unit: Million yen)
Profit attributable
Ordinary income
to owners ofparent294,700

4,800

1,300

500

273,583(785)(3,629)(15,995)

In line with the Group’s medium-term management plan aimed at improving the balance of the business structure
for long-term stable growth, the Group is making steady progress in strengthening the foundations for a return to
the growth path under its new management execution system. Such advances include establishing a branchsystem with branches in four blocks nationwide (regional management system) in April 2015, reviewing thescheme for the development of human resources in the Medical Support, Long-term Care and Health Carebusinesses, and developing the environment for global business, focusing on expansion of the China business.
In April this year, the Group established a new management execution system, reorganizing its branches into fiveblocks and assigning an executive officer to each block to ensure the reliable execution of regional strategies.
Similarly in the China business, the Group sought to establish the Nichii Operation System and strengthen the
management system for scaling up operations in China by assigning managers to each local community service
provider in a bid to strengthen cooperation between the Company’s wholly owned subsidiaries (Beijing,
Shanghai and Guangzhou) and Nichii Hong Kong and the local community services providers (19) under theircontrol.
In the fiscal year ending March 31, 2016, results were extremely disappointing, reflecting tardy improvement of
profits in the language education business, a decline in profitability in the Long-term Care business as a result ofrevised compensation and a shortage of human resources, delays in administrative procedures in the China
business, and the recording of extraordinary losses. In the next fiscal year, the Group will decisively implement
management reforms and steadily push ahead with business strategies from a medium- to long-term perspective
under its new management execution system, to achieve recovery in core domestic businesses and expansion ofstrategic businesses and to ensure full-scale operation in the China business.
Initiatives by segment are as follows.
<Medical Support Segment>
The Group will push ahead with the establishment of a stable human resources base and endeavor to win new
hospitals under contract and improve productivity. The Group will also focus on enhancing diverse services
utilizing the Nichii Group’s management resources, including home rehabilitation support and support for the4

acceptance of overseas patients.
<Long-Term Care Segment>
The Group will seek to improve its ability to supply services by hiring and retaining long-term care humanresources, and focus on recovery in the number of users and the acquisition of various premiums. The Group will
also push ahead with rebuilding the business profit model by implementing area-specific strategies and promoting
community-based dementia care and residence in our business bases as well as by strengthening services for users
with moderate to severe conditions.
<Health Care Segment>
The Group will endeavor to further expand its mainstay Nichii Life housekeeping services and sales of private
brand products. It will also pursue expansion and improvement of its product line-up and sales channels, with thedevelopment of welfare services for companies and new products, and strive to develop new customers.
<Education Segment>
The Group will work to increase the number of new students attending courses by strengthening products
incorporating online English conversation and expanding the franchised classroom network. It will also focus on
hiring more instructors and increasing the efficiency of school operations in a bid to improve the utilization rate.
<Child Care Segment>
The Group opened 30 new child care centers in April 2016. It plans to provide high value-added services throughcooperation with other businesses, and achieve early operation. At the same time, the Group will conduct
aggressive sales activities and push ahead with the opening of a wide variety of centers, ranging from registeredchild care centers to child care centers in hospitals.
<China Business Segment>
The Group will leverage the Long-term Care Business to achieve full-scale expansion of post-natal care,housekeeping services and child care business. It will also seek to expand the areas in which it provides services
by gradually launching services, starting in areas where the service provision system is in place.
<Other>
The Group will strengthen areas such as goods management and delivery, lease, and information processing, tosupport smooth business operations in the core businesses, strategic businesses and globalization businesses.

[Segment changes]
Operating results in China were previously recorded in the Medical Support Segment, Long-term Care Segment,
Healthcare Segment, Child Care Segment or Other depending on the type and sector of the business, but the
China business is an extremely important business that forms the backbone of the Nichii Group’s growthpotential and profitability and is, therefore, presented as a new segment called the China Business Segment.

5(2) Analysis of financial position
1) Overview of financial position
During the fiscal year under review, cash and cash equivalents (“cash”) increased 4,552 million yen year on year, to14,373 million yen. Cash flows from each category of activities and their main factors are described below.

[Cash flows from operating activities]
Net cash provided by operating activities stood at 2,546 million yen.
The main factors were depreciation and amortization and impairment loss.
[Cash flows from investing activities]
Net cash used in investing activities came to 6,250 million yen.
This was primarily the result of the purchase of property, plant and equipment and the purchase of intangible fixed
assets.
[Cash flows from financing activities]
Net cash provided by financing activities was 5,381 million yen.
This was chiefly due to a net increase in short-term loans payable.
Trends in cash flow indicators for the Group can be seen below.
Year ended March 31, 2015

Year ended March 31, 2016

Equity ratio (%)

30.5

20.0

Equity ratio based on present value (%)

37.5

27.2

Debt redemption (years)

6.8

35.0

Interest coverage ratio (times)

3.9

0.7

Equity ratio: Shareholders’ equity/total assets
Equity ratio based on present value: Total present value of stock/total assets
Debt redemption: Interest-bearing liabilities/operating cash flow
Interest coverage ratio: Operating cash flow/interest payments
1. Each indicator was calculated from consolidated financial results.
2. Total present value of stock is the product of closing stock price at the end of period and the total
number of outstanding shares at the end of period (after deducting treasury stock).
3. Operating cash flow is equal to the cash flows from operating activities in the consolidated statements ofcash flow.
Interest-bearing liabilities are all the liabilities on which interest is paid, out of the liabilities in the
consolidated balance sheet. Interest payments are the interest payments as shown in the consolidated
statements of cash flow.

Notes:(3) Basic principles of profit distribution and dividends for the fiscal year under review and the next fiscal year
Our basic policy is to provide our shareholders with stable and continuous profit distributions. Consideringbusiness performance trends from a mid- to long-term standpoint, we formulated a consolidated dividend policy.
For the year ended March 31, 2016, we are planning to pay a year-end dividend of 11 yen per share.
(Yen)
Cash Dividends per Share
(Record date)Year ended March 31,
2016
Year ending March 31,
2017

2Q-endYear-end

Annual11.00 (Actual)

11.00 (Forecast)

22.00 (Forecast)

11.00 (Forecast)

11.00 (Forecast)

22.00 (Forecast)6

(4) Business and other risks
Potential risks to the operations of each segment of the Nichii Group are described below.
The Group strives to mitigate these risks by enhancing its business portfolio, focusing on developing and providing
high value-added services that are not dependent on the medical insurance and long-term care insurance systems.
However, under unexpected circumstances, these risks could have serious implications for the Group’s businessperformance and financial position.
The Company identified the following risks at the end of the fiscal year under review, but risks associated withinvestments in shares in the Company are not limited to those described below.
1) Business risks[Medical Support Segment]
The Nichii Group’s Medical Support Segment provides, among other services, medical services other than medical
practice by medical institutions, medical-related services, medical practice management consulting, and courses inmedical administration. Medical institutions will see major fluctuations in revenues due to biennial revisions of the
medical service fees and medical insurance system reform. The Group provides services to medical institutions, andthe integrated tax and social security reform, percentage changes in medical service fees, or advances in information
technology could affect the Group’s contracts, including contract fees.
The number of students attending the Group’s courses in medical administration could fluctuate dramatically due tochanges in the employment environment and other factors, and this could affect the Group’s performance.
[Long-term Care Segment]
The Nichii Group’s Long-Term Care segment principally provides services regulated under the Long-Term Care
Insurance Law and other relevant laws. Income from these services could be impacted by the revisions to thelong-term care insurance system made every five years or by the revisions to compensation for long-term care madeevery three years. The Company strives to diversify risks by providing services in the Health Care Segment thatare not covered by long-term care insurance and by expanding its service offerings. Nevertheless, these efforts may
not be sufficient to offset a decrease in income that could be caused by a reduction in compensation for long-termcare and other factors, which could have a significant adverse effect on earnings.
The long-term care facilities (including group homes, pay nursing homes, and day-care facilities) operated by theGroup offer community-based services under lease agreements. The term of most of these lease agreements is 20
years, and declines in occupancy rates caused by decreases in resident numbers and falls in market rates forresidents could have adverse effects on earnings in the Long-Term Care segment.
The number of students attending the Group’s long-term care courses, especially training for newly appointed
long-term care workers, could fluctuate dramatically due to changes in the employment environment and otherfactors, and this could affect the Group’s performance.
[Education Segment]
The Nichii Group’s Education Segment provides services consisting mainly in the COCO Juku, COCO Juku Juniorand GABA English conversation schools. The amount of the course fees paid at the time of application for courses
at these schools that corresponds to lessons yet to be provided is included in the liability section of the balance sheet
as “Advances received.” If a large number of students cancel their classes within a short period of time, a substantial
amount of the advances received must be reimbursed, which may affect the financial position and financial resultsof the Company.
[Child Care Segment]
The Nichii Group’s Child Care Segment provides child care services, including registered child care centers andchild care centers in hospitals and companies, as well as child care courses. Factors such as changes to child caresystems could affect the expansion of these services and the Group’s performance.
[China Business Segment]
The Nichii Group’s China Business consists in the cultivation of human resources to work in areas such as
long-term care, post-natal care, housekeeping services and child care business as well as the provision of various
services in China. Factors such as unforeseeable changes in laws and regulations and political or social collapse in
China could affect the development of this business and the Group’s performance.
72) Risks due to the internal management system
The Nichii Group is working to strengthen its self-enforcing operational control structure and internal check
functions to prevent human error and fraudulent activities. However, problems in operational control could causea loss of stakeholder trust and could affect the Group’s performance.
[Risks due to personal information]
The Nichii Group handles personal information specified in the Act on the Protection of Personal Information. The
Group recognizes the protection of personal information as an extremely important business issue and has established the
Personal Information Protection Committee to ensure the appropriate acquisition and handling of information. In
addition, the Group takes preventive steps to block leaks of personal information, including the establishment ofregulations and in-house education and training.
However, personal information leaks could cause a loss of confidence in society and claims for compensation, among
other things, which in turn could affect the Group’s results.
3) Official license and legal regulation in personnel business
To provide worker dispatching services in the Medical Support segment and Health Care segment, the Group has
already obtained a license for the general worker dispatching business under the Act for Securing the Proper Operationof Worker Dispatching Undertakings and Improved Working Conditions for Dispatched Workers (Worker Dispatching
Law). Under the Worker Dispatching Law, if a business engaged in a worker dispatching business meets any of theconditions for disqualification or commits illegal acts, its license could be canceled, or it could be ordered to suspend
its business.
The Nichii Group strives to enhance compliance, but if the Group violates laws and regulations, its performance could
be adversely affected.
Further, the Worker Dispatching Law and related laws and regulations could be amended in the future according toemployment conditions and other factors and, depending on the nature of the amendment, this could affect the Group’s
performance.
4) Risk related to changes in the employment environment
The Nichii Group has its own unique talent acquisition scheme for securing human resources based on a businessmodel dubbed “From Education to Employment.” However, with decline in the working population forecast, any
shortage of human resources arising from changes in the employment environment could adversely affect the Group’s
service provision.
5) Risks due to natural disasters and accidents
The Nichii Group provides services at medical institutions with which the Group has contractual relations, long-termcare facilities, schools, and other facilities across the country. If natural disasters, including earthquakes andtsunamis, occur, or if infectious diseases, including new types of influenza, spread, the Group’s staff and facilities
could not work in the affected areas. In that case, the Group will strive to maintain its system for providing services
by endeavoring to promptly restore the functions of the affected facilities and dispatching support staff. However, if
the Group cannot provide services, its results and financial position could be adversely affected.
Each branch and facility of the Group is reviewing all its countermeasures against risks related to business continuity
in emergencies and is seeking to strengthen its crisis management system, putting priority on the safety of customers.
6) Risks related to the application of impairment accounting
The Nichii Gakkan Group may need to realize an impairment loss on land and buildings owned, goodwill and/or otherassets if the profitability of each business declines significantly, which may affect the financial position and financial
results of the Group.
If IFRS is adopted, goodwill will become a non-amortizable asset. If in an impairment test, which will be conducted atleast once a year, the recoverable value proves to be lower than the book value, an impairment loss could be posted.
7) Risks related to deferred tax assets
The Nichii Group recorded deferred tax assets based on future estimates of taxable income and the results ofscheduling temporary differences. If the Company lowered its taxable income estimate in the future due todeterioration in the operating environment or other factors, the need to reverse deferred tax assets could arise and this
could affect the Group’s performance and financial position.
88) Risks due to overseas expansion
The Nichii Group is implementing a globalization strategy focused on China business, and is developing business not
only in China but also in Singapore, Australia, Canada and the Philippines. The Group endeavors to gather information
concerning aspects such as political trends, changes to the law and the public security situation and implement
measures to reduce the risks associated with business expansion overseas and to deal with them appropriately, but theGroup’s business progress and operating results may be affected in the event of a change that could not be predicted or
exceeded projections such as the following.
・Unforeseen changes in laws and regulations
・Political or social disorder including acts of terrorism
・Greater than anticipated fluctuation in market or economic trends or exchange rates
・Differences in labor-management relations or business customs

9

2. Overview of Nichii GroupThe Nichii Group consists of Nichii Gakkan Company and its 48 subsidiaries and three affiliates, and is engaged in fivesegments (Medical Support, Long-Term Care, Health Care, Education and Child Care).
In the Medical Support segment, the Group provides contract administration services to medical institutions andpharmacies, sells medical equipment to them, and disinfects and sterilizes equipment in medical institutions. The Group’s
services in this segment also include medical business consulting, the operation of clinics in Singapore, medical courses
including courses for medical administration, and the cultivation of post-natal care workers and the provision of
post-natal care services in China.
The Long-Term Care segment provides institutional services such as long-term care insurance. These services include
home-care services (including home-care support, home-visit care, home-visit bathing, home-visit nursing care, and day
care services) and facility-care services (including care for residents in specific facilities and care for group homeresidents with dementia). In this segment, the Group sells and leases welfare equipment, provides welfare services for thedisabled, and runs long-term care courses, especially training for newly appointed long-term care workers. The Groupalso cultivates long-term care workers and provides long-term care services in China.
The Health Care segment sells health care products as services not covered by institutional services, and also provides ahousekeeping service, a care staff dispatching service, produces and sells flowers, plants, seeds and seedlings, operates
and manages sightseeing facilities, and breeds and sells pet dogs. The Group also cultivates housekeepers, provides
housekeeping services, and sells sanitary goods in China.
The Education segment provides language education to meet the needs of a wide range of age groups, through activities
such as the provision of one-on-one English conversation lessons by GABA Corporation, the expansion of COCO Juku
and COCO Juku Junior group lessons, and the development of an overseas study support system.
The Child Care segment provides a range of services including the operation of in-hospital child care centers and theoperation of directly managed in-company child care centers. It also cultivates human resources for child care, provides
child care services and sells child care goods in China.
In addition, the Group, primarily subsidiaries, offers data processing, stores and delivers goods, publishes and sells books,
and engages in leasing.
The table below shows the main services and products in each business category of the Group and the main companies
that provide those services and products. These business categories are roughly the same as business segments.

Segments

Medical Support

Long-Term Care

Health Care

Principal Businesses/Products

Principal Companies

Medical practice services such as reception, medical fee
claims, accounting, computer operations, and medical record
management; sale, disinfection and sterilization services(inside the hospital) for medical equipment; medical affairs
consulting; operation, etc. of clinics in Singapore; provisionof courses in medical administration; cultivation of
post-natal care workers and provision of post-natal careservices in China

Nichii Gakkan Company
Nihon Support Service Co., Ltd.
NICHII INTERNATIONAL
CLINIC PTE. LTD.

Subsidiaries in China

Home-care support (creation of care plan); home-visit care;home-visit bathing; home-visit nursing care; day care; careservice for specified facility residents; care for group home
Nichii Gakkan Company
residents with dementia; sale and rental of welfare
Nichii Carenet Co., Ltd.
equipment; welfare services for the disabled; provision of
Nichii Carepalace Company
training for newly appointed long-term care workers andSubsidiaries in China
training for experienced certified care workers; cultivation of
long-term care workers and provision of long-term careservices in China
Sales of health care products; housekeeping service; care
Nichii Gakkan Company
staff dispatching service; production and sale of flowers,
Nichii Carenet Co., Ltd.
plants, seeds and seedlings; operation and management of
Nichii Green Farm Company
sightseeing facilities; breeding and sale of pet dogs;
Subsidiaries in China
cultivation of housekeepers, provision housekeeping
10

services, and sale of sanitary goods in China

Education

English conversation schools; operation of members’ sports
clubs, focused on swimming schools

Nichii Gakkan Company
GABA Corporation
SELC AUSTRALIA PTY LTD.
SELC ENGLISH LANGUAGE
CENTRE CANADA LTD.
SELC CAREER COLLEGE
CANADA LTD.

JSS Corporation

Child Care

Other

Operation of in-hospital child care centers; operation of
directly managed in-company child care centers; provision of
Nichii Gakkan Company
hobby courses and educational courses; cultivation of humanSubsidiaries in China
resources for child care, provision of child care services andsale of child care goods in China
Data processing; goods storage and delivery service;
publication and sale of books; leasing

11

Nihon Support Service Co., Ltd.
Tokyo Marunouchi PublishingCo., Ltd.
Nihon Credit Lease Corp.

Other Businesses(consolidated subsidiaries)

Nihon Support
Service Co., Ltd.
Data processing
Goods storage and delivery service

Tokyo Marunouchi
Publishing Co., Ltd.

Nihon Credit
Lease Corp.

Publication andsale of educational books, etc.

LeasingNichii Gakkan Company

Medical Support Segment

Education Segment

Long-Term Care Segment

Child Care Segment

Provision of medical
clerk services, etc.

Provision of language
education courses, etc.

Provision of
long-term care services

Provision ofchild care services

Provision of medical
administration courses

Nichii Gakkan Company

Provision of
long-term care courses

Nichii Gakkan Company

Nichii Gakkan Company

Nihon Support
Service Co., Ltd.
NICHII INTERNATIONAL
CLINIC PTE. LTD.
Cultivation of post-natal carers andprovision of post-natal services

Nichii Gakkan Company

GABA Corporation

Nichii Carenet Co., Ltd.

Sale of child care goods

SELC AUSTRALIA PTY LTD.
Nichii Carepalace Company

SELC CAREER COLLEGE
CANADA LTD.

Subsidiaries in China
Cultivation of long-term carers andprovision of long-term care services

SELC ENGLISH LANGUAGE
CENTRE CANADA LTD.

Subsidiaries in China

Cultivation of babysitters andprovision of babysitting services

Subsidiaries in China

JSS Corporation*

Health Care Segment
Provision of services not coveredby long-term care insurance

Nichii Gakkan Company
Nichii Carenet Co., Ltd.
Nichii Green Farm Company
Cultivation of housekeepers andprovision of housekeeping services

Sale of sanitary goods

Subsidiaries in China

Provision of services

Customers
Japan

Japan

Medical institution

Japan

Japan

Long-term care facilities

Students

Users of child care services
Users of long-term care services

Students

Students

China

China

China

Users of long-term care services

Users of babystting services

Users of post-natal care services

Users of housekeeping services

Students

Students
Students

Note: Asterisk indicates equity-method affiliate

12(For reference)In the fiscal year ending March 31, 2017, the Group will change its reportable segments as follows.
・The China business will be separated from each segment to form a separate segment called the China Business
Segment.
・Child care courses (babysitting courses, etc.) will be transferred from the Education Segment to the Child Care
Segment.
The table below shows the main services and products in each business category and the positioning of each business.

Segments

Medical Support

Long-Term Care

Health Care

Principal Businesses/Products
Medical practice services such as reception, medical fee
claims, accounting, computer operations, and medical record
management; sale, disinfection and sterilization services(inside the hospital) for medical equipment; medical affairs
consulting; operation, etc. of clinics in Singapore; provisionof courses in medical administration
Home-care support (creation of care plan); home-visit care;home-visit bathing; home-visit nursing care; day care; careservice for specified facility residents; care for group homeresidents with dementia; sale and rental of welfare
equipment; welfare services for the disabled; provision oftraining for newly appointed long-term care workers andtraining for experienced certified care workers
Sales of health care products; housekeeping service; carestaff dispatching service; production and sale of flowers,
plants, seeds and seedlings; operation and management ofsightseeing facilities; breeding and sale of pet dogs

Principal Companies
Nichii Gakkan Company
Nihon Support Service Co.,Ltd.
NICHII INTERNATIONAL
CLINIC PTE. LTD.

Nichii Gakkan Company
Nichii Carenet Co., Ltd.
Nichii Carepalace Company

Nichii Gakkan Company
Nichii Carenet Co., Ltd.
Nichii Green Farm Company
Nichii Gakkan Company
GABA Corporation

Education

English conversation schools; operation of members’ sports
clubs, focused on swimming schools

SELC AUSTRALIA PTY LTD.
SELC ENGLISH LANGUAGE
CENTRE CANADA LTD.
SELC CAREER COLLEGE
CANADA LTD.

JSS Corporation
Child Care

China Business

Other

Operation of in-hospital child care centers; operation of
directly managed in-company child care centers; provision of Nichii Gakkan Company
babysitting courses
Involvement in a wide range of business activities in China
including cultivation of post-natal carers and provision of
post-natal services, cultivation of long-term carers andSubsidiaries in China
provision of long-term care services, cultivation ofhousekeepers and provision of housekeeping services, sale ofsanitary products, cultivation of child carers and provision ofchild care services, sale of child care products

Data processing, goods storage and delivery service,
publication and sale of books, lease business, etc.

13

Nihon Support Service Co.,Ltd.
Tokyo Marunouchi PublishingCo., Ltd.
Nihon Credit Lease Corp.

Other Businesses(consolidated subsidiaries)

Nihon Support
Service Co., Ltd.

Tokyo Marunouchi
Publishing Co., Ltd.

Nihon Credit
Lease Corp.

Data processing
Goods storage and delivery
servicePublication andsale of educational books,
etc.

LeasingNichii Gakkan company

Medical Support Segment

Education Segment

Long-Term Care Segment

Child Care Segment

China Business segment

Provision of medical
clerk services, etc.

Provision of language
education courses, etc.

Provision of
long-term care services

Provision ofchild care services

Cultivation of post-natal
carers and provision of
post-natal services

Nichii Gakkan Company

Provision of
long-term care courses

Provision of child care courses

Nichii Gakkan Company

Nichii Gakkan Company

Provision of medical
administration courses

Nichii Gakkan Company

GABA Corporation

Cultivation of housekeepers
and provision ofhousekeeping services

Nichii Carenet Co., Ltd.

Nihon Support Service Co., Ltd.
SELC AUSTRALIA PTY LTD.
NICHII INTERNATIONAL
CLINIC PTE.LTD.

SELC CAREER COLLEGE
CANADA LTD.
SELC ENGLISH LANGUAGE
CENTRE CANADA LTD.

JSS Corporation*

Cultivation of long-term
carers and provision of
long-term care services

Sale of sanitary products

Nichii Carepalace Company

Cultivation of child carers
and provision of child careservices

Sale of child care products

Health Care Segment
Provision of services not covered

Subsidiaries in China

Nichii Gakkan Company
Nichii Carenet Co., Ltd.
Nichii Green Farm Company

Provision of services

Customers
Japan

Japan

Medical institution

Japan

Students

Long-term care facilities

Japan

China

Users of child care services

Users post-natal carers andprovision of post-natal
services

Users of long-term care services

Students

Users of long-term care services

Students
Students

Users of housekeeping
services
Users

of
child
services

Students

Note: Asterisk indicates equity-method affiliate

14

care

3. Management principles
3. Management principles(1) Basic policies
Since its foundation, the Nichii Group has made “Integrity, Honor, Passion” its unwavering principles and has
conducted business activities in line with its management philosophy of “helping people live healthy happier lives.”
To put these principles and philosophy into practice, we are endeavoring to create employment in regional
communities, make full use of human resources, and provide care services, under the brand slogan “Making kindness
our strength.” We are also focusing on cooperation between the various services and the global scale-up of ouroperations.
By continuing to uphold this same basic philosophy and working together to achieve our goals with a shared vision,
we aim to become a company that can meet the expectations of stakeholders and contribute to the progress anddevelopment of society and a company that is trusted and chosen by society.
(2) Management goals
The Group aims to achieve the following three management indicators:
1) Year-on-year sales growth: double-digit growth2) Operating margin: 7% or more
3) ROE: Aim to achieve a ROE of between 8% and 15%(3) Mid- to long-term strategies and issues to be addressed
The business environment surrounding the Company is characterized by prioritization under healthcare and long-termcare insurance plans and improvement of efficiency to curb the constantly expanding cost of social security benefits.
Furthermore, in the medical, long-term care and child care sectors, it is difficult to secure human resources as result of
decline in the working population, and complex, efficient operations with businesses and services complementing eachother more than ever before are required.
The Nichii Group plans to push ahead with the development of the service provision structure in core businesses(Medical Support, Long-term Care and Child Care) thereby helping develop infrastructure in regional communities,
and plans to translate this into improvement in its social value as a company.
At the same time, the Group aims to maximize its economic value and achieve dramatic growth by strengthening
profitability through the expansion of its strategic language education and health care businesses and globalization(China business).

(4) Issues to be addressed(Securing human resources)
To be sure of securing the human resources for medical, long-term care and child care businesses, the Group will focus
on areas such as stepping up approaches to students attending courses until their employment, strengthening training
systems, and improving the workplace environment, thus seeking to promote the employment of those who havecompleted courses and improve employee satisfaction.
Each branch company will oversee information about human resources within the area of their jurisdiction, strengthenbusiness frontline systems and allocate human resources across a wide area on the basis ofright-person-in-the-right-place.
For its strategic language education and health care businesses, the Group will endeavor to steadily secure humanresources and build a solid base for cultivating human resources through the early establishment of routes for the
recruitment of human resources from a global perspective and other initiatives.
(Achieving early improvement in the profitability of language education business)
Since making GABA Corporation a subsidiary in 2011, the Nichii Group has made strategic investments to build alanguage education network that meets a wide range of needs, including starting up COCO Juku and COCO Juku
Junior (including franchising), making SELC (Sydney, Canada) a subsidiary, establishing SELC Manilla, establishing
YORK Global Study Center, and opening the NYU School of Professional Studies American Language Institute (ALI)
Tokyo Center.
From April this year, the Group assigned managers to all 80 of its COCO Juku schools in a bid to strengthen
15management. The Group also began offering online English language conversation in cooperation with SELC Manilla.
By introducing online English conversation, the Group will further develop students attending courses in all walks oflife, ranging from busy business people to the general public who want readily available lessons, and will leverage
online lessons to effectively promote courses at COCO Juku and COCO Juku Junior.
(Establishing a regional management system)
The services offered by the Company are services that are deeply rooted in people and must meet the needs ofindividuals and the demands of regional communities through integration of every aspect, from the cultivation ofhuman resources to service provision systems in each region. Accordingly, the Group will strengthen its nationwide
branch management systems and implement the optimal business strategies for each region in all respects, from theutilization of human resources to the provision of services that meet community needs.
In Japan, the Group will strengthen business operation systems at branches and on the front line under a focusedmanagement execution system with executive officers assigned to branches nationwide, concentrating on the speedy
utilization of human resources in line with regional conditions, the development of human resources capable ofmeeting individual needs, and the reconstruction of service management and operation systems.
In China, the Group will strengthen the business operation system, focusing on the management of each local service
provider. The Group will also seek to differentiate itself from its competitors in terms of scale by pushing ahead withthe rapid expansion (scaling-up) of its operations through the early establishment of a matching system for thecultivation of staff and provision of services (Nichii Operation System) in each region.
(Strengthening core businesses and promoting cooperation between businesses)
While the Medical Support, Long-term Care and Child Care businesses, which are the Group’s core businesses, arebusinesses with a very strong social nature, embodying the brand slogan of “Making kindness our strength,” they are
influenced by external factors such as government policies and systems, and the stabilization of profitability is,therefore, an issue to be addressed.
The Group will, therefore, seek to establish a business profit model that can adapt to system change by pursuingservice quality, expanding service areas and improving operation functions. In Japan, a country responding to a fallingbirth rate, aging population and globalization, the Nichii Group will promote cooperation between businesses (medical,
long-term care, child care, health care, language education) and seek geographical cooperation, for example, between
Japan and China, thus contributing to the development of Japan’s social security sector while pursuing the creation ofadded value and expansion in business scale.
(5) Other significant matters for management
There are no applicable matters.

4. Basic Approach to Selection of Accounting Standards
The Nichii Group adopts Japanese accounting standards to ensure comparability of financial statements between
companies and periods, and prepares its consolidated financial statements in accordance with Ordinance on
Terminology, Forms, and Preparation Methods of Consolidated Financial Statements (excluding Chapter 7 andChapter 8) (Finance Ministry Ordinance No. 28 of 1976).
We will examine the adoption of international financial reporting standards in light of the situation both inside andoutside of Japan.

16

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2016

5. Consolidated financial statements(1) Consolidated balance sheets(Thousand yen)
Fiscal 2015
(As of March 31, 2015)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable—trade
Short-term investment securities
Merchandise and finished goods
Work in progress
Raw materials and supplies
Deferred tax assets
Other
Less: allowance for doubtful accounts
Total current assets
Fixed assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures—net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment andvehicles—net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures—net
Land
Lease assets
Accumulated depreciation
Lease assets—net
Construction in progress
Total property, plant and equipment
Intangible assets
Goodwill
Software
Software in progress
Lease assets
Other
Total intangible assets

9,676,856
32,967,460
2,699,192
536,475
36,544
219,948
2,427,270
11,157,583(27,572)
59,693,759

13,530,688
32,803,595
3,020,964
1,037,203
13,335205,143
1,477,876
11,178,378(85,387)
63,181,798

53,903,041(25,509,323)
28,393,717
86,622(83,161)

51,585,011(27,584,443)
24,000,568
89,085(74,257)

3,460

14,8284,569,346(3,371,089)
1,198,256
8,163,254
39,320,846(4,687,647)
34,633,198
590,285
72,982,173

4,531,686(3,632,140)
899,545
8,157,252
45,584,267(6,276,345)
39,307,921
878,358
73,258,475

16,584,638
2,244,111
1,506,446
225,680
206,446
20,767,324

15,776,886
2,577,303
2,253,761
221,353
193,646
21,022,951*2

17

Fiscal 2016
(As of March 31, 2016)

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2016

(Thousand yen)
Fiscal 2015
(As of March 31, 2015)
Investments and other assets
Investment securities
Long-term loans receivable
Long-term prepaid expenses
Guarantee deposits
Deferred tax assets
Other
Allowance for investment loss
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
Current portion of long term loans payable
Lease obligations
Income taxes payable
Accrued consumption taxes
Accrued expenses
Advances received
Deferred tax liabilities
Provision for bonuses
Provision for directors’ bonuses
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Lease obligations
Long-term advances received
Deferred tax liabilities
Provision for directors’ retirement benefits
Asset retirement obligations
Net defined benefit liability
Other
Total non-current liabilities
Total liabilities

18

Fiscal 2016
(As of March 31, 2016)

2,916,228
8,116,797
2,512,314
13,077,561
2,913,933
1,970,790(396,100)
31,111,525
124,861,023
184,554,782

2,281,430
8,442,236
2,545,462
13,053,827
518,006
741,536(140,000)(735,588)
26,706,911
120,988,337
184,170,136

899,695
1,943,712
8,953,071
1,302,049
1,024,196
3,594,420
15,858,530
10,676,085
5,058,440
39,7005,144,723
54,494,625

884,520
20,307,461
4,444,089
1,358,392
1,199,674
1,496,584
16,300,768
11,206,334
1,468
4,892,578
38,0006,041,741
68,171,614

23,987,773
36,165,228
2,896,955
516
166,513
2,242,411
6,209,067
1,706,465
73,374,932
127,869,558

19,548,389
43,399,237
3,248,604
377,666
2,308,169
7,015,433
1,999,142
77,896,643
146,068,258

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2016

(Thousand yen)
Fiscal 2015
(As of March 31, 2015)
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
Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeStock acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

19

Fiscal 2016
(As of March 31, 2016)

11,933,790
17,354,214
37,399,513(9,921,957)
56,765,561

11,933,790
17,354,214
19,635,508(11,377,668)
37,545,845

21,47912,81569,069(522,886)

333,133(1,022,986)(432,337)(677,038)

352,000
56,685,224
184,554,782

511,733
721,337
38,101,877
184,170,136

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2016

(2) Consolidated statements of income and comprehensive income(Consolidated statements of income)Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Advertising and promotion expenses
Directors’ compensation
Salaries and benefits
Provision for employee bonuses
Provision for directors’ bonuses
Provision for directors’ retirement benefits
Provision for employee retirement benefits
Stock-based compensation expenses
Legal welfare expenses
Travel and transportation expenses
Rent expenses
Provision of allowance for doubtful accounts
Depreciation and amortization
Amortization of goodwill
Other
Total selling, general and administrative expenses
Operating income (loss)
Non-operating income
Interest income
Rent income
Subsidy income
Incentive income
Share of profit of entities accounted for using
equity method
Other
Total non-operating income
Non-operating expenses
Interest expenses
Rent expenses
Other
Total non-operating expenses
Ordinary income (loss)
Extraordinary income
Gain on sales of investment securities
Total extraordinary income

Fiscal 2015
(from April 1, 2014
to March 31, 2015)
271,868,409
217,721,410
54,146,999(Thousand yen)
Fiscal 2016
(from April 1, 2015
to March 31, 2016)
273,583,422
223,872,201
49,711,220

6,377,257
182,361
18,315,059
1,252,937
39,7007,961
452,476
3,211,670
1,691,315
3,194,422
5,257
1,736,949
1,846,949
10,659,247
48,973,567
5,173,432

6,315,391
169,358
18,887,041
1,166,308
38,000549,61728,534
3,304,586
1,653,906
3,288,174
10,2991,353,246
2,141,812
11,590,309
50,496,590(785,369)

157,596
211,21096,939108,832

169,256
220,968
340,101
106,349

10,801

41,349333,512918,893

270,480
1,148,505

2,740,804
62,526
144,1942,947,525
3,144,800

3,456,218
59,065477,447
3,992,731(3,629,594)

5,042
5,042

-

20

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2016

(Thousand yen)
Fiscal 2016
(from April 1, 2015
to March 31, 2016)

Fiscal 2015
(from April 1, 2014
to March 31, 2015)
Extraordinary losses
Loss on retirement of property, plant andequipment, net
Loss on sales of property, plant and equipment,
net
Loss on valuation of shares of subsidiaries andassociates
Provision of allowance for doubtful accounts
Impairment loss
Other
Total extraordinary losses
Net income (loss) before 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

21

20,03623,451

2,134

547

24,062

701,999-

408,463

72,7405,531
124,505
3,025,337
2,246,672
330,699
2,577,372
447,964
31,926
416,037

5,718,710
744,905
7,598,078(11,227,673)
1,309,512
3,573,033
4,882,545(16,110,218)(114,286)(15,995,932)

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2016

(Consolidated statements of comprehensive income)Net income
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans,
net of tax
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Comprehensive income attributable tonon-controlling interests

Fiscal 2015
(from April 1, 2014
to March 31, 2015)
447,964(Thousand yen)
Fiscal 2016
(from April 1, 2015
to March 31, 2016)(16,110,218)(3,558)
10,103(8,663)247,374(190,016)(500,100)(183,471)
264,492(261,389)(16,371,608)

232,566(16,240,632)

31,926(130,975)

22

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2016

(3) Consolidated statements of changes in net assets
Fiscal 2015 (from April 1, 2014 to March 31, 2015)(Thousand yen)
Accumulated other
Shareholders’ equity
comprehensive
incomeValuation
Treasury stock, at Total shareholders’ difference on
Capital surplus Retained earnings
cost
equityavailable for-salesecurities

Capital stock
Balance at the beginning of theperiod11,933,790

17,354,214

38,335,223

Cumulative effects of changes
in accounting policies
Restated balance(5,374,688)

96,902
11,933,790

17,354,214

38,432,126

62,248,540
96,902(5,374,688)

62,345,443

Changes of items during theperiodDividends from retained
earnings(1,397,676)(1,397,676)

Profit (loss) attributable toowners of parent

416,037

416,037

Purchase of treasury stock(27)

Disposal of treasury stock

25,037(4,547,351)(4,547,351)

82

54

25,037

Change of scope of
consolidation
Changes other thanshareholders’ equity during theperiod (net)Total changes of items during
the period--(1,032,613)(4,547,268)(5,579,881)(3,558)

Balance at the end of the period

11,933,790

17,354,214

37,399,513(9,921,957)

56,765,561

21,479Stock acquisitionrightsNon-controllinginterests

Total net assets-

327,574

62,327,248(50,947)(50,947)(3,558)

Accumulated other comprehensive income
Total
Foreign currency Remeasurements accumulatedtranslationof definedotheradjustments
benefit planscomprehensive
incomeBalance at the beginning of theperiod58,966(332,870)(248,866)

Cumulative effects of changes
in accounting policies
Restated balance

96,90258,966(332,870)(248,866)-

327,574

62,424,151

Changes of items during theperiodDividends from retained
earnings(1,397,676)

Profit (loss) attributable toowners of parent

416,037

Purchase of treasury stock(4,547,351)

Disposal of treasury stock

54

Change of scope of
consolidation
Changes other thanshareholders’ equity during theperiod (net)Total changes of items during
the period

10,103(190,016)(183,471)-

24,426(159,044)

10,103(190,016)(183,471)-

24,426(5,738,926)

Balance at the end of the period

69,069(522,886)(432,337)-

352,000

56,685,224(50,947)

23

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2015

Fiscal 2016 (from April 1, 2015 to March 31, 2016)

Balance at the beginning of theperiod(Thousand yen)
Accumulated other
Shareholders’ equity
comprehensive
incomeValuation
Treasury stock, at Total shareholders’ difference on
Retained earnings
cost
equityavailable for-salesecurities

Capital stock

Capital surplus

11,933,790

17,354,214

37,399,513(9,921,957)

Cumulative effects of changes inaccounting policies
Restated balance

56,765,561

21,47911,933,790

17,354,214

37,399,513(9,921,957)

56,765,561

21,479Changes of items during theperiodDividends from retained earnings(1,361,086)(1,361,086)

Profit (loss) attributable to ownersof parent(15,995,932)(15,995,932)

Purchase of treasury stock(26)

Disposal of treasury stock(1,455,863)(1,455,863)

152

125

(406,959)

Change of scope of consolidation(406,959)

Changes other than shareholders’equity during the period (net)(8,663)

Total changes of items during theperiod-Balance at the end of the period

11,933,790- (17,764,004)
17,354,214(1,455,711) (19,219,715)

19,635,508 (11,377,668)(8,663)37,545,845

12,815

Accumulated other comprehensive income

Balance at the beginning of theperiodForeign currencytranslation
adjustments

Remeasurementsof defined benefit
plans

Total accumulated
othercomprehensive
incomeStock acquisitionrightsNon-controllinginterests

Total net assets

69,069(522,886)(432,337)-

352,000

56,685,224

Cumulative effects of changes inaccounting policies
Restated balance

69,069(522,886)(432,337)-

352,000

56,685,224

Changes of items during theperiodDividends from retained earnings(1,361,086)

Profit (loss) attributable to ownersof parent(15,995,932)

Purchase of treasury stock(1,455,863)

Disposal of treasury stock125(406,959)

Change of scope of consolidation
Changes other than shareholders’equity during the period (net)

264,063(500,100)(244,700)

511,733

369,336

Total changes of items during theperiod

264,063(500,100)(244,700)

511,733

369,336 (18,583,346)

Balance at the end of the period

333,133(1,022,986)(677,038)

511,733

721,33724

636,369

38,101,877

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2015

(4) Consolidated statements of cash flows(Thousand yen)
Fiscal 2015
(from April 1, 2014
to March 31, 2015)
Cash flows from operating activities:
Income before income taxes
Depreciation and amortization
Amortization of goodwill
Impairment loss
Increase (decrease) in provision for directors'
retirement benefits
Increase (decrease) in provision for bonuses
Increase (decrease( in provision for directors'
bonuses
Increase (decrease) in allowance for doubtful
accounts
Increase (decrease) in provision for loss on store
closing
Increase (decrease) in net defined benefit liability
Increase (decrease) in allowance for investment
loss
Interest and dividends income
Interest expenses
Share of (profit) loss of entities accounted forusing equity method(Gain) loss on sales of investment securities
Loss on valuation of shares of subsidiaries andassociates
Loss on retirement of property, plant andequipment, net(Gain) loss on sales of property, plant andequipment, net
Stock-based compensation expenses(Increase) decrease in notes and accounts
receivable-trade(Increase) decrease in inventories(Increase) decrease in other current assets
Decrease (increase) in claims provable inbankruptcies(Increase) decrease in other fixed assets
Increase (decrease) in notes and accounts
payable—trade
Increase (decrease) in accrued consumption taxes
Increase (decrease) in other current liabilities
Increase (decrease) in other non-current liabilities
Other, net
Sub-totalInterest and dividends income received
Proceeds from dividend income from entities
accounted for using equity method
Interest expenses paid
Income taxes paid
Net cash provided by operating activities

25

Fiscal 2016
(from April 1, 2015
to March 31, 2016)

3,025,337
6,062,982
1,846,949
72,740(11,227,673)
5,945,753
2,141,812
5,718,710(1,271)(166,513)(33,925)(165,861)-(1,700)(14,306)

397,303(8,284)-

268,231461,780-140,000(161,729)
2,740,804(170,988)
3,456,218(10,801)(41,349)(5,042)-

24,062

701,999

20,03623,451

2,134

547

-

360,903(763,473)

173,457

161,165(236,320)(478,476)(643,033)

5,562

11,075

239,090

80,16535,327(24,123)

2,712,696(159,448)
163,663
30,06516,016,246
46,436(2,097,807)
1,894,571
596,544910,159
7,996,928
41,574

2,500

6,250

(2,740,490)(2,695,564)
10,629,128(3,456,334)(2,041,494)
2,546,924

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2015

(Thousand yen)
Fiscal 2016
(from April 1, 2015
to March 31, 2016)

Fiscal 2015
(from April 1, 2014
to March 31, 2015)
Cash flows from investing activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of short-term investment securities
Proceeds from sales of short-term investment securities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of stocks of subsidiaries and affiliates
Purchase of investments in subsidiaries and affiliates
Purchase of investments in subsidiaries resulting inchange in scope of consolidation
Payments of loans receivableCollection of loans receivable
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Subsidy income
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from sales of treasury stock
Purchase of treasury stock
Cash dividends paid by parent company
Dividends paid to non-controlling interests
Repayments of lease obligations
Purchase of investments in subsidiaries not resulting inchange in scope of consolidation
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents from newly
consolidated subsidiary
Cash and cash equivalents at end of year26

(1,008,000)
808,000(2,198,508)
2,700,000(1,748,377)
1,162(1,623,016)(1,009,776)
607,538(531,163)(744,077)(799,844)
1,499,844(1,520,837)
1,700,000(2,046,714)
486(1,791,095)(1,005,610)--(1,394,781)(2,978,775)
152,873(608,434)
392,096
177,039(474,032)(8,085,450)(1,566,380)
668,814(589,923)
600,873
310,418(315,311)(6,250,061)(2,069,915)
16,000,000(9,735,750)
54(4,547,351)(1,396,663)(7,500)(1,278,973)

18,338,627(8,813,574)
125(1,455,863)(1,360,387)(9,600)(1,262,905)-(48,532)(162,253)(3,198,352)(6,013)
5,381,875(5,133)(20,018)(659,807)
10,439,653

1,658,720
9,821,045

41,1992,893,394

9,821,045

14,373,159