Financial Results for the First Half of the Year Ending March 31, 2019 (J-GAAP)
Name of listedcompany:
Securities code:
Representative:

November 7, 2018
Listed on: Tokyo Stock Exchange
1st Section

NICHIIGAKKAN CO., LTD.
9792
(Title)

URL: http://www.nichiigakkan.co.jp
President and COO(Name) Nobusuke Mori
Executive Officer, Acting Division
Contact:(Title)(Name) Kazuya Shiiya
Director Accounting Division
Scheduled date for filing the
Scheduled date to start
November 9, 2018
quarterly financial report:
dividends distribution:
Supplementary quarterly materials prepared: Yes
Quarterly results information meeting held: Yes

TEL: 03-3291-2121
December 6, 2018

(for institutional investors and financial analysts)(Figures shown are rounded down to the nearest million yen.)
1. Consolidated financial results for the first half of the year ending March 31, 2019(April 1, 2018 – September 30, 2018)(1) Consolidated operating results(Percentage figures represent changes from same period of previous year.)
Profit attributable to
Net sales
Operating income
Ordinary income
owners of parent
Million yen% Million yen% Million yen% Million yen%
Six months ended
142,596
0.8
4,154
10.7
1,947
7.2
251
(72.6)
September 30, 2018
Six months ended
141,426
2.7
3,753
360.4
1,815
―
918
―
September 30, 2017
(Note) Comprehensive income:First six months of FY2019:

311million yen(-61.0%)Net income per share

Diluted net income per share

Yen

Yen

3.92

3.91

14.32

14.29

Six months ended
September 30, 2018
Six months ended
September 30, 2017

First six months of FY2018:

799million yen(―%)(2) Consolidated financial position

As of September 30, 2018
As of March 31, 2018
(Reference) Shareholders’ equity:

Total assets
Million yen
192,583
190,239
As of September 30, 2018

Net assets
Million yen
37,31637,65636,153 million yen

Equity ratio
%
18.8
19.1

As of March 31, 2018

36,363 million yen

2. Dividends
Annual dividends

Year ended March 31, 2018Year ending March 31, 2019Year ending March 31, 2019
(forecast)

1Q-endYen――

2Q-end
Yen
11.00
15.00

3Q-endYen―

Year-end
Yen
11.00

―

15.00

Annual
Yen
22.00
30.00

(Note) Revisions to most recently announced dividend forecast: No
3. Forecast of consolidated financial results for the year ending March 31, 2019 (April 1, 2018 – March 31, 2019)(Percentage figures represent changes from previous year)
Profit attributable to
Net income per
Net sales
Operating income
Ordinary income
owners of parent
shareMillion yen %Million yen %Million yen%
Million yen%
Yen
Full year
293,500 3.4
14,700 92.7
9,600 164.6
5,100 496.9
79.39(Note) Revisions to most recently announced financial results forecast: Yes－

1 －* Notes(1) Significant changes in subsidiaries during the term (Changes in specified subsidiaries resulting in changes in scope of
consolidation): None

(2) Application of specific accounting for preparing the quarterly consolidated financial statements: None
(3) Changes in accounting policies, changes of accounting estimates and restatement
1) Changes in accounting policies due to revisions of accounting standards, etc.: None
2) Changes in accounting policies due to reasons other than those stated in 1): None
3) Changes in accounting estimates: None
4) Restatement: None
(4) Number of shares outstanding (common stock)1) Number of shares issued and outstanding(including treasury stock)2) Number of treasury stock3) Average number of shares issued andoutstanding in each period

As of September 30,
2018
As of September 30,
2018
Six

months

ended

September 30, 2018

73,017,952

8,670,871

64,237,050

As of March 31, 2018:
As of March 31,
2018:
Six

months

ended

September 30, 2017

73,017,952

8,825,572

64,193,111* Quarterly financial results are outside the scope of the quarterly review by certified public accountants or audit corporations.
* Explanation concerning the appropriate use of financial result forecasts and other special notes
The above forecasts are based on information Nichii Gakkan had as of the time this report was prepared and on certain
assumptions judged to be reasonable. Various factors may cause actual results to differ significantly from forecasts. Please refer tothe disclaimers, provided under “(3) Information on the future outlook, including consolidated financial results forecasts” of “1.
Qualitative information on quarterly financial results” on page 7 of the attached document, regarding the assumptions upon which
forecasts are based and the use of forecasts.

－

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

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

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

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
Six months ended September 30 …………………………………………………………………………………

10

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

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

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

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

12

－

3 －

1. Qualitative information on quarterly financial results
The forward-looking statements contained in the descriptions below are forecasts determined at the end of the current
quarter.
In addition, ASBJ Statement No. 28 Partial Amendments to Accounting Standard for Tax Effect Accounting (February 16,2018) and other guidelines were applied from the beginning of the first quarter of the consolidated fiscal year. With respect tothe financial position, the figures at the end of the previous consolidated fiscal year after retrospective processing were used incomparison.
(1) Details of business results
During the first half of the fiscal year under review, the Nichii Group implemented organizational reforms, including thedrastic revision of its marketing system, the improvement of the human resources infrastructure, and other activities tostrengthen its business structure with the aim of growing net sales and ensuring stable profit for the establishment of thefoundation for the medium-term management plan VISION 2025 (from the fiscal year ending March 31, 2019 to the fiscal year
ending March 31, 2025).
The business achieved revenue growth thanks to the contribution of the Childcare Business, which increased the number ofservice facilities comprising mostly corporate-run childcare centers, the Long-term Care Business, and the Health Care
Business to net sales. Both operating income and ordinary income grew owing to an increase in the operation of fee-charging
elderly care facilities and childcare facilities and the effect of increased labor productivity and cost management based
primarily on higher operation efficiency. Profit attributable to owners of parent, however, decreased chiefly due to a loss on
sales of subsidiaries and associates upon the dissolution of joint ventures with 15 companies, including regional operatingcompanies in China, as part of the Group’s reorganization in its global business.
Net sales for the first six months of the first half under review were 142,596 million yen (compared with 141,426 million
yen in the same period of the previous fiscal year). Operating income was 4,154 million yen (compared with 3,753 million yen
in the same period of the previous fiscal year). Ordinary income was 1,947 million yen (compared with 1,815 million yen in
the same period of the previous fiscal year). Net income attributable to owners of parent was 251 million yen (compared with
918 million yen in the same period of the previous fiscal year).
(Operating results by business segment)
The business results by segment are as shown below.
From the fiscal year ending March 31, 2019, the categories of the reporting segments were changed. The China Business andservices abroad were transferred from each department to the global segment in presentation by segment. In addition, healthcare product sales were transferred from the Health Care Segment to the Long-Term Care Segment. In this regard, with respect
to the comparison with the same quarter of the previous fiscal year below, figures obtained by reclassifying the figures for thesame quarter of the previous fiscal year under the changed segment categories were used in comparison.
<Medical Support Segment>
Net sales were 53,667 million yen (compared with 53,671 million yen in the same period of the previous fiscal year).
Operating income was 4,448 million yen (compared with 4,522 million yen in the same period of the previous fiscal year).
The Group has been working continuously to strengthen its human resources infrastructure by, for instance, stabilizing theemployment of on-site employees, including indefinite-term hiring, to achieve sustainable growth by improving its service
delivery capacity. While focusing on increasing productivity and quality, persistent negotiations for contract rationalization andobtaining contracts for high value-added services consisting largely of support operations for medical administration during theperiod in preparation for physicians’ workstyle reforms resulted in an increase in sales of the hospital department, growth in
the number of contracts for the clinic department remained sluggish and led to a fall in net sales and income for the segment.
<Long-Term Care Segment>
Net sales were 75,509 million yen (compared with 75,382 million yen in the same period of the previous fiscal year).
Operating income was 8,019 million yen (compared with 7,509 million yen in the same period of the previous fiscal year).
The Long-Term Care Segment has positioned acquiring and retaining nursing personnel and improving the services topatients in a moderate or severe condition as its priority measures, and has been implementing such measures.
In the at-home type care services, the number of patients eligible for nursing care benefits in the visiting nursing care service
has been gradually recovering from the previous year, the payment per patient has also increased due to a rise in the percentageof patients in a moderate or severe condition, and the number of users of at-home type care services grew steadily, resulting in
an increase in segment sales. Profits also increased, chiefly as a result of raising the availability per caregiver as part of efforts
to increase productivity, increasing operation efficiency, and high occupancy maintained at fee-charging elderly care facilities.
－

4 －<Childcare Segment>
Net sales were 5,433 million yen (compared with 3,922 million yen in the same period of the previous fiscal year).
Operating loss was 477 million yen (compared with operating loss of 728 million yen in the same period of the previous fiscal
year).
The Group has been actively establishing corporate-run childcare centers, which were institutionalized based on thegovernment’s plan for reducing the number of children on waiting lists, in order to meet childcare needs and contribute to
women’s social advancement. The Group opened a total of 45 new childcare facilities during the first half of the fiscal year
under review, including licensed nursery schools and other childcare-related facilities, and now operates 247 childcare-related
facilities across Japan.
Net sales grew 38.5% year on year thanks to the increase in the number of facilities. Profit increased thanks to an increase in
the operation of childcare facilities, which resulted from higher recognition of corporate-run childcare centers in each region
and the acquisition of corporate-user contracts; consequently, the loss was reduced by 53.6% (84 million yen) year on year
during the second quarter under review (July through September).
<Health Care Segment>
Net sales were 779 million yen (compared with 674 million yen in the same period of the previous fiscal year). Operating
loss was 309 million yen (compared with operating income of 36 million yen in the same period of the previous fiscal year).
In response to growing demand for housekeeping services, due in part to the declining birthrate and aging population and anincrease in women working outside their homes, the Group has been actively promoting the Nichii Life housekeeping service
and the Sunny Maid Service housekeeping support business provided by foreign personnel in the National Strategic Special
Zone and improving its sales activities to acquire customers. As a result, net sales grew 15.7% year on year, to 779 million yen.
Meanwhile, prior expenses for the preparation for the launch of the Sunny Maid Service in the Kansai region and theacceptance of foreign employees resulted in an operating loss.
<Education Segment>
Net sales were 5,926 million yen (compared with 5,959 million yen in the same period of the previous fiscal year).
Operating loss was 2,041 million yen (compared with operating loss of 2,043 million yen in the same period of the previous
fiscal year).
The Group has integrated services for adults into Gaba one-to-one English conversation lessons and services for children
into COCO Juku Junior, and has been operating these two brands in parallel since April this year as part of its structural reformof the education business.
The Group has been working to acquire new customers through events, campaigns, and other forms of promotional activities
and by improving its enterprise sales activities; however, it incurred a decrease in sales and operating loss due to a delay instructural reform, including raising the operation efficiency through collaborative operation between GABA and COCO Juku
Junior.
<Therapy Segment>
Net sales were 182 million yen (compared with 92 million yen in the same period of the previous fiscal year). Operating loss
was 288 million yen (compared with operating loss of 175 million yen in the same period of the previous fiscal year).
As of the end of September 2018, the Group operates A-LOVE pet salons, providing lifelong support for life with a dog, in
21 locations across Japan. In addition to campaigns and events held using Instagram and other social media and websites, theGroup focused on acquiring customers by improving counseling services and the launch of a coloring service at some of thesalons. Net sales grew as a result; however, prior investment in salon openings led to an operating loss.
<Global Segment>
Net sales were 966 million yen (compared with 1,644 million yen in the same period of the previous fiscal year). Operating
loss was 694 million yen (compared with operating loss of 885 million yen in the same period of the previous fiscal year).
In the China business, which constitutes the core of the Global Segment, the Group continued to focus on building a local
service infrastructure in China using the Nichii (Riyi) brand and selling long-term care training and seminars to the market andpromote the Japanese style of nursing care.
In July this year, Nichii’s project for building a nursing facility complex in China was selected for the project for promoting
the development of international healthcare centers organized by the Ministry of Economy, Trade, and Industry, and the Groupis now set to establish a nursing care facility complex. This project will contribute to the Group’s operation of nursing carefacilities in China in the future.
As a result of implementing the efficient operation of regional operating companies in China, through reorganization anddisposition, including the dissolution of unprofitable joint ventures, deficits were reduced while net sales decreased.
－

5 －<Other Segments>
Net sales were 130 million yen (compared with 80 million yen in the same period of the previous fiscal year). Operating
income was 126 million yen (compared with 96 million yen in the same period of the previous fiscal year).
Through goods management and delivery, data processing, lease, and other businesses, the Group has been working to raise
the efficiency of indirect operations by supporting smooth business operation in its core businesses.
Net sales increased by 50 million yen, and operating income grew by 29 million yen.
[Ref. Non-consolidated operating results]
1st Half of Previous Fiscal Year(from April 1, 2017,
to September 30, 2017)(Million yen)
Net sales

1st Half of Fiscal Year under
Review(from April 1, 2018,
to September 30, 2018)(Million yen)

Year-on-year
Change (%)

121,644

122,599

0.8

Operating income

3,023

4,020

33.0

Ordinary income

2,678

3,429

28.0

Net income

1,925

2,051

6.5

－

6 －

(2) Details of financial position
At the end of the first half of the consolidated fiscal year under review, total assets increased 2,343 million yen as compared tothe end of the previous consolidated fiscal year, to 192,583 million yen. This was attributable primarily to an increase of 3,299
million yen in current assets due to a rise in cash and deposits and other items, which was not offset by a decrease of 955 million
yen in non-current assets due to a fall in items such as goodwill.
Liabilities increased 2,682 million yen as compared to the end of the previous consolidated fiscal year, to 155,266 million yen.
Major factors included an increase of 4,414 million yen in non-current liabilities, mainly as a result of growth in lease obligations,which was not offset by a decrease of 1,731 million yen in current liabilities owing largely to a fall in short-term loans payable.
Net assets decreased 339 million yen from the end of the previous fiscal year, to 37,316 million yen.
(3) Information on the future outlook, including consolidated financial results forecasts
The Group will revise the consolidated financial forecasts for the fiscal year under review that were announced on May 11,2018 as described below in view of the progress made by the second quarter.
The Group will revise the full-year forecast for consolidated net sales, taking into account the results for the first half of the
fiscal year mainly due to the improvement of supply capacity in the core businesses and a delay in the structural reform of thelanguage (education) business. The Group will continue to focus on the implementation of various measures for growing net sales.
The forecast for operating income will remain unchanged from the previous announcement, considering the certain
achievements made through measures such as business infrastructure development and cost management in the core businesses
during the second quarter under review.
The full-year forecasts for ordinary income and profit attributable to owners of parent will be revised in view of expenses thatare expected to arise in the closure of small classes (satellite classes) operated by COCO Juku Junior in the second half of the
fiscal year under review, the renovation of nursing care centers (day service centers), the reorganization (dissolution of joint
ventures) in the China (global) business, etc.
(Consolidated financial forecasts)
Revision of full-year consolidated financial forecasts for the fiscal year ending March 31, 2019 (April 1, 2018 throughMarch 31, 2019)
Profit attributableto owners ofparent

Net income pershare

Million yen
10,500Million yen
6,300

Yen
98.14

14,700

9,600

5,100

79.39

(21,000)―(900)(1,200)

(6.7)

―

(8.6)

(19.0)

283,767

7,630

3,628

854

Operating

Ordinary

incomeincomeMillion yen
314,500

Million yen
14,700293,500

Net sales
Previously announced
forecasts (A)Revised forecasts this time(B)
Difference (B – A)
Percentage increase(decrease) %(Reference)
Full-year results for theprevious fiscal year
(FY ended March 31, 2018)

13.31(Non-consolidated earnings forecasts)
Revision of full-year non-consolidated financial forecasts for the fiscal year ending March 31, 2019 (April 1, 2018 throughMarch 31, 2019)
Profit attributable
Net income per
Operating
Ordinary
to owners of
Net sales
share
incomeincomeparentPreviously announced
forecasts (A)Revised forecasts this time(B)
Difference (B – A)
Percentage increase(decrease) %(Reference)
Full-year results for theprevious fiscal year
(FY ended March 31, 2018)

Million yen
268,700

Million yen
12,100Million yen
10,800Million yen
7,600

Yen
118.39251,300

12,10010,3006,900

107.41(17,400)

―

(500)

(700)

(6.5)

―

(4.6)

(9.2)

243,588

6,241

4,939

3,300

－

7 －

51.41

2. Quarterly consolidated financial statements and major notes(1) Quarterly consolidated balance sheets(Thousand yen)
Fiscal 2018
(As of March 31, 2018)
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 －H1 of Fiscal 2019
(As of September 30, 2018)

18,447,925
33,072,792―
890,572
6,859
222,620
12,639,841(31,360)
65,249,251

20,546,254
33,261,017
189,544738,385
32,433229,073
13,582,370(30,475)
68,548,604

22,260,337
47,283,743
10,230,927
79,775,008

21,719,236
49,125,561
9,642,037
80,486,835

11,424,497
5,592,039
17,016,537

10,273,165
5,190,183
15,463,349

28,464,166(265,077)
28,199,088
124,990,634
190,239,886

28,340,446(255,921)
28,084,524
124,034,709
192,583,314

1,170,987
5,336,220
2,563,388
17,836,819
5,611,659
38,00027,902,439
60,459,515

757,864
1,168,927
2,709,877
18,361,023
6,385,042
22,55029,322,603
58,727,888

22,007,024
53,596,996
7,524,273
2,446,418
6,549,487
92,124,200
152,583,715

23,472,008
55,947,469
7,689,944
2,467,919
6,961,102
96,538,444
155,266,333

(Thousand yen)
Fiscal 2018
(As of March 31, 2018)
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 －H1 of Fiscal 2019
(As of September 30, 2018)

11,933,790
17,026,495
19,636,670(11,376,709)
37,220,245

11,933,790
16,995,080
19,088,989(11,177,243)
36,840,617

19,091

19,570(366,488)(509,191)(856,588)
560,694
731,819
37,656,170
190,239,886(294,095)(412,616)(687,141)582,969
580,535
37,316,981
192,583,314

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

141,426,981
113,946,536
27,480,445
23,726,633
3,753,812

1st Half of Fiscal Year under
Review(from April 1, 2018
to September30, 2018)
142,596,669
114,557,464
28,039,205
23,884,305
4,154,899

76,259116,923
32,14930,542
263,938
519,81272,458104,663
19,79024,133
205,288426,334

2,305,801
18,208
133,667
2,457,678
1,815,946

2,416,896
13,121
203,666
2,633,685
1,947,548―

128,950

5,310
―
5,310

1,691
535
131,177

4,516

3,532

―

149,705―

305,191759
5,275
1,815,982
1,829,910(810,914)
1,018,995
796,986(122,000)
918,987620
459,049
1,619,676
1,890,419(501,716)
1,388,703
230,973(20,790)
251,764

1st Half of Previous Fiscal Year(from April 1, 2017
to September30, 2017)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Rent income
Subsidy income
Equity method investment gain
Other
Total non-operating income
Non-operating expenses
Interest expenses
Rent expenses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investments in capital of subsidiaries
and associates
Gain on reversal of subscription rights to shares
Other
Total extraordinary income
Extraordinary losses
Loss on retirement of property, plant and equipment,
net
Loss on sales of investment securities
Loss on sales of investments in capital of subsidiaries
and associates
Other
Total extraordinary losses
Net income before income taxes
Income taxes—current
Income taxes—deferred
Total income taxes
Net income
Profit (loss) attributable to non-controlling interests
Profit attributable to owners of parent

－

10 －

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

796,986

1st Half of Fiscal Year under
Review(from April 1, 2018
to September30, 2018)
230,973248(99,747)
102,0132,514
799,500

481(16,439)
96,57480,616
311,590929,172

343,700(129,672)(32,109)

1st Half of Previous Fiscal Year(from April 1, 2017
to September30, 2017)
Net income
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency exchange adjustments
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners ofparentComprehensive income attributable to non-controllinginterests－

11 －(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.

－

12 －