Financial Results for the First Quarter of the Year Ending March 31, 2020 (J-GAAP)
August 7, 2019
Name of listed company: NICHIIGAKKAN CO., LTD.

Listed on:

Tokyo Stock Exchange 1st Section

Securities code:
Representative:

9792
Nobusuke Mori, President and COO

URL:

http://www.nichiigakkan.co.jp

Contact:

Kazuya Shiiya, Executive Officer, Acting Division Director Accounting Division

TEL:

Scheduled date for filing the quarterly financial report:

August 9, 2019

Scheduled date to start dividends distribution:–

Supplementary quarterly materials prepared:

Yes

Quarterly results information meeting held:

Yes (for institutional investors and financial analysts)

03-3291-2121(Figures shown are rounded down to the nearest million yen.)

1. Consolidated financial results for the first quarter of the year ending March 31, 2020 (April 1, 2019 – June 30, 2019)(1) Consolidated operating results(Percentage figures represent changes from the previous year.)Net sales

Operating income

Ordinary income

Profit attributable toowners of parent

Million yen%

Million yen%

Million yen%

Million yen%

73,52370,835

3.8
0.7

2,723
1,263

115.5
(16.8)

1,574
139

–
(75.1)

927
(158)

–
–

Three months ended June 30, 2019
Three months ended June 30, 2018

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

Net income per share
Three months ended June 30, 2019
Three months ended June 30, 2018

First three months of FY2019: (124) million yen (–%)

Diluted net income per share
Yen

Yen

14.42
(2.47)

14.32–(2) Consolidated financial position

As of June 30, 2019
As of March 31, 2019
Reference: Shareholders’ equity:

Total assets
Million yen

Net assets
Million yen

194,005
193,640

40,86741,077

As of June 30, 2019: 39,677 million yen

Equity ratio
%

20.5
20.6

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

2. Dividends
1Q-endYen

2Q-endYen

Annual dividends
3Q-endYen

Year-end
Yen

Annual
Yen

–
–

15.00

–

20.00

35.00

20.00

–

20.00

40.00

Year ended March 31, 2019Year ending March 31, 2020
Year ending March 31, 2020 (forecast)(Note) Revisions to most recently announced dividend forecast: No

3. Forecast of consolidated financial results for the year ending March 31, 2020 (April 1, 2019 – March 31, 2020)(Percentage figures represent changes from previous year for full year figures and from same period of previous year for interim period figures.)
Net salesFirst six months
Full year

Operating income

Profit attributable to ownersof parent

Ordinary income

Net income
per share

Million yen%

Million yen%

Million yen%

Million yen%

Yen

149,200
303,000

4.6
5.3

6,200
15,200

49.2
51.5

4,000
11,000

105.4
92.9

2,400
6,700

853.3
9.7

37.30
104.12(Note) Revisions to most recently announced financial results forecast: No

* Notes(1) Significant changes in subsidiaries during the term (Changes in specified subsidiaries resulting in changes in scope of consolidation): None
(2) Application of specific accounting for preparing the quarterly consolidated financial statements: None
(3) Changes in accounting policies, changes of accounting estimates and restatement
1) Changes in accounting policies due to revisions of accounting standards, etc.: None
2) Changes in accounting policies due to reasons other than those stated in 1): None
3) Changes in accounting estimates: None
4) Restatement: None
(4) Number of shares outstanding (common stock)1) Number of shares issued and outstanding (including treasury stock)
As of June 30, 2019:

73,017,952

As of March 31, 2019:

73,017,952

8,672,119

As of March 31, 2019:

8,671,247

2) Number of treasury stock
As of June 30, 2019:3) Average number of shares issued and outstanding in each period
Three months ended June 30, 2019: 64,346,210

Three months ended June 30, 2018:

64,193,048* 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 bereasonable. Various factors may cause actual results to differ significantly from forecasts. Please refer to the disclaimers, provided under “(3)Information on the future outlook, including consolidated financial results forecasts” of “1. Qualitative information on quarterly financial results”
on page 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. Qualitative information on quarterly financial results………………………………………………………………………

2(1) Details of business results ……………………………………………………………………………………………

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

4(3) Information on the future outlook, including consolidated financial results forecasts……………………………………

4

2. Quarterly consolidated financial statements and major notes ………………………………………………………………
(1) Quarterly consolidated balance sheets……………………………………………………………………………………………
(2) Quarterly consolidated statements of income and comprehensive income………………………………………………………
Quarterly consolidated statements of income

5

Three months ended June 30 ………………………………………………………………………………………

7

5
7

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

8(3) Notes to quarterly consolidated financial statements ……………………………………………………………………
(Notes on the premise of a going concern)…………………………………………………………………………………
(Notes on significant fluctuation in the amount of shareholders’ equity) ………………………………………………

9(Significant subsequent events) ………………………………………………………………………………………

9

‐1‐

9
9

1. Qualitative information on quarterly financial results
The forward-looking statements contained in the descriptions below are forecasts determined at the end of the current quarter.
(1) Details of business results
The Nichii Group has been restructuring its business portfolio through selection and concentration to build a sustainable
management foundation based on its long-term vision and improving the profit base of its core businesses, the Medical Support
Segment and the Long-Term Care Segment, and human resources that become the source of growth potential.
During the first quarter of the fiscal year under review, the Group increased its stable profitability, particularly in its
mainstays, the Medical Support Segment and the Long-Term Care Segment, through successful business reform led by on-site
personnel. To increase its human resources supply capacity, the Group improved its approach to persons taking humanresources development courses in the process from application to completion, which resulted in an upward trend in the numberof persons taking the medical administration course and contributed to steady achievements in the Group’s measures topromote human resources development. In the Long-Term Care Segment, the Group aggressively carried out measures such as
the launch of a short-term intensive course to train new nursing care professionals, the development of an environment for arange of human resources to use their skills, and the improvement of the situation for working multiple jobs in housekeeping
services by employing foreign personnel, in an effort to increase its capacity to meet growing demand.
In the business restructure of the Education Segment and the China Business, the further reduction of operational costs
contributed to an increase in gross margin and operating margin.
Net sales for the first three months of the first quarter under review were 73,523 million yen (up 3.8% year on year).
Operating income was 2,723 million yen (up 115.5% year on year). Ordinary income was 1,574 million yen (up 1,029.7% year
on year). Profit attributable to owners of parent was 927 million yen (compared with loss attributable to owners of parent of
158 million yen in the same period of the previous fiscal year).
Yao Medical PFI Co., Ltd., which was a non-consolidated subsidiary in the previous fiscal year, has been included in thescope of consolidation (the Medical Support Segment) since the first quarter of the fiscal year under review.
The business results by segment are as shown below.
<Medical Support Segment>
Net sales were 28,467 million yen (compared with 26,791 million yen in the same period of the previous fiscal year).
Operating income was 2,359 million yen (compared with 2,119 million yen in the same period of the previous fiscal year).
For medical institutions with which the Group is under contract, the Group worked to improve its service proposal skills,
rationalize working hours by closely examining contract operations, and increase customer satisfaction by improving work
accuracy.
Under new contracts, the number of persons who take the medical administration course continues to increase, and theGroup used this trend to acquire new contracts, etc. with large hospitals by employing human resources that can be immediate
assets.
Yao Medical PFI Co., Ltd., the newly consolidated subsidiary, is a special purpose company carrying out the PFI businessfor Yao Municipal Hospital in Osaka, and the Group has been funding 51% of its capital since 2004. The Group signed a 15year contract extension that commenced in May this year and consolidated it as a subsidiary in the first quarter of the fiscal
year under review.
Consequently, net sales and income rose, thanks primarily to the new consolidation and an increase in the number of persons
taking the medical administration course.
<Long-Term Care Segment>
Net sales were 38,059 million yen (compared with 37,439 million yen in the same period of the previous fiscal year).
Operating income was 4,191 million yen (compared with 3,649 million yen in the same period of the previous fiscal year).
In the In-home care service segment, the Group raised its capacity to accept patients in a moderate or severe condition in
response to sickbed reorganization, etc., which resulted in an increase in the number of patients in a moderate or severe
condition using the services and growth in the average sales per customer.
In the residential care service segment, the Group maintained stable, high occupancy and focused on collaboration between
service providers and facilities to reduce vacancies after the vacation of users.
As a result, the high occupancy of residential care service facilities and the stabilization of profit associated with an increasein sales per customer contributed to growth in net sales and income.
<Childcare Segment>
Net sales were 3,153 million yen (compared with 2,568 million yen in the same period of the previous fiscal year).
1‐2‐Operating loss was 546 million yen (compared with operating loss of 404 million yen in the same period of the previous fiscal
year).
In the three months under review, the Group opened 34 new facilities, including licensed nursery schools, which resulted ina total of 285 facilities. In its sales activities, the Group worked to acquire corporate-user contracts for corporate-run childcare
centers and to increase recognition in each region by promoting the expansion of regional usage limits.
As a result, net sales increased thanks to an increase in the occupancy of nursery schools and the opening of new centers.
The operating result was a loss due to upfront expenses incurred for the opening of new facilities, however.
<Health Care Segment>
Net sales were 423 million yen (compared with 381 million yen in the same period of the previous fiscal year). Operating
loss was 493 million yen (compared with operating loss of 115 million yen in the same period of the previous fiscal year).
The Group worked to improve its sales capabilities for the Nichii Life housekeeping service and the Sunny Maid Service
housekeeping support business provided by foreign personnel in the National Strategic Special Zone.
In the Sunny Maid Service business, the Group has been promoting the employment of foreign personnel to respond to thehousekeeping market and build a full-time service system for staff in the Long-term Care Segment and the Health Care
Segment. As of the end of June, the number of foreign staff members totaled 627.
The Group is preparing for employee training, area needs analysis, and other activities to further improve its service capacity.
As a new development, the Group plans to start providing services in Aichi Prefecture in September 2019. It submitted an
application for an office to launch services in the city of Chiba in Chiba Prefecture in the second half of the fiscal year underreview.
As a result, net sales rose, reflecting an increase in the number of service users due to promotions meeting users’ seasonalneeds. Meanwhile, operating loss increased due to an increase in prior expenses for the acceptance of foreign staff.
<Education Segment>
Net sales were 2,784 million yen (compared with 2,891 million yen in the same period of the previous fiscal year).
Operating loss was 56 million yen (compared with operating loss of 1,210 million yen in the same period of the previous fiscal
year).
In the three months under review, the Group closed 15 schools and completed the closure of all 72 schools by the end ofJune due to the withdrawal from the COCO Juku business. (A resolution to close 199 franchise schools by the end of March
2020 has been passed.)In the segment of Gaba One-to-one English Conversation, the existing Gaba Learning Studio (“LS”) continued to perform
well, and the Group worked to develop the business in new areas based on the six former COCO Juku LSs (JR Tower Sapporo
LS, Sendai LS, Funabashi LS, Tsukuba LS, Kyoto LS Annex, and Hiroshima LS) to acquire new customers and encouragecontinuous attendance.
While net sales decreased due to the withdrawal from the COCO Juku business, operating loss was reduced chiefly by adecrease in rents and advertising expenses after the school closures.
<Therapy Segment>
Net sales were 145 million yen (compared with 88 million yen in the same period of the previous fiscal year). Operating loss
was 85 million yen (compared with operating loss of 152 million yen in the same period of the previous fiscal year).
The Group worked to open the A-LOVE dog grooming salons. The Group worked to acquire new customers using theGolden Week campaign and other promotional activities to meet seasonal demand and through active promotion using social
media. The Group also focused on sharing and increasing the quality of grooming techniques through cooperation withpersonnel at other salons in an effort to increase the number of regular customers.
This resulted in an increase in new and regular customers, which contributed to sales growth and reduced operating loss.
<Global Segment>
Net sales were 411 million yen (compared with 484 million yen in the same period of the previous fiscal year). Operating
loss was 149 million yen (compared with operating loss of 326 million yen in the same period of the previous fiscal year).
In the three months under review, the Group improved sales activities to acquire contracts for the operation of long-termcare facilities accepting dementia patients and outside sales training in China. It also launched a consulting business for theestablishment and operation of long-term care facilities as part of the efforts to create new business opportunities.
In the three months under review, while net sales fell, due in part to the reorganization of a joint venture in China that was
launched in the previous fiscal year, operating loss was reduced by concentrating management resources through corporate
reorganization.
‐3‐
2

<Other Segments>
Net sales were 77 million yen (compared with 190 million yen in the same period of the previous fiscal year). Operating
income was 47 million yen (compared with 76 million yen in the same period of the previous fiscal year).
The Group supported an increase in the operation efficiency of goods management, data processing, leases, and other corebusinesses. In the three months under review, net sales and income decreased in Other Segments due to the restructure of
consolidated subsidiaries.
(2) Details of financial position
At the end of the first quarter of the consolidated fiscal year under review, total assets increased 364 million yen ascompared to the end of the previous consolidated fiscal year, to 194,005 million yen. The major causes were an increase of
1,566 million yen in current assets, mainly due to an increase in notes and accounts receivable – trade, and a decrease of 1,201
million yen in fixed assets, mainly due to a decrease in goodwill.
Liabilities increased 574 million yen as compared to the end of the previous consolidated fiscal year, to 153,137 million yen.
Major factors included an increase of 2,171 million yen in current liabilities, mainly as a result of growth in short-term loans
payable and a decrease of 1,596 million yen in non-current liabilities, owing largely to a fall in long-term loans payable.
Net assets decreased 209 million yen from the end of the previous fiscal year, to 40,867 million yen.
(3) Information on the future outlook, including consolidated financial results forecasts
The forecast of consolidated financial results for the year ending March 31, 2020 that was announced on May 10, 2019 remains
unchanged.

3‐4‐

2. Quarterly consolidated financial statements and major notes(1) Quarterly consolidated balance sheets(Thousand yen)
Fiscal 2019
(As of March 31, 2019)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable—trade
Short-term investment securities
Merchandise and finished goods
Work in progress
Raw materials and supplies
Other segments
Less: allowance for doubtful accounts
Total current assets
Fixed assets
Property, plant and equipment
Buildings and structures—net
Lease assets—net
Other—net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investment and other asset
Other
Less: allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Income taxes payable
Accrued expenses
Provision for bonuses
Provision for directors’ bonuses
Allowance for structural reform
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Lease obligations
Net defined benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities

4‐5‐

Q1 of Fiscal 2020
(As of June 30, 2019)18,255,916
33,434,278
256,310364,426
11,159175,533
13,291,468(104,166)
65,684,926

18,220,823
35,275,913
299,458
459,277
22,021
182,122
12,886,723(94,647)
67,251,693

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

22,096,364
49,840,690
10,007,430
81,944,484

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

8,688,998
3,876,002
12,565,001

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

32,486,772(242,349)
32,244,423
126,753,909
194,005,602

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

2,114,195
7,260,588
597,680
18,748,621
3,216,944
19,94060,62730,817,091
62,835,687

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

14,265,166
57,272,343
7,784,163
3,603,074
7,377,281
90,302,028
153,137,716

(Thousand yen)
Fiscal 2019
(As of March 31, 2019)
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency exchange adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets

5‐6‐

Q1 of Fiscal 2020
(As of June 30, 2019)11,933,790
17,009,418
22,867,282(11,177,438)
40,633,052

11,933,790
17,009,401
22,476,861(11,177,505)
40,242,548

12,481

11,066(244,124)(414,813)(646,456)
605,781
485,398
41,077,776
193,640,771(207,224)(368,469)(564,627)
617,080
572,884
40,867,885
194,005,602

(2) Quarterly consolidated statements of income and comprehensive income
Quarterly consolidated statements of income (Three months ended June 30)(Thousand yen)
Q1 of Fiscal 2019(from April 1, 2018
to June 30, 2018)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Rent income
Subsidy income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Rent expenses
Foreign exchange losses
Share of loss of entities accounted for using equity
methodOther
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of property, plant and equipment, net
Gain on reversal of subscription rights to shares
Total extraordinary income
Extraordinary losses
Loss on retirement of property, plant and equipment,
net
Loss on sales of investment securities
Structural reform expenses
Other
Total extraordinary losses
Net income (loss) before income taxes
Income taxes—current
Income taxes—deferred
Total income taxes
Net income (loss)
Profit (loss) attributable to non-controlling interests
Profit (loss) attributable to owners of the parent company

6‐7‐

Q1 of Fiscal 2020
(from April 1, 2019
to June 30, 2019)70,835,690
57,358,847
13,476,842
12,213,155
1,263,686

73,523,266
58,882,077
14,641,188
11,917,533
2,723,654

34,632
46,241
16,85485,290183,019

35,41048,13330,00378,755
192,3021,205,044
6,945
66,243

1,253,264
8,302
30,527

8,475

5,203

20,665
1,307,374
139,33144,572
1,341,870
1,574,087

–
1,691
1,691

6
–
6

357

8,942

149,705––
150,062(9,039)134,259
36,408
170,667(179,707)(21,293)(158,413)–
224,310
15,339248,592
1,325,501
166,609
218,765
385,374
940,126
12,386
927,739

Quarterly consolidated statements of comprehensive income (Three months ended June 30)(Thousand yen)
Q1 of Fiscal 2019(from April 1, 2018
to June 30, 2018)
Net income (loss)
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency exchange adjustments
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners ofparentComprehensive income attributable to non-controllinginterests

7‐8‐

Q1 of Fiscal 2020
(from April 1, 2019
to June 30, 2019)(179,707)

940,126(2,131)
9,239
48,28755,395(124,312)(1,554)37,804
46,34382,593
1,022,719(96,489)

1,009,427(27,822)

13,292

(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.
(Significant subsequent events)
Disposal of treasury stock as stock-based compensation with restrictions on transfer
The Company resolved at the meeting of the board of directors held on July 10, 2019 to dispose of treasury stocks as stockbased compensation with restrictions on transfer (hereinafter referred to as the “Disposal of Treasury Stocks” or the“Disposal”).
1. Purposes of and reasons for the Disposal
The Company resolved at a meeting of its Board of Directors held on May 11, 2018 to introduce the stock-based
compensation plan with restrictions on transfer (hereinafter referred to as the “Transfer”) for the purposes of providing
appropriate incentives toward the achievement of the sustainable enhancement of corporate value and the medium-term
management plan of the Company to directors of the Company other than outside directors (hereinafter referred to as the“Directors”), executive officers who are not directors of the Company and the directors of the subsidiaries of the Company,
and promote the further sharing of values with shareholders. In addition, the 46th annual general meeting of shareholders heldon June 26, 2018 (hereinafter referred to as the “General Meeting of Shareholders”), approved, among other matters, that under
the said plan, the right to claim monetary compensation would be provided to directors of the Company as monetarycompensation for the property contributed to acquire shares with restrictions on transfer up to the annual amount of 1,320,000
thousand yen only for seven (7) years from the date of the general meeting of shareholders.
2. Outline of the Disposal(1)

Date of the Disposal

August 2,2019(2)

Class and number of shares tobe disposed ofCommon stocks of the Company: 153,550 shares(3)

Price for the Disposal

1,658 yen per share(4)

Total amount of the Disposal

254,585,900 yen(5)Buyers and number of buyers
and number of stocks to be

Directors (other than outside directors) of the Company: 8 persons, 132,000 shares
Executive officers of the Company: 41 persons, 16,500 sharesdisposed of

Directors of the subsidiaries of the Company: 9 persons, 5,050 shares(6)

Others

The securities report required by the Financial Instruments and Exchange Act has
been submitted for the Disposal of Treasury Stocks.

8‐9‐