Financial Results for the First Quarter of the Year Ending March 31, 2017 (J-GAAP)
August 10, 2016
Name of listed company: NICHIIGAKKAN CO., LTD.
Listed on: Tokyo Stock Exchange 1st Section
Securities code:
9792
URL:
http://www.nichiigakkan.co.jp
Representative:
Akihiko Terada, Chairman, President and CEO
Contact: Tsuyoshi Terada, Managing Director and Executive Division Director Corporate Governance Headquarters
TEL: 03-3291-2121
Scheduled date for filing the quarterly financial report: August 12, 2016
Scheduled date to start dividends distribution:—
Supplementary quarterly materials prepared:
Yes
Quarterly results information meeting held:
Yes (for institutional investors and financial analysts)(Figures shown are rounded down to the nearest million yen.)

1. Consolidated financial results for the first quarter ended June 30, 2016 (April 1, 2016– June 30, 2016)(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

Three months ended
June 30, 2016
Three months ended
June 30, 2015
(Note) Comprehensive income:%Million yen%

Million yen%

Million yen%

68,414

0.8

(215)

—

(1,250)—(1,313)—67,878

0.2

(614)

—

(1,028)—(1,165)—Three months ended June 30, 2016: minus 1,232 million yen (-%);
Three months ended June 30, 2015: minus 976 million yen (-%)

Net Income per Share

Diluted Net Income per ShareYen

Three months ended
June 30, 2016
Three months ended
June 30, 2015

Yen

(20.46)—(18.05)—(2) Consolidated financial position
Total Assets

Net Assets

Equity Ratio

Million yen

As of June 30, 2016
As of March 31, 2016
Reference: Shareholders’ equity:

Million yen

186,315
184,170%

36,606
38,101

18.9
20.0

As of June 30, 2016: 35,282 million yen; As of March 31, 2016: 36,868million yen

2. Dividends
1Q-endAnnual dividends
3Q-end2Q-endYen

Year ended March 31, 2016
Year ending March 31, 2017
Year ending March 31, 2017
(forecast)

—
—

Yen

Year-end

Yen

Annual
Yen

Yen

11.00

—

11.00

22.00

11.00

—

11.00

22.00

(Note) Revisions to most recently announced dividend forecast: No

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

%

—
—

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

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) 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.: 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(4) Number of shares outstanding (common stock)1) Number of shares issued and outstanding (including treasury stock)
As of June 30, 2016:
73,017,952
As of March 31, 2016:
73,017,952
2) Number of treasury stock
As of June 30, 2016:
8,825,706
As of March 31, 2016:
8,825,918
3) Average number of shares issued and outstanding in each period (quarterly consolidated cumulative period)
As of June 30, 2016:
64,192,077
As of June 30, 2015:
64,561,809*Implementation status of quarterly review procedures
The quarterly review procedure based on the Financial Instruments and Exchange Act does not apply to these quarterly
financial statements, and the procedure based on the Financial Instruments and Exchange Act is in operation as of therelease of these quarterly financial statements.
*Explanation concerning the appropriate use of financial result forecasts and other special notes(Forward looking statements)
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 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 quarterly consolidated
financial results (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. Summary information (notes) ………………………………………………………………………………......

4(1) Significant changes to subsidiaries during the term …………………………………………………………

4(2) Application of specific accounting for preparing the quarterly consolidated financial statements ………….

4(3) Changes in accounting policies, changes of accounting estimates and restatement ………………………...

4

3. Quarterly consolidated financial Statements…………………………………………………………………….

5(1) Quarterly consolidated balance sheets ………………………………………………………………………

5(2) Quarterly consolidated statements of income and comprehensive income …………………………………

7

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

7

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

8(3) Notes to quarterly consolidated financial statements ……………………………………………………….

9

Notes on the premise of a going concern …………………………………………………………………..

9

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

9

Significant subsequent events ………………………………………………………………………………

9

― 1 ―

1. Qualitative information on quarterly financial results(1) Details of business results
During the first three months ended June 30, 2016, the Japanese economy remained on a moderate recovery track,with the employment environment improving as a result of the policies adopted by the government and the Bankof Japan. Nonetheless, the outlook for the economy remained uncertain, chiefly reflecting unstable exchange rates
and stock prices and the decision to postpone the consumption tax hike again due to weak consumer spending. In
the field of social security, there was concern over the effect of postponing the consumption tax hike on finances.
Meanwhile, the National Council for Promoting the Dynamic Engagement of All Citizens discussed improving theworking conditions of long-term care workers and childcare support measures.
In this environment, the Nichii Gakkan Group promoted its medium-term management strategy to pursue its
Triangle Vision—which consists of sociability, economic performance, and growth—through development in thecore businesses, strategic businesses, and globalization businesses so that the Group can build a stable businessbase that is not affected by institutional trends. Meanwhile, the Group changed its management execution structure.
The Group has expanded its executive officer system and has assigned executive officers to each business andeach region to build a strong management system that will expedite management decision making and strengthen
the Group’s business execution function.
Under the new management execution structure, the Group gained new students who attended the qualification
courses in the Medical Support, Long-Term Care, and Child Care Segments, which are the core businesses, bypromoting cooperation among different businesses and by focusing on securing employees, the source of services,and promoting initiatives using the Group’s employee enhancement scheme. To retain staff members, the Group
strengthened its employee base by enhancing its carrier-building system and improving working conditions.
In the Education and Health Care Segments, strategic businesses, the Group enhanced its services and products toincrease the number of customers, while working to add to its customer base.
In the China business, the core globalization business, the Group worked together with local community service
providers to continue developing the Nichii Operation System in China, which integrates the entire process fromthe cultivation of employees to the provision of services. To strengthen its operation management structure andability to promote business in China, the Group cultivated local staff members who have a good command ofJapanese as senior staff members and assigned them to operating companies. The Group will work to launch the
Nichii Operation System early on to create a long-term care market across China.
The Group positions the fiscal year ending March 31, 2017 as a transition period towards long-term stable growth,and for this reason it has made future-oriented investments. Meanwhile, the Company worked to recoup
investments that had been made. Net sales and operating income rose (the operating loss was reduced), reflecting
the strong performance of the Education Segment, Child Care Segment, and China Business Segment, in which
the Group made strategic investments. Ordinary income and profit attributable to owners of parent declined,primarily because of interest paid for real estate leases of long-term care facilities and child care facilities andexchange rates. The Group will work to accelerate the recovery in earnings by continuing to recruit employees forthe core businesses, while at the same time strive to promote the strategic and globalization businesses and cut
costs, in particular selling, general and administrative expenses.
In the first quarter under review, the Group posted net sales of 68,414 million yen (67,878 million yen in the firstquarter of the previous fiscal year), an operating loss of 215 million yen (an operating loss of 614 million yen), an
ordinary loss of 1,250 million yen (an ordinary loss of 1,028 million yen), and a loss attributable to owners ofparent of 1,313 million yen (a loss attributable to owners of parent of 1,165 million yen).
Results by business segment are as follows:
From the first quarter under review, the China business—the results of which were originally recorded in the
Medical Support Segment, Long-term Care Segment, Healthcare Segment, Child Care Segment, and Other—ispresented separately as the China Business Segment. Child care courses (babysitting courses, etc.), which
previously were included in the Education System, are now included in the Child Care Segment.
To compare the results in the first quarter under review and the results in the first quarter of the previous fiscal
year in the following results by business segment, the business segments for the previous fiscal year have been
reclassified, as described above.

― 2 ―<Medical Support Segment>
To provide diverse management support services to medical institutions as well as commissioned medical services,
the Group developed medical interaction services, data analysis services, and consulting services, making the mostof the Group’s organizational capabilities. To acquire and retain staff members, the Group promoted attendance inqualification courses by group participants and reinforced training. Net sales in this segment fell as a result of thedecline in sales from medical education due to the half-price discount for course fees, but the number of attending
students and the number of students that completed courses continued to rise. Profits declined due to upfront
expenses related to the start of operations at hospitals with which new contracts were concluded and the effect of
the improvements in staff member treatment.
Net sales for the segment came to 27,008 million yen for the first quarter under review (compared with 27,106
million yen posted in the same period of the previous fiscal year). Operating income for the segment was 1,672
million yen (1,900 million yen in the same period of the previous fiscal year).

<Long-term Care Segment>
To recover the number of users of home care services, the Group strengthened its human resources base. The
Group took steps to acquire attending students by reforming the scheme for expanding employees that was
implemented in the previous fiscal year, and took steps to promote applications. While the Group worked toacquire attending students, it sought to help students who completed courses start working. Meanwhile, the Group
strengthened marketing activities targeting medical institutions to acquire users with moderate to severe conditions.
In the facility care services, the Group conducted aggressive marketing activities to promote residence in and theshort-term use of facilities and to increase occupancy rates. The number of users of home care services declined
from a year ago, and revenue decreased. However, there were some positive signs, such as the increase in thenumber of users related to long-term care benefits that continued for four consecutive months. Profits rose,reflecting an increase in the number of residents at care facilities.
Net sales for the segment came to 35,668 million yen for the first quarter under review (compared with 35,673
million yen in the same period of the previous fiscal year). Operating income for the segment was 2,037 million
yen (1,608 million yen in the same period of the previous fiscal year).
<Health Care Segment>
In Nichii Life housekeeping services and private brand product sales, the Group enhanced its system for providing
services and product line-up to gain new customers and expand the customer base in response to growing demand
due to greater participation of women in society and the increase in the elderly population. Segment sales were
down due to the discontinuation of the food service business and the downscaling of helper dispatch services.
Profits rose, reflecting strong performance in terms of the number of users of Nichii Life and sales quantities ofprivate brand products.
Sales in this segment came to 850 million yen in the first quarter under review (compared with 913 million yen in
the first quarter of the previous fiscal year), and operating income was 97 million yen (compared with 33 million
yen in the first quarter of the previous fiscal year).
<Education Segment>
The Group expanded channels to gain students. In April, the Group started online lessons using its network toprovide new language learning opportunities for cultivating employees who are able to work outside Japan.
COCO Juku strove to improve the contract renewal rate by enhancing the capabilities of its instructors andcounselors, and introduced a COCO Juku customer satisfaction assurance system to gain new students by
guaranteeing the quality of services. As a result, sales increased, reflecting an increase in the number of students
with the contract renewal rate and the number of new students being at high levels primarily in COCO Juku
courses for adults. Profits rose (the operating loss fell) due to the increase in sales and a reduction in advertisingexpenses.
Net sales for the Education Segment totaled 3,213 million yen (compared with 3,116 million yen in the firstquarter of the previous fiscal year). Operating loss for the segment was 1,110 million yen (compared with anoperating loss of 1,606 million yen in the first quarter of the previous fiscal year).

― 4 ―<Childcare Segment>
Responding to demand for child care facilities in communities, the Group pushed ahead with the opening of newchild care centers, in particular registered child care centers. In April 2016, the Group established 35 registeredchild care centers, and the number of child care facilities operated by the Nichii Gakkan Group as of the end ofJune came to 114. In addition to the opening of new facilities, the Group strove to start operation early on andstrengthen its service management systems. As a result, the number of children attending child care centers
increased, and overall the new facilities made a good start.
Net sales for the Child Care Segment totaled 1,153 million yen (compared with 712 million yen in the first quarterof the previous fiscal year). The operating loss for the segment was 262 million yen (compared with a loss of 261
million yen in the first quarter of the previous fiscal year).
<China Business Segment>
The Group developed bases for services in cooperation with local community service providers. Specifically, it
developed a business model, established bases of business, and enhanced its ability to cultivate employees. In
certain areas, long-term care services started in April in the second quarter of the current consolidated fiscal year.
Sales in this segment increased, chiefly reflecting an increase in the number of consolidated subsidiaries. Profits
declined largely because of upfront investment associated with system development and the start of operation, as
well as an increase in personnel costs associated with the enhancement of management systems.
Net sales for this segment amounted to 482 million yen (compared with 318 million yen in the first quarter of theprevious fiscal year). Operating loss for the segment was 365 million yen (compared with a loss of 116 million
yen in the first quarter of the previous fiscal year).
<Other Businesses>
In Other Businesses, the Group worked to increase earnings at subsidiaries to strengthen its capabilities.
Net sales for this segment stood at 38 million yen (compared with 37 million yen in the first quarter of theprevious fiscal year). Operating income was 96 million yen (compared with 74 million yen in the first quarter ofthe previous fiscal year).

(2) Details of financial position
Total assets at the end of the first quarter under review increased 2,144 million yen from the end of the previous
fiscal year, rising to 186,315 million yen. The main reasons for the increase were a 3,142 million yen rise in fixed
assets, mainly reflecting an increase in lease assets, and a 998 million yen decrease in current assets primarily due
to the decline in short-term investment securities.
Liabilities increased 3,640 million yen from the end of the previous fiscal year, rising to 149,708 million yen. The
key factors contributing to this increase were a 1,221 million yen rise in current liabilities, mainly reflecting an
increase in short-term loans payable, and a 2,418 million yen increase in non-current liabilities, primarily
attributable to an increase in lease obligations.
Net assets decreased 1,495 million yen from the end of the previous fiscal year, to 36,606 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, 2017 that was announced on May 13,
2016 remains unchanged.

2. Summary information (notes)(1) Significant changes to subsidiaries during the term
There are no applicable matters.
(2) Application of specific accounting for preparing the quarterly consolidated financial statements
There are no applicable matters.
(3) Changes in accounting policies, changes of accounting estimates and restatement
There are no applicable matters.
― 4 ―3. Quarterly consolidated financial statements(1) Quarterly consolidated balance sheets(Thousand yen)
Fiscal 2016
(As of March 31, 2016)
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—net
Lease assets—net
Other—net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investment and other asset
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
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― 5 ―Q1 of Fiscal 2017
(As of June 30, 2016)

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

14,161,115
32,448,245
999,411
1,139,974
30,493274,753
1,287,907
11,870,371(28,499)
62,183,773

24,000,568
39,307,921
9,949,984
73,258,475

23,975,369
42,482,159
9,417,687
75,875,216

15,776,886
5,246,065
21,022,951

15,602,617
5,344,452
20,947,069

27,582,499(140,000)(735,588)
26,706,911
120,988,337
184,170,136

27,679,013—(369,964)
27,309,049
124,131,335
186,315,108

884,520
20,307,461
1,199,674
16,300,768
4,892,578
38,00024,548,610
68,171,614

752,188
23,180,413
676,170
17,088,722
2,642,709
23,45025,029,622
69,393,276

19,548,389
43,399,237
7,015,433
2,308,169
5,625,412
77,896,643
146,068,258

18,450,725
46,947,032
7,113,052
2,318,704
5,485,683
80,315,198
149,708,474

(Thousand yen)
Fiscal 2016
(As of March 31, 2016)
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
incomeSubscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets― 6 ―Q1 of Fiscal 2017
(As of June 30, 2016)

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

11,933,790
17,354,214
17,924,089(11,377,345)
35,834,749

12,815

9,789

333,133(1,022,986)

407,601(969,158)(677,038)(551,767)

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

512,810
810,841
36,606,634
186,315,108

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

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income (loss)
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 method
Other
Total non-operating expenses
Ordinary income (loss)
Extraordinary income
Gain on reversal of subscription rights to shares
Total extraordinary income
Extraordinary losses
Loss on retirement of property, plant andequipment, net
Loss on sales of property, plant and equipment,
net
Loss on cancellation of leases
Total extraordinary losses
Income (loss) before income taxes
Income taxes—current
Income taxes—deferred
Total income taxes
Net income (loss)
Profit (loss) attributable to non-controlling interests
Profit (loss) attributable to owners of parent

Q1 of Fiscal 2016
(from April 1, 2015
to June 30, 2015)
67,878,088
55,634,208
12,243,879
12,858,014(614,134)

Q1 of Fiscal 2017(from April 1, 2016
to June 30, 2016)
68,414,741
56,036,130
12,378,611
12,593,834(215,223)

39,52655,811
259,952
117,605
472,895

33,582
48,195
124,327
153,011359,118

799,790
14,834—

973,192
9,186
349,498

7,457

2,989

65,272
887,355(1,028,594)

59,843
1,394,710(1,250,815)

—
—

8,158
8,158

7,234

1,089

568

—

8,390
16,194(1,044,788)
269,819(154,515)
115,303(1,160,091)
5,438(1,165,529)

206
1,295
(1,243,951)
251,769(158,404)
93,364(1,337,316)(23,975)(1,313,341)― 7 ―(Quarterly consolidated statements of comprehensive income)(Three months ended June 30)(Thousand yen)

Net income (loss)
Other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustments
Remeasurements of defined benefit plans, net oftax
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests

Q1 of Fiscal 2016
(from April 1, 2015
to June 30, 2015)(1,160,091)

Q1 of Fiscal 2017(from April 1, 2016
to June 30, 2016)(1,337,316)

7,015(3,025)

140,668

54,152

36,18253,828183,866(976,225)

104,955(1,232,361)(981,629)
5,404(1,188,070)(44,290)― 8 ―(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)
There are no applicable matters.

― 9 ―