Kyoritsu Maintenance Co., Ltd.
(Securities Code: 9616)

Third Quarter of the Fiscal Year Ending March 2018
Consolidated Earnings Results Update
February 20181

Third Quarter of the Fiscal Year Ending March 2018 Consolidated Earnings Announcement
February 9, 2018

Company Name: Kyoritsu Maintenance Co., Ltd.
Tokyo Stock Exchange
Stock Code: 9616, URL: http://www.kyoritsugroup.co.jp/
Director: Takumi Ueda, President
Contact: Koji Nakamura, Director, General Manager of Management Planning Department; Tel: +81-3-5295-7778
Quarterly Earnings Announcement Report Filing Date (Anticipated): February 13, 2018
Dividend Payment Date (Anticipated): ―Quarterly Earnings Presentation Document (Anticipated): Yes
Quarterly Earnings Presentation Meeting (Anticipated): None
(All figures of less than one million yen are rounded down to the nearest digit)
1. Third Quarter of the Fiscal Year Ending March 2018 Consolidated Earnings (April 1, 2017 to December 31, 2017)(1) Consolidated Earnings (Aggregated)(% figures show year-on-year change)
Net Sales

Operating Income

Profit Attributable to Ownersof Parent

Ordinary Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

108,726

7.5

10,214

5.5

9,985

7.0

6,661

13.9

101,112
1.4
9,685
12.8
9,334
15.6
5,847
3Q FY3/17(Note) Comprehensive income: ¥7,124 million (21.0% YoY) in 3Q FY3/18; ¥5,887 million (18.4% YoY) in 3Q FY3/17

11.3

3Q FY3/18

EPS

Fully Diluted EPS

3Q FY3/18

Yen

Yen

171.56

157.47151.10138.213Q FY3/17(Note) The Company carried out a stock split on April 1, 2017, at a ratio of two shares per one common share. Accordingly, EPS andfully diluted EPS have been calculated presuming that this stock split was carried out at the start of the previous consolidated fiscal year.
(2) Consolidated Financial Position
Total Assets

Net Assets

Equity Ratio

Book Value Per Share

Millions of yen

Millions of yen%

Yen

188,086

70,48037.5

1,809.13

3Q FY3/18

FY3/17
173,609
64,32037.0
1,660.61(Note) Capital: ¥70,480 million in 3Q FY3/18; ¥64,320 million in FY3/17(Note) The Company carried out a stock split on April 1, 2017, at a ratio of two shares per one common share. Accordingly, book value
per share has been calculated presuming that this stock split was carried out at the start of the previous consolidated fiscal year.
2. Dividend Conditions
Dividend Per Share
1Q-End2Q-EndYen

3Q-EndFY3/17

―

Yen
26.00

―

FY3/18

―

18.00

―

4Q-End
Yen

Total
Yen
36.00

Yen
62.00

FY3/18 (Projected)
18.00
36.00
(Note) Recent changes in dividend projections: None
(Note) The Company carried out a stock split on April 1, 2017, at a ratio of two shares per one common share. The actual dividend
amount prior to the stock split is noted here for the fiscal year ended in March 2017.
3. Fiscal Year Ending March 2018 Consolidated Earnings Estimates (April 1, 2017 to March 31, 2018)(% figures show year-on-year change for the full year)
Net Sales

Operating Income

EPS

Millions of yen% (YoY)

Millions of yen% (YoY)

Millions of yen% (YoY)

Yen

Full Year
151,000
11.2
12,600(Note) Recent changes in earnings estimates: Yes

6.6

12,300

6.8

8,200

14.9

210.48Millions of yen% (YoY)

Profit Attributable to
Owners of Parent

Ordinary Income

Please refer to the press release issued on February 9, 2018, entitled “Notification of Revisions to Earnings Forecasts” for information onrevisions to consolidated earnings forecasts.

2

Notes(1) Important changes in our subsidiaries, including changes to the scope of our consolidation: None
(2) Application of special accounting procedures in the preparation of our quarterly consolidated financial statements: Applicable(Note) Please refer to “2. Quarterly Consolidated Financial Statements and Important Notes, (3) Quarterly consolidated financial
statement notes (Application of special accounting procedures in the preparation of our quarterly consolidated financial
statements)” on page 11 for more details.
(3) Changes in the accounting policies, procedures, and changes or revisions in the display of accounting estimates:
1. Changes accompanying revisions in accounting standards:
None
2. Other changes:
None
3. Changes in accounting estimates:
None
4. Redisplay of revisions:
None(4) Shares Issued (Common Stocks)
1. Shares issued as of term-end (including treasury shares)

3Q FY3/18
3Q FY3/18
3Q FY3/18

2. Treasury stock as of term-end
3. Average during the term (first nine months)

39,182,362
224,215
38,832,276

FY3/17
FY3/173Q FY3/17

38,954,452
221,546
38,700,577(Note) The Company carried out a stock split on April 1, 2017, at a ratio of two shares per one common share. Accordingly, sharesissued (common stock) have been calculated presuming that this stock split was carried out at the start of the previous
consolidated fiscal year.
* The earnings announcement is exempt from quarterly review practices.
* Notes and explanations regarding the appropriate use of our earnings projections:(Notes on forecast results)
All earnings estimates and forward-looking statements in this document are based on the best information available and rational
decisions of management at the time of its creation, and actual earnings may diverge largely from those estimates and forward-looking
statements put forward in this document due to various unforeseen factors. Moreover, for information regarding earnings estimates
and the assumptions upon which they are based, and the usages of these earnings estimates, please refer to the section, “1. Qualitative
Information about Quarterly Earnings, (3) Explanation of future forecasts including consolidated earnings estimates” on page 6.
(Method for obtaining supplementary explanatory information on financial results)
The Company will post supplementary explanatory information on financial results on its website.

3

Kyoritsu Maintenance (9616), 3Q FYE March 2018 Earnings Announcement
Index
1. Qualitative Information about Quarterly Earnings

5(1) Explanation of business performance5(2) Explanation of financial position

6(3) Explanation of future forecasts including consolidated earnings estimates6

2. Quarterly Consolidated Financial Statements and Important Notes

7(1) Quarterly consolidated balance sheet

7(2) Quarterly consolidated income statement and comprehensive income statement

9

Quarterly consolidated income statement
Consolidated third quarter

9

Quarterly consolidated comprehensive income statements
Consolidated third quarter10(3) Quarterly consolidated financial statement notes

11(Notes regarding going concern assumptions)11(Significant changes in shareholders’ equity notes)

11(Application of special accounting procedures in the preparation of
our quarterly consolidated financial statements)(Segment information)

11
11

4

Kyoritsu Maintenance (9616), 3Q FYE March 2018 Earnings Announcement
1. Qualitative Information about Quarterly Earnings(1) Explanation of business performance
During the first three quarters of the consolidated fiscal year ending March 31, 2018, growth in inbound demand, an upturnin employee hiring among corporations, and an increase in the number of foreign students improved the Group’s businessenvironment. However, we also noted factors such as labor shortages and new entrants from other industries into theGroup’s core dormitory and hotel businesses. Geopolitical risk has also been cited as yet another factor affecting theGroup’s business.
In this environment, the Group established the Kyoritsu Jump Up Plan, a five-year medium-term management plan thatbegan this fiscal year, under which we steadily promoted the two aims of improving customer satisfaction and pursuing
advanced developments, which together constitute the framework for the medium-term management plan.
As a result, during the three quarters of the current fiscal year, sales rose 7.5% year on year to ¥108,726 million, andoperating income increased 5.5% to ¥10,214 million. Ordinary income was up 7.0% to ¥9,985 million. Profit attributable toowners of parent climbed 13.9% over the previous year to ¥6,661 million, reaching a record high. Our consolidated
earnings forecasts initially projected that ordinary income would increase 1.6% over the previous year in the full year due
to ¥1,270 million in business commencement expenses in the hotel business incurred in line with the medium-term
management plan. However, progress with real estate liquidation has contributed, in addition to steady increases in hotel
occupancy rates and average daily rates, effectively absorbing the business commencement expenses, and thus we haverevised our growth forecast upward to 6.8% year-on-year growth.
We provide details of our earnings by business segment as follows.
Dormitory businessOur dormitory business got off to a solid start with a 98.3% occupancy rate at the beginning of the fiscal term, the same as
the previous year, while an increase of 628 year on year in the total number of contracted residents cumulated in 33,143
residents as of the end of December. In addition, the number of contracts for corporate dormitories increased in the first
three quarters of the current fiscal year due to factors such as companies actively hiring greater numbers of new employees
and more companies now opting to offer employee dormitories. Consequently, sales rose by 3.4% year on year to ¥34,378
million, while operating income increased by 2.3% to ¥5,168 million.
Hotel businessIn the Dormy Inn (business hotel) business, we opened seven facilities, namely “Myojin no Yu Dormy Inn Premium
Kanda,” “Natural Springs Hyuga no Yu Dormy Inn Miyazaki,” “Natural Springs Yakumo no Yu Dormy Inn Izumo,”“Natural Springs Kaijin no Yu Dormy Inn EXPRESS Sendai Seaside,” “Natural Springs Shoun no Yu Dormy Inn Kofu
Marunouchi,” “Natural Springs Yoshino-zakura no Yu Onyado Nono Nara,” and “Global Cabin Tokyo Suidobashi.”Moreover, existing hotels generated favorable results, exceeding levels of the same period in the previous fiscal year withrespect to both occupancy rates and the average daily rate due to a significant increase in business involving inboundcustomers and solid growth in use by domestic customers.
In the resort hotel business, we opened two facilities first in the Chugoku / Shikoku area, namely the “Inishie no Yado
Keiun,” and “Oyado Tsukiyo no Usagi” hotels, both in the vicinity of the Izumo Taisha shrine. We also opened “Le Chien
Kyu-Karuizawa,” Kyoritsu Resort’s first resort to welcome pets, and the high-grade “Gora Onsen Setsugetsuka Bettei
Suiun,” our fourth resort in the Hakone region. In addition, existing hotels achieved year-on-year increases in both
occupancy rates and the average daily rate, despite the adverse effects of typhoons on business. Moreover, we thoroughly
implemented cost controls in part by means of flexible personnel assignments tailored to occupancy conditions.
As a result, sales rose 16.2% year on year to ¥53,029 million and operating income increased 6.5% to ¥6,714 million,
absorbing the ¥1,070 million in preparation costs for the opening of new hotels in the first three quarters of this fiscal year.
Contracted services businessIn the contracted services business, earnings decreased due to the impact of major construction work in the same period in
the previous year. As a result, sales and operating income fell by 8.5% and 16.0% year on year to ¥10,289 million and ¥224
million, respectively.
Food service business
The food service business recorded higher revenues and earnings due to increased business in hotel restaurant outsourcing
and also due to closures of unprofitable establishments. Consequently, sales and operating income rose by 4.8% and552.4% year on year to ¥5,095 million and ¥117 million, respectively.

5

Kyoritsu Maintenance (9616), 3Q FYE March 2018 Earnings Announcement
Construction businessIn the construction business, sales and income declined due to a decrease in the development of built-for-salecondominiums, in addition to delays with some hotel development projects. As a result, sales and operating income fell by
5.4% and 13.9% year on year to ¥15,100 million and ¥610 million, respectively.
Other business
Our other business segments are the Senior Life business (management of senior citizen housing), the PKP business(consigned services business provided to regional government bodies), single life support business and insurance agency
business, comprehensive human resource services business, and financing and administrative outsourcing services. The
other business segments posted total net sales of ¥8,855 million, an increase of 5.5% year on year, and incurred an
operating loss of ¥226 million, in comparison with an operating loss of ¥251 million in the same period of the previous
fiscal year.
(2) Explanation of financial position(Assets)
Total consolidated assets rose by ¥14,477 million from the end of the previous fiscal year to ¥188,086 million at the end of
the third quarter. The main factor behind this increase was an increase in real estate for sale in process, and buildings andstructures.
(Liabilities)
Total consolidated liabilities rose by ¥8,317 million from the end of the previous fiscal year to ¥117,606 million at the end of
the third quarter, due primarily to an increase in short-term loans payable.
(Net assets)
Net assets grew by ¥6,159 million from the end of the previous fiscal year to ¥70,480 million at the end of the second quarter,due mainly to a rise in retained earnings.
Consequently, equity ratio declined by 0.5 p.p. from the end of the previous fiscal year to 37.5% at the end of the third
quarter.
(3) Explanation of future forecasts including consolidated earnings estimates
Our consolidated earnings forecasts initially projected that ordinary income would increase 1.6% over the previous year in
the full year due to ¥1,270 million in business commencement expenses in the hotel business, incurred in line with themedium-term management plan. However, progress with real estate liquidation has contributed, in addition to steadyincreases in hotel occupancy rates and average daily rates, effectively absorbing the business commencement expenses, andthus we have revised our growth forecast upward to 6.8% year-on-year growth.
Please refer to the press release issued on February 9, 2018, entitled “Notification of Revisions to Earnings Forecasts,” for
information on revisions to consolidated earnings forecasts.

6

Kyoritsu Maintenance (9616), 3Q FYE March 2018 Earnings Announcement
2. Quarterly Consolidated Financial Statements and Important Notes(1) Quarterly consolidated balance sheet
FY3/17(March 31, 2017)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable–trade
Real estate for sale
Costs on uncompleted construction contracts
Real estate for sale in process
Other
Allowance for loan losses
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net
LandConstruction in progress
Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Guarantee deposits
Lease deposits
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Deferred assets
Total assets

7(Unit: Millions of yen)
3Q FY3/18(December 31, 2017)15,210
8,643
920
420
－
7,179
(23)
32,35016,708
7,883
735
376
4,035
8,279
(23)
37,99440,251
37,77017,373
2,698
98,0942,957

43,451
39,95016,172
3,145
102,719
3,909

5,032
14,561
11,526
8,979(206)
39,892140,944313
173,609

5,318
15,83913,0059,238(218)
43,183
149,812279
188,086

Kyoritsu Maintenance (9616), 3Q FYE March 2018 Earnings Announcement(Unit: Millions of yen)
3Q FY3/18(December 31, 2017)

FY3/17(March 31, 2017)
Liabilities
Current liabilities
Notes and accounts payable–trade
Short-term loans payable
Current portion of bonds
Income taxes payable
Provision for bonuses
Provision for directors’ bonuses
Provision for warranties for completed construction
Provision for point card certificates
Provision for loss on construction contracts
Other
Total current liabilities
Non-current liabilities
Bonds payable
Convertible bond-type bonds with subscription
rights to shares
Long-term loans payable
Director retirement benefit reserve
Provision for point card certificates
Net defined benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

8

6,230
17,398
2,950
2,175
1,829
486
8
18
30
21,35152,477

5,943
36,892
3,020
1,621
1,111
291
8
20
13
18,43467,356

18,65016,45020,511

20,00011,842
287
28
1,102
4,389
56,811
109,289

7,833
269
22
1,143
4,530
50,249117,606

7,703
12,55843,888(321)
63,8297,923
12,77949,154(331)
69,526

834
(356)
13
491
64,320173,609

1,123
(179)
9
953
70,480188,086

Kyoritsu Maintenance (9616), 3Q FYE March 2018 Earnings Announcement(2) Quarterly consolidated income statement and comprehensive income statement(Quarterly consolidated income statement)(Consolidated third quarter)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Gain on investments in partnership
Other
Total non-operating income
Non-operating expense
Interest payment
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Other
Total extraordinary income
Extraordinary losses
Impairment loss
Provision for loss on disaster
Loss on retirement of non-current assets
Dismantlement costs
Other
Total extraordinary losses
Income before income taxes
Income taxes

3Q FY3/17(April 1, 2016 to
December 31, 2016)
101,11277,87323,23913,553
9,685(Unit: Millions of yen)
3Q FY3/18(April 1, 2017 to
December 31, 2017)
108,726
83,31725,40815,194
10,214

52
43
57
152
307

55
49
149
117
371

453
204
657
9,334

384
216
600
9,985

－
－
－

196
27
224

89
309
27
－
－
427
8,907
3,059
5,847
5,847

－
－
113
115
2
231
9,978
3,316
6,661
6,661

ProfitProfit attributable to owners of parent

9

Kyoritsu Maintenance (9616), 3Q FYE March 2018 Earnings Announcement(Quarterly consolidated comprehensive income statements)(Consolidated third quarter)

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income(Details)
Comprehensive income attributable to owners of parent

10

3Q FY3/17(April 1, 2016 to
December 31, 2016)
5,847(Unit: Millions of yen)
3Q FY3/18(April 1, 2017 to
December 31, 2017)
6,661

111
(81)
9
39
5,887

288
176
(3)
462
7,124

5,887

7,124

Kyoritsu Maintenance (9616), 3Q FYE March 2018 Earnings Announcement(3) Quarterly consolidated financial statement notes(Notes regarding going concern assumptions)Not applicable(Significant changes in shareholders’ equity notes)
Not applicable(Application of special accounting procedures in the preparation of our quarterly consolidated financial statements)(Calculation of tax expense)
The Company applies the method that reasonably estimates an effective tax rate to be assessed on income before income
taxes for the year ending March 31, 2018, including the nine months ended December 31, 2017, after accounting for the
tax effects, and multiplies income before income taxes during the nine months ended December 31, 2017, by this estimatedeffective tax rate. However, in cases in which calculating tax expenses using the estimated effective rate yields a result thatis markedly irrational, then the legally determined effective tax rate is used.
(Segment information)
Segment information
I. Third quarter of the fiscal year ended March 2017 (From April 1 to December 31, 2016)
1. Information pertaining to segment sales, profits and losses(Unit: Millions of yen)
Reporting segments

Other
(Note
1)

Total

Adjustments(Note 2)

Consolidated(Note 3)

Dormitories

HotelsContracted
Services

33,07445,535

5,523

1,300

7,619

93,055

8,057

101,112–101,112

176

98

5,720

3,561

8,340

17,898333

18,231(18,231)–

Total

33,251

45,634

11,243

4,862

15,960110,953

8,390

119,344(18,231)

101,112Segment profit/loss

5,051

6,301

267

18

708

12,347(251)

12,095(2,410)

9,685

Food
Services

Construction

Subtotal

Sales
External sales
Inter-segment sales
and transfers(Notes) 1. Other is not considered as a reporting business segment and is comprised of the Senior Life (management of seniorcitizen housing), PKP business (consigned services business provided to regional government bodies), single life support
services, insurance agency business, comprehensive human resources, financing, administrative outsourcing services,and other related services.
2. Adjustment for segment profit and loss of ¥2,410 million includes ¥580 million for inter-segment transaction
eliminations, and ¥1,829 million in companywide expenses that cannot be allocated to specific reporting segments.
Companywide expenses are primarily those expenses arising from the accounting and management divisions.
3. Segment profits or losses are derived by adjusting the operating income used in the quarterly consolidated income
statement.

2. Impairment accounting losses and goodwill amortization of fixed assets by reporting segments
None

11

Kyoritsu Maintenance (9616), 3Q FYE March 2018 Earnings Announcement
II. Third quarter of the fiscal year ending March 2018 (From April 1 to December 31, 2017)
1. Information pertaining to segment sales, profits and losses(Unit: Millions of yen)
Reporting segments
Dormitories

Hotels

Other(Note 1)

Contracted
Services

Food
Services

Construction

Subtotal

Total

Adjustments(Note 2)

Consolidated(Note 3)

Sales
External sales

34,16052,900

5,665

1,188

6,308

100,224

8,502

108,726–

108,726

Inter-segment
sales andtransfers

217

128

4,623

3,907

8,791

17,669353

18,022(18,022)–

Total

34,37853,02910,2895,095

15,100117,893

8,855

126,749(18,022)

108,726

Segment
profit/loss

5,168

6,714

224

117

610

12,835(226)

12,608(2,394)

10,214(Notes) 1. Other is not considered as a reporting business segment and is comprised of the Senior Life (management of seniorcitizen housing), PKP business (consigned services business provided to regional government bodies), single life support
services, insurance agency business, comprehensive human resources, financing, administrative outsourcing services,and other related services.
2. Adjustment for segment profit and loss of ¥2,394 million includes ¥430 million for inter-segment transaction
eliminations, and ¥1,963 million in companywide expenses that cannot be allocated to specific reporting segments.
Companywide expenses are primarily those expenses arising from the accounting and management divisions.
3. Segment profits or losses are derived by adjusting the operating income used in the quarterly consolidated income
statements.

2. Impairment accounting losses and goodwill amortization of fixed assets by reporting segmentsNone12