Kyoritsu Maintenance (9616), FYE March 2017 Earnings Announcement

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

Fiscal Year Ended March 2017
Consolidated Earnings Results Update
May 2017

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Kyoritsu Maintenance (9616), FYE March 2017 Earnings Announcement

Fiscal Year Ended March 2017 Consolidated Earnings Announcement
May 15, 2017

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
General Shareholders Meeting (Anticipated): June 28, 2017; Dividend Payment Date (Anticipated): June 29, 2017
Financial Accounts Filing Date (Anticipated): June 28, 2017
Earnings Presentation Document: Available
Earnings Presentation Meeting: Available (for institutional investors)(All figures of less than one million yen are rounded down to the nearest digit)
1. Fiscal Year Ended March 2017 Consolidated Earnings (April 1, 2016 to March 31, 2017)(1) Consolidated Earnings (Aggregated)
Profit attributable to owners
Net Sales
Operating Income
Ordinary Incomeof parent％

Million yen％

Million yen％

Million yen

FY3/17
135,8280.6
11,815
15.3
11,51417.8
FY3/16135,053
22.5
10,244
24.7
9,775
27.6
(Note) Comprehensive income: ¥7,290 million (34.9% YoY) in FY3/17; ¥5,405 million (3.9% YoY) in FY3/16
EPS

Fully Diluted EPS
YenOrdinary Income toTotal Asset Ratio

ROE
％

Yen

Million yen

％

7,135
5,970

19.5
36.1

Operating Margin％％

184.35168.6611.7
6.9
8.7
FY3/17157.28152.74
11.4
6.5
7.6
FY3/16(Reference) Equity accounting method profit: ¥0 in FY3/17; ¥0 in FY3/16(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

Million yen

Book Value Per Share
％Million yen

Yen173,609
64,320FY3/1737.0
1,660.61
161,40257,974
FY3/1635.9
1,498.55(Reference) Capital: ¥64,320 million in FY3/17; ¥57,974 million in FY3/16(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.
(3) Consolidated Cash Flow Conditions
Operating Cash Flow

Investing Cash Flow

Financing Cash Flow

Cash and Equivalents at Term End

Million yen

Million yen

Million yen

Million yen

14,412
8,222(28,263)(13,971)

3,139
15,70814,85325,603

Dividend Per Share
2Q-End3Q-End4Q-EndTotal Dividend
Payment(Annual)FY3/17
FY3/16
2. Dividend Conditions
1Q-EndYen

FY3/16
FY3/17

-

Yen

25.00
26.00

Yen

-

Total

Dividend Payout
Ratio(Consolidated)

Dividend to Net
Asset Ratio(Consolidated)

Yen

Yen

Million yen

％

％

27.00
36.00

52.00
62.00

1,003
1,200

16.5
16.8

1.8
2.0

FY3/18 (Forecast)
18.00
18.00
36.00
17.4
(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 amountprior to the stock split is noted here for the fiscal years ended in March 2016 and March 2017. It should be noted regarding theinterim dividend and year-end dividend for the fiscal year ending March 31, 2018 (forecast), this has been stated in considerationof the effect of said stock split.
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
Million yen

Operating Income％

Million yen

Profit attributable to ownersof parent

Ordinary Income％

Million yen％

Million yen

％

EPS
Yen

74,000
8.1
6,700
(6.6)
6,400
(6.7)
4,300
0.7
111.02First Half
148,200
9.1
12,2003.3
11,700
1.6
8,000
12.1
206.54
Full Year
(Note) The Company carried out a stock split on April 1, 2017, at a ratio of two shares per one common share. With regard to “EPS” of theconsolidated earnings estimates, this has been calculated from the number of shares issued (excluding treasury shares) after said
stock split.

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Kyoritsu Maintenance (9616), FYE March 2017 Earnings Announcement
Notes(1) Important changes in our subsidiaries, including changes to the scope of our consolidation: None
(2) Changes in the accounting policies, procedures, and changes or revisions in the display of accounting estimates:
1. Changes accompanying revisions in accounting standards:
Applicable
2. Other changes:
None
3. Changes in accounting estimates:
None
4. Redisplay of revisions:
None(3) Shares Issued (Common Stocks)
1. Shares issued as of term-end (including treasury shares)
2. Treasury Shares as of term-end
3. Average during the term

FY3/17
FY3/17
FY3/17

38,954,452
221,546
38,707,607

FY3/16
FY3/16
FY3/1638,904,346
217,146
37,962,483(Note) The Company carried out a stock split on April 1, 2017, at a ratio of two shares per one common share. Accordingly, shares issued(common stock) has been calculated presuming that this stock split was carried out at the start of the previous consolidated fiscal
year.
(Reference) Outline of non-consolidated business results
1. Fiscal Year Ended March 2017 Parent Earnings (From April 1, 2016 to March 31, 2017)(1) Parent Earnings
Net Sales
For the fiscal year ended

Operating Income(% figures show year-on-year change)

Ordinary Income

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

March 31, 2017

112,078

6.8

11,55919.6

11,735

22.4

7,875

25.4

March 31, 2016

104,912

10.7

9,668

18.9

9,589

18.0

6,279

21.9

Book Value Per ShareNet Income Per Share–Diluted

For the fiscal year ended

March 31, 2017

Yen

Yen

203.46186.13

March 31, 2016
165.41160.63(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” and “Net Income Per Share–Diluted” have been calculated presuming that this stock split was carried out at the start ofthe previous consolidated fiscal year.
(2) Parent Financial Position
Total Assets
As of March 31, 2017

Net Assets

Equity Ratio

Book Value Per Share

Millions of yen

Millions of yen%

Yen161,600

63,82839.5

1,647.92

As of March 31, 2016
(Reference) Shareholders’ equity:

146,034
56,80238.9
1,468.24
As of March 31, 2017: ¥63,828 million
As of March 31, 2016: ¥56,802 million(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. Fiscal Year Ending March 2018 Parent Earnings Estimates (April 1, 2017 to March 31, 2018)(% figures show year-on-year change for the full year)
Net Sales

Operating Income

Ordinary Income

EPS

Million yen%

Million yen%

Million yen%

Yen

First Half

61,200

9.8

6,400

(6.1)

4,500

1.4

116.18Full Year

123,400

10.1

11,400

(2.9)

8,100

2.9

209.12(Note) The Company carried out a stock split on April 1, 2017, at a ratio of two shares per one common share. With regard to “EPS” of theparent earnings estimates, this has been calculated from the number of shares issued (excluding treasury shares) after said stock split.
* The earnings announcement is exempt from audit procedures.
*Notes and explanation of appropriate usage of earnings estimates:(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. For information regarding earnings estimates and the assumptions upon which they are based, and the usages of theseearnings estimates, please refer to “(4) Forecasts” under “1. Overview of Operating Results” on page 8.
(Method for obtaining supplementary explanatory information on financial results and the briefing on financial results)
The Company will post supplementary explanatory information on financial results on its website.

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Kyoritsu Maintenance (9616), FYE March 2017 Earnings Announcement
Index
1. Overview of Operating Results

5(1) Overview of Operating Results in the Fiscal Period under Review

5(2) Overview of Financial Position in the Fiscal Period under Review

7(3) Overview of Cash Flows in the Fiscal Period under Review

7(4) Forecasts

8(5) Our Basic Policy Regarding the Distribution of Profits in the Current and Next Terms

9

2. Basic Approach to Selecting Accounting Standards

9

3. Consolidated Financial Statements and Important Notes

10(1) Consolidated Balance Sheets

10(2) Consolidated Income Statement and Comprehensive Income Statement

12

Consolidated Income Statement

12

Consolidated Comprehensive Income Statements

14(3) Consolidated Shareholders’ Equity Statements

15(4) Consolidated Cash Flow Statements

17(5) Consolidated Financial Statement Notes

19(Notes Regarding Going Concern Assumptions)19(Important Articles in the Assumption Used to Create Consolidated Financial Statements)

19(Segment Information)

19

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Kyoritsu Maintenance (9616), FYE March 2017 Earnings Announcement
1. Overview of Operating Results(1) Overview of Operating Results in the Fiscal Period under Review
1. Overview of Overall Earnings in Current Term
(Consolidated Earnings)(Unit: million yen)Previous Term
Current Term
% YoY Change
FY3/16
FY3/17
Net Sales
135,053
135,828
0.6
Operating Income
10,244
11,815
15.3
Ordinary Income
9,775
11,514
17.8
Profit attributable to owners of parent
5,970
7,135
19.5
During the fiscal year ended March 31, 2017, the Japanese economy experienced a modest recovery in employment andincome environments, but consumer confidence remained weak, and personal consumption continued to see a lack ofstrength. In addition, in the global economy, the US, China, and the EU have all seen increased uncertainty. Against thisbackdrop, Japan’s travel market experienced record-high numbers of foreign travelers to Japan from January to December
2016, with a 21.8% climb over the previous year to 24,039,000.
In this environment, the Group accelerated development investment and reinforced profitability to achieve the Kyoritsu
Full Acceleration Plan, the medium-term management plan announced in May 2015. In addition, the Group continuously
endeavored to enhance its corporate brand image by co-sponsoring the university relay race in Hakone (Hakone Ekiden),which has a high affinity for our business, and entering various IR events.
This fiscal year, in addition to the stable growth in earnings of the dormitory business, there has been strong performancewith high occupancy rates and ADR (Average Daily Rate) in the hotel business, partly due to the increase in inbounds,
although this was impacted by the initial expenses of eight new facilities. This resulted in a substantial increase inearnings.
As a result, sales rose 0.6% year on year to ¥135,828 million, operating income increased 15.3% to ¥11,815 million andordinary income was up 17.8% to ¥11,514 million. Profit attributable to owners of parent climbed 19.5% over theprevious year to ¥7,135 million. These results set the record for highest earnings, surpassing the results of the previous
fiscal year, and resulted in the earnings targets of the medium-term management plan being reached at an early stage.
2. Our Main Business Segment Performance
Dormitory Business (Student, Corporate, Domeal, Consigned Dormitories)
Previous Term
Current Term
% YoY Change
FY3/16
FY3/17
Contracted Residents
35,48936,474
2.8
Sales (million yen)
44,39545,644
2.8
Operating Income (million yen)
6,574
7,243
10.2
The dormitory business got off to a good start with a 1.0% year-on-year increase in the initial occupancy rate over theprevious year to 98.3%, a level that remained solid throughout the year. In addition, cost optimization has been successful,
resulting in a substantial increase in earnings.
The student dormitory business continued to benefit from a high need for dormitories due to the rise in university
attendance rates and an increase in students from abroad attending universities in Japan. In this fiscal year, we succeeded informing new alliances with Tokyo Institute of Technology and seven others. On the other hand, the decrease in the numberof preparatory school students throughout Japan did have an effect. As a result, the number of contracted residents in thestudent dormitories fell by 154 year on year to 20,420 residents, and sales fell by 0.4% year on year to ¥25,280 million.
The corporate dormitory business achieved substantial gains in the number of contracts mainly due to continuous
improvement of the employment environment and the rise in the number of corporations introducing employee dormitories.
As a result, the number of contracted residents rose by 835 year on year at the end of the fiscal year to 10,833, and salesrose by 7.2% year on year to ¥12,108 million.
In our Domeal business, we received support from client schools and companies through their introductions of newresidents seeking dormitories and also met demand from people looking to move out of dormitories providing meals by
providing studio-type dormitory facilities. Consequently, the number of contracted residents rose by 304 year on year to
5,221, and sales grew by 6.4% year on year to ¥4,430 million.
In our consigned dormitory business, we manage corporate and school dormitory facilities on a consigned basis, and we
endeavor to differentiate our services by promoting our status as “Japan’s best dormitory operator.” Sales rose by 7.7% year
on year to ¥3,824 million.
As a result, the number of dormitory facilities increased by 10 over the previous year to 465 (excluding consigned
facilities), contracted residents grew by 864 to 37,040, and sales and operating income rose 2.8% and 10.2% year on year to¥45,644 million and ¥7,243 million, respectively.

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Kyoritsu Maintenance (9616), FYE March 2017 Earnings Announcement
Hotel Business (Dormy Inn, Resort Hotels)(Unit: million yen)Previous Term
Current Term
% YoY Change
FY3/16
FY3/17
Sales
53,43060,408
13.1
Operating Income
6,006
6,931
15.4
With regard to the hotel business, in addition to demand from domestic travelers and inbounds continuing to increase, wehave earned a reputation as a regular place to stay for repeat visitors, have had a high occupancy rate in excess of last fiscal
year, and have seen an increase in ADR, resulting in significantly improved earnings.
With respect to the Dormy Inn business hotels, this fiscal year we have opened seven establishments: Natural Springs Tento
no Yu Dormy Inn Abashiri, global cabin Gotanda, Natural Springs Toyama Tsurugi no Yu Onyado Nono, Natural Springs
Zenkou no Yu Dormy Inn Nagano, Denma no Yu Dormy Inn PREMIUM Tokyo Kodenmacho, Natural Springs Kafu no
Yu Onyado Nono Namba, and Dormy Inn SEOUL Gangnam. “global cabin Gotanda” is a new cabin type hotel concept that
secures the rationality of a capsule hotel, the comfort of a Dormy Inn, and private space, and is a response to thediversifying needs of our customers. The Dormy Inn business has seen the number of inbound customers increase by 25%
compared to the same period last year. As a result, sales were up 13.2 % year on year to ¥32,316 million.
In the resort hotel business, we opened the Naruko Onsen Yumoto Kissho. The overall occupancy rate remained high andsurpassed the results of the previous fiscal year, partly due to an increase over typical years in occupancy rates of our hotels
in the Hakone region, which were affected by an increase in the level of the volcano threat alert during the previous fiscal
period. In addition, cost management was thorough due to flexible personnel assignments tailored to individual occupancy
conditions. Consequently, sales rose by 12.9% year on year to ¥28,091 million.
As a result of these efforts, the total number of facilities in operation rose to 86 (up eight from the previous year) and thenumber of rooms to 12,716 (up 1,121 from the previous fiscal year) in the hotel business overall. Sales and operating
income rose 13.1% and 15.4% year on year to ¥60,408 million and ¥6,931 million, respectively.
Contracted Services Business(Unit: million yen)Previous Term
Current Term
% YoY Change
FY3/16
FY3/17
Sales
14,85915,953
7.4
Operating Income
508
518
1.9
In the contracted services business, both revenues and earnings increased due to an increase in building management andbuilding construction work. As a result, sales increased 7.4% to ¥15,953 million and operating income increased by 1.9%
year on year to ¥518 million.
Food Services Business(Unit: million yen)Previous Term
Current Term
% YoY Change
FY3/16
FY3/17
Sales
5,787
6,498
12.3
―
Operating Income(4)53Both revenues and earnings increased in the food service business as the number of contracted hotel restaurants rose.
Consequently, sales rose by 12.3% year on year to ¥6,498 million, and operating income increased by ¥58 million year on
year to ¥53 million.
Construction Business(Unit: million yen)Previous Term
Current Term
% YoY Change
FY3/16
FY3/17
Sales
16,31323,00741.0
Operating Income
677
946
39.7
The construction business generated significant increases in revenue and earnings as a result of bringing in greater numbersof orders for hotel development. Consequently, sales and operating income rose by 41.0% and 39.7% year on year to¥23,007 million and ¥946 million, respectively.

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Kyoritsu Maintenance (9616), FYE March 2017 Earnings Announcement
Other Business(Unit: million yen)Previous Term
Current Term
% YoY Change
FY3/16
FY3/17
Sales
11,786
11,172(5.2)―
Operating Income
(212)
(404)
Our other business segments are the Senior Life business (management of senior citizen housing), the Public Kyoritsu
Partnership business (PKP: consigned services business provided to regional government bodies), single life support
business and insurance agency business, comprehensive human resource services business, and financing andadministrative outsourcing services. The other business segments posted total net sales of ¥11,172 million, a decrease of
5.2% year on year, and incurred an operating loss of ¥404 million, in comparison with an operating loss of ¥212 million in
the previous fiscal year. The main cause of the operating loss was the effect of the opening of new facilities in the SeniorLife Business.
(2) Overview of Financial Position in the Fiscal Period under Review(Assets)
During the current fiscal year, total consolidated assets increased by ¥12,206 million from the end of the previous fiscal
year to ¥173,609 million. The main factors behind this increase included rises in land and construction in progress.
(Liabilities)
Over the same period, total liabilities increased by ¥5,861 million to ¥109,289 million, due primarily to an increase in bonds
and a decrease in loans.
(Net Assets)
Net assets increased by ¥6,345 million to ¥64,320 million over the same period due primarily to an increase in retained
earnings.
Consequently, equity ratio rose by 1.1 points from the end of the previous fiscal year to 37.0%.
(3) Overview of Cash Flows in the Fiscal Period under Review
Consolidated cash and equivalents decreased by ¥10,750 million from the end of the previous term to ¥14,853 million at theend of the current term.
(Cash Flow from Operating Activities)
The net cash inflow from operating activities increased by ¥6,190 million from the previous term to ¥14,412 million in thecurrent term, due to a decrease in notes and accounts receivable – trade and inventories.
(Cash Flow from Investing Activities)
The purchase of property, plant and equipment, and payments for lease and guarantee deposits led to a ¥14,292 million
increase in the net cash outflow year on year to ¥28,263 million in investing activities.
(Cash Flow from Financing Activities)
A net cash inflow in financing activities decreased by ¥12,569 million from the previous term to ¥3,139 million reflecting
proceeds from a decrease in short-term loans payable and proceeds from the issuance of bonds.
(Reference) Trends in Our Cash Flow Indicators
FY3/13

FY3/14

FY3/15

FY3/16

FY3/17

Equity Ratio (%)
28.4
26.2
33.6
35.9
37.0
Equity Ratio, Market Capital-Based (%)
30.7
34.4
72.6
116.4
74.0
Cash Flow to Interest-Bearing Liability Ratio (%)
11.6
8.8
7.5
8.2
5.0
Interest Coverage Ratio (x)
4.0
7.3
8.9
10.2
24.9
Equity Ratio: Capital / Total Assets
Equity Ratio, Market Capital-Based: Market Capitalization / Total Assets
Cash Flow to Interest-Bearing Liability Ratio: Interest-Bearing Liabilities / Operating Cash Flow
Interest Coverage Ratio: Operating Cash Flow / Interest Payments(Note) 1. Each indicator is based on consolidated financial data.
2. Market capitalization excludes treasury stock.
3. Cash flow is based on our operating cash flow.
4. Interest-bearing debt includes all of the liabilities that bear interest payments on our consolidated balance sheet.
5. We use interest payments from our consolidated cash flow statements.

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Kyoritsu Maintenance (9616), FYE March 2017 Earnings Announcement(4) Forecasts(Consolidated)

Net Sales
Operating Income
Ordinary Income
Profit Attributable to Owners of Parent(Unit: million yen)
Current Term
FY3/17
135,828
11,815
11,514
7,135(Parent Earnings)

Coming Term
FY3/18148,200
12,20011,7008,000% YoY Change
9.1
3.3
1.6
12.1

(Unit: million yen)
Current Term
Coming Term
% YoY Change
FY3/17
FY3/18Net Sales
112,078
123,400
10.1
Ordinary Income
11,735
11,400(2.9)
Net Income
7,875
8,100
2.9
With regard to the future outlook, although the moderate economic recovery in the Japanese economy is expected tocontinue, uncertainties such as political risk in the US and Europe, the new president in South Korea, and the slowdown of
the Chinese and Asian economies are forecast to continue. Furthermore, in the medium term, reflecting the increase invisitors in conjunction with the Tokyo 2020 Olympic and Paralympic Games, it is forecast that there will be significant
environmental changes, including soaring construction costs and personnel shortages, etc. In regard to this, in order toovercome these environmental changes, we formulated the new medium-term management plan “Kyoritsu Jump Up Plan”,
conducted development in advance, and created a stable management base at an early stage.
In the next fiscal year, which is the first year of the new medium-term management plan, the dormitory business occupancy
rate in April got off to a good start at 98.3%, the same as in the previous year. Operation of the dormitory business remains
stable, and we expect solid performance in the next fiscal year. Kyoritsu is taking steps to flexibly respond to greater
diversification among residents as well as their diverse needs, while also building a stable revenue structure by optimizing
costs.
In the hotel business, as the first fiscal year of advanced development, we plan to open nine new facilities in the Dormy Inn
business, with the Myojin no Yu Dormy Inn PREMIUM Kanda, Natural Hot Springs Hyuga no Yu Dormy Inn Miyazaki(tentative name), Natural Hot Springs Kaijin no Yu Dormy Inn EXPRESS Sendai Seaside (tentative name), global cabin
Suidobashi (tentative name), Dormy Inn Kofu Marunouchi (tentative name), Dormy Inn Izumo (tentative name), Onyado
Nono Nara (tentative name), Dormy Inn Kochi (tentative name), and Dormy Inn Matsuyama (tentative name). The resort
hotel business plans to open four new facilities, with the Inishie no Yado Taisha no Yu Keiun (tentative name), Oyado
Tsukiyo no Usagi (tentative name), Le Cyan Karuizawa (tentative name), and Setsugetsuka Bettei Gora Suiun (tentativename). It should be noted that the opening costs for these new hotels are forecast to be 1.27 billion yen.
In the contracted services business, Kyoritsu will implement measures to increase our credibility with customers throughimprovements in our specialized technologies and product lineup. These measures will also allow us to aggressively
provide customers with high-quality building maintenance and other services that are highly competitive within the market
with our new enhanced organization.
In the food services business, Kyoritsu will develop products and services with high levels of customer satisfaction, andimplement strict management of variable costs as part of its earnings reform strategy.
In our construction business, we will continue to support the Kyoritsu Group development and new facility opening plans,in addition to cultivating external clients and strictly managing costs.
In our other business segment, we will focus on quickly establishing a business model to make the Senior Life business andthe Public Kyoritsu Partnership (PKP) next-generation businesses and realize higher levels of profitability.
As a consequence of the above, in the next fiscal year, net sales are expected to increase 9.1% to ¥148,200 million,
operating income to rise 3.3% to ¥12,200 million, ordinary income to grow 1.6% to ¥11,700 million and profit attributableowners of parent to increase 12.1% to ¥8,000 million on a consolidated basis. On a parent basis, we forecast a 10.1%
increase in net sales to ¥123,400 million, a 2.9% decrease in ordinary income to ¥11,400 million and a 2.9% increase in net
income to ¥8,100 million. The reason for the profit growth rate being more moderate than in the previous year is the effectof the preparation costs for the new facilities in the hotel business, but this is a temporary phenomenon associated withadvanced development aimed toward dramatic growth in the future.
It should be noted that the forecasts above were created based on the information that could be obtained as of the
publication date of this document, and actual results may differ from the forecast values due to various factors in the future.

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Kyoritsu Maintenance (9616), FYE March 2017 Earnings Announcement(5) Our Basic Policy Regarding the Distribution of Profits in the Current and Next Terms
We consider the capital contributed by shareholders to be invaluable, and place a high priority on the distribution of profits toour shareholders in line with our earnings performance. One of our goals is to maintain a stable level of dividends over thelong term and we have established a target dividend payout ratio of 20%. With regard to the current term, in addition to thesteadily improving performance of the dormitory business, which is the main business, our strong performance in the hotelbusiness compared to the previous year, thanks to strong customer reviews, has resulted in the profit targets of themedium-term management plan being achieved early, and we have recorded a record high profit. Consequently, we anticipate
increasing our dividend by ¥10 per share to ¥36 at the term-end for a full-year dividend of ¥62 per share. In the next fiscal
year, we plan to pay ¥36 as full-year dividend. This is substantially a 16% effectual increase year on year, considering thetwo-for-one stock split that we carried out on April 1. In the future, we will endeavor to maintain a stable level of dividends
while also responding flexibly to reflect changes in our earnings. At the same time, we also seek to retain a level of earnings
that will give our management the flexibility to make necessary capital investments in response to changes in the market andto develop new businesses whenever appropriate.
2. Basic Approach to Selecting Accounting Standards
The Group prepares its consolidated financial statements using Japanese standards, in consideration of the ability tocompare periods in consolidated financial statements and make comparisons between companies.
The Group will respond appropriately to the adoption of IFRS in light of conditions in Japan and overseas.

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Kyoritsu Maintenance (9616), FYE March 2017 Earnings Announcement
3. Consolidated Financial Statements and Important Notes(1) Consolidated Balance Sheets

Previous Term
(March 31, 2016)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable – trade
Real estate for sale
Costs on uncompleted construction contracts
Deferred tax assets
Other
Allowance for loan losses
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
LandConstruction in progress
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Guarantee deposits
Lease deposits
Net defined benefit asset
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Deferred assets
Bond issuance cost
Total deferred assets
Total assets

10(Unit: million yen)
Current Term
(March 31, 2017)25,960
9,763
2,827
331
998
5,370
(19)
45,231

15,210
8,643
920
420
954
6,224
(23)
32,35059,601(23,263)
36,33733,807
6,906
9,962(7,772)
2,190
79,2401,710

65,795(25,543)
40,251
37,77017,373
10,935(8,236)
2,698
98,094
2,957

5,034
293
12,19910,103
2
1,189
6,492
(212)
35,103116,054

5,032
413
14,561
11,526
7
1,314
7,243
(206)
39,892140,944

116
116
161,402313
313
173,609

Kyoritsu Maintenance (9616), FYE March 2017 Earnings Announcement

Previous Term
(March 31, 2016)
Liabilities
Current liabilities
Notes and accounts payable – trade
Short-term loans payable
Current portion of bonds
Income taxes payable
Advances received
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
Long-term guarantee deposited
Deferred tax liabilities
Net defined benefit liability
Director retirement benefit reserve
Provision for point card certificates
Asset retirement obligations
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

11(Unit: million yen)
Current Term
(March 31, 2017)

6,966
21,471
1,350
2,765
11,079
1,700
426
8
18
－
7,861
53,6486,230
17,3982,950
2,175
11,431
1,829
486
8
18
30
9,920
52,477

5,600
20,608
17,940
3,090
460
1,072
287
25
238
454
49,779103,428

18,65020,511
11,842
3,104
448
1,102
287
28
399
437
56,811
109,289

7,654
12,50937,778(305)
57,637

7,703
12,55843,888(321)
63,829

736
(393)
(5)
336
57,974
161,402

834
(356)
13
491
64,320173,609

Kyoritsu Maintenance (9616), FYE March 2017 Earnings Announcement(2) Consolidated Income Statement and Comprehensive Income Statement(Consolidated Income Statement)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Salaries, allowances and bonuses
Welfare expenses
Provision for bonuses
Provision for directors' bonuses
Retirement benefit expenses
Director retirement reserve provisions
Promotion expenses
Commission fee
Provision of allowance for doubtful accounts
Provision for point card certificates
Business consignment expenses
Rent expenses
Depreciation
Other
Total selling, general and administrative expense
Operating income
Non-operating income
Interest income
Dividend income
Gain on investments in partnership
Deposit redemption income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Commission fee
Other
Total non-operating expenses
Ordinary income

12Previous Term(April 1, 2015 toMarch 31, 2016)
135,053
107,189
27,863(Unit: million yen)
Current Term(April 1, 2016 to
March 31, 2017)
135,828
105,255
30,573

4,228
886
537
426
51
1
2,225
5,023
22
12
1,295
323
171
2,413
17,61910,244

4,400
907
532
486
92
1
2,011
5,980
9
6
1,346
431
196
2,353
18,757
11,815

159
90
9
102
257
618

67
127
59
115
189
559

803
101
183
1,087
9,775

587
103
168
859
11,514

Kyoritsu Maintenance (9616), FYE March 2017 Earnings Announcement(Unit: million yen)
Current Term(April 1, 2016 to
March 31, 2017)

Previous Term(April 1, 2015 toMarch 31, 2016)
Extraordinary income
Gain on sales of investment securities
Gain on cancellation of leasehold contracts
Total extraordinary income
Extraordinary losses
Impairment loss
Loss on disaster
Loss on store closing
Settlement funds
Other
Total extraordinary losses
Income before income taxes
Income taxes – current
Income taxes – deferred
Total income taxes
ProfitProfit attributable to owners of parent

13

47
432
479

-

180
75
175
39
470
9,784
4,092
(278)
3,813
5,970
5,970

198
309
30
539
10,975
3,984
(144)
3,839
7,135
7,135

Kyoritsu Maintenance (9616), FYE March 2017 Earnings Announcement(Consolidated Comprehensive Income Statements)

5,970(Unit: million yen)
Current Term(April 1, 2016 to
March 31, 2017)
7,135

(10)
(514)
(40)
(565)
5,405

97
37
18
154
7,290

5,405

7,290

Previous Term(April 1, 2015 toMarch 31, 2016)
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

14

Kyoritsu Maintenance (9616), FYE March 2017 Earnings Announcement(3) Consolidated Shareholders’ Equity Statements
Consolidated Figures for Fiscal Year Ended March 2016 (April 1, 2015 to March 31, 2016)(Unit: million yen)
Shareholders’ equity
Capital surplus

Retained earnings

Treasury stock

Total shareholders’equity

5,136

9,313

32,670(1,109)46,011

2,518

2,517

Common stock
Balance as of start of current fiscal year
Increase (decrease) due to change
Issuance of new shares (exercise ofsubscription rights to shares)

5,036

Dividends from surplus

(863)

(863)

Profit attributable to owners of parent

5,970

5,970

Acquisition of treasury stock
Sales of treasury stock

678

(127)

(127)

931

1,610

Items other than changes in shareholders’equity, due to change (net)Total change during fiscal year

2,518

3,196

5,107

804

11,626

Balance as of end of current fiscal year

7,654

12,50937,778(305)

57,637

Accumulated other comprehensive income
Net unrealized gains
on other securities
Balance as of start of current fiscal year

Translation
adjustments

747

120

Retirement
benefit-related
adjustments
34

Total accumulated
other comprehensive
income902

Total net assets

46,913

Increase (decrease) due to change
Issuance of new shares (exercise ofsubscription rights to shares)

5,036

Dividends from surplus(863)

Profit attributable to owners of parent

5,970

Acquisition of treasury stock(127)

Sales of treasury stock

1,610

Items other than changes in shareholders’equity, due to change (net)

(10)

(514)

(40)

(565)

(565)

Total change during fiscal year

(10)

(514)

(40)

(565)

11,061

Balance as of end of current fiscal year

736

(393)

(5)

336

57,97415

Kyoritsu Maintenance (9616), FYE March 2017 Earnings Announcement
Consolidated Figures for Fiscal Year Ended March 2017 (April 1, 2016 to March 31, 2017)(Unit: million yen)
Shareholders’ equity
Common stock
Balance as of start of current fiscal year

Capital surplus

Retained earnings

Treasury stock

Total shareholders’equity12,50937,778(305)

57,637

7,654

Cumulative impact of changes in theaccounting policy
Issuance of new shares (exercise ofsubscription rights to shares)

48

48

97

Dividends from surplus(1,025)(1,025)

Profit attributable to owners of parent

7,135

7,135

Acquisition of treasury stock
Sales of treasury stock

0

(17)

(17)

0

1

Items other than changes in shareholders’equity, due to change (net)Total change during fiscal year
Balance as of end of current fiscal year

48

49

6,110

(16)

6,191

7,703

12,55843,888(321)

63,829

Accumulated other comprehensive income
Net unrealized gains
on other securities
Balance as of start of current fiscal year

Retirement
benefit-related
adjustments

Translation
adjustments

736

(393)

(5)

Total accumulated
other comprehensive
income336

Total net assets

57,974

Increase (decrease) due to change
Issuance of new shares (exercise ofsubscription rights to shares)

97

Dividends from surplus(1,025)

Profit attributable to owners of parent

7,135

Acquisition of treasury stock(17)

Sales of treasury stock
Items other than changes in shareholders’equity, due to change (net)

1
97

37

18

154

154

Total change during fiscal year

97

37

18

154

6,345

Balance as of end of current fiscal year

834

(356)

13

491

64,32016

Kyoritsu Maintenance (9616), FYE March 2017 Earnings Announcement(4) Consolidated Cash Flow Statements(Unit: million yen)Previous Term FY3/16(April 1, 2015 toMarch 31, 2016)
Cash flow from operating activities
Income before income taxes

Current Term FY3/17(April 1, 2016 to
March 31, 2017)

9,784

10,975

3,602

3,945

Amortization of long-term prepaid expenses

351

441

Amortization of guarantee deposits

200

225

Increase (decrease) in provision for bonuses

429

128

Interest and dividend income

(249)

(194)

Interest expenses

803

587

Loss (gain) on investments in partnership

(9)

(59)

Impairment loss

180

198

Loss on disaster-

309

Loss on closing of stores

75-

Gain on cancellation of leasehold contracts

(432)

-

Settlement funds

175-(2,923)

1,122

Depreciation

Decrease (increase) in notes and accounts receivable – trade
Decrease (increase) in accounts receivable – other

(52)

(167)

Decrease (increase) in inventories

(955)

1,750

Increase (decrease) in notes and accounts payable – trade

1,729

(737)

Increase (decrease) in advances received

(952)

216

Increase (decrease) in accounts payable – other

(180)

156

Increase (decrease) in accrued consumption taxes

(556)

333

Increase (decrease) in deposits received

44

109

Increase (decrease) in guarantee deposits received

197

39

Other

559

48

Subtotal

11,822

19,431

Interest and dividend income received

197

274

Interest expenses paid

(806)

(579)

Income taxes refund

17

1Income taxes paid

(3,008)(4,715)

Cash flow from operating activities

8,222

14,412(2)(11)

Cash flow from investing activities
Purchase of securities
Proceeds from sales of securities
Purchase of property, plant and equipment

1,159

352

(13,255)(22,442)

Proceeds from sales of property, plant and equipment

746

112

Purchase of intangible assets(155)(1,401)

Purchase of long-term prepaid expenses

(406)

(449)

Payments of loans receivable

(798)

(509)

Collection of loans receivable

1,539

672

Payments for lease and guarantee deposits(2,268)(4,380)

Proceeds from collection of lease and guarantee deposits

417

203

Purchase of insurance funds(988)(1,001)

87

331

Proceeds from cancellation of insurance funds
Other
Cash flow from investing activities

17

(43)

260

(13,971)(28,263)

Kyoritsu Maintenance (9616), FYE March 2017 Earnings Announcement(Unit: million yen)Previous Term FY3/16(April 1, 2015 toMarch 31, 2016)
Cash flow from financing activities
Net increase (decrease) in short-term loans payable

Current Term FY3/17(April 1, 2016 to
March 31, 2017)

3,000(1,400)

Proceeds from long-term loans payable

3,800

2,600

Repayments of long-term loans payable(8,660)(11,371)

Proceeds from issuance of bonds

19,96615,756

Redemption of bonds(1,350)(1,350)Purchase of treasury shares

(127)

(17)

Cash dividends paid

(861)

(1,023)

Other

(58)

(55)

15,708

3,139

Cash flow from financing activities
Effect of exchange rate change on cash and cash equivalents

(114)

(38)

Net increase (decrease) in cash and cash equivalents

9,844(10,750)

Cash and cash equivalents at beginning of period

15,75825,603

Cash and cash equivalents at end of period

25,603

14,85318

Kyoritsu Maintenance (9616), FYE March 2017 Earnings Announcement(5) Consolidated Financial Statement Notes(Notes Regarding Going Concern Assumptions)Not applicable(Important Articles in the Assumption Used to Create Consolidated Financial Statements)
1. Scope of Consolidation(1) Consolidated subsidiaries: 9 Companies
Kyoritsu Estate Co., Ltd.
Kyoritsu Trust Co., Ltd.
Kyoritsu Food Service Co., Ltd.
Japan Placement Center Co., Ltd.
Kyoritsu Financial Service Co., Ltd.
Builnet Co., Ltd.
Central BuilWork Co., Ltd.
Kyoritsu Maintenance Korea Co., Ltd.
Kyoritsu Insurance Service Co., Ltd.
(2) Non-Consolidated Subsidiaries: 6 Companies
Flat Co., Ltd.
Okinawa Kyoritsu Maintenance Co., Ltd.
Kyoritsu Assist Co., Ltd.
Ecofoods Co., Ltd.
Ryokan Okunobo
Kyoritsu Maintenance Taiwan co.,Ltd(Reason for the exclusion from scope of consolidated accounts)
The assets, sales and net income of these non-consolidated companies only amount to a marginal amount of the total
consolidated accounts and are not considered to be important enough to be included in consolidated accounts.
(Segment Information)
1) Overview of Reported Segments
Financial information related to the individual divisions of our business segments is readily available, and ourmanagement considers the validity of these segments on a regular basis during their board of directors’ meetings inassessing segment earnings and the allocation of business resources in accordance with these segments.
Our divisions and subsidiaries responsible for the various services within our Group are also responsible fordeveloping both strategies and business activities for their respective businesses.
Therefore, our segments are defined by the basic services provided by each of the divisions and subsidiaries and are
divided into five main segments including “dormitories,” “hotels,” “contracted services,” “food services,” and“construction.”
We provide an overview of our reported business segments as follows:
Dormitories: Dormitories provided to students and corporate employees, Domeal, management of outsourced
dormitories
Hotels: Dormy Inn business hotels, resort hotels
Contracted Services: Office building and residential property management services
Food Services: Restaurant business, management of outsourced cafeterias, hotel restaurants and other facilities
Construction: Planning, design and construction, real estate brokerage business, condominiums for sale, other related
services
2) Method of calculation for sales, income and losses, assets and other items of reported segments
Profits in the reported business segments are operating income.
Intersegment earnings and transfers are based on actual market pricing.

19

Kyoritsu Maintenance (9616), FYE March 2017 Earnings Announcement
3) Sales, profits, assets and other information regarding reporting segments
Consolidated Figures for Fiscal Year Ended March 2016 (April 1, 2015 to March 31, 2016)(Unit: million yen)
Adjustments(Note 2)

Values Used in
Consolidated
Financial
Statements(Note 3)

Reporting Segments
Other(Note 1)

Total

Contracted
Services

Food
Services

Construction

Subtotal

53,319

7,820

1,663

16,741

123,709

11,344135,053－

135,053

231

110

7,038

4,124

(428)

11,076442

11,519(11,519)－

Total
Operatingincome44,39553,43014,8595,787

16,313

134,786

11,786

146,572(11,519)

135,053

6,574

6,006

508

(4)

677

13,762(212)

13,550(3,306)

10,244

Assets44,461

66,14012,514

1,343

12,176

136,636

7,580

144,217

17,184

161,402

1,137

2,238

103

67

23

3,570

118

3,689

(86)

3,602

15

9

－

－

143

169

10

180

－

180

2,447

12,519

27

413

774

16,182

99

16,282(595)

15,686

Dormitories

HotelsExternal sales

44,164

Intersegment
sales andtransfers

Net sales

Other items
Depreciation
Impairment
loss
Change inproperty, plantand equipment
and intangible
assets(Notes)1. Other is not considered as a reporting business segment and is comprised of the Senior Life (formerly Wellness Life) business(management of senior citizen housing), PKP business (consigned services business provided to regional government bodies), single
life support services, insurance agency business, comprehensive human resources, financing services and other related services.
2. Details of adjustments are provided below.
(Unit: million yen)
Operating Income(247)Intersegment transaction cancellations
Companywide expenses (Note)(3,058)Total(3,306)(Note) Companywide expenses represent the expenses associated primarily with finance and accounting, and other operations
associated with headquarters.
(Unit: million yen)Segment Assets(7,647)
24,832
17,184
Total(Note) Companywide assets represent cash and equivalents, investment securities, deferred tax assets and other assets associated with
headquarters.
Intersegment transaction cancellations
Companywide assets (Note)

3. Segment profits or losses are derived by adjusting the operating income used in the quarterly consolidated income statement.
4. In addition to the above impairment loss, a ¥39 million impairment loss in the food business is included in loss on store closing.

20

Kyoritsu Maintenance (9616), FYE March 2017 Earnings Announcement
Consolidated Figures for Fiscal Year Ended March 2017 (April 1, 2016 to March 31, 2017)(Unit: million yen)
Reporting Segments
Other(Note 1)

Total

Adjustme
nts(Note 2)

Values Used in
Consolidated
Financial
Statements(Note 3)

Dormitories

HotelsContracted
Services

Food
Services

Construction

Subtotal

External sales

45,40460,274

8,219

1,707

9,505

125,111

10,716

135,828－

135,828

Intersegment
sales andtransfers

239

134

7,733

4,791

13,501

26,400455

26,856(26,856)－

Total
Operatingincome45,64460,40815,953

6,498

23,007

151,512

11,172

162,684(26,856)

135,828

7,243

6,931

518

53

946

15,693(404)

15,289(3,474)

11,815

Assets

46,95889,37012,235

1,356

11,905

161,827

7,385

169,212

4,397

173,609

1,076

2,639

87

64

47

3,915

113

4,029

(83)

3,945

16

－

89

52

－

158

40

198

－

198

2,994

23,69477

43

626,81556

26,872(1,213)25,659Sales

Other items
Depreciation
Impairment
loss
Change inproperty, plantand equipment
and intangible
assets(Notes)1. Other is not considered as a reporting business segment and is comprised of the Senior Life business (management of senior citizen
housing), PKP business (consigned services business provided to regional government bodies), single life support services, insurance
agency business, comprehensive human resources, financing services and other related services.
2. Details of adjustments are provided below.
(Unit: million yen)
Operating Income(781)
Intersegment transaction cancellations
Companywide expenses (Note)(2,692)
Total(3,474)(Note) Companywide expenses represent the expenses associated primarily with finance and accounting, and other operations
associated with the headquarters.
(Unit: million yen)Segment Assets(11,029)
15,426
4,397Intersegment transaction cancellations
Companywide expenses (Note)
Total(Note) Companywide assets represent cash and equivalents, investment securities, deferred tax assets and other assets associated with
headquarters.
3. Segment operating income is derived from adjustments made to the operating income of the consolidated financial statements.

21

Consolidated Income Statement
net sales
gross income
operating income
ordinary income
net income

3/07
66,287
12,242
3,745
3,787
2,413

3/08
75,60614,183
4,492
4,167
2,740

3/09
82,303
15,507
5,349
4,510
2,133

3/10
84,513
13,957
4,033
3,012
1,254

3/11
84,983
15,408
4,610
3,308
1,052

3/12
91,17017,863
6,017
4,602
2,376

3/13
99,472
19,910
6,521
5,599
3,206

3/14
105,216
21,524
7,490
6,796
3,829

3/15
110,21223,338
8,217
7,663
4,387

3/16
135,053
27,863
10,244
9,775
5,970

Units: million yen
3/17
3/18E
135,828 148,200
30,57333,20011,815
12,20011,514
11,7007,135
8,000

Consolidated Balance Sheetcurrent assets
fixed assets
total assets
current liabilities
fixed liabilities
total liabilities
net assets

24,901
85,562
110,50737,342
46,06883,411
27,096

19,967
95,728
115,738
44,11944,07988,19927,53821,852
103,891
125,793
41,61555,26696,882
28,911

23,104
115,980
139,20941,49967,956
109,455
29,75336,783
104,428
141,31450,54660,600111,147
30,16628,234
97,319125,649
38,961
55,13594,09731,55130,852
91,335
122,259
38,892
48,58487,47634,78237,47394,434
131,995
40,81956,586
97,40534,59031,457108,190
139,750
47,59045,246
92,836
46,91345,231116,054
161,40253,64849,779103,428
57,97432,350140,944
173,60952,47756,811
109,289
64,320

na
na
na
na
na
na
na

yy change
net sales
gross income
operating income
ordinary income
net income

5.1%
3.9%
-18.8%-21.5%
20.0%

14.1%
15.9%
19.9%
10.0%
13.6%

8.9%
9.3%
19.1%
8.2%
-22.2%

2.7%-10.0%-24.6%-33.2%-41.2%

0.6%
10.4%
14.3%
9.8%
-16.1%

7.3%
15.9%
30.5%
39.1%
125.7%

9.1%
11.5%
8.4%
21.7%
34.9%

5.8%
8.1%
14.9%
21.4%
19.4%

4.7%
8.4%
9.7%
12.7%
14.6%

22.5%
19.4%
24.7%
27.6%
36.1%

0.6%
9.7%
15.3%
17.8%
19.5%

9.1%
8.6%
3.3%
1.6%
12.1%

margins
gross margins
operating margins
ordinary margins
net margins

18.5%
5.7%
5.7%
3.6%

18.8%
5.9%
5.5%
3.6%

18.8%
6.5%
5.5%
2.6%

16.5%
4.8%
3.6%
1.5%

18.1%
5.4%
3.9%
1.2%

19.6%
6.6%
5.0%
2.6%

20.0%
6.6%
5.6%
3.2%

20.5%
7.1%
6.5%
3.6%

21.2%
7.5%
7.0%
4.0%

20.6%
7.6%
7.2%
4.4%

22.5%
8.7%
8.5%
5.3%

22.4%
8.2%
7.9%
5.4%

other benchmarks
ROE
ROA
equity ratio

9.2%
2.2%
24.4%

10.1%
2.4%
23.6%

7.6%
1.7%
22.8%

4.3%
0.9%
21.2%

3.5%
0.7%
21.3%

7.7%
1.9%
25.1%

9.7%
2.6%
28.4%

11.0%
2.9%
26.2%

10.8%
3.1%
33.6%

11.4%
3.7%
35.9%

11.7%
6.9%
37.0%

na
na
na