Financial Results for the Fiscal Year Ended March 31, 2016
[Japanese GAAP] (Consolidated)
May 10, 2016
Stock Listing: TSE

Name of Listed Company:
UCHIYAMA HOLDINGS INC.
Code Number: 6059
URL: http://www.uchiyama-gr.jp
Representative: Fumiharu Uchiyama, President and Representative Director
Contact Point: Takehiro Yamamoto, Senior Managing Director and Manager of Business Planning Office
Phone: (093) 551-0002
Scheduled Date of Annual Meeting of Shareholders:June 29, 2016
Scheduled Date of Dividend Payment Start:
June 30, 2016
Scheduled Date of Financial Statements Filing:
June 30, 2016
Supplementary materials for Financial Results: None
Investor conference for Financial Results: Yes (For institutional investors and security analysts)(Amounts are rounded down to the nearest one million yen)

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2016 (April 1, 2015 – March 31, 2016)(% of change from previous year)(1) Consolidated Financial Results
Net sales
Operating income
Ordinary income
Net income
Millions of yen%

FY 2016
23,897
1.1
128
FY 2015
23,6288.6
1,432(Note) Comprehensive income
FY 2016: ¥ 931 million (-28.6%)

Millions of yen%(91.0)(32.4)Net income
per share

Diluted net
income per share
Yen

Millions of yen

Millions of yen%

324(79.1)
983
1,554(35.5)
1,289
FY 2015: ¥1,304 million (-41.5%)%(23.8)(41.8)

Return on equity

Ordinary income
to total assets%

Yen

Operating income
to net sales%%

FY 2016
46.11
46.03
FY 2015
59.66
59.56(Reference) Equity in earnings of affiliated companies: FY 2016: ¥ - million

6.4
1.0
8.7
4.9
FY 2015: ¥ - million

0.5
6.1

(2) Consolidated Financial Position
Total assets

Equity ratio

Net assets

Millions of yen

FY 2016
FY 2015(Reference) Equity capital:

Net assets per share

Millions of yen

30,912
32,693
FY 2016: ¥15,284 million%%

15,28549.4
15,38647.0
FY 2015: ¥15,378 million

765.54711.35(3) Consolidated Cash Flows
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash and cash
equivalents
at end of year

Cash flows fromfinancing activities

Millions of yen

Millions of yen

Millions of yen

Millions of yen

888
2,010

1,901
(911)

(4,491)249

9,301
11,007FY 2016
FY 2015
2. Dividends
End ofthe 1QFY 2015
FY 2016
FY 2017 (forecast)

Dividends per share
End of
End ofYear-end
the 2Qthe 3Q

AnnualTotal
dividends(annual)Dividends
Dividends on
payout ratio
net assets(consolidated) (consolidated)

Yen

Yen

Yen

Yen

Yen

Millions of Yen

%

%

－
－
－

6.00
5.00
5.00

－
－
－

5.00
5.00
5.00

11.00
10.00
10.00

237
207

18.4
21.7
32.5

1.6
1.4

3. Forecasts of Consolidated Financial Results for the Fiscal Year Ending March 31, 2017 (April 1, 2016 – March 31, 2017)(% of change from previous year for full year, same quarter of the previous year for 2Q)

Net sales
Millions of yen

2Q(cumulative)
Full year

Operating income%

Millions of yen

Ordinary income%

Millions of yen

Net income
per share

Net income%

Millions of yen%

Yen

12,398

5.7

234

205.3

271

69.6

166

(62.5)

8.36

25,618

7.2

898

597.8

907

179.5

614

(37.5)

30.77

*Notes(1) Changes in significant subsidiaries (changes of specified subsidiaries resulting in changes in scope of consolidation) during
the current term: None
(2) Changes in accounting policies, accounting estimates and restatements:
1) Changes in accounting policies due to revisions of accounting standards:
2) Changes in accounting policies due to reasons other than above 1):3) Changes in accounting estimates:
4) Restatements:(3) Number of outstanding shares (common stock)1) Number of outstanding shares (including treasury
stock) at end of term2) Number of treasury stock at end of term3) Average number of shares

Yes
None
Yes
None

FY 2016

21,618,800 shares

FY 2015

21,618,800 shares

FY 2016

1,652,676 shares

FY 2015376 shares

FY 2016

21,322,764 shares

FY 2015

21,618,424 shares(Reference) Overview of Non-Consolidated Financial Results
1. Non-Consolidated Financial Results for the Fiscal Year Ended March 31, 2016 (April 1, 2015 – March 31, 2016)(% of change from previous year)(1) Non-Consolidated Financial Results
Net sales
Operating income
Ordinary income
Net income
FY 2016
FY 2015

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen

%

676
670

0.8
(0.6)

166
168

(1.5)
(4.1)

224
239

(6.4)
26.4

221
227

(2.8)
15.2

Net income
per share
FY 2016
FY 2015

Diluted net income
per share
Yen

Yen

10.37
10.52

10.35
10.50

(2) Non-Consolidated Financial Position
Total assets

Net assets

Millions of yen

FY 2016
FY 2015(Reference) Equity capital:

Equity ratio

Net assets per share

Millions of yen

4,876
5,750
FY 2016: ¥4,648 million

4,648
5,458
FY 2015: ¥5,458 million

%

Yen

95.3
94.9

232.80252.492. Forecasts of Non-Consolidated Financial Results for the Fiscal Year Ending March 31, 2017 (April 1, 2016 – March 31, 2017)(% of change from previous year for full year, same quarter of the previous year for 2Q)

Net sales
Millions of yen

2Q (cumulative)
Full year345
693

Ordinary income
%

2.2
2.5

Millions of yen

103
209

Net income pershare

Net income%(13.3)(6.4)

Millions of yen

103
205

%

Yen

(11.4)
(6.9)

5.20
10.30

* Information Regarding Implementation of Auditing Procedures

The auditing procedures of the Financial Instruments and Exchange Act do not apply to this financial notice, and at thetime of release it is being audited using procedures for financial statements.

* Statement regarding the proper use of financial forecasts and other remarks
 Descriptions regarding the future, including the financial projections contained in this report, are based on certain
assumptions currently available to the Company, which are, at the discretion of the Company, deemed reasonable. Actual
financial results may significantly vary due to various factors. For assumptions used in forecasting financial results andprecautions in using the financial projections, please refer to Appendix on Page 2, “1. Analysis concerning results ofoperations and financial condition (1) Analysis concerning results of operations.” The Company is planning to host a financial settlement reporting meeting for investors and analysts on May 24, 2016. The
contents (recorded sound) will be posted together with the handouts on the Company’s Web page immediately after the
meeting.

○Table of contents of the appendix

1. Analysis Concerning Results of Operations and Financial Condition .......................................................................................... 2(1) Analysis Concerning Results of Operations ............................................................................................................................ 2(2) Analysis Concerning Financial Situation ................................................................................................................................ 3(3) Basic Principle Concerning Profit Sharing and Dividends for the Current and Next Fiscal Year ........................................... 5(4) Risk of Businesses, etc............................................................................................................................................................ 5
2. Situation of the Corporate Group ................................................................................................................................................123. Management Policy .....................................................................................................................................................................16(1) Basic Management Policy......................................................................................................................................................16(2) Target Management Indicator ................................................................................................................................................16(3) Mid- to Long-term Management Strategies ...........................................................................................................................16(4) Challenges of the Corporate Group........................................................................................................................................17
4. Basic Principles of Selecting Accounting Standards ...................................................................................................................19
5. Consolidated Financial Statements ..............................................................................................................................................20(1) Consolidated Balance Sheets .................................................................................................................................................20(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income .............................................22(3) Consolidated Statements of Changes in Net Assets ...............................................................................................................24(4) Consolidated Statements of Cash Flows ................................................................................................................................26(5) Notes Regarding Consolidated Balance Sheet .......................................................................................................................28(Notes regarding premise of a going concern) .........................................................................................................................28(Changes in accounting policies) .............................................................................................................................................28(Change of display method) ....................................................................................................................................................28(Changes in accounting estimates) ..........................................................................................................................................28(Segment information, etc.) .....................................................................................................................................................29(Per share information) ............................................................................................................................................................34(Significant subsequent event).................................................................................................................................................34

1

1. Analysis Concerning Results of Operations and Financial Condition(1) Analysis Concerning Results of Operations(Results of operations during the current FY)
In this consolidated fiscal year, the Japanese economy showed gentle recovery, including the improvement of employment
situations, as corporate performance improved due to the economic measures and monetary easing of the government andthe Bank of Japan. However, there are some negative factors, including the slowdown of overseas economies, the decline inoil price, and the unstable fluctuations of exchange rates and stock markets. Accordingly, business circumstances are still
uncertain.
In this business environment, the corporate group has conducted active sales activities, etc. based on business strategies ineach segment. For enhancing the synergy between business sections, the chefs of the restaurant business section weredispatched to nursing-care facilities, and held “a whole tuna cutting show” for occupants, enhancing the added value ofservices; and the karaoke and restaurant sections promoted the use of their stores for after-parties, to catch the flow ofcustomers and pull in them more. In addition, the company reviewed expenses and reduced costs, to streamline theirbusiness administration.
As a result, sales of the current consolidated fiscal year were 23,897,098 thousand yen (up 1.1% Year-on-Year (YoY)),
operating income was 128,726 thousand yen (down 91.0% YoY), ordinary income was 324,901 thousand yen (down 79.1%
YoY), and profit attributable to owners of the parent was 983,096 thousand yen (down 23.8% YoY).
The results of each segment were as follows.
(1) Nursing Care Business
For the Nursing Care Business segment, the Corporate Group operated business actively, by opening 5 paid nursing-carehomes for the elderly, and establishing 1 house for the elderly with nursing-care services, 2 group homes, 3 short-stayoffices, and 1 after-school day service center for disabled children. In addition, the Corporate Group bought and acquired
one paid nursing-care home for the elderly. As a result, the Corporate Group operates 136 business establishments in 71
locations as of the end of the current consolidated fiscal year. Furthermore, for the existing facilities, in order to reduce thenumber of vacant rooms and achieve stable occupancy rate, the Corporate Group made efforts to strengthen collaboration
with nearby hospitals and home-based care support centers. As a result, the average occupancy rate of existing facilities inthis consolidated accounting period was 89.6%. (Average in the previous term: 89.3%). On the other hand, businessperformance was affected by the decrease in the rate of nursing-care benefits in April 2015, and in this consolidated
accounting period, over 10 paid nursing-care homes for the elderly, etc. were opened, and certain amounts of costs for
management personnel, facility maintenance, etc. are necessary as fixed costs from the opening of the facilities. Accordingly,
expenses were first posted, and so sales were 12,836,667 thousand yen (up 9.8% YoY) and segment income was 441,794
thousand yen (down 51.7% YoY).
(2) Karaoke Business
For the Karaoke Business segment, the Corporate Group strived to recover the number of customers by renewing 29
existing shops, etc. In addition, they promoted the all-you-can-drink course, made efforts to increase repeat customers bypulling in mobile-device members for smartphones, and utilized the informative websites of restaurants to attract customers.
However, the downturn in consumer confidence has been lingering since the consumption tax hike, and there were no signsof recovery. Consequently, sales were 8,558,664 thousand yen (down 3.0% YoY) and segment income was 623,649
thousand yen (down 53.0% YoY). In the current consolidated accounting period, the Corporate Group opened one shop in
Nagasaki Prefecture, converted a Japanese-style bar into a karaoke shop in Fukuoka Prefecture, closed 3 shops, andconverted 1 shop into a Japanese-style bar. Accordingly, the number of shops as of the end of the current consolidated
accounting period was 97.
(3) Restaurant Business2For the Restaurant Business segment, the Corporate Group renewed 4 existing restaurants. In Bangkok, Thailand, theCorporate Group opened the second overseas restaurant “Kantekiya Thong Lo” in March and the third overseas restaurant“Kantekiya Phrom Phong” in December. Inside Japan, it opened 1 restaurant, closed 3 restaurants, and converted 1
restaurant into a karaoke shop. Accordingly, the number of restaurants as of the end of the current consolidated accounting
year was 25 in Japan, and 3 outside Japan. As the downturn in consumer confidence has been lingering since theconsumption tax hike and the customers of existing restaurants were decreasing, the Corporate Group tried to pull incustomers by continuing limited offer, etc. and visited companies to increase corporate customers, and meet the demand forbanquets, etc. As a result, sales were 1,928,555 thousand yen (down 3.2% YoY) and segment loss was 35,016 thousand yen(segment income was 117,460 thousand yen during the same term last year)(4) Real Estate Business
For the Real Estate Business segment, the Corporate Group’s core businesses activities are sales/purchase of real estate
properties for sale and intermediary work for rental properties. As a result, sales were 311,243 thousand yen (down 60.0%
YoY) and segment income was 86,538 thousand yen (up 77.4% YoY).
(5) Other businesses
In the Other businesses segment, for the hotel business, the Corporate Group made efforts to increase guests using
advertisement media in order to secure demand associated with increasing domestic travels influenced by depreciation ofyen. As a result, sales were 261,968 thousand yen (down 23.7% YoY) and segment loss was 12,999 thousand yen (segment
loss was 10,576 thousand yen during the same term last year).
(Forecast of the next term)
As for the outlook for the economies in the next term, the gentle recovery is expected to continue as a whole, but the
global economy has uncertainties about the slower growth of major emerging countries, oil price, the trend of financial
markets, etc. Inside Japan, the yen appreciation and the decline in share prices that started at the beginning of this year are
considered to affect corporate performance and decrease consumer confidence. Accordingly, uncertain situations are
estimated to continue.
In addition, the Kumamoto Earthquake in April 2016 forced 3 karaoke shops and 1 Japanese-style bar of the Corporate
Group to be closed temporarily. As aftershocks are still frequent, it is unclear when economic activities will return to normal
in the devastated and surrounding areas.
Under these circumstances, the Corporate Group will make efforts to enhance customers’ satisfaction and improve its
business performance by clarifying business strategies for each segment, conducting effective and efficient sales andensuring to provide services based on its basic philosophy of “Loving-kindness, Respect for dignity, and Customer firstspirit”.
The Corporate Group also makes efforts to maximize synergy among business segments, achieve streamlining bycollectively purchasing supplies or exchanging employees, and providing catering services at the nursing care facilities.
Through these efforts, the Corporate Group will establish solid characteristics as a corporation and obtain support from thecustomers and residents of the nursing care facilities. As for the forecast of the consolidated business performancethroughout the year, sales are expected to be 25,618,657 thousand yen (up 7.2%, from the current consolidated fiscal year),
operating income is expected to be 898,235 thousand yen (up 597.8%, same), ordinary income is expected to be 907,978
thousand yen (up 179.5%, same), and profit attributable to owners of the parent is expected to be 614,275 thousand yen(down 37.5%, same).

(2) Analysis Concerning Financial Situation(1) Status of assets, liabilities and net assets
Total assets at the end of the current consolidated fiscal year were 30,912,409 thousand yen, down 1,780,768 thousand3

yen from the previous consolidated fiscal year.
Current assets were 14,098,916 thousand yen, down 2,102,611 thousand yen from the end of the previous consolidated
fiscal year. The major factors for the change were the decrease of 2,153,202 thousand yen in cash and deposits and347,159 thousand yen in others (current assets) and increase of 228,845 thousand yen in real estate for sale.
Noncurrent assets were 16,813,493 thousand yen, up 321,842 thousand yen from the end of the previous consolidated
fiscal year. The major factors for the change were the increase of 364,591 thousand yen in buildings and structures and373,220 thousand yen in investment securities, and decrease of 382,531 thousand yen in land.
Liabilities at the end of the current consolidated fiscal year were 15,626,653 thousand yen, down 1,680,508 thousand
yen from the previous consolidated fiscal year.
Current liabilities were 6,432,527 thousand yen, down 647,618 thousand yen from the end of the previous consolidated
fiscal year. The major factors for the change were the decrease of 669,187 thousand yen in short-term loans payable and217,453 thousand yen in current portion of long-term debt payable and the increase of 116,286 thousand yen in provision
for point card certificates.
Noncurrent liabilities were 9,194,125 thousand yen, down 1,032,890 thousand yen from the end of the previous
consolidated fiscal year. The major factor for the change was the decrease of 1,248,760 thousand yen in long-term loans
payable and the increase of 245,818 thousand yen in deferred tax liabilities.
Net assets at the end of the current consolidated fiscal year were 15,285,755 thousand yen, down 100,259 thousand yen
from the previous consolidated fiscal year. The major factor for the change was the increase of 766,911 thousand yen inretained earnings as a result of including profit attributable to owners of the parent in the accounting book and thedecrease of 815,273 thousand yen for purchase of treasury stock.
As for liquidity of assets, the current ratio during the current consolidated fiscal year is 219.2%. The Corporate Groupwill make efforts to increase the current ratio in order to secure enough liquidity in the future.
(2) Situation of cash flow
Cash and cash equivalent (hereinafter referred to as “funds”) during the end of the current consolidated fiscal year
stood at 9,301,340 thousand yen, down 1,705,777 thousand yen from the previous consolidated fiscal year.
The status of each cash flow is as follows:(Cash flow from operating activities)
Funds obtained by operating activities were 888,908 thousand yen (down 55.8% YoY). The major breakdown ofincome was 1,522,084 thousand yen of net income before income taxes, 1,284,040 thousand yen of depreciation andamortization, and 272,780 thousand yen of impairment loss. The major breakdown of expenditure was 1,253,176
thousand yen of gain on sales of noncurrent assets, 221,587 thousand yen of increase in inventories and 339,553 thousand
yen of income taxes paid.
(Cash flow from investing activities)
Funds obtained by investing activities were 1,901,391 thousand yen (funds used in the previous year were 991,867
thousand yen). The major breakdown of income was 4,379,052 thousand yen of proceeds from sales of property, plant andequipment, 1,956,270 thousand yen of proceeds from withdrawal of time deposits, and 587,741 thousand yen of gain on
sales of investment securities. The major breakdown of expenditure was 3,092,519 thousand yen of purchase of property,
plant and equipment, 899,650 thousand yen of purchase of investment securities and 507,861 thousand yen of payments
into time deposits.
(Cash flow from financing activities)
Funds used in financing activities were 4,491,739 thousand yen (funds obtained in the previous year were 249,456
thousand yen). The major breakdown of income was 3,887,100 thousand yen of proceeds from long-term loans payable.

4

The major breakdown of expenditure was 5,353,314 thousand yen of repayment of long-term loans payable, 1,401,728
thousand yen of payments made to trust account for acquisition of treasury stock, and 702,042 thousand yen of
repayments of installment payables.
(Reference) Trend of Cash Flow Related Indicators
FY ended

FY ended

FY ended

FY ended

FY ended

March 2012

March 2013

March 2014

March 2015

March 2016

Equity ratio (%)
Equity ratio on market
price basis (%)
Debt repayment period(years)Interest coverage ratio(times)

37.7

41.3

46.7

47.0

49.4

―

42.1

43.3

36.7

33.1

5.0

5.2

16.6

6.9

13.3

9.8

11.1

5.0

14.2

7.4

Equity ratio: equity capital/total assets
Equity ratio on market price basis: total market value of stock/total assets
Debt repayment period: interest-bearing debt/operating cash flow
Interest coverage ratio: operating cash flow/interest payments(Notes)1.

All are calculated using financial figures on consolidated base.

2.

Cash flow is using cash flow from operating activities.

3.

Market value of stock is calculated as end-of-the-term share value multiplied by the number of shares issued at
the end of the term (after excluding treasury shares). The equity ratio on market price basis for FY ended March2012 is not listed because market price was not available.

4.

Interest-bearing debt includes all debts that are included in the consolidated balance sheet, for which interests are
paid.

(3) Basic Principle Concerning Profit Sharing and Dividends for the Current and Next Fiscal Year
The Company considers that profit returning to the shareholders is important management priority and will make efforts
to continuously pay stable dividends while securing necessary internal reserves for continuation of the businesses including
fee-based nursing homes for elderly business, karaoke business and restaurant business, etc.
The basic principle of the Company is to pay dividends of surplus twice a year (i.e. interim dividend and year-end
dividend).
These dividends of surplus are determined at the general shareholders’ meeting for the year-end dividend and board
meeting for the interim dividend.
The year-end dividend for the current fiscal year will be 5 yen per share in accordance with the above principle, and theannual dividend including interim dividend (Note) for the current fiscal year will be 10 yen.
The dividend for the next fiscal year will also be determined in accordance with the above principle, and the annual
dividend is planned to be 10 yen per share (5 yen for interim dividend and 5 yen for year-end dividend).

(Note) During the current fiscal year, the Company paid 5 yen of interim dividend per common share.

(4) Risk of Businesses, etc.

5Concerning the matters related to the situation of business and accounting of the Corporate Group, followings are thematters that may give significant impact on the investors’ decision. Furthermore, even if they are not necessarily applicableto such risks, matters that may be important to the investors’ decision are also included from the perspective of proactive
information disclosure. It should be noted that the contents below might not include all risks concerning the investment on
the shares of the Corporate Group.
Based on the recognition of the possibilities of these risks, the Corporate Group is making efforts to avoid risks or takeprompt responses in case a risk arises; however, it is important for the investors to make a decision on the Corporate Group’s
shares based on a careful deliberation using the information in this section as well as other places. The matters concerning
the future in this section are based on the judgment of the Company as of the end of the current consolidated fiscal year.
1. Concerning Nursing Care Businesses(1) The nursing-care insurance system
The Corporate Group’s Nursing Care Business is focusing on the services based on the national nursing-care insurance
system, and the service contents, compensation, business operation and management and other business in general arelegally controlled by the Public Nursing Care Insurance Law and various relevant laws and regulations.
The government reviews and amends the nursing-care insurance system every 5 years and the nursing carecompensation every 3 years. The most recent amendment was conducted in April 2015, and the entire nursing carecompensation was reduced by 2.27%. This led to reduction in the amount of money that the Corporate Group’s nursing
care facilities will receive as nursing care compensation.
If regulations are tightened as a result of changes in laws and regulations as well as the relevant systems in the future,
the Corporate Group may need to modify its service contents or take other actions. There is also a possibility that the
Corporate Group’s business expansion may be influenced. Revision of the nursing care compensation may also give
impact on the profit and profitability of the Corporate Group’s business. Furthermore, these factors may give negative
impact on the results of operation or financial status of the Corporate Group.
Especially, if there is a drastic change on the framework of the nursing care, etc. arising from the issues of insurance
premium contribution and nursing care insurance finances, etc. in the environment of decreasing population and aging
population, the business of the Corporate Group may receive significant impact.
(2) Securing qualified staff and manpower
As a business entity based on Public Nursing Care Insurance Law, various services provided through the Nursing Care
Business must meet certain human resource standards including placement of qualified staff. In order to meet thestandards, the Corporate Group is making efforts to secure manpower including qualified staff and develop humanresources through training programs, etc.
The Corporate Group is not aware of any critical difficulties to secure manpower at this point; however, in case it
becomes difficult to secure enough manpower for the future business development and expansion or in case existing
manpower leaves the Corporate Group, service quality may decline, nursing care compensation may decrease, or
providing nursing care services may become difficult. The Corporate Group may also need to review the benefits for its
employees to secure manpower or increase in recruitment cost, etc. These cases may affect the results of operations andfinancial situation of the Corporate Group.
(3) Concerning management of safety and health for nursing care of elderly
Most of the residents of the nursing care homes and users of the nursing care services are the elderly people who are inneed of nursing care or have certification for nursing care need, and there are risks of falling, food poisoning or groupinfection, etc. during provisions of various nursing services.
The Corporate Group is making efforts to place adequate number of facility staff, provide training programs on
treatment and service, ensure development and use of various manuals, and sanitation management and safety6management of equipment, etc. But in case of unforeseen circumstances concerning a damage claim, the Corporate Groupmay be held liable for negligence, which may lead to sue for damage compensation or guidance or disciplinary action by
the government. The trust from the public to the Corporate Group’s operation may also decline significantly in such a case.
These cases may affect the future development of business, results of operations and financial situation of the Corporate
Group.
(4) Development policy of nursing care facilities
As for the Nursing Care Business, the Corporate Group is planning to develop new facilities with a focus on fee-based
assisted-living nursing homes for elderly.
The fee-based assisted-living nursing homes for elderly became subject to the total volume control of nursing careinsurance facilities in April 2006, and development of new facilities in each area is determined by the nursing careinsurance plan of each municipality. Because of this, it is difficult to predict mid-term development in terms of the areasof development and number of residents as it is highly influenced by the decision of the municipal government. There is
no guarantee that the Corporate Group can develop the business establishments in desired areas. This may affect theresults of operations and financial situation of the Corporate Group.
(5) Competition
After the introduction of the nursing-care insurance system, the users of nursing care services are increasing, and it isexpected to continue to increase as aging society with fewer children advances. Furthermore, medical corporations, social
welfare corporations and various other companies are now entering into the nursing-care related industry, because theindustry is expected to expand, yet the barrier to enter into the industry is low. Intensified competition due to participationof new companies in the future may affect the results of operation and financial situation of the Corporate Group.
(6) Network with local relevant institutions
The Corporate Group conducts community-based operation of each facility under the Nursing Care Business. This typeof business operation requires close collaboration with local administrative agencies, medical institutions, care managers
and social workers, and the trust relationships with them is an essential part of the business development. If the trust in the
Corporate Group declines due to flaws in service provision or facility operation, accidents, troubles and other reasons, theCorporate Group’s facility operation, service provision and obtaining users may become difficult, which may affect theresults of operations and financial situation of the Corporate Group.
(7) Impact of rumor
For the Nursing Care Business, reputation and trust by the users and their families towards the Corporate Group and its
facilities have a strong impact on the operation of the facilities. The Corporate Group is making efforts to improve service
quality, etc. that meet the needs of the users; however, if reputation of the Corporate Group or its facilities is undermined
for some reasons or if unfavorable rumors about the Corporate Group or its facilities spread, obtaining new users andmaintaining the operation rate of the facilities will be difficult, which may affect the results of operations and financial
situation of the Corporate Group.
(8) Compliance
The nursing care industry is subject to various laws and regulations as described above. In order to comply with theselaws and regulations, the companies in the industry are required to build strong compliance systems. The Corporate
Group is making efforts to strengthen its operation control framework and internal checking function in order to ensurecompliance with laws and regulations and to prevent human errors and fraud during business operation. If these systems
do not function adequately in the future business development, issues in relation to operational control may arise, which
may affect the results of operations and financial situation of the Corporate Group.

7(9) Rental of nursing care facilities
Out of all nursing care facilities of the Corporate Group, 57 of them are operated in rental properties (including sale andlease back properties), and for each facility, rental agreement is concluded with the owner of the property. The agreement
period is usually 20 to 30 years (including renewal) and the rental fee is reviewed usually every 2 to 5 years based on
discussions.
The Corporate Group secures stable continuation of the facility management by establishing relatively long-term
agreement, but it is difficult to cancel during the agreement period. It is also difficult to close a facility or change rental
fee in a short span of time. Therefore, if the operation rate decreases significantly or if rental fee in the neighborhood
decreases at a facility, the profit margin may drop, which may affect the results of operations and financial situation of the
Corporate Group.
(10) Name, “Sawayaka”“Sawayaka” is used for the company name and facility name for the Nursing Care Business of the Corporate Group.
Because “Sawayaka” is a general term and it is difficult for the Company to register it as the Company’s trademark, theCorporate Group registers the whole name of the facility (e.g. “Sawayaka Keifukan”) as a trademark.
Meanwhile, there are already many nursing care facilities that use “Sawayaka” in their names in Japan. If there is anaccident or misconduct at these facilities other than the Corporate Group’s facilities, the public may misidentify it as oneof the facilities of the Corporate Group, which may cause to unexpected reputational damage to the Corporate Group.
2．Concerning the Karaoke Business and Restaurant Business(1) External environment
The leisure market and restaurant market have been shrinking due to such factors as decline in consumer confidence
due to concerns about the future of the economy and intensifying price competition caused by competitive situation
among many business entities. Thus, the business environment concerning the Karaoke Business and Restaurant Businessof the Corporate Group has been severe.
The Corporate Group is making efforts to maintain and enhance customer satisfaction by enriching pre-fixed menu andservice packages for the Karaoke Business and enriching low-priced items, remodeling existing restaurants and changing
business styles for the Restaurant Business; however if these actions are not accepted by the consumers or if competitiveenvironment becomes intensified due to increase in new companies in the industry, the results of operations and financial
situation of the Corporate Group may be affected.
(2) Stores opening policy, etc.
For the Karaoke Business and Restaurant Business, the Corporate Group is focusing on opening businessestablishments mainly in entertainment areas, aiming to develop more urban-type stores. When opening new stores andrestaurants, the Company is making efforts to proactively secure properties based on information from real-estateagencies and financial institutions; however, there is no guarantee that properties that match the Company’s requirements
in terms of rent, population of the market area, or competition with other companies can be obtained. Furthermore,
although careful deliberation is made before actually opening a store or restaurant, estimated profit may not be achieved,
even if the property matches the Corporate Group’s requirements. In these cases, the results of operations and financial
situation of the Corporate Group may be affected.
The business establishments for the Karaoke Business and Restaurant Business are basically using rental properties. If
the deposited guaranty money is not returned to the Corporate Group due to financial deterioration or other reasons of thelessee, the results of operations and financial situation of the Corporate Group may be affected.
(3) Purchase of food8

In recent years, issues to undermine consumers’ trust in “food safety”, such as health hazards by imported food, false
labeling of food, and food poisoning caused by eating raw beef, are frequently seen. The Corporate Group offers meals
for the Karaoke Business and Restaurant Business and provides feeding service for the Nursing Care Business. It ismaking efforts to establish collaborative relationships with suppliers to ensure stable purchase of safe ingredients;
however, if similar cases/accidents occur and the anxiety among the public increases, the results of operations and thefinancial situation of the Corporate Group may be affected.
Furthermore, if the food price increases associated with lean harvest of agricultural products including rice andvegetables due to external factors such as bad weather or natural disaster or caused by environmental changes of suppliers,
the results of operations and the financial situation of the Corporate Group may be affected.
(4) Sanitation control
Each store and restaurant of the Corporate Group’s Karaoke Business and Restaurant Business has a food sanitation
supervisor based on the Food Sanitation Act and has a business permit obtained from a health center under the jurisdiction.
The Corporate Group also provides manuals concerning sanitation control for each store and restaurant and ensures toprovide training programs and guidance to the employees. Furthermore, it also tries to strengthen sanitation measuresthrough regular sanitation inspections by external specialists; however, if hygiene issues such as food poisoning arises at astore or restaurant of the Corporate Group, it may receive business suspension penalties for a certain period of time or thecustomers may stay away from any stores of the Corporate Group as a result of lowered corporate image. These cases
may affect the business development, results of operations and financial situation of the Corporate Group.
(5) Legal regulations
Some stores operated by the Corporate Group are controlled by the regulations established by the respective prefectural
government such as “Prefectural Ordinance of Sound Development of Youth” by Fukuoka prefecture. The Corporate
Group is making efforts to implement verification of customers’ age and prevention of inappropriate drinking andsmoking or prevention of use of facilities during the midnight period from the legal compliance perspective; however, if
the Corporate Group violates these regulations, the public trust in the Corporate Group will be lost, which may affect theresults of operations and financial situation of the Corporate Group.
Furthermore, if regulations are tightened in association with amendment of ordinance, etc., limitations on thedevelopment of the business may arise and some kind of responses by the Corporate Group may be required. This may
affect the business development, results of operations and financial situation of the Corporate Group.
3. Concerning the operation area of the Corporate GroupAll business segments of the Corporate Group operate mainly in the Kyushu region. Because of this, the Corporate
Group currently receives impact of the economic climate, consumption trend, transition of elderly population and othersof the Kyushu region.
Furthermore, in case there is a natural disaster such as earthquake and typhoon or in case of spread of infectious diseasesuch as new type of influenza in the Corporate Group’s operation area, it may affect the results of operations and financial
status of the Corporate Group.
4. Concerning business structure(1) Management system of a holding company
The Corporate Group is based on the holding company structure, and the Company, which is the holding company,
provides management guidance to its group companies as well as consolidates and controls administrative work of eachcompany.
The Corporate Group is intending to strengthen the management system in an effort to develop and expand thebusiness; however, if securing and developing manpower or strengthening various management functions is hindered, it

9may affect the business development, results of operations and financial situation of the Corporate Group.
(2) Labor management
The Corporate Group requires a lot of manpower for its business operation and has many full-time employees as wellas temporary employees including part-time employees and temporary staff. Furthermore, because the Nursing Care
Business and Karaoke Business require 24-hour work system, the Corporate Group is making efforts to secure anddevelop necessary manpower for business operation and establish and manage working conditions and labor environmentthat are in compliance with labor-related laws and regulations. If any issues are caused for some reasons, they may affectthe business development, results of operations and financial situation of the Corporate Group.
(3) Customers’ information management
The Nursing Care Business and Karaoke Business of the Corporate Group deal with personal information of thecustomers. In order to manage the personal information, the head office and each business office have strengthened theirsystems to manage the documents. The data that include confidential information are consolidated and managed by a
responsible department, and access from external sources to the data is shut down. As such, with very careful attention,
the Corporate Group is making efforts to adhere to relevant laws and regulations and to prevent the leakage of personal
information; however, if personal information of the customers is leaked for some reasons, the information management
capacity of the Corporate Group may be criticized, and its accountability may be accused. The customers’ confidence in
the Corporate Group may also be lost. These cases may affect the business development, results of operations andfinancial situation of the Corporate Group.
5．Concerning results of operations and financial situation(1) Impact of newly established nursing care facilities
A new nursing care facility requires a certain period of time until the residents and users are secured in the beginning.
Thus, after the opening, it usually requires up-front expenditure until the number of residents and users reaches a certain
level. This means that opening a new nursing care facility may suppress the profit of the Corporate Group in the short run.
Furthermore, if it takes long time or if it is difficult to have residents and users for a new facility, the results of operations
and financial situation of the Corporate Group may be affected.
(2) Use of off-balance scheme system for the nursing care facilities
The Corporate Group uses the sale and leaseback transaction method to minimize capital investment for the nursing
care facilities. A typical arrangement is to sell and leaseback the nursing facilities that the Corporate Group developed toSpecial Purpose Companies (SPCs) invested by domestic and international investment funds.
When using such off-balance scheme system, the Corporate Group seeks opinions of professionals such as accountants
and uses measures that are considered appropriate at that point; however, in case the off-balance scheme system becomes
unavailable due to change of accounting standards, etc., the total assets on the consolidated balance sheet will increase asa result of adding nursing care facilities and unearned lease fees, which will result in drastic deterioration of equity ratio.
This may give significant impact on the financial situation of the Corporate Group.
(3) Impact of the off-balance scheme system for the nursing care facilities on business performance, etc.
As described above, the Corporate Group uses the off-balance scheme system for the nursing care facilities. The
Corporate Group sold 3 facilities (at the sales price of 3,000 million yen) in the consolidated fiscal year ended March
2015, and 4 facilities (at the sales price of 3,700 million yen) in the consolidated fiscal year ended March 2016.
Due to influence by the market price, etc., at the time of the sales of these facilities, 814 million yen of extraordinary
income called “Gain on sales of noncurrent assets” were added in the consolidated fiscal year ended March 2015, and 937
million yen of extraordinary income called “Gain on sales of noncurrent assets” were added in the consolidated fiscal year10

ended March 2016.
The leaseback transactions through this arrangement reduces depreciation burden as compared with the costs ofmanaging its own properties, even though the expenditures for facility lease are incurred and expenditures for nursing
care facilities will increase.
Although the Corporate Group is planning to use the above-mentioned off-balance scheme system in the considerationof business establishment development, financial situation, etc., there is no guarantee that the Corporate Group canachieve the intended results, as they will depend on the external environment surrounding the nursing care industry andvarious conditions concerning sales and lease with business partners.
(4) Dependency on interest-bearing debt
The Corporate Group acquires a part of the funds to open new nursing care facilities for the Nursing Care Businesssegment and most of the funds to open new stores and restaurants for the Karaoke Business and Restaurant Businesssegments by borrowing money from financial institutions. The interest-bearing liabilities balance (Note) as of the end of
the consolidated fiscal year ended March 2016 were 11,834 million yen, which occupied 38.3% of the total assets. The
Corporate Group is planning to continue to use borrowed funds from financial institutions for the future establishment of
new facilities and stores. If there is a major change in the interest rates, it may affect the results of operations and financial
situation of the Corporate Group. Furthermore, if there is a change in financing attitude by the financial institutions
towards the Corporate Group due to changes in financial landscape, etc., the Corporate Group’s plans and businessdevelopment may be affected.
(Note) Interest-bearing debt includes all debts that are included in the consolidated balance sheet, for which interests are
paid.
(5) Accounting for impairment loss
Each business segment of the Corporate Group needs to recognize impairment loss in case deficit continues when
profitability of each business establishment and store declines due to business environment changes or economic factors.
This may affect the results of operations and financial situation of the Corporate Group.
6．Concerning lawsuit risks
In case of unexpected troubles and issues in relation to service provision or other transactions for each businesssegment of the Corporate Group, with or without defects of the Corporate Group, the damage compensation in relation tothese troubles and issues may be demanded to the Corporate Group or the Corporate Group may be sued.
The progress or results of these lawsuit contents or damage compensation amount may affect the results of operations,financial situation and social credibility of the Corporate Group.

112. Situation of the Corporate GroupThe Corporate Group is consisted of the Company (holdings company) and consolidated affiliates (Sawayaka Club andBonheure Co., Ltd.) and local corporations in Thailand (Bonheure (Thailand) Co., Ltd. and KANTEKIYA (THAILAND)
CO.,LTD.) Together, the Corporate Group conducts mainly 5 types of businesses (Nursing Care Business, Karaoke Business,
Restaurant Business, Real Estate Business, Others). As the holdings company, the Company carries out development ofstrategies for each group company and provides managerial controls and guidance to each group company. The major business
contents of each company and its relationship with the business segment of the Corporate Group are as follows.
(1) Nursing Care Business
For this Business, the Corporate Group provides various services based mainly on the Public Nursing Care Insurance Law
for the elderly in need of nursing care, etc. mainly in Kitakyushu city, Fukuoka prefecture.
The services include fee-based nursing homes (fee-based assisted-living nursing homes for elderly and resident-type feebased home for elderly), group homes, short stay, helper station, care planning center, day-service center, small-scale
multifunctional home-based nursing care facilities, and homes for elderly with various services. With a focus on residenttype facilities such as fee-based assisted-living nursing homes for elderly, the Corporate Group expands its business by
establishing business offices for various nursing care services.
In addition, the Corporate Group offers after-school day services for supporting disabled children.
As of the end of this consolidated fiscal year, the Corporate Group has 136 business offices in 71 locations. The contents
and characteristics of each nursing care service are described below.
(a) Fee-based assisted-living nursing homes for elderly (Number of facilities at the end of this consolidated fiscal year:
39)
These are fee-based nursing homes for elderly that are designated as “daily life nursing care for a person admitted to acommunity-based specified facility” under the Public Nursing Care Insurance Law. They target the people in need ofnursing care need or require assistance. Based on the specified facility service plan, the facility staff members assist theusers in bathing, excretion, and eating meals and provide other supports for their daily lives and functional trainings.
(b) Resident-type fee-based nursing homes for elderly (15 business establishments)
These are fee-based nursing forms for elderly that are not designated as daily life nursing care for a person admitted to
a community-based specified facility. They provide feeding services and assistance for the users’ daily lives. The facility
staff members, in principle, do not offer nursing care services. If the residents want nursing care assistance, they need touse external services such as visiting care, based on a separate contract. The Corporate Group provides nursing careservices required by the resident by establishing various nursing care/assistance services business offices next to thenursing homes.
(c) Group homes (10 business establishments)
These are resident-type facilities for the elderly with dementia who have received certificate for nursing care need.
Making 5 to 9 people as 1 unit, the facility staff members assist the users in bathing, excretion, and eating meals in ahomelike atmosphere.
(d) Short stay services (28 business establishments)
Short stay services are offered for the families that take care of the elderly who require nursing care or assistance athome on a daily basis but in need of temporary assistance for the elderly. The users can receive assistances for bathing,excretion and eating meals as well as care for their daily lives and functions recovery training, etc.
(e) Helper stations (11 business establishments)

12Helper stations target the elderly who require nursing care or assistance and dispatches helpers to their homes. The
helpers provide support services including physical assistance for bathing, excretion, eating meals and going out as wellas support for daily lives such as cleaning, washing, cooking and shopping, in accordance with the users’ level of physicaland mental capacity. The services through helper stations are mainly offered to the residents of the fee-based resident-typenursing homes operated by the Corporate Group.
(f) Care planning centers (6 business establishments)
Dedicated care managers (nursing care managers) are placed at each care planning center. Based on the requests fromthe elderly who need care and their families, the facility staff members develop care plans, aiming at improving the users’
daily lives and facilitating independence. They also provide services such as consultation on nursing care and applicationby proxy for the certificate for nursing care need.
(g) Day-service centers (20 business establishments)
The day-service centers are for the elderly who require nursing care or assistance. The users visit the centers on a daily
basis. The centers provide various nursing care services such as life style guidance, functions training, health check-ups,
and assistance for eating meals and bathing.
(h) Small-scale multifunctional home-based nursing care (4 business establishments)
This service is to provide assistance such as bathing, excretion and eating meals to the users to continue their
independent lives at their homes. The service styles include “day service (users come to the facility)”, “visiting service(the workers visit the users’ homes”, and “short stay (users stay overnight at the facility)”, depending on the needs of theusers and their families. The services are offered for 24 hours.
(i) Housing with services for the elderly (2 business establishments)
This housing is based on the standards of the Acts on Stable Supply of Residences for the Elderly and registered at theprefectural, designated city and core city governments. The housing has infrastructure that fulfills certain required
standards such as the size of living room and barrier free. It also offers life style guidance and confirmation of theresidents’ safety by nursing care specialists to create an environment for the elderly to live safely.
(j) After-school day service for supporting disabled children (1 business establishment)
In accordance with the standards specified in the Child Welfare Act, the Corporate Group operates a training facility for
mainly disabled children at the age of 6 to 18 who commute to school. They go to the facility after school, on school
holidays, including Saturdays, Sundays, and national holidays, or during vacations, including summer and wintervacations. This facility also enables the family members of disabled children to refresh themselves, by looking after theirchildren on behalf of them temporarily.
(Nursing-care insurance system)
The “nursing-care insurance system” is a public system to provide nursing care services to the people who havecertificate for nursing care need or certificate for needed care using the insurance premium paid by the public and tax
collected by the national and municipal governments. It is a system to support the elderly people who require care due todeterioration of physical functions by the entire society. The elderly people who receive certificate for nursing care needor certificate for needed care can use various nursing care services by shouldering 10% of the actual nursing care costs(There is a possibility that those who have over a certain amount of income will have to bear 20% from August 2015.)
The Nursing Care Business of the Corporate Group mainly provides nursing care services for the elderly people who
receive certificate for nursing care need or certificate for needed care. It receives nursing care compensation from thenational health insurance organizations in each prefecture that conducts review and payment of nursing care insurance for13the nursing care services provided.
(Concerning business development)(a) Areas and business development
As of the end of the current consolidated fiscal year, the Corporate Group’s main area of business is the Kyushu region(87 business establishments in 42 locations in Fukuoka, 5 business establishments in 3 locations in Oita). In other areas,
the Corporate Group has business establishments across Japan, including 4 business establishments in 2 locations in
Hokkaido, 3 business establishments in 2 locations in Akita, 6 business establishments in 3 locations in Niigata, 4business establishments in 3 locations in Chiba, 9 business establishments in 5 location in Tochigi, 2 businessestablishment in 2 location in Saitama, 3 business establishments in 2 location in Aichi, 4 business establishments in 2
locations in Kyoto, 2 business establishments in 2 locations in Osaka, 2 business establishments in 1 location in Hyogo, 2business establishments in 1 location in Mie, and 3 business establishments in 1 location in Ehime. For the Nursing Care
Business, although the fee-based assisted-living nursing homes for elderly are the focus of the business development,
establishment of such business establishments are only possible if municipality has public offering for new facilities basedon their plans. Therefore, currently, the Corporate Group is making efforts to develop new facilities with a focus on
publicly announced projects in each area. For the other business establishments, the decision is made based on the
demand trend, etc. of each area.
(b) Nursing-care facilities
Because establishment of new nursing-care facilities require a lot of funds for facility investment, the Corporate
Group’s priority is to rent facilities that are built by the owners and fit the specification of the Corporate Group. In reality,
however, it is difficult to establish new nursing care facilities using this method. Therefore, the Corporate Group also
develops some of its own facilities using its own funds.
Once these facilities developed by the Corporate Group reach a certain operation rate, the Corporate Group will switch
to the leasing system by selling them to the SPCs that are invested by domestic and international investment funds.
(c) Fee schedule that does not receive temporary money for occupancy
Except for a few facilities, the nursing-care facilities of the Corporate Group do not collect lump-sum for occupancy at
the time when the occupants move in. This is to offer wider opportunities for elderly people to receive nursing-careservices, regardless of their income and assets statues. For business development, the Corporate Group is making efforts
to increase profitability through these measures, differentiate the Group’s facilities from the other companies, improve
facility operation rates and shorten the vacant period.
(2) Karaoke Business
The Karaoke Business focuses on the operation of karaoke rooms mainly in Fukuoka. The name of the karaoke stores is“Korokke Club”.
The stores for the Karaoke Business have basically around 30 rooms per establishment. They are differentiated from theother companies’ karaoke sores by opening basically for 24 hours, 7 days a week. By offering lunch and karaoke as a set
during the day, and meal and karaoke or all-you-can-drink and karaoke as a set at night, the Corporate Group is making
efforts to enhance eating/drinking rate to increase profit. Furthermore, the Corporate Group is making efforts to makekaraoke stores more children- and elderly-friendly to have a broader range of customers.
As of the end of the current consolidated fiscal year, the Corporate Group operates 97 karaoke stores.
(Store development)
The number of karaoke stores in each prefecture as of the end of the current consolidated fiscal year is listed in thefollowing table. They are located in various prefectures in the Kyushu region as well as Yamaguchi, Hiroshima, Mie, Shiga,

14Hyogo, Shizuoka, Tokyo, Ibaraki, and Kanagawa prefectures.
Although the Corporate Group’s focus was to open suburb-type stores in the Kyushu region and Yamaguchi prefecture
until 2008, in recent years, it is more focusing on urban and busy districts where there are more customers.
Tokyo

Kanagawa

IbarakiShizuoka

Mie

Shiga

Hyogo

Hiroshima

Yamaguchi

Fukuoka

Saga

Nagasaki

Kumamoto

Oita

MiyazakiKagoshima

Okinawa

6

2

1

1

1

1

2

3

9

36

4

3

4

8

6

4

6

Number ofstores(3) Restaurant Business
For the Restaurant Business, the Corporate Group mainly operates izakaya (Japanese style pub) in various parts of the
Kyushu region. Several types of izakaya with different concepts are offered: “Kanteki-ya” (mainly targeting white-collar
workers), “Susu” (mainly targeting female customers), and “Saisei-sakaba” (low-cost izakaya) to capture a wide range ofcustomers. Furthermore, by changing and renewing the styles of existing restaurants, the Corporate Group is trying to keep
the customers from getting bored and come back to the restaurants.
The number of restaurants the Corporate Groups operates as of the end of the current consolidated fiscal year is 28 (24izakayas in Japan, 1 Udon noodle restaurant, and 3 izakayas in Thailand).
(4) Real Estate Business
Sawayaka Club Co., Ltd. deals with leasing of rental condominiums and sales and brokerage activities of real estate
properties, and Bonheure Co., Ltd. deals with leasing and management of rental condominiums and sales and brokerage
activities of real estate properties.
(5) Others
The Hotel Department of Sawayaka Club Co., Ltd. operates 2 hotels with hot springs next to resident-type, fee-based
nursing homes in Beppu, Oita. In addition to the general customers, the residents who live in the nursing-care facilities nextdoor or the residents of other nursing-care facilities of the Corporate Group can also use the hotel facilities for recreation
purposes.

15

3. Management Policy(1) Basic Management Policy
Since its establishment in October 2006, through its affiliates (i.e. Sawayaka Club, Co., Ltd. and Bonheure Co., Ltd.), theCorporate Group has been evolving its businesses on the operation of nursing-care facilities for elderly, operation of karaoke
stores and restaurants, and management of real estate properties based on its concept of “Collaborative Living of Children,
Youth and Elderly”. Currently, it operates its business with pillars of Nursing-Care Business, Karaoke Business andRestaurant Business. Its current management goals are to become a corporation group that is needed by the local
communities and to continuously provide services that the customers feel safe and reliable.
As for the environment that surrounds the Corporate Group’s 3 core business segments, the demand for its Nursing Care
Business is expected to increase with the background of aging society. Until June 2010, a standard was in place to back up
the regulation to control the total volume of users at nursing-care facilities such as specified nursing homes for elderly. It
was abolished in June 2010, and from the 5th Nursing Care Insurance Plan (from FY 2012 to 2014), it was decided by the
Cabinet that each prefectural government would be able to establish its plan based on its circumstances. These changes will
facilitate the creation of environment that is tailored to the local situation in each area. Therefore, it will be necessary for the
Corporate Group to have even closer network with municipal governments and obtain the public announcement information
on a timely basis for the establishment of new specified facilities that are the Corporate Group’s main focus. Furthermore,during the 2015 Nursing-Care Compensation Revision, the revised rate was decreased by 2.27%. This change will have asignificant impact not only on the companies in the nursing-care industry but also insured people who use nursing careinsurance. Thus, the users will look for nursing-care business entities with sound management more than ever.
For the Karaoke Business, the Corporate Group believes that the competition in the industry is going to intensify because
the karaoke room market is shrinking. In the future, it is expected that the use of karaoke room stores by the young people intheir 10s and 20s, which are the major customers, will gradually shrink due to declining birthrate. In the meanwhile, thebaby boomer generation is hoped to become a new customer group, for karaoke will become activities to spend their leisuretime after retirement. Given the fact that the number of people who enjoy karaoke since 2007 has not changed much, it isanticipated that the number of karaoke population will remain at the same level in the future.
For the Restaurant Business, the market for the izakaya industry, in which the Corporate Group mainly operates, is on ashrinking trend due to prolonged deflation and also because young people are moving away from alcohol. Because this trend
is anticipated to continue, the Corporate Group needs to make efforts to differentiate its restaurants from the othercompanies by enriching the products other than alcohol, improving quality and varieties of meals to serve, and improving
customer service.
Under these business circumstances, the Corporate Group will distinguish itself from the other competitors bystrengthening its responses to the issues, promptly responding to the customers’ needs, and deepening the network andestablishing trust relationships with the local communities for each business field. Furthermore, it will strengthen its
business quality by ensuring education of the employees to equip them with professional expertise and enhancing the qualityof service.

(2) Target Management Indicator
The management indicator that the Corporate Group is focusing on is the operating income rate. For each businesssegment, the Corporate Group will make efforts to improve the performance by understanding the needs of the residents andcustomers and promptly and adequately reflecting their needs to the business. At the same time, the Corporate Group will try
to establish solid business foundation by focusing on cost control and conducting sound business operation. The Corporate
Group’s goal is to secure and maintain 10% of the consolidated operating income on sales as a result.

(3) Mid- to Long-term Management Strategies
The environment surrounding the Corporate Group differs by segment. For the Nursing-Care Business, establishment of
more trustful relationships with the users and residents is needed as aging population is rapidly growing in Japan. For the16Karaoke Business and Restaurant Business, the business environment will be more severe, and the Corporate Group needs
to respond to the intensifying competition against other companies and stores.
Under these circumstances, the Corporate Group will differentiate itself from the others by emphasizing the individual
characteristics for its major business segments.
Followings are the goals for each segment.
(a) Nursing-Care Business
The Corporate Group is planning to open 5 to 10 new nursing-care facilities per year. In order to steadily achieve thisgoal, the Corporate Group will collect information on the potential properties and establish good relationships withadministrative agencies.
(b) Karaoke Business
The Corporate Group is planning to open about 5 restaurants per year. Especially, it will focus on the opening of newrestaurants in the Tokyo metropolitan area. Nonetheless, it will make a flexible plan in terms of areas and principles of
opening new restaurants based on careful review of economic environment and consumers’ trend. By expanding thebusiness nationwide, the Corporate Group will be able to enhance its recognition, interest and attention from the public.
(c) Restaurant Business
The Corporate Group is planning to open 2 stores per year, including changing the types of existing stores. It will
improve stores’ structure so that they will not be affected by the changes of consumption environment by strengthening
characteristics of each store and creating stores that customers would come back.
(d) Real Estate Business
The Corporate Group is planning to mainly handle leasing of rental condominiums and undertake sales and brokerage
activities of real estate properties. It will carefully assess the situation of the real estate market, etc. and take appropriate
measures.

(4) Challenges of the Corporate GroupThe Corporate Group has been evolving its businesses activities around the operation of nursing-care facilities for elderly,
operation of karaoke stores and restaurants and management of real estate properties based on its concept of “Collaborative
Living of Children, Youth and Elderly”, with a goal to “create society where children, youth and elderly can live happily
together”.
In order to expand the businesses in wider areas and establish the concept and brand image of the Corporate Groupnationwide, it will continue examining issues in each business segment and take appropriate measures to address them.
The current significant issues that the Corporate Group is faced with for its expansion and progress of the business are as
follows.
(Entire company)(a) Principle of human resource development
The industries of Nursing-Care Business, Karaoke Business and Restaurant Business that the Corporate Groupbelongs to have chronic issues of labor shortage. As countermeasures, the Corporate Group will not only focus on
recruiting employees but also support individual employee’s development and enhance their sense of responsibility andloyalty to the Corporate Group through technical assistance such as OJT as well as various activities based on theemployees training system. This way, it is hoped to achieve stable retention rate.
(b) Strengthening management structure17In order for the Corporate Group to expand its business scale, it is important to strengthen the management structureand establish more functional corporate governance structure, in addition to human resource development. The
Corporate Group is making efforts to carry out accurate and efficient corporate governance by consolidating various
management departments and corporate planning division that deal with management and control functions at theCompany, which is the holding company, and establish and operate an integrated management line as a corporate group.
(Nursing-Care Business)(a) Expansion of business areas
Although the Corporate Group’s focus was in the Kyushu region, it will try to examine the measures to expand its feebased assisted-living nursing homes for elderly (Life assistance for the residents of specified facilities), which is theGroup’s core business, in other areas and, because it is subject to the total volume control of nursing care insurance
facilities, achieve more speedy opening of new establishments by applying for public offerings of the municipal
governments across the country and obtaining approval for new establishments and aggressively collecting informationon the M&A projects of existing facilities associated with industry restructuring. Although the target is nationwide, theCorporate Group is conducting appropriate investigations concerning living conditions of the elderly, availability ofother companies, and their operation status in the candidate areas to examine the future prospect of the areas.
(b) Improvement in service level
Most of the residents of the nursing-care facilities of the Corporate Group are the people who have certificate fornursing care need. In order for the Corporate Group to provide comfortable lives to them, it is essential to take into
consideration the support for their independence and avoid excessive service. This requires knowledge, experience andaccurate information. In order to carry it out properly, the Corporate Group is making efforts to improve its training
programs and enhance capacities of the employees as well as enhance the quality of essential services and obtainsatisfaction and trust from as many users as possible.
(c) Improvement in facility levels
In order for the users to spend time feeling safe and secure at nursing-care facilities, it is necessary for the care
workers to have better service and also secure safety and credibility of the facilities. The Corporate Group is trying toenhance the safety and health control by carrying out disaster drill in preparation for disasters, cleaning the facilities on adaily basis and sanitation inspection in the kitchen, etc. Because disseminating the information about relevant laws andregulations such as the Nursing Insurance Act and Elderly Welfare Act is essential for the nursing-care business, theCompliance Promotion Group of the Corporate Group provides comprehensive instructions concerning laws andregulations to its relevant employees under the Guidance of the Compliance Committee.
(d) Securing qualified personnel
It is essential for the companies that provide nursing-care service to secure qualified personnel such as nurses, caremanagers and certified care workers. Also from the perspectives of compliance with laws and regulations, securing
stable employment of qualified personnel is an important issue. When recruiting qualified personnel, the Corporate
Group takes into full consideration of their knowledge and experiences. Once they become the employees, their benefits
are adequately reviewed in accordance with their capacities and performances to enhance stable employment andimprove the retention rate.
(Karaoke Business)(a) Strengthening capacities of the stores in remote areas
The Karaoke Business of the Corporate Group is now spreading not only in the Kyushu region (mainly Fukuoka) andYamaguchi prefecture but also in Mie, Shiga, Hiroshima, Tokyo, Hyogo, Ibaraki, Shizuoka and Kanagawa prefectures.

18

These stores are becoming a foothold for further expansion of the business in wider areas. Nonetheless, it takes time for
new stores in remote areas to establish the brand image and make profit. In order for the Corporate Group to expand its
business throughout Japan, there is a need to make its store name, “Korokke Club”, well known across the country. By
conducting more vigorous advertisement activities and frequently collecting information on the customers and competitors
in the target areas, the Corporate Group will establish the systems to objectively assess service capacity of the stores andproduct values and to promptly modify them.
(b) Intensifying competition and differentiation from the other companies
The companies in the karaoke industry, just like the Corporate Group, tend to open new stores centered on high-traffic
areas such as in front of stations and entertainment areas, resulting in intensifying competition across Japan. The Corporate
Group is trying to differentiate itself from the other companies by improving pre-fixed menus and increasing types ofservices such as all-you-can-drink-and-sing in order to respond to the party demands that are often expected inentertainment areas.
(Restaurant Business)(a) Intensifying competition and differentiation from the other companies
In the Japanese restaurant field, competitions are getting fierce as consumer confidence has declined, and this situation isestimated to continue. The Corporate Group will take some measures by converting or renewing existing restaurants while
discussing competitive products, services, price setting, etc. when necessary. It will also keep discussing the restaurant
operation outside Japan, where the demand for Japanese cuisine is high.
(b) Strengthening product values and customer service
The Corporate Group carries out chefs’ meeting once a month in order to provide the products that meet the needs of thecustomers in a timely manner. It also works on refining existing products and developing new products as well as
improving their quality and safety. For the customer service, the Corporate Group is also making efforts to secure excellent
human resources through proactive recruitment activities and improve the employees’ service skills through education andtraining programs.
(c) Strengthening sanitation control
Preventing sanitation-related accidents and keeping trust from the customers are essential for continuous operation of therestaurant business. The Corporate Group places designated ‘environment patrollers’ who check cleanliness of therestaurants. It also commissions external contractors to regularly conduct sanitation inspection at all stores including the
Karaoke Business to enhance the level of sanitation control through objective verification.

4. Basic Principles of Selecting Accounting Standards
Currently, the activities of the Corporate Group are mainly conducted in Japan. Therefore the Japanese accounting standards
will be used for the time being. In the future, however, as the Corporate Group expands its business overseas, the needs ofusing the accounting based on the IFRS will increase as important information for decision making by investors, financial
institutions and other stakeholders in Japan and overseas. The Company is planning to deliberate on the application of the
IFRS including the appropriate timing of introduction.

19

5. Consolidated Financial Statements(1) Consolidated Balance Sheets(Thousands of yen)
FY ended March 31, 2015
(As of March 31, 2015)

FY ended March 31, 2016
(As of March 31, 2016)

AssetsCurrent assets
Cash and deposits

11,925,172

9,771,970

1,418,113
72,3501,551,065
64,795

Real estate for sale
Supplies

720,14939

948,994
39

Deferred tax assets
Other

218,479
1,868,055

252,328
1,520,895

Notes and accounts receivable-trade
Merchandise

Allowance for doubtful accounts(20,833)(11,173)

16,201,527

14,098,916

12,695,005

13,464,336

Accumulated depreciation(5,565,369)(5,970,108)

Buildings and structures, net

7,129,636

7,494,227

LandConstruction in progress

3,729,127
444,291

3,346,595
81,909Other
Accumulated depreciation

3,560,657(2,557,672)

3,035,474(2,002,753)

1,002,985

1,032,721

Total current assets
Noncurrent assets
Property, plant and equipment
Buildings and structures

Other, net

12,306,040

11,955,453

Intangible assets

Total property, plant and equipment

61,18255,202

Investments and other assets
Investment securities

117,705

490,925

Long-term loans receivable
Deferred tax assets

272,064
178,356

247,260
148,661

Lease and guarantee deposits
Other

2,290,775
1,353,492

2,413,868
1,589,996

Allowance for doubtful accounts(87,966)(87,875)

Total investments and other assets
Total noncurrent assets
Total assets

20

4,124,427

4,802,837

16,491,650

16,813,493

32,693,177

30,912,409

(Thousands of yen)
FY ended March 31, 2015
(As of March 31, 2015)

FY ended March 31, 2016
(As of March 31, 2016)

Liabilities
Current liabilities
Notes and accounts payable-trade

331,926

343,831

1,489,000
2,589,297

819,813
2,371,843

Current portion of bonds
Lease obligations

35,0001,120

35,000866

Income taxes payable
Provision for bonuses

140,465
197,316

107,819
217,384

Provision for point card certificates
Provision for shareholder benefit program

271,571
12,050387,858
10,175

Asset retirement obligations
Other

2,012,397

8,333
2,129,601

Total current liabilities

7,080,146

6,432,527

Short-term loans payable
Current portion of long-term loans payableNoncurrent liabilities
Bonds payable

35,000-Long-term loans payable
Lease obligations

8,281,439
1,660

7,032,679
794

Deferred tax liabilities
Asset retirement obligation

277,803
199,909523,622
199,340

Other

1,431,202

1,437,688

Total noncurrent liabilities

10,227,016

9,194,125

17,307,162

15,626,653

Capital stock
Capital surplus

2,222,935
2,676,892

2,222,935
2,676,892

Retained earnings
Treasury stock

10,446,116(237)

11,213,028(815,511)

Total shareholders' equity

15,345,707

15,297,345

31,897(13,186)705

650

32,602(12,536)

7,705

946

Total net assets

15,386,015

15,285,755

Liabilities and net assets

32,693,177

30,912,409

Total liabilities
Net assets
Shareholders' equity

Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Total accumulated other comprehensive
incomeNon-controlling interests21(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Consolidated Statements of Income

Net sales
Cost of sales(Thousands of yen)
FY ended March 31, 2015
FY ended March 31, 2016
(April 1, 2014- March 31, 2015) (April 1, 2015- March 31, 2016)
23,628,459
23,897,098
20,713,973
22,197,604

Gross profit

2,914,485

1,699,494

Directors' compensations
Salaries and allowances

166,977
284,114

169,418
288,765

Taxes and dues
Provision of allowance for doubtful accounts

372,264
4,589

448,327-

Provision for bonuses
Provision for allowance for shareholders' benefits

6,936
12,047

5,176
10,032

Selling, general and administrative expenses

Other
Total selling, general and administrative expenses
Operating income

634,725

649,046

1,481,656

1,570,767

1,432,829

128,726

Non-operating income
Interest income

9,530

11,985

Dividends income
Commission fee

1,984
76,967

1,277
101,044

Insurance income
Subsidy income

132,945
3,735

39,501
112,127

Other

59,10275,024

Total non-operating income

284,264

340,959

142,646
20,331

123,654
21,130Non-operating expenses
Interest expenses
Other
Total non-operating expenses
Ordinary income

162,978

144,784

1,554,115

324,901

814,626289

1,253,176
127,480-

68,699Extraordinary income
Gain on sales of noncurrent assets
Gain on sales of investment securities
Insurance income
Gain on negative goodwill-

20,605

Total extraordinary income

814,916

1,469,963

Extraordinary loss
Loss on retirement of noncurrent assets

20,204-

Impairment loss
Loss on sales of investment securities

292,632
185

272,780-

144-

Loss on valuation of investment securities
Total extraordinary loss

313,166

272,780

Income before income taxes

2,055,864

1,522,084

Income taxes-current
Income taxes-deferred

660,072
109,027

282,940
262,750

Total income taxes

769,100

545,690

1,286,764

976,393(2,961)(6,702)

1,289,725

983,096

Net income
Profit (loss) attributable to non-controlling interests
Profit attributable to owners of the parent

22

Consolidated Statements of comprehensive income(Thousands of yen)
FY ended March 31, 2015
FY ended March 31, 2016
(April 1, 2014- March 31, 2015) (April 1, 2015- March 31, 2016)
Net income
Other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Total other comprehensive income

1,286,764

976,393

16,664(45,084)

1,439

(111)

18,104(45,195)

Comprehensive income

1,304,868

931,197

Comprehensive income attributable toComprehensive income attributable to owners of
the parent
Comprehensive income attributable to noncontrolling interests

1,307,096

937,957(2,227)(6,759)23

(3) Consolidated Statements of Changes in Net Assets
FY ended March 31, 2015 (From April 1, 2014 to March 31, 2015)(Thousands of yen)
Shareholders' equity
Capital stock
Balance at beginning ofcurrent period
Changes of items during
period2,222,935

Capital surplus

Retained earnings

Treasury stock

Total shareholders'equity2,676,892

9,394,193(237)

14,293,784

Dividends from surplus
Profit attributable toowners of the parent
Net changes of items
other than shareholders'equityTotal changes of items
during the period
Balance at the end ofcurrent period(237,802)(237,802)

1,289,725

1,289,725――

1,051,923―

1,051,923

2,222,935

2,676,892

10,446,116(237)

15,345,707

Accumulated other comprehensive income

Balance at beginning ofcurrent period
Changes of items during
periodDividends fromsurplusProfit attributable toowners of the parent
Net changes of items
other thanshareholders' equity
Total changes of items
during the period
Balance at the end ofcurrent period

Valuationdifference on
available-for-salesecurities

Foreign currencytranslation
adjustment

Total accumulated
othercomprehensive
incomeNon-controllinginterests

Total net assets

15,232―

15,232―

14,309,016(237,802)
1,289,725
16,664705

17,3707,705

25,075

16,664705

17,3707,705

1,076,998

31,897705

32,602

7,705

15,386,015

24

FY ended March 31, 2016 (From April 1, 2015 to March 31, 2016)(Thousands of yen)
Shareholders' equity
Capital stock
Balance at beginning ofcurrent period
Changes of items during
period2,222,935

Capital surplus

Retained earnings

Treasury stock

Total shareholders'equity2,676,892

10,446,116(237)

15,345,707

Dividends from surplus
Profit attributable toowners of the parent
Purchase of treasurystock
Net changes of items
other than shareholders'equityTotal changes of items
during the period
Balance at the end ofcurrent period(216,184)(216,184)

983,096

983,096(815,273)(815,273)――

766,911(815,273)(48,361)

2,222,935

2,676,892

11,213,028(815,511)

15,297,345

Total accumulated
othercomprehensive
incomeNon-controllinginterests

Total net assets

32,602

7,705

15,386,015

Accumulated other comprehensive income
Valuation difference Foreign currency
on available-for-saletranslation
securities
adjustment
Balance at beginning ofcurrent period
Changes of items during
period31,897705

Dividends from surplus
Profit attributable toowners of the parent
Purchase of treasurystock
Net changes of items
other than shareholders'equityTotal changes of items
during the period
Balance at the end ofcurrent period(216,184)
983,096(815,273)(45,084)(54)(45,138)(6,759)(51,898)(45,084)(54)(45,138)(6,759)(100,259)(13,186)650(12,536)

946

15,285,755

25

(4) Consolidated Statements of Cash Flows(Thousands of yen)
FY ended March 31, 2015
FY ended March 31, 2016
(April 1, 2014- March 31, 2015) (April 1, 2015- March 31, 2016)
Net cash provided by (used in) operating activities
Income before income taxes

2,055,864

1,522,084

1,312,285
292,632

1,284,040
272,780

6,030(9,751)

40,686

20,06837,567116,286

945(1,875)(11,514)(13,263)Interest expenses
Loss on retirement of noncurrent assets

142,646
20,204

123,654-

Loss (gain) on sales of noncurrent assets
Loss (gain) on valuation of investment securities(814,626)
144(1,253,176)
-

(104)
-

(127,480)(68,699)-(20,605)(156,335)(132,952)

475,016(221,587)

Increase (decrease) in accrued consumption taxes
Increase (decrease) in notes and accounts
payable-trade
Other(20,152)(93,524)

39,52043,94823,898(193,168)Subtotal

3,444,710

1,246,777

Depreciation and amortization
Impairment loss
Increase (decrease) in allowance for doubtful
accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for point cardcertificates
Increase(decrease) in allowance for shareholders'
benefits
Interest and dividends income

Loss (gain) on sales of investment securities
Insurance income
Gain on negative goodwill
Decrease (increase) in notes and accounts
receivable-trade
Decrease (increase) in inventories

Interest and dividends income received

6,290

8,434

(141,849)-(119,700)
92,951

Income taxes paid
Net cash provided by (used in) operating
activities
Net cash provided by (used in) investment activities(1,299,019)(339,553)

2,010,131

888,908

Purchase of property, plant and equipment
Proceeds from sales of property, plant andequipment
Purchase of intangible assets
Purchase of investment securities(3,547,565)(3,092,519)

2,999,474

4,379,052(28,189)(5,000)(1,386)(899,650)

Proceeds from sales of investment securities
Payments into time deposits

985(726,273)

587,741(507,861)

Proceeds from withdrawal of time deposits
Payments for lease and guarantee deposits
Proceeds from collection of lease and guarantee
deposits
Payments for transfer of business

602,800(274,048)

1,956,270(157,845)

134,172

32,289-(215,000)

Payments of loans receivableCollection of loans receivable(17,413)41,076(9,896)38,874Other
Net cash provided by (used in) investment
activities(91,886)(208,676)(911,867)

1,901,391

Interest expenses paid
Insurance income26

(Thousands of yen)
FY ended March 31, 2015
FY ended March 31, 2016
(April 1, 2014- March 31, 2015) (April 1, 2015- March 31, 2016)
Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans
payableProceeds from long-term loans payable

26,000(669,187)

5,997,943

3,887,100(4,880,267)(35,000)(5,353,314)(35,000)

Repayments of lease obligations
Repayments of installment payables
Proceeds from share issuance to non-controllingshareholders
Payments made to trust account for acquisitionof treasury stock
Cash dividends paid

(2,323)(629,022)(1,120)(702,042)

9,932

-

-

(1,401,728)(237,218)(216,341)

Other
Net cash provided by (used in) financing
activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents

(587)

(105)

249,456(4,491,739)

300(4,338)

1,348,021(1,705,777)

Cash and cash equivalents at beginning of year

9,659,097

11,007,118

Cash and cash equivalents at end of year

11,007,118

9,301,340

Repayment of long-term loans payable
Redemption of bonds

27

(5) Notes Regarding Consolidated Balance Sheet(Notes regarding premise of a going concern)
Nothing is applicable.
(Changes in accounting policies)(Application of accounting policies related to business combinations)
The “Accounting Standard for Business Combination” (ASBJ Statement No. 21, September 13, 2013, hereinafter referred
to as the “Business Combination Accounting Standard.”), the “Accounting Standard for Consolidated Financial Statements”(ASBJ Statement No. 22, September 13, 2013, hereinafter referred to as the “Consolidated Accounting Standard.”) and the“Accounting Standard for Business Divestitures,” (ASBJ Statement No. 7, September 13, 2013, hereinafter referred to as the“Business Divestitures Accounting Standard.”) shall be applied from this consolidated fiscal year. In the case that ownershipwere to be continued, the Company shall post the change in equity on the subsidiary as capital surplus, and record
acquisition-related cost as the expense for the fiscal year in which it emerged. As for the business combination after the
beginning of this consolidated fiscal year, the Company shifted to the method of reflecting the revision to the allocatedamount of acquisition cost based on provisional accounting settlement in the consolidated financial statements for the period
including the business combination. In addition, the Company changed the indication of net income, etc. and shifted fromminority interest to non-controlling interest. In order to reflect these revisions, consolidated financial statements for theprevious consolidated financial year have been reproduced.
As for the application of the Business Combination Accounting Standard, etc., we follow the provisions for transitional
handling specified in the Business Combination Accounting Standard No. 58, Section 2 (4), the Consolidated AccountingStandard No. 44, Section 5 (4) and the Business Divestiture Accounting Standard No. 57, Section 4 (4), from the onset of
this consolidated accounting year to the future.
In the consolidated statement of cash flows for this consolidated fiscal year, the cash flow for the acquisition or sale of theshares of subsidiaries that is not accompanied by the change in the scope of consolidation is categorized into “Cash flows
from financing activities,” and the cash flow related to the expenses for acquiring the shares of subsidiaries that isaccompanied by the change in the scope of consolidation or the expenses for the acquisition or sale of the shares ofsubsidiaries that is not accompanied by the change in the scope of consolidation is categorized into “Cash flows fromoperating activities.”
There is a slight influence on the consolidated financial statements.
(Change of display method)(In relation to the consolidated statements of income)“Subsidy income,” which was included in “Other” of “Non-operating income” in the previous consolidated accounting
year, exceeded 10% of the total amount of non-operating income, and so it will be separately posted from the current
consolidated accounting year. In order to reflect this change in indication, the consolidated financial statements for theprevious accounting year have been reproduced.
As a result, in the consolidated statements of income for the previous accounting year, “Other” of “Non-operating income”
amounting to 62,837 thousand yen was divided into “Subsidy income” amounting to 3,735 thousand yen and “Other”
totaling 59,102 thousand yen.
(Changes in accounting estimates)(Revision to estimated asset retirement obligation)
Regarding asset retirement obligation posted as the obligation to restore shops, etc. to original state in accordance withreal estate lease contracts, the Corporate Group obtained new information on relocation, store closing, etc. and then revised
the estimates of the cost for restoring shops to original state and the period of use of each shop. As a result, 35,772 thousand
yen was added in the current consolidated accounting year.

28

(Segment information, etc.)【Segment information】
1. Overview of the reporting segments(1) How to determine the reporting segments
The reporting segments of the Corporate Group are the constituent units of business for which segregated financial
information is available and that are the subject of regular examination by the Board of Directors to decide management
resources and assess business performance.
The Company has business departments for each service, and each business department develops comprehensive
strategies for the services, etc. that they handle. Therefore, the Company is consisted of segments per service based oneach business department. There are 4 reporting segments including “Nursing-Care Business”, “Karaoke Business”,“Restaurant Business” and “Real Estate Business”.
(2) Types of products and services that belong to each reporting segment
The “Nursing-Care Business” operates fee-based assisted-living nursing homes for elderly, day-service centers, grouphomes and care planning centers. It also conducts sales and lease of social-welfare tools. The “Karaoke Business”
operates karaoke stores, and the “Restaurant Business” operates restaurants such as izakaya and udon noodle restaurant.
The “Real-Estate Business” handles leasing of rental condominiums and undertakes sales and brokerage activities of realestate properties.
2. Method to calculate the amount of sales, profits, loss, assets and other items per reporting segment per reporting segment
The accounting of reporting business segments is handled in the almost same way as the description in “the basic significant
items to make the consolidated balance sheet”.
The profit in the reporting segment is based on the figures of operating income.
Internal profit and transferred amount among the segments are based on the prevailing market values.
3. Information concerning the amount of sales, profits, loss, assets and other items per reporting segment
Previous consolidated fiscal year (From April 1, 2014 to March 31, 2015)(Thousands of yen)
Reporting segments
Others (Note)

Total

Nursing-care

Karaoke

Restaurant

Real EstateBusiness

Business

Business

Business

11,688,238

8,825,583

1,992,764

778,367

23,284,954

343,505

23,628,459

―

1,710

51,6382,951

56,300102

56,402

11,688,238

8,827,294

2,044,402

781,319

23,341,254

343,607

23,684,862

914,373

1,326,028

117,460

48,771

2,406,634(10,576)

2,396,057

9,319,811

5,731,050

1,201,456

1,919,195

18,171,514

254,335

18,425,849

353,613829,00280,29013,311

1,276,218

8,713

1,284,931

2,784,675

1,093,800

234,018

27,111

4,139,605

2,543

4,142,149

Total

Sales
Sales to external customers
Internal sales or transferred amountamong the segments
Total
Segment income (loss)
Segment assets
Other items
Depreciation and amortization
Increased amount for property, plant andequipment and intangible assets(Note) “Others” is the business segment that is not included in the reporting segment. “Others” include hotel business andcommunication business.

29

Current consolidated fiscal year (From April 1, 2015 to March 31, 2016)(Thousands of yen)
Reporting segments

Others (Note)

Total

Nursing-care

Karaoke

Restaurant

Real EstateBusiness

Business

Business

Business

12,836,667

8,558,664

1,928,555

311,243

23,635,130

261,968

23,897,098―

817

46,4258,611

55,853―55,853

12,836,667

8,559,482

1,974,980

319,854

23,690,984

261,968

23,952,952

441,794

623,649(35,016)

86,5381,116,966(12,999)

1,103,966

9,125,961

6,172,120

1,128,209

2,066,918

18,493,209

221,954

18,715,164

322,517

816,750

95,386

13,4791,248,133

8,546

1,256,679

2,668,411

1,424,543

196,270

3,079

4,292,305

809

4,293,115

Total

Sales
Sales to external customers
Internal sales or transferred amountamong the segments
Total
Segment income (loss)
Segment assets
Other items
Depreciation and amortization
Increased amount for property, plant andequipment and intangible assets(Note) “Others” is the business segment that is not included in the reporting segment. “Others” include hotel business andcommunication business.

30

4. Balance between the total amount of reporting segments and the amount on the consolidated balance sheet and the breakdownof the balance (Items concerning balance adjustment)(Thousands of yen)
Sales

Previous consolidated fiscal year Current consolidated fiscal year

Reporting segments, total amount

23,341,254

23,690,984

Sales for “Others” segment343,607261,968

Offsetting between segments(56,402)(55,853)

23,628,459

23,897,098

Sales on the consolidated balance sheet(Thousands of yen)
ProfitPrevious consolidated fiscal year Current consolidated fiscal year

Reporting segments, total amount

2,406,634

1,116,966

Profit (loss) for the “Others” segment(10,576)(12,999)

Offsetting between segments

456,744454,711

Expenses for all companies (Note)(1,419,972)(1,429,951)

Operating income on the consolidated balance sheet

1,432,829

128,726(Note) Expenses for all companies are mainly general administrative expenses that do not belong to the reporting segments.
(Thousands of yen)
AssetsPrevious consolidated fiscal year Current consolidated fiscal year

Reporting segments, total amount

18,171,514

18,493,209

Assets for the “Others” segments

254,335

221,954

Offsetting of debt

(4,089,683)(2,949,345)

Assets of all companies (Note)

18,357,011

15,146,590

Total assets on the consolidated balance sheet

32,693,177

30,912,409(Note) Assets of all companies are mainly surplus funds (cash and deposits) that do not belong to the reporting segments, longterm investment funds (investment securities), and assets for operation department.
(Thousands of yen)
Reporting segments, total
Other items

Previous

Current

OthersPrevious

Adjustment amount (Note)
Current

Previous

Current

Amount on the consolidatedbalance sheet
Previous

Current

consolidated consolidated consolidated consolidated consolidated consolidated consolidated consolidated

Depreciation and amortization

fiscal year

fiscal year

fiscal year

fiscal year

fiscal year

fiscal year

fiscal year

fiscal year

1,276,218

1,248,133

8,713

8,546

27,35327,3601,312,285

1,284,040

4,139,605

4,292,305

2,543

809

59,82130,5854,201,970

4,323,700

Increased amount for
property, plant andequipment and intangible
assets(Note) 1. The adjustment amount of depreciation and amortization (i.e. previous consolidated fiscal year: 27,353 thousand yen
and current consolidated fiscal year: 27,360 thousand yen) is for the operation department of the head office.
2. The adjustment amount of property, plant and equipment and intangible assets (i.e. previous consolidated fiscal year:
59,821 thousand yen and current consolidated fiscal year: 30,585 thousand yen) is the capital investment amount in
the all companies’ assets that do not belong to each segment.

31

【Related information】
Previous consolidated fiscal year (From April 1, 2014 to March 31, 2015)
1. Information for each product and service
It is not described here because the same information is disclosed in the Segment Information section.
2. Information per region(1) Sales
Because sales to the external customers within Japan exceed 90% of the sales on the consolidated balance sheet, thedescription is omitted here.
(2) Property, plant and equipment
Because the amount of property, plant and equipment that exist within Japan exceeds 90% of the property, plant andequipment on the consolidated balance sheet, the description is omitted here.
3．Information per major customer(Thousands of yen)
Name of the customer

Sales
4,251,015

Fukuoka National Health Insurance Organization

Relevant segment
Nursing Care BusinessCurrent consolidated fiscal year (From April 1, 2015 to March 31, 2016)
1. Information for each product and service
It is not described here, because the same information is disclosed in the Segment Information section.
2. Information per region(1) Sales
Because sales to the external customers within Japan exceed 90% of the sales on the consolidated balance sheet, thedescription is omitted here.
(2) Property, plant and equipment
Because the amount of property, plant and equipment that exist within Japan exceeds 90% of the property, plant andequipment on the consolidated balance sheet, the description is omitted here.
3．Information per major customer(Thousands of yen)
Name of the customer

Sales
4,310,945

Fukuoka National Health Insurance Organization

32

Relevant segment
Nursing Care Business【Information concerning impairment loss of noncurrent assets per reporting segment】
Previous consolidated fiscal year (From April 1, 2014 to March 31, 2015)(Thousands of yen)
Reporting segment
All companies/
Nursing-Care

Karaoke

Restaurant

Real EstateBusiness

Business

Business

Business

24,033

Impairment loss

232,380

Others―36,218

Total
offset――292,632

Current consolidated fiscal year (From April 1, 2015 to March 31, 2016)(Thousands of yen)
Reporting segment
All companies/
Nursing-Care

Karaoke

Restaurant

Real EstateBusiness

Business

Business

Business

Impairment loss―

97,439170,460

4,880

OthersTotal
offset――272,780【Information concerning amortization amount and unamortized balance of goodwill per reporting segment】
Nothing is applicable.
【Information concerning gain from negative goodwill per reporting segment】
Previous consolidated fiscal year (From April 1, 2014 to March 31, 2015)
Nothing is applicable.
Current consolidated fiscal year (From April 1, 2015 to March 31, 2016)
In the “nursing-care business” segment, the Corporate Group took over 1 nursing-care facility in Oita-shi, Oita Prefecturefrom Yorozuya LLC on September 30, 2015. In the current consolidated accounting year, an income from negative goodwillof 20,605 thousand yen was posted.

33

(Per share information)
Previous consolidated fiscal year Current consolidated fiscal year
(From April 1, 2014 to(From April 1, 2015 toMarch 31, 2015)
March 31, 2016)
Net assets per share

711 yen 35 sen

765 yen 54 sen

Net income per share

59 yen 66 sen

46 yen 11 sen

Diluted net income per share

59 yen 56 sen

46 yen 03 sen(Note) 1

The basis of calculation for net income per share and diluted net income per share is as follows.
Previous consolidated fiscal year Current consolidated fiscal year
(From April 1, 2014 to(From April 1, 2015 toMarch 31, 2015)
March 31, 2016)

Item
Net income per share
Profit attributable to owners of the parent (thousandyen)
Amount that is not attributable to common shareholders (thousand yen)
Profit attributable to owners of the parent for commonshare (thousand yen)
Average number of common shares outstanding(shares)

1,289,725

983,096――

1,289,725

983,096

21,618,424

21,322,764――

Increased number of common shares (shares)

36,032

33,629(Out of which, subscription rights to shares (shares))(36,032)(33,629)

Diluted net income per share
Adjustment amount of profit attributable to owners of
the parent (thousand yen)

Overview of the dilutive shares that are not included in thecalculation of the diluted net income per share because they
did not have dilutive effect.
3――

The basis of calculation for net assets per share is as follows.
Previous consolidated fiscal year
(As of March 31, 2015)

Total amount of net assets (thousand yen)
Deducted amount from the total amount of
net assets (thousand yen)(Out of which, subscription rights toshares)(Outofwhich,
non-controllingshareholders’ interests)
End of term net assets for common shares(thousand yen)
Number of end of term common sharesthat are used to calculate net assets per
share (shares)(Significant subsequent event)Nothing is applicable.

34

Current consolidated fiscal year
(As of March 31, 2016)

15,386,015

15,285,755(7,705)

(946)

(―)

(―)

(7,705)(946)

15,378,310

15,284,809

21,618,424

19,966,124