Third Quarter Financial Report for the Fiscal Year Ending March 31, 2019 [Japan GAAP] (Consolidated)
Name of listedcompany:
Securities code:
Representative:

9792(Title)Contact:(Title)February 6, 2019
Listed on: Tokyo Stock
Exchange 1st Section

NICHIIGAKKAN CO., LTD.
URL: http://www.nichiigakkan.co.jp
President and COO
Executive Officer, Acting Division
Director Accounting Division

Scheduled date for filing the
February 8, 2019
quarterly financial report:
Supplementary quarterly materials prepared: Yes
Quarterly results information meeting held: Yes(Name) Nobusuke Mori
(Name) Kazuya Shiiya

TEL: 03-3291-2121

Scheduled date to start
dividends distribution:－(for institutional investors and financial analysts)(Figures shown are rounded down to the nearest million yen.)

1. Consolidated financial results for the third quarter ended December 31, 2018 (April 1, 2018 – December 31, 2018)(1) Consolidated operating results(Percentage figures represent changes from same period of previous year.)
Profit attributable to
Net sales
Operating income
Ordinary income
owners of parent
Million yen%
Million yen%
Million yen%
Million yen%
Nine months ended
215,723
1.3
7,336
23.0
4,043
34.1
2,107
23.7
December 31, 2018
Nine months ended
212,914
2.7
5,963
184.4
3,014
―
1,704
―
December 31, 2017
(Note) Comprehensive income:Nine months ended December 31, 2018

2,208million yen(31.3%)

Net income per share

Diluted net income per share

Yen

Yen

32.79

32.71

26.55

26.49

Nine months ended
December 31, 2018
Nine months ended
December 31, 2017

Nine months ended December 31, 2017

1,681million yen(－%)(2) Consolidated financial position

As of December 31, 2018
As of March 2018
(Reference) Shareholders’ equity:

Total assets
Million yen
189,124
190,239
As of December 31, 2018

Net assets
Million yen
37,07637,65636,001 million yen

Equity ratio
%
19.0
19.1

As of March 31, 2018

36,363million yen

2. Dividends
Annual dividends

Year ended March 31, 2018Year ending March 31, 2019Year ending March 31, 2019
(forecast)

1Q-endYen――

2Q-end
Yen
11.00
15.00

3Q-endYen――

Year-end
Yen
11.00
15.00

Annual
Yen
22.00
30.00

(Note) Revisions to most recently announced dividend forecast: No
3. Forecast of consolidated financial results for the year ending March 31, 2019 (April 1, 2018 – March 31, 2019)(Percentage figures represent changes from previous year)
Profit attributable to
Net income per
Net sales
Operating income
Ordinary income
owners of parent
shareMillion yen%
Million yen%
Million yen%
Million yen%
Yen
Full year
293,500
3.4
14,70092.7
9,600 164.6
5,100 496.9
79.39(Note) Revisions to most recently announced financial results forecast: No－ 1 －* Notes(1) Significant changes in subsidiaries during the term (Changes in specified subsidiaries resulting in changes in scope of
consolidation): None

(2) Application of specific accounting for preparing the quarterly consolidated financial statements: None
(3) Changes in accounting policies, changes of accounting estimates and restatement
1) Changes in accounting policies due to revisions of accounting standards, etc.: None
2) Changes in accounting policies due to reasons other than those stated in 1): None
3) Changes in accounting estimates: None
4) Restatement: None
(4) Number of shares outstanding (common stock)1) Number of shares issued and outstanding(including treasury stock)2) Number of treasury stock3) Average number of shares issued andoutstanding in each period

As of December 31,
2018
As of December 31,
2018
As of December 31,
2018

73,017,952
8,670,974
64,270,038

As of March 31,
2018:
As of March 31,
2018:
As of December 31,
2017

73,017,952
8,825,572
64,193,040* Quarterly financial results are outside the scope of the quarterly review by certified public accountants or audit corporations.
* Explanation concerning the appropriate use of financial result forecasts and other special notes
The above forecasts are based on information Nichii Gakkan had as of the time this report was prepared and on certain
assumptions judged to be reasonable. Various factors may cause actual results to differ significantly from forecasts. Please referto the disclaimers, provided under “(3) Information on the future outlook, including consolidated financial results forecasts” of “1.
Qualitative information on quarterly financial results” on page 8 of the attached document, regarding the assumptions upon which
forecasts are based and the use of forecasts.

－

2 －Table of Contents for the Attached Document
1. Qualitative information on quarterly financial results………………………………………………………………………

4(1) Details of business results ……………………………………………………………………………………………

4(2) Details of financial position ……………………………………………………………………………………………

8(3) Information on the future outlook, including consolidated financial results forecasts …………………………………

8

2. Quarterly consolidated financial statements and major notes ……………………………………………………………

9(1) Quarterly consolidated balance sheets…………………………………………………………………………………

9(2) Quarterly consolidated statements of income and comprehensive income ………………………………………………

11

Quarterly consolidated statements of income
Consolidated cumulative third quarter……………………………………………………………………………

11

Quarterly consolidated statements of comprehensive income
Consolidated cumulative third quarter……………………………………………………………………………

12(3) Notes to quarterly consolidated financial statements ……………………………………………………………………

12(Notes on the premise of a going concern) ……………………………………………………………………………

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

13(Significant subsequent event)………………………………………………………………………………………

13

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3 －

1. Qualitative information on quarterly financial results
The forward-looking statements contained in the descriptions below are forecasts determined at the end of the current
quarter.
In addition, ASBJ Statement No. 28 Partial Amendments to Accounting Standard for Tax Effect Accounting (February 16,2018) and other guidelines were applied from the beginning of the first quarter of the consolidated fiscal year. With respect tothe financial position, the figures at the end of the previous consolidated fiscal year after retrospective processing were used incomparison.
(1) Details of business results
During the consolidated cumulative third quarter under review in the first year of the medium-term management plan
VISION 2025 (from the fiscal year ending March 31, 2019 to the fiscal year ending March 31, 2025), the Nichii Group focusedon establishing the foundation for future development by executing its priority strategies, namely targeting growth in net sales,
strengthening the business structure to achieve the plans, and reforming the structure of the Education Business.
In aiming at growth in net sales, all businesses except the Global Business, which is now in the process of becoming a
consolidated subsidiary, achieved an increase in net sales and the effects of strengthening the sales system began to appear. The
Global (China) Business continued to move ahead with the streamlining of the business with the dissolution of unprofitablejoint ventures while enhancing sales promotion through measures such as undertaking contracts for facility operations.
In strengthening the business structure, signs of improvement were seen in the securing and retention of human resources in
the core businesses due to measures for stabilizing the employment of on-site employees, resulting in a gradual foundational
improvement in the human resources who are providing the services.
In the structural reforms of the Education Business, the Group endeavored to improve CS and enhance management bystrengthening the education of instructors and counselors. It also pursued efficient business management such as by reviewing
the development of schools.
Consequently, the business resulted in an increase both in net sales and income from the same period in the previous fiscal
year. Net sales for the consolidated cumulative third quarter under review were 215,723 million yen (compared with 212,914
million yen in the same period of the previous fiscal year), operating income was 7,336 million yen (compared with 5,963
million yen in the same period of the previous fiscal year), ordinary income was 4,043 million yen (compared with 3,014
million yen in the same period of the previous fiscal year) and net income attributable to owners of parent was 2,107 million
yen (compared with 1,704 million yen).
(Operating results by business segment)
The business results by segment are as shown below.
From the fiscal year ending March 31, 2019, the categories of the reporting segments were changed. The China Business andservices abroad were transferred from each department to the global segment in presentation by segment. In addition, healthcare product sales were transferred from the Health Care Segment to the Long-Term Care Segment. In this regard, with respect
to the comparison with the same quarter of the previous fiscal year below, figures obtained by reclassifying the figures for thesame quarter of the previous fiscal year under the changed segment categories were used in comparison.
<Medical Support Segment>
Net sales were 80,729 million yen (compared with 80,469 million yen in the same period of the previous fiscal year).
Operating income was 6,693 million yen (compared with 6,541 million yen in the same period of the previous fiscal year).
The Group has been working continuously to strengthen its human resources infrastructure by employment of on-site
employees with the adoption of indefinite-term hiring and enhancement of human resource matching and by proactively
holding campaigns in the medical administration course in order to improve its ability to provide services. In the medical
administration course, the number of students has been gradually recovering.
The Group tackled negotiations for contract rationalization with medical institutions, sought to obtain contracts during theterm for assistant work for medical administration, surveys and other highly needed services and took steps to improve
operations and productivity. As a consequence, both net sales and income increased compared with the same period of theprevious fiscal year.
<Long-Term Care Segment>
Net sales were 114,148 million yen (compared with 113,285 million yen in the same period of the previous fiscal year).
Operating income was 12,474 million yen (compared with 11,212 million yen in the same period of the previous fiscal year).
In In-home care services, the number of Long-term care benefits users in the Home-visit care service has continued torecover. In addition, the use of the services by patients whose nursing care levels are 3 to 5 has increased as the Group－4 －strengthened its response to those in a moderate or severe condition, as a result of which the payment per patient has also
increased.
In the Residential care services, the trend in the number of users of Fee-baced nursing homes and group homes has beenstable.
Consequently, the Long-Term Care Segment as a whole achieved an increase in net sales, and income also increased due tothe high occupancy rate maintained in Fee-baced nursing homes and the continuous improvement of operational efficiency,
mainly undertaken by people at the business sites.
<Childcare Segment>
Net sales were 8,739 million yen (compared with 6,332 million yen in the same period of the previous fiscal year).
Operating loss was 229 million yen (compared with operating loss of 783 million yen in the same period of the previous fiscal
year).
The Group has been actively expanding childcare facilities to contribute to women’s social advancement and to reduce thenumber of children on waiting lists in each region.
In the third quarter under review, the Group opened three new childcare facilities, and operated 250 facilities across Japan asof the end of December 2018.
Net sales grew 38.0% year on year thanks to the increase in the number of facilities. Profit increased (with an operating loss
reduced) due to the acquisition of corporate-user contracts for corporate-run childcare centers and measures to increase
recognition in each region such as childcare events.

－

5 －<Health Care Segment>
Net sales were 1,228 million yen (compared with 1,051 million yen in the same period of the previous fiscal year).
Operating loss was 707 million yen (compared with operating loss of 88 million yen in the same period of the previous fiscal
year).
On the back of an increase in women working outside their homes and the trend toward nuclear families, the market forhousekeeping services has been expanding.
In response to growing needs for the services, the Group has been actively promoting the Nichii Life housekeeping service
and the Sunny Maid Service housekeeping support business provided by foreign personnel in the National Strategic Special
Zone.
In the Kansai region (Hyogo Prefecture and Osaka City), the Sunny Maid Service was launched, and due to the campaign tomeet the demand for the year-end general house cleaning, the number of service users increased steadily. As a result, net sales
grew 16.8% year on year. Meanwhile, income decreased due to an increase in prior expenses for the preparation for theacceptance of foreign staff.
<Education Segment>
Net sales were 8,911 million yen (compared with 8,908 million yen in the same period of the previous fiscal year).
Operating loss was 2,761 million yen (compared with operating loss of 2,879 million yen in the same period of the previous
fiscal year).
The Group has undertaken structural reform of the Education Business and is pursuing initiatives to improve customer
satisfaction, achieve efficient operation and construct a new business model for Gaba.
In the Gaba one-to-one English conversation lessons for adults, measures to improve customer satisfaction have been taken
by supporting clients and strengthening counseling. The conventional Gaba is now heading for a recovery with a steady trend
in the number of the students in the classes.
In COCO Juku Junior for children, the Group has prepared for closures of small, community-based schools (satellite classes)
to improve efficiency of its business operations. As a result, net sales increased, and income also increased (with a reduced
operating loss).
<Therapy Segment>
Net sales were 304 million yen (compared with 146 million yen in the same period of the previous fiscal year). Operating
loss was 276 million yen (compared with operating loss of 184 million yen in the same period of the previous fiscal year).
The Group opened three new outlets for the pet salon, A-LOVE, which supports living with a dog under the concept Feeling
Happiness Together and Forever, in the latter half of the fiscal year, so that 24 salons have opened across Japan as of the end of
December 2018.
In addition to community-based events and campaigns using SNS, by holding training for salon managers across Japan andenhancing customer counseling, the Group has focused on the acquisition of customers.
As a result, net sales increased, however, prior investment in salon openings led to an operating loss.
<Global Segment>
Net sales were 1,437 million yen (compared with 2,555 million yen in the same period of the previous fiscal year).
Operating loss was 1,107 million yen (compared with operating loss of 1,229 million yen in the same period of the previous
fiscal year).
In China Business, which constitutes the core of the Global Segment, the Group continued its efforts to sell seminars on
Japanese style nursing care and promote sales activities to undertake contracts for the operation of long-term care facilities tobuild a local service infrastructure in China.
The Group started the operation of a nursing facility complex equipped with both In-home care functions and Residential
care functions in Zhongshan District at the center of Dalian in December 2018.
As a result of promoting efficient operation through the reorganization and disposition of local business companies in China,
net sales decreased while income increased (with a reduced operating loss).
<Other Segments>
Net sales were 223 million yen (compared with 163 million yen in the same period of the previous fiscal year). Operating
income was 173 million yen (compared with 150 million yen in the same period of the previous fiscal year).
Through goods management, data processing, lease and other businesses, the Group has been supporting the smooth
operations of the main businesses to raise the efficiency of indirect operations and improve the revenue of the entire Group.
Net sales increased by 60 million yen, and operating income grew by 23 million yen.
－

6 －

[Ref. Non-consolidated operating results]
Previous consolidated cumulative
third quarter(from April 1, 2017,
to December 31, 2017)(Million yen)

Current consolidated cumulative
third quarter(from April 1, 2018,
to December 31, 2018)(Million yen)

Year-on-year
Change (%)

182,926

184,983

1.1%

Operating income

4,480

6,226

39.0%

Ordinary income

3,640

5,064

39.1%

Net income

2,735

2,808

2.7%

Net sales－7 －(2) Details of financial position
At the end of the third quarter of the consolidated fiscal year under review, total assets decreased 1,115 million yen ascompared to the end of the previous consolidated fiscal year, to 189,124 million yen. This was attributable primarily to anincrease of 1,625 million yen in current assets due to a rise in cash and deposits and other items, which was not offset by adecrease of 2,741 million yen in non-current assets due to a fall in items such as goodwill.
Liabilities decreased 535 million yen as compared to the end of the previous consolidated fiscal year, to 152,047 million yen.
Major factors included an increase of 3,647 million yen in non-current liabilities, mainly as a result of growth in leaseobligations, which was not offset by a decrease of 4,183 million yen in current liabilities owing largely to a fall in short-termloans payable.
Net assets decreased 579 million yen from the end of the previous fiscal year, to 37,076 million yen.
(3) Information on the future outlook, including consolidated financial results forecasts
There is no change in the consolidated financial results forecasts that were announced on November 7, 2018 concerning the
fiscal year ending March 31, 2019.
As announced in the Notice of Structural Reform of Education Business released on January 31, 2019, the Groups will close
all of COCO Juku Junior’s main schools and satellite classes and a part of GABA LSs (former COCO Juku classes). The
influence of these closures on the consolidated financial results forecasts for the fiscal year ending March 31, 2019 is now
being investigated. If any revision is required, the Group will announce it as soon as possible.

－

8 －2. Quarterly consolidated financial statements and major notes(1) Quarterly consolidated balance sheets(Thousand yen)
Fiscal 2018
(As of March 31, 2018)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable—trade
Short-term investment securities
Merchandise and finished goods
Work in progress
Raw materials and supplies
Other
Less: allowance for doubtful accounts
Total current assets
Fixed assets
Property, plant and equipment
Buildings and structures—net
Lease assets—net
Other—net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investment and other asset
Other
Less: allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets
Liabilities
Current liabilities
Notes and accounts payable—trade
Short-term loans payable
Income taxes payable
Accrued expenses
Provision for bonuses
Provision for directors’ bonuses
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Lease obligations
Net defined benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities－

9 －Current consolidated third quarter(As of December 31, 2018)

18,447,925
33,072,792―
890,572
6,859
222,620
12,639,841(31,360)
65,249,251

19,307,937
33,569,274
172,074
483,438
41,644
195,016
13,223,642(118,025)
66,875,000

22,260,337
47,283,743
10,230,927
79,775,008

21,325,711
49,863,339
9,756,017
80,945,069

11,424,497
5,592,039
17,016,537

9,813,854
4,156,203
13,970,058

28,464,166(265,077)
28,199,088
124,990,634
190,239,886

27,587,365(253,039)
27,334,326
122,249,453
189,124,454

1,170,987
5,336,220
2,563,388
17,836,819
5,611,659
38,00027,902,439
60,459,515

980,042
1,229,774
804,464
19,282,829
2,920,615
3,450
31,054,678
56,275,854

22,007,024
53,596,996
7,524,273
2,446,418
6,549,487
92,124,200
152,583,715

21,388,929
56,817,308
7,793,835
2,478,676
7,293,248
95,771,998
152,047,853

(Thousand yen)
Fiscal 2018
(As of March 31, 2018)
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency exchange adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets

－

10 －

Current consolidated third quarter(As of December 31, 2018)

11,933,790
17,026,495
19,636,670(11,376,709)
37,220,245

11,933,790
17,009,418
18,866,525(11,177,336)
36,632,397

19,091

12,262(366,488)(509,191)(856,588)
560,694
731,819
37,656,170
190,239,886(279,115)(364,329)(631,182)
594,375
481,009
37,076,601
189,124,454

(2) Quarterly consolidated statements of income and comprehensive income(Quarterly consolidated statements of income)(Consolidated cumulative third quarter)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Rent income
Subsidy income
Foreign exchange gains
Equity method investment gain
Other
Total non-operating income
Non-operating expenses
Interest expenses
Rent expenses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investments in capital of subsidiaries
and associates
Gain on reversal of subscription rights to shares
Other
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Loss on sales of non-current assets
Loss on sales of investment securities
Loss on sales of investments in capital of subsidiaries
and associates
Other
Total extraordinary losses
Net income before income taxes
Income taxes—current
Income taxes—deferred
Total income taxes
Net income
Profit (loss) attributable to non-controlling interests
Profit attributable to owners of parent(Thousand yen)Previous consolidated cumulative Current consolidated cumulative
third quarter
third quarter(from April 1, 2017(from April 1, 2018
to December 31, 2017)
to December 31, 2018)
212,914,135
215,723,471
171,725,054
172,805,016
41,189,081
42,918,455
35,225,195
35,581,463
5,963,885
7,336,991－

11 －

114,093
159,531
34,876
101,471
48,714
277,601
736,288

107,395
149,219
15,236―40,477279,256
591,586

3,482,299
26,796
176,446
3,685,542
3,014,631

3,654,759
19,181
210,7443,884,685
4,043,892―

137,114

5,310
85
5,396

1,691
652
139,458

44,605―――63,643
1,787
149,705

1,118
45,723
2,974,304
1,440,915(38,456)
1,402,458
1,571,846(132,418)
1,704,265

1,035
521,3633,661,987
1,569,089
8,475
1,577,565
2,084,421(23,001)
2,107,423

305,191

(Quarterly consolidated statements of comprehensive income)(Consolidated cumulative third quarter)

Net income
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency exchange adjustments
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners ofparentComprehensive income attributable to non-controllinginterests(Thousand yen)Previous consolidated cumulative Current consolidated cumulative
third quarter
third quarter(from April 1, 2017(from April 1, 2018
to December 31, 2017)
to December 31, 2018)
1,571,846
2,084,421

－

12 －

4,054
(47,486)
153,020
109,588
1,681,434(6,859)(14,333)
144,862
123,668
2,208,090

1,810,841

2,243,955(129,407)(35,864)(3) Notes to quarterly consolidated financial statements(Notes on the premise of a going concern)
There are no applicable matters.
(Notes on significant fluctuation in the amount of shareholders’ equity)
There are no applicable matters.
(Significant subsequent event)
Implementation of structural reform of the Education BusinessIn the meeting of the Board of Directors held on January 31, 2019, it was resolved to undertake a new structural reform of
the Education Business to improve the corporate value and enhance the overall profitability of the Group.
1. Background of implementation of the new structural reform
To reduce the institutional risk associated with the revisions of the medical and long-term care insurance systems, the Groupmade GABA Corporation, which has operated one-to-one English conversation schools, one of its subsidiaries to enter the
language education market. Since then, the Group has focused on the providing consistent language learning opportunities tomeet the various needs of adults and children, including the development of COCO Juku and COCO Juku Junior for group
lessons, provision of overseas study support services and operations of overseas language schools SELC and NYU School ofProfessional Studies Tokyo.
Last April, the Group reorganized lessons for adults into Gaba one-to-one English conversation lessons (Gaba) and lessons
for children into COCO Juku Junior, as a move to maximize the business profitability. It has sought to improve the profitabilityof the business with this new school system.
However, although the conventional Gaba learning studios (LSs) have seen strong increases in student numbers, some of theformer COCO Juku classes that have turned into the new Gaba have not been seen any operational effects from the reform andhave continued to struggle.
Therefore, in order to promote further structural reform this time, it was decided to close all the COCO Juku Junior’s main
schools and satellite classes and a part of Gaba LSs (former COCO Juku classes).
2. Details of the structural reform(1) Closure of classes(i) Closure of all of COCO Juku Junior’s 72 main school classes and all 101 satellite classes* Operation of franchise classes will be continued(ii) A part of Gaba LSs (among 72 LSs established in COCO Juku Junior, 51 LSs will be closed)■LSs to be closed (51 LSs in total)
Aomori LS, Hachinohe LS, Akita LS, Koriyama LS, Yamagata LS, Niigata LS, Nagaoka LS, Toyama LS, Fukui LS,
Shinjuku L Tower LS, Ikebukuro Higashiguchi LS, Hachioji LS Annex, Kichijoji LS Annex, Tachikawa LS Annex,
Ochanomizu LS, Kinshicho LS Annex, Osaki LS, Aoyama LS, Kofu LS, Omiya LS Annex, Chiba LS Annex, Kashiwa LS
Annex, Matsudo LS, Kawasaki LS Annex, Yokohama LS Annex, Machida LS Annex, Hiratsuka LS, Fujisawa LS Annex,
Kamiooka LS, Hamamatsu LS, Nagoya LS Annex, Yokkaichi LS, Umeda LS Annex, Kyobashi LS, Sakai Higashi LS, Nara
LS, Sannomiya LS, Kusatsu LS, Tokuyama LS, Matsue LS, Tottori LS, Matsuyama LS, Kochi LS, Tokushima LS,
Fukuoka LS Annex, Saga LS, Nagasaki LS, Oita LS, Kumamoto LS, Miyazaki LS, and Naha LS■LSs to be continued (21 LSs in total)
JR Tower Sapporo LS, Sendai LS, Morioka Malios LS, Nagano LS, Matsumoto LS, Kanazawa LS, Minami-Koshigaya LS,
Kawagoe LS, Takasaki LS, Utsunomiya LS, Funabashi LS, Mito LS, Tsukuba LS, Shizuoka LS, Gifu LS, Wakayama LS,
Kyoto LS Annex, Okayama LS, Hiroshima LS, Takamatsu LS, and Kagoshima LS(2) Employees of closed classes
For the employees of the relevant classes, the Group will in principle secure their employment.
3. Schedule(1) Resolution date of the Board of Directors: January 31, 2019(2) Implementation date: March 31, 2019
4. Future forecast
At present, the Group has been scrutinizing the costs for the closure of the classes.

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13 －