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

1. Consolidated financial results for the first three quarters ended December 31, 2015 (April 1, 2015 – December
31, 2015)(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

Nine months ended
December 31, 2015
Nine months ended
December 31, 2014
(Note) Comprehensive income:%Million yen%

Million yen%

Million yen%

205,290

0.5

(112)

—

(1,960)—(2,844)—204,307

(0.0)

4,795

(5.3)

3,376

(14.5)

1,336(41.9)

Nine months ended December 31, 2015: -2,714 million yen (-%);
Nine months ended December 31, 2014: 1,431 million yen (-34.7%)

Net Income per Share

Diluted Net Income per Share
Yen

Nine months ended
December 31, 2015
Nine months ended
December 31, 2014

Yen

(44.22)

—

19.18

—

(2) Consolidated financial position
Total Assets

Net Assets
Million yen

As of December 31, 2015
As of March 31, 2015
Reference: Shareholders’ equity:

Equity Ratio
Million yen

191,640
184,554%

51,931
56,68526.5
30.5

As of September 30, 2015: 52,077 million yen; As of March 31, 2015: 56,333 million yen

2. Dividends
1Q-endYen——

Year ended March 31, 2015
Year ending March 31, 2016
Year ending March 31, 2016
(forecast)

Annual dividends
3Q-end2Q-endYen

Year-end

Yen

10.00
11.00

Annual
Yen

Yen

—

10.00

20.00

—

11.00

22.00

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

3. Forecast of consolidated financial results for the year ending March 31, 2016 (April 1, 2015 – March 31, 2016)(Percentage figures represent changes from same period of previous year.)

Net Sales

Operating Income

Million yen

Full year

275,500%

1.3

Million yen%

Million yen

200(96.1)(2,400)(Note) Revisions to most recently announced financial results forecast: Yes

Profit attributable to Net Income
owners of parent
per Share

Ordinary Income%—

Million yen(3,500)%—Yen(54.45)

* Notes(1) Significant changes in subsidiaries during the term (Changes in specified subsidiaries resulting in changes in scope of
consolidation): None
(2) Application of specific accounting for preparing the quarterly consolidated financial statements: None
(3) Changes in accounting policies, changes of accounting estimates and restatement
1) Changes in accounting policies due to revisions of accounting standards, etc.: Yes
2) Changes in accounting policies due to reasons other than those stated in 1): None
3) Changes in accounting estimates: None
4) Restatement: None
(Note) For details, please refer to page 6, (3) Changes in accounting policies, accounting estimates, and restatement of 2. Summary information(notes) of Attached Document.

(4) Number of shares outstanding (common stock)1) Number of shares issued and outstanding (including treasury stock)
As of September 30, 2015:
73,017,952
As of March 31, 2015:
73,017,952
2) Number of treasury stock
As of September 30, 2015:
8,825,324
As of March 31, 2015:
7,521,206
3) Average number of shares issued and outstanding in each period (quarterly consolidated cumulative period)
As of September 30, 2015:
64,376,251
As of September 30, 2014:
69,883,839* Implementation status of quarterly review procedures
The quarterly review procedure based on the Financial Instruments and Exchange Act does not apply to these quarterly
financial statements, and the procedure based on the Financial Instruments and Exchange Act is in operation as of therelease of these quarterly financial statements.
* Explanation concerning the appropriate use of financial result forecasts and other special notes(Forward looking statements)
The above forecasts are based on information Nichii Gakkan had as of the time this report was prepared and on certain
assumptions judged to be reasonable. Various factors may cause actual results to differ significantly from forecasts.
Please refer to the disclaimers, provided under “(3) Information on the future outlook, including consolidated financial
results forecasts” of “1. Qualitative information on quarterly financial results” on page 5 of the quarterly consolidated
financial results (attached document), regarding the assumptions upon which forecasts are based and the use of forecasts.

Table of Contents for the Attached Document
1. 1. Qualitative information on quarterly financial results ································································· 2(1) Details of business results ································································································· 2(2) Details of financial position ······························································································· 6(3) Information on the future outlook, including consolidated financial results forecasts ···························· 6
2. Summary information (notes) ································································································ 7(1) Significant changes to subsidiaries during the term ···································································· 7(2) Application of specific accounting for preparing the quarterly consolidated financial statements ·············· 7(3) Changes in accounting policies, accounting estimates and restatement ············································· 7
3. Quarterly consolidated financial statements ················································································ 8(1) Quarterly consolidated balance sheets ··················································································· 8(2) Quarterly consolidated statements of income and comprehensive income ········································· 9
Quarterly consolidated statements of income
Nine months ended December 31 ······················································································ 9
Quarterly consolidated statements of comprehensive income
Nine months ended December 31 ····················································································· 10(3) Notes to quarterly consolidated financial statements ································································· 11
Notes on the premise of a going concern ··············································································· 11
Notes on significant fluctuation in the amount of shareholders’ equity ············································ 11

11. Qualitative information on quarterly financial results(1) Details of business results
In the first nine months of the fiscal year ending March 31, 2016, the Japanese economy remained on a modest
recovery path amidst continued improvement in corporate performance and the employment situation. With low
birth rates and an aging population leading to decline in the working-age population, a government-appointed
panel to promote “a society where all 100 million people are active” met in November 2015 to draw up measuresdesigned to encourage women, the elderly and foreigners to join the work force and to discuss enhancing social
security, including support for childrearing and healthcare and nursing care services, with the aim of realizing
further economic growth and a sustainable society.
In this business environment, the Nichii Gakkan Group promoted its medium-term management strategy that
focuses on the expansion of four business areas and globalization, with a view to breaking away from institutionalrisks and achieving stable long-term growth. Alongside promotion of this strategy, the Group has also increased its
capability to execute strategies by restructuring organizations, the business operating structure, etc. and innovating
its corporate structure.
In the Medical Support and Long-term Care Segments, its two mainstay businesses, the Group worked tostrengthen human resource capabilities, with a view to achieving the expansion in service supply capacity required
to get back on a growth path. As a result of transformation of the “from education to job placement” businessmodel, adopted since the Group’s foundation, into a more efficient human resources development scheme,
numbers of students attending courses exceeded year-ago levels in both the Medical Support and Long-term Care
Segments. At the same time, the Group worked to acquire new staff, prevent existing staff from leaving andimprove the retention rate by enhancing its career path program and welfare program.
In the Education and Childcare Segments, its strategic businesses, the Group promoted enhancement of services tomeet demand for practical English and expansion of child care facilities in response to the Support System forChildren and Child Rearing, aiming to turn these two businesses into new engines of earnings growth comparable
to its two mainstay businesses in Japan. Alongside business expansion, the Group also promoted the establishmentof a sound business operating structure under which management and supervisory functions pervade theorganization at every level, to strengthen compliance and management functions.
In the China business, which is central to its globalization strategy, the Group worked to construct the Nichii
Group’s unique business model, focusing on developing the home-care services market and producing humanresources, in response to the rapid aging of the population amid extremely low birth rates. The Group teamed up
with local community service providers to promote the training of managerial-level human resources, IT systems,
the governance structure, etc.in preparation for the rollout of services in mainland China. In China, customs andculture are different from those in Japan and it, therefore, takes time to construct unified operating systems linking
service providers. However, the Group plans to create social value in China by training human resources androlling out services promptly and will then translate this into expansion of earnings in China.
Looking at the operating results, overall sales increased, driven by the Medical Support Segment and the
Education and Childcare Segments. Income declined, reflecting the impact of a reduction in long-term care basic
rates in the revised compensation for long-term care workers in the Long-term Care Segment, and a decline in thenumber of users of home-care services due to time taken to hire staff.
In the first three quarters under review, the Group posted net sales of 205,290 million yen (compared with 204,307
million yen in the first three quarters of the previous fiscal year), an operating loss of 112 million yen (comparedwith operating income of 4,795 million yen in the first three quarters of the previous fiscal year), and an ordinary
loss of 1,960 million yen (compared with ordinary income of 3,376 million yen in the first three quarters of theprevious fiscal year). The Group recorded a loss attributable to owners of parent of 2,844 million yen (comparedwith profit attributable to owners of parent of 1,336 million yen in the first three quarters of the previous fiscal
year).

2

Results by business segment are as follows:
From the first quarter of this fiscal year, courses for medical office work and training for new care workers,
qualification-type courses which were in the Education Segment, are incorporated into the Medical Support
Segment and the Long-Term Care Segment, respectively. The childcare business is reported as a separate segment
called the Childcare Segment. The results of the newly consolidated Chinese businesses’ services that existed
before those companies began to collaborate with the Company are included in the Other Businesses.
To compare the results in the first three quarters of the fiscal year under review and the results in the first threequarters of the previous fiscal year in the following results by business segment, the business segments for theprevious fiscal year have been reclassified, as described above.

3

<Medical Support Segment>
The Group strove to enhance services, such as seminars for managers of medical institutions ahead of the revisionof medical fees in April and home rehabilitation support for discharged patients through collaboration with theLong-term Care Segment, and also focused on sales activities. As a result, the Group won new contracts andexpanded operations related to medical institutions that were already under contract, and sales in this segment rose.
However, profits declined due to upfront expenses related to the start of operations at hospitals with which newcontracts were concluded and higher personnel expenses associated with turning contracted staff into regular
employees to create a stable human resources base.
Net sales for the segment came to 81,581 million yen for the first three quarters of the fiscal year under review(compared with 81,035 million yen posted in the same period of the previous fiscal year). Operating income forthe segment was 5,743 million yen (compared with 5,988 million yen posted in the same period of the previous
fiscal year).
<Long-term Care Segment>
The Group focused on strengthening its personnel supply system to achieve recovery in the number of service
users. Largely due to changes in the human resources development scheme, numbers of students attending
qualification courses were above year-ago levels. However, the process from course attendance to work placementtakes time. While these changes will lead to the acquisition of workers in the future, in the first nine months underreview the Group was unable to secure sufficient human resources and the number of users of home-care services
declined, resulting in decreased sales and profits. The Group will continue working to prevent care workers fromleaving through improvements to internal programs, and will also keep up efforts to acquire users with moderate
to severe conditions through collaboration with the Medical Support Segment, acquire premiums related to
specialist care, including dementia care, and expand short stays at specific facilities.
Net sales for the segment came to 107,692 million yen for the first three quarters of the fiscal year under review(compared with 109,441 million yen posted in the same period of the previous fiscal year). Operating income forthe segment was 4,820 million yen (compared with 9,389 million yen posted in the same period of the previous
fiscal year).
<Health Care Segment>
In Nichii Life housekeeping services, which are in growing demand due to greater participation of women insociety and an increase in elderly households, the Group worked to acquire new customers by strengthening
collaboration with the Long-term Care Segment and conducting strategic campaigns. In private brand productsales, the Group conducted aggressive sales activities targeting long-term care institutions and medical institutions
and sought to expand sales channels. As a result, both Nichii Life services and private brand product sales showeddouble-digit sales growth. However, segment sales were down due to the downscaling of helper dispatch services.
Meanwhile, profits increased due to lower SG&A expenses associated with the downscaling of helper dispatch
services.
Net sales for the segment came to 2,914 million yen for the first three quarters of the fiscal year under review(compared with 3,026 million yen posted in the same period of the previous fiscal year). Operating income for thesegment was 446 million yen (compared with 198 million yen posted in the same period of the previous fiscal
year).
<Education Segment>
Amidst the promotion of English education reform which emphasizes conversations skills with an eye on 2020,
the Group harnessed its management resources to provide services such as support services for overseas students
and practical language learning opportunities and also endeavored to improve lesson quality and increasecustomer satisfaction by improving the skills of teachers. As a result, the number of students increased, largely
thanks to COCO Juku Junior, and sales rose. On the profit front, the operating loss narrowed as a result of lower
advertising expenses and lower SG&A expenses as a result of organizational changes.
Net sales for the Education Business segment totaled 9,559 million yen (compared with 9,078 million yen
posted in the first three quarters of the previous fiscal year). Operating loss for the segment was 3,791 million yen(compared with a loss of 4,349 million yen posted in the first three quarters of the previous fiscal year).

4<Childcare Segment>
The Group focused on sales activities for newly opened facilities, especially registered child care centers, to help
increase the availability of child care in the community. The Group also promoted the development of a healthyliving environment and reinforcement of the management and operating structure to reassure parents leaving theirchildren at its child care centers. As a result, the number of children attending childcare centers increased, driven
up by new centers that opened during the first quarter, and sales increased. Profits declined due to upfront costs
associated the establishment of new centers.
Net sales for the Childcare Segment totaled 2,290 million yen (compared with 1,475 million yen posted in thefirst three quarters of the previous fiscal year). Operating loss for the segment was 687 million yen (comparedwith a loss of 521 million yen posted in the first three quarters of the previous fiscal year).
<Other Businesses>
The results in the Other Businesses include the operating results of pre-existing services at Chinese local
community service providers. The number of consolidated service providers increased from the six companies thatwere consolidated by the end of the second quarter of the fiscal year under review to eight companies and one
school, an increase of two schools and one school corporation (hereinafter “school”), on the statements of income,and nine companies and one school, an increase of three companies and one school, on the balance sheets.
Net sales for the Other Businesses segment amounted to 1,251 million yen (compared with 250 million yen
posted in the first three quarters of the previous fiscal year). Operating loss for the segment was 41 million yen(compared with an operating income of 379 million yen posted in the first three quarters of the previous fiscal
year).

(2) Details of financial position
Total assets at the end of the first three quarters under review increased 7,085 million yen from the end of theprevious fiscal year, to 191,640 million yen. The main reasons for the increase were a 4,092 million yen rise incurrent assets, mainly reflecting an increase in cash and deposits, and a 2,993 million yen increase in fixed assets,
primarily due to an increase in lease assets. Liabilities increased 11,839 million yen from the end of the previous
fiscal year, to 139,709 million yen. The key factors contributing to this increase were a 9,340 million yen rise incurrent liabilities, mainly reflecting an increase in short-term loans payable, and a 2,499 million yen increase in
non-current liabilities, primarily attributable to an increase in lease obligations.Net assets decreased 4,753 million
yen from the end of the previous fiscal year, to 51,931 million yen.
(3) Information on the future outlook, including consolidated financial results forecasts
There is no change in the consolidated financial results forecast for the year ending March 31, 2016, which was
released on November 10, 2015.

5

2. Summary information (notes)(1) Significant changes to subsidiaries during the term
There are no applicable matters.

(2) Application of specific accounting for preparing the quarterly consolidated financial statements
There are no applicable matters.
(3) Changes in accounting policies, accounting estimates and restatement
Changes in accounting policies(Application of Accounting Standard for Business Combinations)
From the first quarter of this fiscal year, the Company is applying the Accounting Standard for Business
Combinations (ASBJ Statement No. 21; September 13, 2013), the Accounting Standard for Consolidated
Financial Statements (ASBJ Statement 22; September 13, 2013), and the Accounting Standard for Business
Divestitures (ASBJ Statement No. 7; September 13, 2013). Under the newly applied accounting standards, theCompany shall post a gain or loss on change in the Company’s equity in subsidiaries that the Company continues
to control in capital surplus and shall post expenses related to acquisitions as expenses in the consolidated fiscal
year in which they are incurred. Any review of the allocation of the acquisition cost in provisional accounting of abusiness combination from the beginning of the first quarter of this fiscal year shall be reflected in quarterly
consolidated financial statements for the quarter in which the date of the business combination belongs. The
Company also changed the presentation of the net income as well as the presentation from the minority interests
to the non-controlling interests. To reflect these changes in presentation, the quarterly consolidated financial
statements for the first half of the previous fiscal year and the consolidated financial statements for the previous
fiscal year have been reorganized.
The application of the Accounting Standard for Business Combinations, etc. follows the transitional treatment set
forth in Paragraph 58-2 (4) of the Accounting Standard for Business Combinations, Paragraph 44-5 (4) of the
Accounting Standard for Consolidated Financial Statements, and Paragraph 57-4 (4) of the Accounting Standard
for Business Divestitures, and the accounting standards are applied from the beginning of the first quarter of thisfiscal year.
The application of the accounting standards has no impact on the Group’s earnings.

6

3. Quarterly consolidated financial statements(1) Quarterly consolidated balance sheets(Thousand yen)
Fiscal 2015
(As of March 31, 2015)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable—trade
Short-term investment securities
Merchandise and finished goods
Work in progress
Raw materials and supplies
Deferred tax assets
Other
Less: allowance for doubtful accounts
Total current assets
Fixed assets
Property, plant and equipment
Buildings and structures—net
Lease assets—net
Other—net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investment and other asset
Other
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
Provision for directors’ retirement benefits
Net defined benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities

7

Q3 of Fiscal 2016
(As of December 31, 2015)

9,676,856
32,967,460
2,699,192
536,475
36,544
219,948
2,427,270
11,157,583(27,572)
59,693,759

13,971,855
32,587,713
2,499,256
786,080
57,164
208,165
2,704,177
10,998,581(27,058)
63,785,936

28,393,717
34,633,198
9,955,257
72,982,173

27,466,413
39,126,852
9,570,847
76,164,113

16,584,638
4,182,685
20,767,324

16,621,686
4,421,225
21,042,911

31,507,625(396,100)
31,111,525
124,861,023
184,554,782

31,029,784(382,278)
30,647,505
127,854,531
191,640,467

899,695
1,943,712
1,024,196
15,858,530
5,058,440
39,70029,670,350
54,494,625

854,121
12,615,842
630,231
19,337,535
2,403,839
6,450
27,987,059
63,835,078

23,987,773
36,165,228
166,513
6,209,067
2,242,411
4,603,937
73,374,932
127,869,558

21,765,162
39,979,288－
6,397,848
2,286,287
5,021,699
75,450,285
135,508,267

(Thousand yen)
Fiscal 2015
(As of March 31, 2015)
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeSubscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets

8

Q3 of Fiscal 2016
(As of December 31, 2015)

11,933,790
17,354,214
37,399,513(9,921,957)
56,765,561

11,933,790
17,354,214
33,007,824(11,377,465)
50,918,363

21,47923,86769,069(522,886)

173,129(413,290)(432,337)(216,293)－
352,000
56,685,224
184,554,782

502,221727,073
51,931,365
191,640,467

(2) Quarterly consolidated statements of income and comprehensive income(Quarterly consolidated statements of income)(Nine months ended December 31)(Thousand yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income (loss)
Non-operating income
Interest income
Rent income
Subsidy income
Share of profit of entities accounted for using
equity method
Other
Total non-operating income
Non-operating expenses
Interest expenses
Rent expenses
Other
Total non-operating expenses
Ordinary income (loss)
Extraordinary losses
Loss on retirement of property, plant andequipment, net
Loss on sales of property, plant and equipment,
net
Share-based compensation expenses
Impairment loss
Other
Total extraordinary losses
Income (loss) before income taxes and minority
interests
Income taxes—current
Income taxes—deferred
Total income taxes
Net income (loss)
Profit (loss) attributable to non-controlling interests
Profit (loss) attributable to owners of parent

Fiscal 2015
(from April 1, 2014
to December 31, 2014)
204,307,538
163,157,149
41,150,389
36,355,014
4,795,374

Fiscal 2016
(from April 1, 2015
to December 31, 2015)
205,290,504
168,182,281
37,108,223
37,221,215(112,992)

118,425
166,121
71,272125,932
173,601
273,059

9,431

38,443

317,727
682,979

281,649
892,686

2,019,133
47,595
35,1172,101,846
3,376,508

2,544,189
44,299151,769
2,740,259(1,960,565)

16,432

19,502

2,134

558

－
33,7405,522
57,828360,90333,171
9,724
423,860

3,318,679(2,384,426)

1,108,440
847,901
1,956,341
1,362,338
25,4191,336,918

959,040(419,247)
539,793(2,924,219)(80,206)(2,844,012)

9

(Quarterly consolidated statements of comprehensive income)(Nine months ended December 31)(Thousand yen)

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

Fiscal 2015
(from April 1, 2014
to December 31, 2014)
1,362,338

Fiscal 2016
(from April 1, 2015
to December 31, 2015)(2,924,219)(4,553)

2,388

11,152

97,63962,104

109,596

68,703
1,431,041

209,624(2,714,595)

1,405,622
25,419(2,627,968)(86,626)

10

(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.

11