Financial Results for the First Half of the Year Ending March 31, 2017 (J-GAAP)
November 9, 2016
Name of listed company: NICHIIGAKKAN CO., LTD.
Listed on: Tokyo Stock Exchange 1st Section
Securities code:
9792
URL:
http://www.nichiigakkan.co.jp
Representative:
Akihiko Terada, Chairman, President and CEO
Contact:
Nobusuke Mori, Executive Vice President
TEL: 03-3291-2121
Scheduled date for filing the quarterly financial report: November 11, 2016
Scheduled date to start dividends distribution:
December 6, 2016
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 half ended September 30, 2016 (April 1, 2016 – September 30, 2016)(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

Six months ended
September 30, 2016
Six months ended
September 30, 2015
(Note) Comprehensive income:%Million yen%

Million yen%

Million yen%

137,751

0.9

815

—

(1,110)—(1,240)—136,575

0.4

(473)

—

(1,701)―(2,296)—Six months ended September 30, 2016: -1,547 million yen (― %)Six months ended September 30, 2015: -1,981 million yen (― %)Net Income per Share

Diluted Net Income per ShareYen

Six months ended
September 30, 2016
Six months ended
September 30, 2015

Yen

(19.32)—(35.68)—(2) Consolidated financial position
Total Assets

Net Assets
Million yen

As of September 30, 2016
As of March 31, 2016
Reference: Shareholders’ equity

Equity Ratio
Million yen

188,516
184,170%

36,344
38,101

18.6
20.0

As of September 30, 2016: 35,083 million yen ; As of March 31, 2016: 36,868 million yen

2. Dividends
1Q-endYen——

Year ended March 31, 2016
Year ending March 31, 2017
Year ending March 31, 2017
(forecast)

Annual dividends
3Q-end2Q-endYen

Year-end

Yen

11.00
11.00

Annual
Yen

Yen

—

11.00

22.00

—

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, 2017 (April 1, 2016 – March 31, 2017)(Percentage figures represent changes from same period of previous year.)

Net Sales

Operating Income

Million yen

Full year

282,000%

3.1

Million yen

4,800

%

―

(Note) Revisions to most recently announced financial results forecast: Yes

Profit attributable to Net Income
owners of parent
per Share

Ordinary Income
Million yen

1,300

%

—

Million yen

500

%

—

Yen

7.79

* 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)
As of September 30, 2016:
73,017,952
As of March 31, 2016:
73,017,952
2) Number of treasury stock
As of September 30, 2016:
8,825,112
As of March 31, 2016:
8,825,918
3) Average number of shares issued and outstanding in each period (quarterly consolidated cumulative period)
As of September 30, 2016
64,192,337
As of September 30, 2015:
64,376,251* 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 the release 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 theassumptions upon which forecasts are based and the use of forecasts.

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

2(1) Details of business results………………………………………………………………………………………………

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

5(3) Information on the future outlook, including consolidated financial results forecasts…………………………………

5

2. Summary information (notes)………………………………………………………………………………………………

6(1) Significant changes to subsidiaries during the term……………………………………………………………………

6(2) Application of specific accounting for preparing the quarterly consolidated financial statements…………………….

6(3) Changes in accounting policies, changes of accounting estimates and restatement…………………………………...

6

3. Quarterly consolidated financial Statements……………………………………………………………………………….

7(1) Quarterly consolidated balance sheets…………………………………………………………………………………

7(2) Quarterly consolidated statements of income and comprehensive income……………………………………………

9

Quarterly consolidated statements of income
Six months ended September 30………………………………………………………………………………..

9

Quarterly consolidated statements of comprehensive income
Six months ended September 30………………………………………………………………………………..

10(3) Notes to quarterly consolidated financial statements………………………………………………………………….

10

Notes on the premise of a going concern…………………………………………………………………………….

10

Notes on significant fluctuation in the amount of shareholders’ equity……………………………………………..

10

Significant subsequent events………………………………………………………………………………………..

10

1

1. Qualitative information on quarterly financial results
1. Qualitative information on quarterly financial results(1) Details of business results
During the first six months ended September 30, 2016, the Japanese economy remained on a modest recovery track
against the background of improved employment and income conditions. However, the outlook for the economy
became uncertain, chiefly reflecting the slowdown of emerging economies, increased global economic uncertainly
due to the Brexit and stagnant corporate earnings.
With the advent of a super-aging society and a shrinking population, Japan has arrived at a chronic labor shortage.
The administration led by Prime Minister Shinzo Abe is about to insert a scalpel into the structural problem known
as productivity decline caused by the decreasing workforce through a labor-force participation ratio increase basedon reforms such as the correction of different wages for identical labor and long working hours, through policies it
calls the “promotion of dynamic engagement of all citizens” and “reforms of working styles.”Personnel procurement has also been an issue of utmost importance in the fields of long-term care and child care
where the Nichii Gakkan Group operates. A shortage in the volume of services provided attributable to a serious
shortage of competent individuals has been causing people to leave their jobs in order to take care of family
members and has led to an increase in the number of children on waiting lists for admission to kindergartens. Thissituation has been a barrier to labor productivity enhancement across all industries.
In this business environment, the Nichii Gakkan Group undertook its operations to meet rapidly changing social
requirements, achieve corporate growth and solve problems in society based on its management philosophy of“contributing to the enhancement of human life through the development of our business.”
The Group aims to be a team of excellent companies whose presence is felt worldwide, adopting as its management
vision the business triangle of core businesses (the Medical Support, Long-term Care and Child Care Segments)
performed with sincerity and pride, strategic businesses (the Education and Health Care Segments) that support
greater profit returns to all stakeholders, and globalization businesses (overseas businesses in China and othermarkets), undertaken with a wide range of vision, dreams and passion.
The Group is building a stable and highly profitable business base that is unaffected by system trends, and isstrengthening its future-oriented business base with international contributions in mind by expanding a businesslineup that covers social contribution, profit returns and future orientation without omission.
In terms of reforms in the management execution structure, the Group worked to revitalize its entire organization
through the executive officer system and took exhaustive actions to speed up business execution by 28 executive
officers assigned to take charge of the respective businesses and regions and to implement community-based
strategies. Furthermore, the Group made efforts to bolster the business execution and strategic implementation
capabilities of its respective branches, other offices and business bases.
Looking at operating results, the Medical Support and Long-term Care Segments weakened as delays occurred in
the acquisition of contracts with medical institutions and long-term care service users due to a shortage of capable
individuals. Nonetheless, sales grew, backed by the Child Care and China Business Segments, which remained
strong. Income also improved as a result of administrative operation reviews at the head office, branches and otheroffices and the advancement of promotional activities focused on cost-effectiveness.
The Group will strive to build a solid personnel base and secure stable income by acquiring and retaining capable
individuals who will be its service providers with the maximum use of its original personnel training scheme
dubbed “from education to job placement.”
In the first six months under review, the Group posted net sales of 137,751 million yen (compared with net sales of
136,575 million yen in the first half of the previous fiscal year), operating income of 815 million yen (comparedwith an operating loss of 473 million yen in the first half of the previous fiscal year), an ordinary loss of 1,110
million yen (compared with an ordinary loss of 1,701 million yen in the first half of the previous fiscal year) and a
net loss attributable to owners of parent of 1,240 million yen (compared with a net loss attributable to owners ofparent of 2,296 million yen in the first half of the previous fiscal year).

Results by business segment are as follows:
From the first quarter of this fiscal year, the China business—the results of which were originally recorded in the
Medical Support Segment, Long-term Care Segment, Healthcare Segment, Child Care Segment, and Other—ispresented separately as the China Business Segment.
2Child care courses (babysitting courses, etc.), which previously were included in the Education System, are now
included in the Child Care Segment.
To compare the results in the first half under review and the results in the first half of the previous fiscal year in thefollowing results by business segment, the business segments for the previous fiscal year have been reclassified, as
described above.
<Medical Support Segment>
In the Medical Support Segment, the Group worked to expand businesses with a focus on the proposal-based sales ofservices with high added value, such as diversified management support to medical institutions that had already been
under contracts, aiming to increase revenues through personnel retention. Personnel expenses grew due to reasons
including the improved treatment of employees. However, the Group attempted to improve its earnings structure tosecure appropriate income from new contracts and their existing counterparts. The number of students in courses for
medical office work rose temporarily as a result of a special campaign. However, their number showed weakness
compared with the first six months of the previous fiscal year.
As a result, the Group focused on approaching medical institutions that had already been under contracts. Both sales
and income for the Segment decreased year on year, partly owing to the Group’s switch to the policy of prioritizing
income.
Net sales for the segment came to 54,065 million yen for the first half under review (compared with 54,395 million
yen posted in the same period of the previous fiscal year). Operating income for the segment was 3,641 million yen(3,831 million yen in the same period of the previous fiscal year).
<Long-term Care Segment>
In the Long-term Care Segment, residential care services, including those at newly established facilities, achieved
strong results. However, user acquisition for home care services produced undesirable results due to the inability toestablish a system for supplying sufficient personnel able to meet growing demand. The Group worked to procure
personnel by stepping up its personnel training scheme, upgraded systems for improving skills and measures forbettering treatment, and focused on promotional activities for training programs aimed at new care workers.
Personnel procurement is taking some time, but sales shifted in the direction of prioritizing the service user structure
focusing on users with severe conditions, signs of year-on-year sales growth began to appear, and the Segment began
to shift toward a recovery track. Furthermore, income levels began recovering for both home and residential careservices as a result of personnel allocation and shift management reviews.
As a result, both sales and income for the Segment rose year on year, supported by a steady increase in the number ofresidential care service users, even though the number of home care service users failed to grow.
Net sales for the segment came to 71,961 million yen for the first half under review (compared with 71,670 million
yen in the same period of the previous fiscal year). Operating income for the segment was 4,935 million yen (3,383
million yen in the same period of the previous fiscal year).
<Health Care Segment>
In the Health Care Segment, the Group bolstered the lineups of Nichii Life housekeeping services and private brandproducts for sale to meet diverse service demands caused by lifestyle changes, and worked to expand the customer
base and improve the level of customer satisfaction.
As a result, income for the Segment rose against the background of the expansion of the Nichii Life customer baseand steady user growth, even though sales for the Segment decreased due to food service discontinuation andcutbacks in helper dispatch services.
Sales in this segment came to 1,790 million yen in the first half under review (compared with 1,890 million yen in
the first half of the previous fiscal year), and operating income was 218 million yen (compared with 132 million yen
in the first half of the previous fiscal year).
<Education Segment>
In the Education Segment, the need for new language learning opportunities for training employees able to workoutside Japan has been rising, as demonstrated by developments such as foreign language activities to be madecompulsory for elementary school pupils in Grade Three and higher in fiscal 2020 and advanced language skill
evaluation through university entrance examination reforms. The Group began offering online language lessons
3making the most of its network in April 2016, advanced the maximization of learning outcomes through the
integration of online and school lessons, and focused on acquiring more students. The Group succeeded in acquiring
students efficiently and effectively through exhaustive promotional activities, including events taking advantage of its
nationwide network of community-based schools, in which cost-effectiveness was emphasized.
As a result, sales for the Segment increased with steady rises in renewal ratios at schools for adults and children, andin the number of new students. Operating loss for the Segment decreased, attributable to the sales growth andimproved advertising efficiency.
Net sales for the Education Segment totaled 6,347 million yen (compared with 6,346 million yen in the first half ofthe previous fiscal year). Operating loss for the segment was 2,405 million yen (compared with an operating loss of
2,862 million yen in the first half of the previous fiscal year).
<Child Care Segment>
In the Child Care Segment, the Group aggressively expanded its business bases centered on registered child carecenters in a bid to reduce the number of children on the waiting lists for admission to kindergartens and promote thedynamic engagement of women. Furthermore, the Group focused on proposing the establishment of child care centers
within hospitals and company offices and worked to expand the lineup of its services and the organization for
supplying the services in order to meet a range of child care requirements. The Group was able to strengthen
operations within the Tokyo metropolitan area where demand remains high with the acquisition in July 2016 of allshares in Sawayaka Hoiku, which provides services within the area.
As a result, sales for the Segment increased 72% year on year, contributing to revenue expansion for the Group.
However, income for the Segment decreased under the adverse effects of aggressive investment in operations forestablishing new child care centers.
Net sales for the Child Care Segment totaled 2,557 million yen (compared with 1,486 million yen in the first half ofthe previous fiscal year). The operating loss for the segment was 497 million yen (compared with a loss of 460 million
yen in the first half of the previous fiscal year).
<China Business Segment>
The Group’s organization for providing services in China expanded to 16 companies and five school corporations in
15 cities with the addition of five regional operating companies and four school corporations to the scope of
consolidation in the first six months under review. These companies and corporations steadily prepared a base fortraining personnel in a bid to achieve the spread of independent long-term care in the respective communities. At thesame time, they worked to dig up service requirements with a multi-angled approach.
The training of workers who assume the responsibility for long-term care is also an urgent issue in China. It is crucial
to improve their positions as specialists.
The Group will promote personnel exchanges between Japan and China and work to achieve the spread of soundlong-term care globally in order to establish the social status of long-term care workers and help them to achieve theirambitions with improved employment qualifications.
Net sales for this segment amounted to 949 million yen (compared with 712 million yen in the first half of theprevious fiscal year). Operating loss for the segment was 722 million yen (compared with a loss of 410 million yen in
the first half of the previous fiscal year).
<Other Businesses>
In Other Businesses, the Group made efforts to increase synergy among businesses and companies and to improve
revenues toward the goal of stepping up its management capabilities both in Japan and overseas.
Net sales for this segment stood at 78 million yen (compared with 72 million yen in the first half of the previous fiscal
year). Operating income was 139 million yen (compared with 140 million yen in the first half of the previous fiscal
year).

4

(2) Details of financial position
Total assets at the end of the first half under review increased 4,346 million yen from the end of the previous fiscal
year, rising to 188,516 million yen. The main reasons for the increase were a 5,612 million yen rise in fixed assets,
mainly reflecting an increase in lease assets, and a 1,266 million yen decrease in current assets primarily due to thedecline in short-term investment securities.
Liabilities increased 6,103 million yen from the end of the previous fiscal year, rising to 152,171 million yen. The
key factors contributing to this increase were a 1,614 million yen rise in current liabilities, mainly reflecting an
increase in short-term loans payable, and a 4,488 million yen increase in non-current liabilities, primarily attributable
to an increase in lease obligations.
Net assets decreased 1,757 million yen from the end of the previous fiscal year, to 36,344 million yen.
(3) Information on the future outlook, including consolidated financial results forecasts
Based on progress in the first six months of the fiscal year, the Group has revised its financial results forecast for the
fiscal year ending March 31, 2017, which was released on May 13, 2016, as presented below.
The Group expects sales for the Medical Support Segment and the Long-term Care Segment to fall below thepreviously announced figures due to delays in the acquisition of medical institutions under contract and long-termcare service users caused by a shortage of capable individuals.
The Group has retained the previously announced figures as its income forecasts in view of progress in the first half
according to its overall plan. The Group will continue making efforts to achieve forecast income levels, taking steps
including the reviews of administrative operations at the head office, branches and other offices, and theadvancement of promotional activities focusing on cost effectiveness.
(Forecast of consolidated financial results)
Fiscal year ending March 31, 2017 (April 1, 2016 – March 31, 2017)
Net Sales

Operating
IncomeOrdinary
IncomeProfitattributable toowners ofparentNet Income per
ShareMillion yen
294,700

Million yen
4,800

Million yen
1,300

Million yen
500

Yen
7.79

Revised forecast (B)282,000

4,800

1,300

500

7.79

Change (B – A)

(12,700)

－

－

－

－

Change (%)(4.31)－－－－(Reference) Actual
results (fiscal year
ended March 31,
2016)273,583(785)(3,629)(15,995)(248.83)

Net Income

Net Income per
SharePreviously announced
forecast (A)(Forecast of nonconsolidated financial results)
Fiscal year ending March 31, 2017 (April 1, 2016 – March 31, 2017)
Operating
Ordinary
Net Sales
IncomeIncomeMillion yen
254,000

Million yen
2,900Million yen
1,700Million yen
1,700

Yen
26.48

Revised forecast (B)242,800

2,900

1,700

1,700

26.48

Change (B – A)

(11,200)

－

－

－

－

Change (%)(4.41)－－－－(Reference) Actual
results (fiscal year
ended March 31,
2016)

238,885(1,696)(2,772)(15,910)(247.51)

Previously announced
forecast (A)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, changes of accounting estimates and restatement
There are no applicable matters.

6

3. Quarterly consolidated financial statements(1) Quarterly consolidated balance sheets
Fiscal 2016
(As of March 31, 2016)
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
Allowance for investment loss
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

7

H1 of Fiscal 2017
(As of September 30, 2016)

13,530,688
32,803,595
3,020,964
1,037,203
13,335205,143
1,477,876
11,178,378(85,387)
63,181,798

13,328,303
32,808,816
1,502,296
1,068,930
38,940287,796
1,676,719
11,235,838(32,307)
61,915,334

24,000,568
39,307,921
9,949,984
73,258,475

23,769,560
45,203,442
9,349,715
78,322,718

15,776,886
5,246,065
21,022,951

15,093,797
5,322,111
20,415,908

27,582,499(140,000)(735,588)
26,706,911
120,988,337
184,170,136

28,224,984(362,719)
27,862,265
126,600,892
188,516,226

884,520
20,307,461
1,199,674
16,300,768
4,892,578
38,00024,548,610
68,171,614

670,977
22,411,321
1,522,635
16,737,730
5,439,228
23,45022,980,803
69,786,146

19,548,389
43,399,237
7,015,433
2,308,169
5,625,412
77,896,643
146,068,258

17,351,175
49,915,279
7,217,851
2,341,044
5,560,065
82,385,416
152,171,563

(Thousand yen)
Fiscal 2016
(As of March 31, 2016)
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-sale securities
Foreign currency translation 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

8

H1 of Fiscal 2017
(As of September 30, 2016)

11,933,790
17,354,214
19,635,508(11,377,668)
37,545,845

11,933,790
17,312,190
18,043,395(11,376,473)
35,912,902

12,815333,133(1,022,986)(677,038)
511,733
721,337
38,101,877
184,170,136

12,52073,273(915,330)(829,536)
518,663742,634
36,344,663
188,516,226

(2) Quarterly consolidated statements of income and comprehensive income(Quarterly consolidated statements of income)(Six months ended September 30)(Thousand yen)
H1 of Fiscal 2016
(from April 1, 2015
to September 30, 2015)
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
methodOther
Total non-operating income
Non-operating expenses
Interest expenses
Rent expenses
Other
Total non-operating expenses
Ordinary income (loss)
Extraordinary income
Gain on reversal of subscription rights to shares
Other
Total extraordinary income
Extraordinary losses
Loss on retirement of property, plant and equipment,
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
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

9

H1 of Fiscal 2017(from April 1, 2016
to September 30, 2016)

136,575,297
111,774,164
24,801,132
25,275,045(473,913)

137,751,166
112,306,182
25,444,983
24,629,642
815,341

82,576117,264
270,424

75,311
100,978
130,519

21,063

16,858198,120
689,449

286,085
609,752

1,661,370
29,566
225,816
1,916,754(1,701,217)

1,975,120
18,372542,3622,535,855(1,110,761)

-

8,158
783
8,942

9,711

1,124

566
360,903
9,391
380,574(2,081,792)
769,649(525,811)
243,837(2,325,630)(28,843)(2,296,787)

24,464463
26,052(1,127,871)
762,751(561,271)
201,480(1,329,351)(88,891)(1,240,460)

(Quarterly consolidated statements of comprehensive income)(Six months ended September 30)(Thousand yen)
H1 of Fiscal 2016
(from April 1, 2015
to September 30, 2015)
Net income (loss)
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans, net of tax
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests(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 events
There are no applicable matters.

10

H1 of Fiscal 2017(from April 1, 2016
to September 30, 2016)(2,325,630)(1,329,351)

100
271,105
72,889344,095(1,981,534)(295)(325,768)
107,656(218,407)(1,547,758)(1,958,578)(22,956)(1,392,958)(154,800)