Regarding Sales
Students applying for courses are required to pay tuitions at the time of their initial application (TAC calls these fees tuition advance pre-adjustment sales or sales on a cash basis), which are then booked on the balance sheet as a liability under the title "tuition advance." These tuition advances are then written down and booked as sales in the month that educational services were provided to the student (TAC calls these fees tuition advance pre-adjustment sales or sales on an accrual basis). While sales booked on the income statement are "sales on an accrual basis (tuition advance pre-adjustment sales)", the actual indicator of the sales conditions of the Company in the term are considered to be the "sales on a cash basis (tuition advance pre-adjustment sales)" (The fact that cash and equivalents are influenced strongly by the sales on a cash income is a characteristic that is shared with companies that take orders) and they are deemed to be a leading indicator for actual sales. Therefore, TAC management identifies this "sales on a cash basis (tuition advance pre-adjustment sales)" as a key management indicator.
Regarding Seasonal Characteristics
Examinations for the majority of certification courses are held from the second (July to September) to third quarters (October to December), and core courses, especially those for Certified Public Accountants and Licensed Tax Accountants, fall into the time frame for examinations in the following year. At the same time, all courses fall into the fourth (January to March) and first quarters (April to June).
Despite an increase in sales on a cash basis and Account receivable-trade sales during the second and third quarters, tuition advances are written down and booked depending upon enrollment period and gross margin is profoundly influenced because of the booking of a fixed level of expenses every month. In the fourth and first quarters, these tuition advances are then written down and booked as sales in each month, causing gross margin to increase.
Sales and profit declined
Sales on a cash basis were 10,728 million yen, down 3.7% year on year. Sales on an accrual basis were 10,854 million yen, down 2.3% year on year. While the sales of the Personnel Education and Corporate Training Businesses declined, the sales of the Publishing and Manpower Businesses increased.
Operating profit on a cash basis decreased 31.2% year on year to 735 million yen. Operating profit on an accrual basis was 861 million yen, down 17.2% year on year. Cost of sales, composed of mainly personnel expenses, decreased 0.6% year on year, and sales, general and administrative expenses, composed of mainly advertisement cost, dropped 2.1% year on year, but they could not offset the decline in sales.

<Personnel Education>
Sales grew, but profit declined

The sales from courses for Certified Public Accountant declined in the first quarter (April to June), but increased in the second quarter (July to September). Instruction fees, outsourcing fees for course material creation, rent and other operating expenses decreased 0.4% year on year to 6,268 million yen.
<Corporate Training Business>
Sales and profit declined.

Operating expenses, including instruction fees and personnel expenses for marketing, augmented 0.2% year on year to 1,649 million yen.
<Publishing Business>
Higher Sales, Higher Profits
Higher Sales
Real Estate Notary Certified Social Insurance and Labor Consultant, Financial Planner, Condominium Management Consultant, and medical care-related area saw higher sales.
The guidebooks for watching FIFA World Cup Russia 2018, travel books, and picture books for children contributed.
Lower Sales
Bookkeeping and Judicial Scrivener saw lower sales.
Operating expenses decreased 3.0% year on year. While personnel expenses and net provision for returns, etc. augmented, sales promotion costs decreased as the costs of publication of translated books subsided and measures for expanding sales channels are nearly completed.
<Manpower Business>
Higher Sales, Higher Profits
In manpower Business, personnel introduction saw solid performance due to the overall shortage of human resources in the accounting industry, but temporary staffing shrunk due to the affection of the amendment of the Worker Dispatch Law.
The sales from advertisement declined, as the number of orders for promotional videos for corporations were completed.
As for medical human resources services, Medical Office Staffing Kansai Co., Ltd. increased sales, as it received orders for work related to the National Health Insurance in Hyogo Prefecture and so on. The company concentrates on marketing for securing and dispatching medical office staff and improvement of matching.


<Market Overview>
The number of official test applicants of the various curricula taught by TAC declined by about 28,000 from the previous year 2.609 million to 2.581 million. It's the first time decrease in three years.

(Finance, Accounting Area)
The courses for Certified Public Accountant were sluggish in the first quarter, but the courses for beginners and second-time examinees performed well in the second quarter. Consequently, the sales in this area were unchanged from the previous year.
(Management, Taxation Area)
The sales from the courses for Licensed Tax Accountant declined, due to the decrease in the number of Tax Accounting examination takers.
(Financial Service, Real Estate Area)
Favorable performance continued from the first to second quarters, and the company saw the growth of sales from Real Estate Appraiser, Real Estate Transaction Manager, Condominium Management Consultant, Architects and Building Engineers, Financial Planner, etc. The healthy sales of books for preparing for the exams for Real Estate Transaction Manager and Financial Planner contributed to the sales growth of the courses as a whole.
(Public Officer Labor Area)
The sales from the Public Officer course (National Public Employees in the Regular Service and Senior Officials of Local Government course) decreased, as the employment conditions in the private sector were good.
(Medical, Welfare Area)
The sales growth of Medical Office Staffing Kansai Co., Ltd. thanks to new orders and the sales of the books for preparing for exams for Certified Social Workers and Certified Care Workers contributed.
Business Trends by Curriculum Category (Combined Total for both Personal and Corporate Instruction)
<Increases>
Courses for Real Estate Appraiser (up 4.9% year on year), Architects and Building Engineers (up 24.7% year on year), Condominium Management Consultant (up 31.1% year on year), and Financial Planner (up 5.3% year on year), Business Schools (up 23.8% year on year), etc.
<Declines>
The Certified Public Accountant(down 3.2% year on year)、Licensed Tax Accountant(down 9.1% year on year)、Small and Medium Enterprise Management Consultant(down 4.4% year on year)、National Public Employees in the Regular Service and Senior Officials of Local Government course(down 5.2% year on year), etc.
As for the courses for corporate clients, sales were similar in the previous year. As for the in-university seminar, affiliated school and consigned training, those sales declined 17.9 %, 13.3% and 20.9% year on year respectively.

Current assets increased 981 million yen from the end of the previous term, due to the growth of cash and deposits, etc. Fixed assets rose 125 million yen from the end of the previous term, due to the increase in investments and other assets, etc. Consequently, total assets were 22,725 million yen, up 1,106 million yen from the end of the previous term.
Total liabilities were 16,897 million yen, up 570 million yen from the end of the previous term, due to the augmentation of long and short debt, etc. Net assets increased 536 million yen from the end of the previous term to 5,828 million yen, due to the rise in retained earnings, etc.
As a result, capital adequacy ratio rose 1.1% from the end of the previous term to 25.6%.
(6) Topics
◎ Change of the representative director and president
On October 23, 2018, Mr. Hiroaki Saito, who founded the company and served as representative director and president, resigned because of his health condition, and Mr. Toshio Tada, who had been serving as director and vice-president, was appointed as representative director and president.
The new president Tada joined the company in January 1984, became a senior managing director in March 1998, and was appointed as a director and vice-president in June 2007.
◎ Challenge for the sciences field
As was mentioned in the previous report, in October 2018, the company started offering "Third-Class Chief Electricity Engineer's License Course" as a newly established course and also began publication of books for preparing for the examination.
(Overview of the Licensed Electrical Engineer-class 3 License)
The Licensed Electrical Engineer-class 3 License is a national qualification that allows certified persons to supervise the safety of construction, maintenance, and operation of electric equipment (electric facilities for business use) installed in commercial buildings and factories. The Electricity Business Act requires those who engage in installing electric facilities for business use to appoint one or more persons who hold the Licensed Electrical Engineer License, which means that the qualification plays an extremely vital social role in enabling the public to use electric facilities safely.
Electricity is one of the most essential social infrastructures that closely relates to our daily lives, including not only ordinary homes but also commercial buildings, factories, and railways, and the Licensed Electrical Engineer License is a certificate that is significantly promising.
In recent years, the number of applicants for the examination for the Licensed Electrical Engineer-class 3 License has been about 65,000, with the passing rate (the ratio of the number of successful examinees to the total number of examination takers) being approximately 8%. The course has more participants than the course for Licensed Tax Accountants, or Certified Social Insurance and Labor Consultants.
The company has specialized in preparations for tests for challenging certificates, qualifications, and licenses, such as Certified Public Accountants, Licensed Tax Accountants, and Real Estate Appraisers, and produced myriad successful examinees; however, it has not broken fresh ground in the field of "sciences."
The company will strive to produce a multitude of successful applicants also in the area of the Licensed Electrical Engineer-class 3 License by taking advantage of its excellent teachers who have extensive practical work experience, as well as the know-how for passing examinations and effective curricula that it has cultivated.
The company published 5 kinds of books: introduction, theory, electric power, machinery, and law. The sales of each book ranked first, leaving the second-ranking book far behind. (Surveyed by the company)
The company considers that it made a very good start, and expects that it will grow further.
◎ Proactive utilization of IT for education
The company will proactively utilize IT for managing data on the attendance of attendees (timely grasping the progress of learning of each attendee and appropriately supporting attendees lagging behind others) and data on the performance of attendees (grasping the subjects each attendee is good at and not good at, and supporting them in learning the subjects they are not good at).
By meticulously managing and checking these data, the company plans to brush up the skills of enrolled attendees and improve pass rates.