For the smiles of children…

JP-HOLDINGS, INC.
The No.1 operator of children’s daycare services in Japan

3rd Quarter Financial Results for the Fiscal Year ending March 20171

Company Profile
Company Name

JP-HOLDINGS, INC.

Listed Market

First Section of the Tokyo Stock Exchange (Securities code: 2749)

Location
Date of Establishment
CapitalHead Office: 17F Chikusa New Tower Bldg., 3-15-31 Aoi, Higashi-ku, Nagoya-shi Aichi
Tokyo Office: 5F Shinagawa Season Terrace, 1-2-70 Konan, Minato-ku Tokyo
March 31, 1993
1,603.955 million yen

Representative

Mr. Kazuhiro Ogita, Representative Director

No. of Employees

Employees: 2,749 / Part-time workers: 1,979*As of December-end 2016
Japan Nursery Service Inc. (Capital stock: 99 million yen / Wholly owned subsidiary)
Shikoku Nursery Service Inc. (Capital stock: 10 million yen / 51% owned subsidiary)
J Kitchen Inc. (Capital stock: 10 million yen / Wholly owned subsidiary)

Consolidated Subsidiaries

J Cast Inc. (Capital stock: 10.4 million yen / Wholly owned subsidiary)
J Planning Sale Inc. (Capital stock: 10 million yen / Wholly owned subsidiary)
Japan Nursery Institute for General Research (Capital stock: 10 million yen / Wholly owned subsidiary)
Amenity Life Inc.(Capital stock: 70 million yen / Wholly owned subsidiary)
Nursery Service (Japan Nursery Service, Shikoku Nursery Service and Amenity Life)
Gymnastics, English and Eurhythmics Schools Contracting Service (J Cast)

Business Areas

Food Service (J Kitchen)
Distribution Service (J Planning Sale)
Researching , Training and Consulting Service (Japan Nursery Institute for General Research)*Sotetsu Amenity Life K.K. was affiliated by obtaining 100% stock and renamed as Amenity Life Inc..
*No. of employees aforementioned includes Amenity Life Inc. employees.

2
Copyright©JP-HOLDINGS,INC All Rights Reserved.

INDEX
1) Company Overview: p.4
2) The Opportunity: p. 9
3) Bottlenecks to Growth & Our Solutions: p.15
4) 3Q FY3/17 Results: p.23
5) JP Holdings’ Strengths: p.28
6) Mid-term Management Plan & Growth Strategy: p.30
7) Appendix: p.36

3
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Company Overview

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4

(1) Image of JP Holdings’ Group Structure
J CastJ Kitchen

Teacher

Nurseryschool teacher

Nutritionist

EnglishGymnastics
Eurhythmics

Childcaregoods

J Planning Sale

Lunch

Childcare

Japan Nursery
Service

We will take fulladvantage of groupsynergies – fromfacilities andequipment to thequality improvementof staff

Training

Japan Nursery Institute forGeneral Research

Copyright©JP-HOLDINGS,INC All Rights Reserved.

5

(2) JP Holdings is the largest operator in the Industry

We have significantly pulled away from our rivals to stay as the largest operator in theindustry. We have held the number one spot for sales in the childcare services industry forthe past five years in a row.



Our strengths lie in the wealth of our management, results (number, scale, location andform), our relationship with major municipalities in Japan and management that makes the
maximum use of economies of scale to achieve a reduction in costs.
Sales of Conpanies in the Childcare Industry(Unit: million yen)
25000
JP Holdings

Rival A

Rival B

Rival C

Rival D

Rival E

20000

15000

10000

5000

*Rival C’s sales is estimated number by JPHD
0
2011

2012

2013

2014

2015

2016

Source: Based on the past six years of the Nikkei MJ’s Service Industry Survey
Copyright©JP-HOLDINGS,INC All Rights Reserved.

6

(3) Business Expansion 1: No. of Facilities Operated
FY3/01 FY3/02

FY/03

FY3/04 FY3/05

FY3/06

FY3/08

FY3/09FY3/10FY3/11

FY3/12

FY3/13

FY3/14

FY3/15

FY3/16

2

3

5

8

10

11

14

16

14

10

10

1

4

9

20

28

43

61

71

85

102

118

136

Licensed schools(Publicprivate management)
Licensed schools(Private
management)

As at
Dec.2016

FY3/07

1

7

10

13

18

21

22

24

26

26

26

26

26

26

23

2

2

2

3

3

4

7

5

4

4

4

4

4

1

0

1

3

4

3

2

0

0

0

0

0

0

0

0

4

3

4

4

4

4

3

2

2

1

0

0

0

0

0

0

0

School clubs

9

18

22

26

37

39

40

43

46

55

62

Children's houses

5

6

8

6

9

7

8

8

8

10

12

TokyoApproved
NonlicensedMunicipalltyAuthorisedNon-licensedOthernonlicensed
Joint establishmentwith
amusementfacilities

2

3

4

Private school clubs

300

2

Total

3

8

16

20

24

46

63

86

98

129

148

163

182

200

224

*We reviewed the count by management structure in the 2Q of FY3/16 and changed three licensed schools (private-public management) to other non-licensed nursery schools
250 as at Dec 31 2016 include those operated by Amenity Life Inc. which was affiliated on Sep 30 2016(4 Licensed nurseries & 3 private school clubs)*Facilities

8Children's houses
8

School clubs
150

8

Joint establishmentwith amusementfacilities
7

Non-licensedOthernon-licensed
9

Non-licensedMunicipalltyAuthorised
100

TokyoApproved
Licensed schools(Private management)

Licensed schools(Public-private management)
50

5
9

0
FY3/01

FY3/02

FY/03

4
12

10

Private school clubs
200

250

7
FY3/04

10

13

18
4

FY3/05

FY3/06

FY3/07

6
18

8
22

6
26

37

20

FY3/08

FY3/0928
FY3/10

26

26
26

24

21
9

23
26

26

26

22

46

43

40

39

62
55

61

43

71

85

102

118

136

10

11

14

16

14

10

10

FY3/11

FY3/12

FY3/13

FY3/14

FY3/15

FY3/16As at
Dec.2016

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7

(4) Business Expansion 2: No. of Facilities Operated by Region
No. of Facilities Operated(3Q FY3/17)：172
Nursery schools：62
School clubs：12Children’s houses
Private school clubs ：4
：250
Total

Kyushu・Okinawa
Licensed nurseryschools: 2

Hokkaido
Licensed nurseryschools: 3

TohokuLicensed nurseryschools: 10
Chubu
Licensed
nursery schools: 9
School clubs: 3
Children’s houses: 6

Kinki
Licensed nurseryschools: 6

Kanto
Lic. nursery schools: 116
Non-lic. nursery schools: 26
School clubs: 59
Children’s houses: 6
Private school clubs: 4*Facilities as at Dec 31 2016,include those operated by Amenity Life Inc. which was affiliated on Sep 30 2016 (4 Licensed nurseries & 3 private school clubs )Copyright©JP-HOLDINGS,INC All Rights Reserved.

8

The Opportunity

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9

(1) Current Waiting List Situation


The child day care waiting list problem
remains serious. This is especially so in theTokyo metropolitan area and prefectures where
major cities (e.g. designated cities) are located.
(Refer to the map on the right.)

The number of children on waiting lists as ofApril 2016 increased by 386 from April 2015
to 23,553.



The Ministry of Health, Labour andWelfare(MHLW) published the potential
number of children on waiting lists in March
2016 based on the number of people extending
their childcare leave or giving up on searching
for work who were previously excluded fromthese statistics. Together with the number ofchildren already known to be on waiting
lists, this has seen the grand total rise toapproximately 60,000 (as of April 2015).

National Waiting List Map(April 1, 2016)

Current as of April 1 ,2016
Less than 100
100 or more but less than 500
500 or more less than 1,000
1,000 or more less than 3,000
3,000 or more but less than 5,000
5,000 or more

No of Prefectures

(22)
(16)
(13)
(15)
( 0)
( 1)

Source: Ministry of Health, Labour and Welfare’s Nursery School Situation Summary (April 1, 2016)

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Prefecture

No. of Children
on the waiting
List

Hokkaido
Aomori
Iwate
Miyagi
Akita
Yamagata
Fukushima
IbarakiTochigi
Gunma
Saitama
Chiba
Tokyo
Kanagawa
東京都
Niigata
神奈川県
Toyama新潟県
富山県
Ishikawa
石川県
Fukui
福井県
Yamanashi
山梨県
Nagano
長野県
Gifu
岐阜県
静岡県
Shizuoka
愛知県
Aichi
三重県
Mie
滋賀県
Shiga
京都府
Kyoto
大阪府
兵庫県
Osaka
Hyogo
Nara
Wakayama
Tottori
Shimane
Okayama
Hiroshima
Yamaguchi
Tokushima
KagawaEhime
Kochi
Fukuoka
Saga
Nagasaki
Kumamoto
Oita
MiyazakiKagoshima
Okinawa
Total

94
0
194
638
33
0
462
382
155
5
1,026
1,460
8,466
497
0
0
0
0
0
0
23
449
202
101
339
64
1,434
1,050
260
10
0
38
875
161
65
60
324
110
42
948
18
70
233
370
64
295
2,536
23,55310

(2) Gov’t efforts to eliminate day care waiting lists
Day Care Waiting List Elimination(accelerated plan)（Enacted April 2013）

Create 400,000 new day care spots between 2013 and 2017-end

Secure Extra Day Carers Plan
（Enacted Jan 2015）

Secure 70,000 new qualified day carers by the 2017-end

Urgent Measures to achieve
100mn Total Active Society（Compiled in Nov 2015）

Expand the 2017-end target of 400,000 day care places to 500,000 including 90,000 day
carers to accommodate thisUrgent Acceleration to Eliminate
Day Care Waiting Lists Plan
（Announced Mar 2016）

Dynamic Engagement of All
Citizens Plan
all industries（June 2016 Cabinet decision）

Action Plan for
Seamless Nursery Service(Announced Sep 2016)

Coordinating cities/pref. to actively drive plans to eliminate child day care waiting lists by:①Speed up understanding of current situation ④Strengthen/expand current business further②More workplace flexibility to secure staff⑤Aggressive deployment of workplace childcare③Ensure the promotion of facility expansion
Improve salaries of day carers by 2%
Eliminate gap between child care providers with skills and experiences and female workers
across all industries
Supporting municipals engage in seamlessly eliminating child day care waiting lists with thefollowing measures:①Further promotion of facilities construction and securing nursery staff②Introduce a nursery reservation system for infants after mothers’ childcare leave③Deploy nursery concierges who can satisfy parents’ needs④Clarify the exemption of property tax on lenders to nurseries

Source：Prime Minister’s Office home page- ”Preventing Child day care waiting lists – working to create an environment of raising children in peace

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11

(3) Dynamic Engagement of All Citizens Plan
June 2nd, 2016 – Cabinet decides “Dynamic Engagement of All Citizens Plan”

・Day care places - Expand the original 400,000 target by 2017-end to 500,000
・Treatment of Day Carers - Improve salaries by 2% (c. ¥6000 per month)Accelerate measures to eliminate the gender pay gap and close the ¥40,000 per month gap for
qualified day care staff to that of all industries
・Secure & develop day carers - expand productivity by ICT and offer expansion of loan forgiveness for day carers
・After school activity clubs - develop places for 300,000 persons by 2019-end

Expanding child day care spaces
YoY comparison(people）

Increase in
day carespacesTreatment of day carers（number）

After School Clubs（people）

Clubs

PlannedChildren unable to use

Low wages have been cited as a cause in theinability to secure additional day carers.

Children registered・Day Carers：¥3.23m＊ (Women only ¥3.22m)
・All industries：¥4.89m＊ (Women only ¥3.73m）
Day carers see difficulty in a long career path soaverage years of service tends to be shorter.

・Day Carer：Length of service 7.6yrs＊
・All Industries：Length of service 12.1yrs＊*MHLW「2015 Survey on wages structure」
2009

2010

2011

2012

2013

2014

2015

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 152016

Gov’t to prepare additional childcare arrangements for 500,000
children by the end of FY2017 (compared with FY2013)(From FY2018 onward, will ensure adequate spaces.)

Gov’t will eliminate a wage gap between
childcare providers with skills and experiences
and female workers across all industries.

Prepare extra arrangements of “After‐school Kids’ Clubs for
300,000 children by the end of FY2019 (compared with FY2014)(Look for ways to complete it by the end of FY2018.)

Source; ：Prime Minister’s Office HP: Dynamic Engagement of All Citizens Plan (Overview) June 2, 2016

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12

(4) Favorable Government Budget Trends

Rental expenses in the unit cost of official prices (= the compensation required for operation inorder to satisfy the minimum standards of childcare set forth by the government) have been
greatly increased in FY3/17. Therefore, the building rental fees generated by many of ournursery schools have been reduced (contribution to sales and revenue).
Rental Expenses
Addition Unit Cost in
FY3/16 Per Child(Yen per Month)

Rental Expenses
Addition Unit Cost in
FY3/17 Per Child(Yen per Month)

20

6,500

16,80021 to 30

4,500

11,70031 to 40

4,000

10,40041 to 50

3,600

9,300

51 to 60(*1) 3,000(*2) 7,800

61 to 70

2,600

6,700

71 to 80

2,900

7,500

81 to 90

2,600

6,700

91 to 100

2,300

6,000

101 to 110

2,500

6,500

111 to 120

2,300

6,000

121 to 130

2,100

5,400

131 to 140

2,300

6,000

141 to 150

2,200

5,700

151 to 160

2,000

5,200

161 to 170

2,200

5,700

171 or more

2,000

5,200

Capacity
Category

Case Study in Tokyo with the Highest Unit Costs
This is a trial calculation using the standard nursery school model (60 children
capacity) in our firm.
Calculation by the FY3/16 Unit Cost
Monthly amount per child (Table on the left (*1)): 3,000 yen × 60 children × 12
months= 2,160,000 yen (Annual amount per facility)
Calculation by the FY3/17 Unit Cost
Monthly amount per child (Table on the left (*2)): 7,800 yen × 60 children × 12
months= 5,616,000 yen (Annual amount per facility)
Difference
5,616,000 yen – 2,160,000= 3,456,000 yen (Change in the annual amount per facility)*There are also cases in which such addition is not provided depending on the facility or rental
expenses supported only by municipalities are decreased for the amount of change(consequently this is ±0 yen).

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13

(5) Emergent Action Plan of Tokyo Metropolitan Gov’t for eliminating child day care waiting lists
Announced by Bureau of Social Welfare and Public Health, Tokyo Metropolitan Government on September 9, 2016

First Pillar : Promote setting up of nurseries, etc.
1. Create new subsidy against rising construction costs
2. Initiate new subsidy on rent

25 % lift on national standard of subsidy for construction cost

Promote the development of nurseries by utilizing leased properties such as vacanthouses or shops

3. Promote regular and longer term temporary childcare
4. Expand subsidy on land rental

Add subsidy on regularized temporary childcare (Uniqueinitiative of Tokyo Metropolitan Government)

Targeting rising land price, lift restriction to more than 3 fold of average publishedland price 0.35 million yen/m2 up to a maximum of 20 million yen

5. Encourage use of land owned by Tokyo Metropolitan Government
6. Utilize private land and vacant houses

Enable enterprises to rent Tokyo Government land

Secure appropriate properties in cooperation with associations of real

Second Pillar : Secure Personnel
7. Expand subsidies on rented housing

Extend the support period over 6yrs after recruitment instead of max 5yrs

8. Increase childrearing support staff

Regard teachers of kindergartens and elementary schools, childrearing support
staff etc., as deemed child care staff and employ them subject to their
numbers not exceeding 1/3rd the standard number of qualified child care staff

Third Pillar : Enhance assistance on users
9. Increase nursery concierges

Boost personnel expenses to increase staff to assist parents

10. Reduce burden of non-licensed nurseries users
11. Improve quality of non-licensed nurseries

Assist municipalities to support independent nursery fees

Organize a new patrol team to encourage best practice in non-licensed
nurseries

Resource: Press Release dated September 9, 2016 by Bureau of Social Welfare and Public Health, Tokyo Metropolitan Government *Translated by JPHD

Copyright©JP-HOLDINGS,INC All Rights Reserved.

14

Bottlenecks to Growth&
Our Solutions

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15

(1) Current Nursery School Teacher Shortage Situation 1
Need to secure additional c. 90,000 child care staff to care 500,000 children by the end of 2017

“Latent nursery school teachers”, who have qualified but do not currently engage in child care areapprox. 840,000（2015）

Of 42,000 graduates from nursery school teacher training facilities only 22,000 (approx. half of all
graduates) actually joined nurseries （graduate numbers are as of 2014-end）
Trend of latent nursery school teachers number（Thousand）
1,400

1,312
Registered

Engaging

Latent

1,200
1,000

954

894

800
600
400

516
378

1,186

1,126

1,069

1,013

627

673

385

396

1,246

705

759

802

840

444

472

572
382

421

427

200
0
2008

2009

2010

2011

2012

2013

2014

2015

Source：Registered：Investigation of Equal Employment, Child and Family Policy Bureau, MHLW
(Number at April 1 in each year）
Engaging：Investigation of Director-General for Statistics and Information Policy, MHLW
（Number at October 1 in each year）*Translated by JPHD
(N.B.)Engaging number for 2015 includes qualified nursery school teachers, child care staff and family caregivers

16
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(2) Current Nursery School Teacher Shortage Situation 2
The effective opening to application ratio for nursery school teachers remains at ahigh level. There continues to be a shortage of nursery school teachers on anationwide scale.

The effective opening to application ratio for nursery school teachers in Tokyo isover 6-fold. The employment situation in the metropolitan area remains extremely
difficult.

7

6.24

5.68

6
Nationwide

Tokyo

5

4
3

2.44

2.34

2
1
0

Source: Ministry of Health, Labour and Welfare Employment Security Bureau’s General job placements (Report on Employment Service)

Copyright©JP-HOLDINGS,INC All Rights Reserved.

17

(3) Current Nursery School Teacher Remuneration Situation
Wage Level Comparison of Nursery School Teachers andRelevant Jobs
(2015) (Unit: 10,000 Yen)
35



32.9

33.3

30
25
21.9

22.9

22.3

22.5

Welfarefacility carepersonnelHomehelpers

20

The average monthly salary fornursery school teachers in 2015
across Japan was 219,000 yen. Thisis 114,000 yen less than the average
333,000 yen salary for all jobs.

15

All job
categories

Kindergarten
teachers

Nurses

59



50

40.4
40
30

34.9

31.5

27.4
20.3

20
10
0

Source: Ministry of Health, Labour and Welfare’s Basic
Survey on Wage Structure (2015)

Desired Workplace Improvements (%)

70
60

Nurseryschoolteachers

13.7

Furthermore, in addition to increasingsalary levels to secure nursery school
teachers, it is necessary to increase
the number of personnel and reduce
office/administrative work.

Source: Tokyo Metropolitan Government Bureau of Social Welfare and Public
Health’ Tokyo Nursery School Teacher Investigation Report (March 2014)18
Copyright©JP-HOLDINGS, INC. All Rights Reserved.

(4)Trend of improvement for nursery school teachers treatment by Gov’t


On Dec 22 2016, Cabinet decided Gov’t budget plan for FY2017



Besides a 2% (c. 6,000 yen/month) increase in salary for all personnel , the plan adds 5,000 yen
for leaders with expertise and 40,000 yen/month for senior personnel＋abt10％＋max40,000yen

TREND OF IMPROVEMENT （VS FY2012）abt32,000yen/m＋max40,000yen/m

16%※amount of monthly salary improvement in each year is planned improvement in budget
14%

Further improvement focusing
on skill and experience12%＋abt8％
＋約8％

10%

+

・leaders with expertise

2.0%+5,000yen/m

3.0%

・Vice-chiefs
・Professional leaders

abt26,000yen/m
月額約26,000円＋約7％＋abt7％
月額約21,000円
abt21,000yen/m8%＋abt5％＋約5％3.0%

abt15,000yen/m
月額約15,000円

6%
abt9,000yen/m
月額約9,000円

4%（approx. 7years over）

3.0%＋abt3％＋約3％（approx. 3 years over）+40,000yen/m
2.0%

2.0%

1.9%

1.9%

1.3%

1.3%

2016年度

2017年度
（予定）

2.85%
2.0%
2%
2.85%

2.0%

1.9%

2014年度

2015年度0%
2012年度

2013年度

Source：Ministry of Health, Labour and Welfare‘s“Countermeasures on improvement for
nursery school teachers treatment”*Translated by JPHD

19
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(5) Our Plan to Secure Nursery School Teachers 1
A ve r a g e A n n u a l S a l a r y o f N u r s e r y S c h o o lTeachers (10,000 Yen)







National average calculation method = Monthly salary at the timeof the survey every year (June) × 12 months + Bonuses in the
one year prior to the time of the survey

Our average has been above thenational average since 2012.
While leveraging the budgetaryprovisions of the government, we
continue to improve wages andexceed the government’s
expectations.
We’ve raised wages by another
4% in 2016 as well.

全国平均
National

370

JP Holdings
弊社平均
averageaverage

350
330
310
290
270
250
2006年 2007年 2008年 2009年 2010年 2011年 2012年 2013年 2014年 2015年

2006

2006

2007

2008

2009

2007

2010

2008

2009

2011

2010

2012

2011

2012

2013

2013

2014

2014

2015

2015

National Average(10,000 Yen)

326.93 324.08 322.52 328.44 324.94 324.23 315.03 309.80 316.70 323.34

Our Average(10,000 Yen)

282.57 285.24 287.05 300.86 314.60 310.83 323.88 332.35 331.41 354.14
Source: Company data based on the Ministry of Health, Labour and Welfare’s Basic Survey on Wage Structure

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20

(6) Our Plan to Secure Nursery School Teachers 2
We hold seminars and bus tours to visit nursery schools according to career level around Japan.



We started a benefit scholarship system in FY3/16. This supports those aspiring to be nurseryschool teachers from their student days and leads to their desire to join our company.



We expanded recruitment of kindergarten teachers who are willing to become qualified nurserystaff with sponsored support.



We started training course recruitment for those who are unqualified but who are looking to pass
the national test at our company in FY3/16.

Reduce the daily burdens on day carers by employing administration staff and janitors• Dormitory and boarding
fee assistance• Employment support
money• Dormitory and boarding
fee assistance• Employment support
money• Benefit scholarships

Mid-career
recruitment

Reappoint
ment
recruitment

New
graduate
recruitment

Nonqualified
personnel
recruitment

Copyright©JP-HOLDINGS,INC All Rights Reserved.

• Reappointment seminars• Qualification acquisition
course• Nursery school assistantrecruitment

21

(7) Occupancy rate of our nurseries

Occupancy rate of our nurseries in FY2016 (Actual Children/Capacity of Acceptance) is approx. 82%

To maximize the occupancy rate, we need additional approx. 330 nursery school teachers at ourexisting facilities.



Sufficient disposition of nursery school teachers enables us to increase net sales of c. 2.5 billion yen,operating earnings of c. 0.8 billion yen.
Dispositionof 330teachers

100%
90%

80%

Increase of
Net sales

70%
60%

c.2.5bn yen,

50%

Operatingearnings

40%

82％

c.0.8bn yen

30%
20%
10%
0%

Occupancy rate of our nurseries（FY2016）

Max. occupancy rate
22

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3Q FY3/17 Results

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23

(1) 3Q FY3/17 Financial Highlights
3Q FY3/16

3Q FY3/17

ChangeYear on Year
Comparison(%)

Net sales (million yen)

15,04916,720

1,671

11.1

Operating income (million yen)

1,064

743

△ 320

△ 30.1

Ordinary income (million yen)

1,136

883

△ 253

△ 22.3

Net income attributable to owners ofparent (million yen)

697

514

△ 182

△ 26.2

Net income per share (yen)

8.36

6.13

△ 2.23―

Net assets per share (yen)

72.95

82.28

9.33

―

Shareholders’ equity ratio (%)

31.8

26.9

△ 4.9

―

Copyright©JP-HOLDINGS,INC All Rights Reserved.

24

(2) FY3/17 Expected New Openings
We are scheduled to open 13 licensed nursery schools and 11 school clubs/children’s houses in FY3/17.
Of these, we have already opened 13 licensed nursery schools, 7 school clubs , 3 children’s houses and1 private school club as of the end of December 2016.
*Facilities as at Dec 31 2016 do not include those operated by Amenity Life Inc. which was affiliated as on Sep 30 2016 (4 Licensed nurseries & 3 private school clubs)*In addition to the above, our existing Asc Toyosu Nursery School became licensed at its present location on April 1, 2016. Moreover, we are scheduled tore- open one existing non-licensed nursery school with a license after July 2017.
First Expansion
Yamagata:
1 licensed nursery school

Completed Opening

Aichi:
2 licensed nursery schools

Scheduled Opening•••

Asc Miharashi-no Oka Nursery School••

Okinawa:
1 licensed nursery school••

Asc Yamada Kagitori Nursery SchoolFirst Expansion
Fukushima:
1 licensed nursery school

Owariasahi Shibukawa Children’s Club
Owariasahi Zuiho Children’s Club

2 children’s houses

・Asc Kokuba Nursery School•

Asc Meito Fujigaoka Nursery School
Asc Shidami Nursery School

2 school clubs

First Expansion

Miyagi:1 licensed nursery school・ Asc Yatsuyamada Nursery School

Owariasahi Shibukawa Children’s House
Owariasahi Zuiho Children’s House

Tokyo:
3 licensed nursery schools•

First Expansion
Shiga:
1 licensed nursery schoolFirst Expansion

Fukuoka:
1 licensed nursery school・Asc Higashihie Nursery School•

Tokyo: Mitaka
1 school club
（ Opening scheduled
Feb 2017 ）Asc Gotenhama Nursery School••

Asc Ikebukuro Honcho Nursery
SchoolAsc Shiba Koen Nursery School
Asc Ryuhoku Nursery School

5 school clubs
•
•
•
•
•

Takecho Children’s Club
Sengoku No. 1 Cultivation Room
Sengoku No. 2 Cultivation RoomMeidai Cultivation Room
Hanabatake School Club

1 children’s house

Osaka:
1 licensed nursery school•

Asc Kamishinden Nursery School

Kanagawa:
1 licensed nursery school•・Asc Tsujido Nursery School•

Copyright©JP-HOLDINGS,INC All Rights Reserved.

Sengoku Children’s House

1 private school club
AEL Yushima25

(3) 3Q FY3/17 Profit and Loss Statement
3Q FY3/16
Amount(Million Yen)

Year on Year
Comparison

3Q FY3/17

Component
Component
AmountAmountRatio
Ratio(Million Yen)
(Million Yen)(%)(%)

Rate of
Change(%)

Net sales

15,049100.0

16,720

100.0

1,671

11.1

Cost of sales

12,64884.0

14,163

84.7

1,514

12.0

Gross profit

2,400

16.0

2,557

15.3

157

6.6

SG & A expenses

1,336

8.9

1,814

10.8

477

35.8

Operating income

1,064

7.1

743

4.4

△ 320

△ 30.1Non-operating income

100

0.7

184

1.1

84

83.7

Non-operating expenses

28

0.2

45

0.3

16

58.8

1,136

7.6

883

5.3

△ 253

△ 22.3

697

4.6

514

3.1

△ 182

△ 26.2

Ordinary income

Net income attributable to ownersof parent

Copyright©JP-HOLDINGS,INC All Rights Reserved.

26

(4) 3Q FY3/17 Balance Sheet
FY3/16(Million Yen)

3Q FY3/17(Million Yen)

Amount of Change(Million Yen)

6,954

9,737

2,783

Cash and cash deposits

3,777

6,868

3,090

Accounts receivable

1,770

1,506

△ 264

14,56516,084

1,519

8,900

9,399

499

12

430

418

5,652

6,254

602

Total assets

21,51925,822

4,303

Current liabilities

5,949

7,325

1,375

2,935

3,392

456

691

422

△ 269

8,998

11,546

2,547

8,457

10,811

2,354

Total liabilities

14,94818,871

3,923

Net assets

6,570

6,950

380

Total liabilities and net assets

21,51925,822

4,303

Current assets

Non-current assets
Property and equipment, net
Intangible fixed assets
Investment and other assets

Long-term debt within one year
maturity

Note and accounts payableNon-current liabilities
Long-term debt

Copyright©JP-HOLDINGS,INC All Rights Reserved.

27

JP Holding’s Strengths

Copyright©JP-HOLDINGS,INC All Rights Reserved.

28

(1) Provision of High-quality Childcare Conforming to
Our Management Philosophy
Prioritizing safety andpeace of mind
• Creation of a
specialized
department focusedon safety
management.
• Fixtures with thoroughfall prevention• Cushion floor infantrooms• Development ofvarious manuals (e.g.
how to deal withdisasters and abuse)• AED deployment in all
facilities• Emergency lifesaving
training for all staff
members• Structure to shareaccident cases

Facilities that offer
unforgettable
memories• Gymnastics, English
and eurhythmics
courses• Event foods, local
foods and cooking
childcare• Three elements of ourchildcare philosophy:
Strength to grow by
yourself, strength tostretch yourself laterand childcare withyour five senses

Emergency Life-saving Training

Facilities that are
truly needed• Facility patrol support
by development support
teams• Suku-Suku Plus childsupport advisory center(Rehabilitation support
project)• Dietary education
activity support by foodand agriculture
guidance teams• Extended-hours
childcare and temporaryuse

Example of Event Food

Gymnastics Program

Copyright©JP-HOLDINGS,INC All Rights Reserved.

Facilities where staff
members enjoy
working• In-house activity
encouragement(activity expenseassistance)• In-house sports days
to deepen friendshipamong employees• Multi-level employee
care structure bymanagers andsupervisors

Cooking Childcare

29Mid-term Management Plan&
Growth Strategy

Copyright©JP-HOLDINGS,INC All Rights Reserved.

30

(1) Planned Numerical Targets
Net sales (billion yen)

Forecastof
FY3/17

Forecastof
FY3/18

227

240

12

19

Ordinary income(billion yen)

Consolidated Results (Unit: million yen)
30,00025,00020,000Net sales (left axis)
Ordinary income (right axis)

2,000

300

Forecastof
FY3/18

New Nurseries

13

11

New School clubs,Children’s houses andPrivate School clubs

128

No. of Managed Facilities at the End of the
Fiscal Year (Unit: schools/facilities)*We have totaled the number of school clubs andchildren’s houses for the forecast numbers only.

1,800
1,600
1,400

250
200

1,200
15,000

Forecastof
FY3/17

1,000

9

5,000

600
400

100

22

0

56

39

66

55
46

43
40

37

26

50

200
0

8

6

8

83

102

88
80

8

8
7

150

800
10,00010

Nursery schools
School clubs
Children's house

115

131

146

159

176

187

0

*Facilities as at Dec 31 2016 include those operated by Amenity Life Inc. which wasaffiliated on Sep 30 2016(4 Licensed nurseries & 3 private school clubs)

Copyright©JP-HOLDINGS,INC All Rights Reserved.

31

(2) For Plan Implementation
Key Objectives in the Period of the Plan
(1) Enhance security measures and further improve the quality of childcare(2) Increase the number of children accepted by opening new facilities and increasing the number of nurseryschool teachers in existing facilities(3) Increase investment in human resources (strengthen recruitment activities, enhance human resource
development and review the personnel assessment system)(4) Re-develop our business management structure (enhance our business risk management structure andstrengthen group company cooperation)(5) Start work on new business aimed at expanding our revenue base (private school clubs and external sales ofour existing services)

Measures to Achieve the Key Objectives(1)Further strengthen our safety management structure (create a specialized department and promote crossorganizational structure enhancement)(2)Raise the salary of employees (we raised the salary of nursery school teachers by 8% in FY3/16 and plan toraise it again by 4% in FY3/17)(3)Introduce systems in each field (reduce workload and optimize business management)(4)Further enhance policies aimed at securing nursery school teachers (increase the recruitment expenses budget)

Copyright©JP-HOLDINGS,INC All Rights Reserved.

32

(3) Specific Initiatives 1≪Strengthening the Safety
Management System≫
April 2016
Safety Measures Divisionfounded≪Strengthening hiring
activity≫
June 13th, 2016
Tokyo HQ relocation≪Securing day carers≫
Review personnel evaluation
system & raise salaries 4% in2016≪Starting new businesses≫
Private after school club
『AEL Yushima』intended
opening Sep 2016

≪Reduce burden on workforce≫
Promote ICT on nursery sites withtablet devices

Copyright©JP-HOLDINGS,INC All Rights Reserved.

33

(4) Specific Initiatives 2
Acquired 100% of Sotetsu Amenities Life from Sotetsu Holdings K.K.
on September 2016 and renamed as Amenity Life Inc.
Acquisition Target
Name

Amenity Life Inc.

Address

17F Chikusa New Tower Bldg., 3-15-31
Aoi, Higashi-ku, Nagoya-shi Aichi

Business typeDay care centre and nursery management

Capital

70 million yen
Net sales

570m¥

Operating income

49m¥

Ordinary income

49m¥

Net income

30m¥

FY3/16

Licensed day care

4 (in Yokohama)

Private School Club

3 (in Yokohama)• Strengthening one of themost important bases in
Yokohama• Foothold to expand private
school children club
facilities

Impact on FY3/17 results expected to be minor.

Facilities

Copyright©JP-HOLDINGS,INC All Rights Reserved.

34

(5) Specific Initiatives 3
Intention to establish a joint-venture with Shiseido
Company, Limited with a focus on the entrusted
operation of in-house nurseries, scheduled to start its
operation in February 2017.



Shareholding ratio between the two parties is Shiseido
51% & JPHD 49%



Joint venture will provide an entrusted operational
service for a new in-house nursery which Shiseido will
set up on its Kakegawa factory site in autumn 2017.

Outline of the joint venture
・Provide the setup consulting and entrusted
operational service to enterprises interested
in in-house nurseries

・Cooperate with University Center for Baby
Science to conduct new research on the
behavioral development of children

・Start the new business of inhouse nurseries
・Create a new childrearing
support service based on the
study of children’s behavioral
development

Impact on FY3/17 results expected to be minor.
Copyright©JP-HOLDINGS,INC All Rights Reserved.

35

Appendix

Copyright©JP-HOLDINGS,INC All Rights Reserved.

36

(1) Our Group Business Areas
Target of official prices (compensation for education andchildcare services set by the government) = Management isguaranteed by the government budget

Non-targets of official prices (compensation for education and childcare
services set by the government)

Kinderg
artensNon-licensed nursery schools(With municipality independentassistance)

Non-licensed nursery schools(Without municipality
independent assistance)

Tokyo licensed nurseryschools, etc.

Baby hotels, day-care centers
and nursing rooms at events

Public(Public
management)

Licensedchildren schools

Licensed nurseryschools

Public(Public-private
management)

PrivateOur business areas

Our management is focused on being designated managers* of private licensed nursery schools and public
licensed nursery schools

We also manage non-licensed nursery schools through independent assistance from municipalities (e.g.
Tokyo licensed nursery schools).

*Operation is guaranteed for schools managed by designated managers due to the budgets of the municipalities of jurisdiction.
Copyright©JP-HOLDINGS,INC All Rights Reserved.

37

(2) Nursery School Contract Form
Licensed Nursery School

Reference: Tokyo Licensed
Nursery School System

Municipality

Municipality

Facility Payments

Childcare Fees

Assistance(Change depending on age)

(Change depending on
income)(Change depending on
age)

Nursery
SchoolParentNursery
SchoolDirectcontract
ParentChildcare
Fees(Fixed in principle)

Copyright©JP-HOLDINGS,INC All Rights Reserved.

38

(3) Comparison of Kindergartens, Nursery Schools and Licensed Children’s Schools
Kindergarten

Nursery School

Licensed Children’s School(Kindergarten/Nursery School
Cooperation type)Act on Child Education and Childcare Support (Defines the framework of cross-ministerial and unified payments in the Cabinet
Office)Underlying
Laws/Regulations

Section 3 of the School Education Act(Under the jurisdiction of the Ministry of
Education, Culture, Sports, Science andTechnology)

Article 7 (1) of the Child Welfare Act(Under the jurisdiction of the Ministry of
Health, Labour and Welfare)

Article 7 (1) of the Child Welfare Act
Article 2 (7) of the Licensed Children’s
School Law(Under the jurisdiction of the Ministry of
Education, Culture, Sports, Scienceand Technology & the Ministry of
Health, Labour and Welfare)Type of Facility

SchoolChild welfare facility

School and child welfare facility

Target Children*

1st certification

2nd and 3rd certification

1st, 2nd and 3rd certification

Kindergarten Education Guidelines

Nursery School Childcare Guidelines

Licensed Children’s School Education
and Childcare Guidelines

Basis of Education andChildcare Content

Daily Education andChildcare Time

4 hours as standard

8 hours as standard

Hours depending on the children (8hours for children requiring childcare
and 4 hours for children requiring
education) as standard

Number of Education
and Childcare Days ina Year39 weeks or more

No stipulations

Depending on the regional conditions*1st certification: Children of 3 years old or older requiring education / 2nd certification: Children of 3 years old or older requiring childcare / 3rd certification:
Children under 3 years old requiring childcare
Copyright©JP-HOLDINGS,INC All Rights Reserved.

39

(4) Overview of School Clubs and Children’s Houses
School Clubs (Broad Definition)
After-school Children’s Health
Promotion Business

After-school Children’s Classroom
Promotion BusinessChildren’s Houses

Underlying
Laws/Regulations

Article 6-3 (2) of the Child Welfare Act(Under the jurisdiction of the Ministry of
Health, Labour and Welfare)

Implementation of After-school Children’s Plan
Promotion Business(Under the jurisdiction of the Ministry of
Education, Culture, Sports, Science andTechnology)

Article 40 of the Child Welfare Act(Under the jurisdiction of the Ministryof Health, Labour and Welfare)

Nature of the Facility

The aim is to provide a place forappropriate fun and lifestyles for children
enrolled in elementary school whoseparents are not at home after school due towork and foster them healthily by using afacility such as child welfare facilities after
school.

This aims to establish safe and secure activity
bases (locations) for children using spareclassrooms in schools after hours or on theweekends. These provide opportunities forlearning and a variety of experiences/exchange
activities for children on a regular and continuous
basis with the participation of local residents.

This aims to offer healthy fun tochildren in the community, promote
their health and nurture emotions.
(one of children’s recreational
facilities)

Target Children

Grades 1 to 3 in elementary school(However, it is also possible to target
children in special support elementary
schools and elementary school children ingrades 4 and above)

All children in the community (regardless ofwhether infants, children or students andregardless of whether their parents work or not)All children under the age of 18

Basis of Education andChildcare Content

After-school Children’s Health Promotion
Business Action Guidelines
After-school Children’s Club Guidelines

After-school Children’s Classroom Promotion
Business Action Guidelines

Children’s House Guidelines

Daily Education andChildcare Time

3 hours or more on average(However, this is 8 hours or more as a
general rule on Saturdays, school holidays
and long-term holiday periods)

Number of Education
and Childcare Days in aYear

250 days or more as a general rule
(However, this can be 200 days or more
depending on the form of the user’s needs)

4 hours or less on average(However, this is 8 hours or less as a general ruleon Saturdays, school holidays and long-term
holiday periods)

Set in accordance with the situationin the community (e.g. the age of thetarget children and convenience ofparents)

Less than 250 days as a general rule

Copyright©JP-HOLDINGS,INC All Rights Reserved.

40

(5) Consolidated Results (Highlights)
Net sales(million yen)
Operating income(million yen)
Ordinary income(million yen)
Net income attributableto owners of parent(million yen)
Net income per share(Yen)

FY3/07

FY3/08

FY3/09FY3/10FY3/11

FY3/12

FY3/13

FY3/14

FY3/15

FY3/16

5,488

6,062

7,272

8,194

9,166

11,867

13,78915,747

17,86820,552

202

392

521

738

839

1,114

1,336

1,288

1,431

1,834

316

500

707

800

866

1,150

1,375

1,514

1,636

1,884

139

266

440

444

500

653

750

872

1,003

1,195

1.86

3.60

5.98

6.06

6.67

7.83

8.99

10.45

12.03

14.32

* Net income per share is the amount that reflects the stock split.

Net
sales
売上高（左軸）(left axis)

Ordinary
income
経常利益（右軸）(right axis)

Operating income（right axis）(Million yen)

25,000

2000
1800
1600
1400
1200
1000
800
600
400
200
0

20,00015,00010,0005,000
0FY3/07

2007年…

FY3/08

2008年…

FY3/092009年…

FY3/102010年…

FY3/11

2011年…

FY3/12

2012年…

FY3/132013年…

FY3/142014年…

Copyright©JP-HOLDINGS,INC All Rights Reserved.

FY3/152015年…

FY3/162016年…

41

(6) Consolidated Results (Balance Sheet / Statement of Cash Flows)
FY3/07

FY3/08

FY3/09FY3/10FY3/11

FY3/12

FY3/13

FY3/14

FY3/15

FY3/16

Total assets(million yen)

3,136

3,823

4,275

5,763

9,432

9,808

10,926

13,626

19,11521,519Net assets(million yen)

1,054

1,242

1,546

1,903

3,559

3,977

4,485

5,102

5,774

6,570

Shareholders’equity ratio
(%)

33.5

32.4

36.1

32.9

37.7

40.5

41.0

37.4

30.2

30.5

FY3/07

FY3/08

FY3/09FY3/10FY3/11

FY3/12

FY3/13

FY3/14

FY3/15

FY3/16

Cash flows fromoperating activities(million yen)

406

439

672

378

915

1,205

1,173

1,038

1,294

1,804

Cash flows frominvesting activities(million yen)

△ 426

△ 587

△ 363

Cash flows fromfinancing activities(million yen)

455

33

△ 157

412

2,473

△ 219

514

1,220

3,748

1,553

Year-end balance of
cash and cash
equivalents(million yen)

1,086

972

1,137

1,022

2,602

2,768

3,188

1,808

2,891

3,798

△ 906 △ 1,808△ 821 △ 1,268 △ 3,638 △ 3,959 △ 2,449

Copyright©JP-HOLDINGS,INC All Rights Reserved.

42

(7) Dividends
The basic policy of our company is to continue paying a performance-linked dividend with a payout ratio of around
30% while maintaining the necessary internal reserves for future business development and to strengthen ourmanagement structure.
FY3/07

FY3/08

FY3/09FY3/10FY3/11

FY3/12

FY3/13

FY3/14

FY3/15

FY3/16

Amount ofdividend per
share
(yen)

0.60

1.12

1.90

2.00

2.90

3.00

3.20

3.60

4.00

5.00

Commemor
ative
dividend:
0.50 yen

Commemor
ative
dividend:
0.50 yen

Payout ratio
(%)

32.1

43.4

38.3

35.6

34.5

33.3

34.9

31.0

31.7

33.0

The amount of dividend per share reflects the stock split.

Copyright©JP-HOLDINGS,INC All Rights Reserved.

43

(8) Corporate Philosophy
For the smiles of children…
Smiles of children: This is our pride that cannot be replaced. We
always provide childcare where children who will lead the future
can develop generosity as well as words and emotions to express
themselves in a safe environment.
We strive for continual self-improvement to be models to children.
We also strive to connect with children with passion and a sense of
responsibility, and to acquire strong ethical values and social
conscience.



Our corporate message contains the idea that all
our employees always think about and put into
practice what they can and should do for thesmiles of children regardless of his/her
occupation, job title, department or experience
with our objective becoming the best childcare
operator.
Copyright©JP-HOLDINGS,INC All Rights Reserved.

44

(9) Code of Conduct and Management Philosophy
Code of
Conduct

As a childcare
operator

Follow social
conscience

Aim for personal
growthNumber one priority:
Safety and security

Compliance

Among individuals andfriends• We will provide peace of mind
to children and protect theirsafety and lives• We will value each individual
child and respect theirpersonalities• We will listen carefully tochildren and parents• We will provide childcare
support close to users andcommunities• We will contribute to thedevelopment of communities
and the conservation of theenvironment as a member ofsociety• We will contribute to an
improvement in social welfare
for the future of children• We will comply with laws andregulations as a member ofsociety• We will respect human rights• We will never overlook abuse• We will protect personal
information• We will not use company
assets for private use• We will maintain absolutely
no relations with anti-social
forces; we will keep healthy
and appropriate relationships
with politicians and public
officials• We will strive to actively
disclose information• We will act while thinking
about what is best
• We will act independently
with a sense of responsibility• We will continue to learn as
experts• We will never forget to smileand have a sense of fun• We will have our own
opinions while listening
closely to those of others

Management
Philosophy
Number one
priority:
Safety andsecurityChildcarethat remains
memorable
forever tousers

Provision ofhigh-quality
servicesneeded byusers

Creation ofwork-friendly
environments

Copyright©JP-HOLDINGS,INC All Rights Reserved.

45

(10) NADESHIKO 2016
Following on from 2015, we were again selected as a 2016 NADESHIKO
Brand. We will continue to strive toward the proactive activity promotion
and management position appointment of women in the future.

Copyright©JP-HOLDINGS,INC All Rights Reserved.

46

Forecast Precautions
This document contains forecasts about the future. However, these are predictions thathave been made by our company based on the information available at the time of
publication. The reality may be significantly different from our predictions due to economic
conditions and market trends. Furthermore, this document is not intended to solicit
investment. We are under no obligation to amend or change the information pertaining toforecasts contained in this document even if we obtain new information in the future.

Inquiries: Mika Matsumiya

17F Chikusa New Tower Bldg., 3-15-31 Aoi,
Higashi-ku, Nagoya-shi Aichi

General Manager of Administration Div.

TEL: 052-933-5419
FAX: 052-933-5163

JP-HOLDINGS, INC.

E-mail: mika_matsumiya@jp-holdings.co.jp

Copyright©JP-HOLDINGS,INC All Rights Reserved.

47