www.nichiigakkan.co.jp

NICHII GAKKAN COMPANY

Financial Results Briefing Document
for the 1H of the Fiscal Year Ending March 31, 2015
November 11, 2014

www.nichiigakkan.co.jp

Management Policies under the
株式会社ニチイ学館
New Business
Execution System
2014年３月期

通期決算

参考資料

Chairman, President and CEO

Akihiko Terada

Copyright © 2014Nichii Gakkan Company. All rights reserved.

FY2015 1H Results Briefing1Growth Strategies of Nichii

Theme of New Management Strategy

To the 1st Stage for Globalization

Copyright © 2014Nichii Gakkan Company. All rights reserved.

1st StageDeveloping business in China
with a long-term care model as
the core

2nd Stage

Further developing business in
the Asia-Pacific region

FY2015 1H Results Briefing

21st Stage: Chinese Market

The overwhelming scale of the Chinese market,
where Nichii is expanding business

Major areas where Nichii will start business in 2015
Nichii Beijing

NichiiShanghai

Nichii
Guangzhou

North/ Northeast
regions

Central/ Northwest
regions

South/ Southwest
regions- Beijing- Harbin (Heilongjiang)- Changchun (Jilin)- Shenyang (Liaoning)- Dalian (Liaoning)- Tianjin- Jinan (Shandong)- Tsingtao (Shandong)- Zhengzhou (Henan)

BeijingShanghai

・- Shanghai- Changzhou (Jiangsu)- Hangzhou (Zhejiang)- Guangzhou (Guangdong)- Shenzhen (Guangdong)- Chengdu (Sichuan)- Hefei (Anhui)- Wuhan (Hubei)- Nanchang (Jiangxi)- Chongqing- Xian (Shaanxi)- Changsha (Hunan)- Fuzhou (Fujian)- Nanning (Guangxi province)- Kunming (Yunnan)

Copyright © 2014Nichii Gakkan Company. All rights reserved.

・Guangzhou

FY2015 1H Results Briefing

3Core Competence of the China business

Point 1The development of business in China
demonstrates the strengths of Nichii

Introduction of and support for the expertise and business model
cultivated in Japan, a country with advanced long-term care
Cultivation of human resources
Business operation

Our excellent human resources cultivation system will determine theexcellence of our services.
Success and failure in business management will influence thesuccess and failure of the business.

Zhihu training system integrated with industry, government, and academia
Aging and Long-term Care
Training Society

Zhihu training
leadership department- China Planning Institute on Aging- Specialized institutions, such asuniversities- Zhihu training leadership department- Nichii- Group company(Nanning)

Training ofinstructors

Training ofstaff- NICHII CARENET CHINA Co., Ltd., Nichii China Co., Ltd.,NICHII (GUANGZHOU) CO., LTD.
- Group company(Guangzhou Zhengxianghe Housekeeping
Service Co. , Ltd.)- Zhihu strategy department
Copyright © 2014Nichii Gakkan Company. All rights reserved.

Home care
Day careFacility care

Zhihu business operation system
Zhihu strategic unit

Main long-term careservices

Strategyadministrative
agent* One Group
company promoted

Dementia careGroupcompanies

Support of persons
with disabilities

FY2015 1H Results Briefing

4Core Competence of the China business

Point 2

Building a business scheme based on cooperation
between the public and private sectors(1) A strategic partnership agreement concluded with the China Planning
Institute on Aging, an institute under direct control of the government.
• A strategic partnership agreement was concluded with the China Planning Institute on Aging, an institutedirectly run by the government of People’s Republic of China.
• We are working to spread quality and efficient long-term care services and formulate a healthy long-termcare market.
• We are promoting the standardization of specialized knowledge and skills and raising the level throughthe systematization of human resources training for long-term care.

Amalgamation of partnerships in the public and private sectors(2) The Zhihu Group was built by incorporating local business operators invarious regions of China.
• We are working to amalgamate the Chinese culture with our services by incorporating local companies
into the Zhihu Group.
• We are winning confidence through community-based business operation by reflecting the culture andcustoms of various regions of China in our services.
Zhihu is a brand strategy for spreading the highest quality care services (Zhihu) into the various regions of China.
Copyright © 2014Nichii Gakkan Company. All rights reserved.

FY2015 1H Results Briefing

5Core Competence of the China business

Point 3

Boosting of the Japanese brand based oncooperation between Nichii and strong alliancepartners in Japan

Synergy through the combination of the businesses of Nichii
and the complementation of partner companies
NichiiStrong alliance partners

Business combination

Product manufacturing
power in China

 Long-term Care*(40%)

 Medical Support(20%)

 Child Care(22%)

 Health Care(10%)

 Education( 8%)

 Oji Holdings
 Nippon Paper Crecia
 XXXXXXXXXXX* Composition ratio in 2020 (forecast)
Copyright © 2014Nichii Gakkan Company. All rights reserved.

FY2015 1H Results Briefing

6Organizations of the Zhihu Group
Nichii (Japan/ Tokyo)

China Planning Instituteon Aging

Strategic alliance

Beijing Loved Hongyu
Technology Co., Ltd.

Nichii Hong Kong

Joint venture Zhihu Service Management Co., Ltd.
(tentative name)Local subsidiaries of Nichii (Beijing,Shanghai, Guangzhou)

Zhihu Group

Core partner companies(human resources cultivation)

Partnercompany

PartnercompanyPartnercompany

Core partner companies(business operation)

Partnercompany

Partnercompany

Partnercompany

Partnercompany

Partnercompany

IT platform
Collection/managementof information

Collection/managementof information
Provision of services

Customers
Copyright © 2014Nichii Gakkan Company. All rights reserved.

Provision of services

Customers
FY2015 1H Results Briefing

7

Business Concept of the Zhihu Group
Human resources
cultivation business
Provision of services and products bystaff who have mastered the knowledge
and techniques of sanitary care

Excellentproducts
Excellent products
sales business

Sanitary product sales
business
Sales of products for the elderly
Disposable diapers for adults
Sales of child care products
Disposable diapers for children

Excellent
human resources

Cultivate instructors

Human resources cultivationand training business

Cultivate staff

Threeexcellences
Excellent
services
Life support
service business

Production of excellent
human resources from thecultivation business

Human support businessSupporting the elderlyHome careCommunity care

Provision of quality
products to support theelderly and child rearing

Facility careChild rearing support

Home service
supportMaternity careHome service
support

Copyright © 2014Nichii Gakkan Company. All rights reserved.

Baby-sitter
Operation ofchildcare facilities
FY2015 1H Results Briefing

8Growth Image

Avoiding institutional risk through a diversification strategy and increasing
growth potential and profitability for long-term stable growth.

FY2015.3

Improvement in businessstructure balanceChild Care 0.9%
Education 6.3% Other 2.7%
Health Care 2.5%
MedicalSupport
34.9%
Long-term Care
52.6%

Education 5%
Health Care
7.5%

FY2017.3 (forecast)Child Medical
Care Support
15%
15%
Long-term Care (Japan)
7.5%

Long-term Care (China)
50%

Nichii Beijing

Diversification
through globalization
Copyright © 2014Nichii Gakkan Company. All rights reserved.

Nichii Shanghai
Nichii Guangzhou
Nichii Gakkan

FY2015 1H Results Briefing

9Business Execution System Supporting Globalization

Building a management system capable of responding toa variety of operations quickly and accurately
Image of the 3 general headquarters system
Chairman, President and CEO
Akihiko Terada

Business Headquarters
President’s OfficeSenior Managing
Vice President andDirector and President’s Representative Director
Office Executive Officer
Kazuyoshi Yaji
Nobusuke Mori

Corporate Governance代表取締役副社長Headquarters
寺田 大輔
Managing DirectorTsuyoshi Terada

China businessHeadquarters
Vice President andRepresentative Director
Daisuke Terada

Officers in charge of each segment
concurrently serve as directors in charge ofbusiness in Japan and China
Nichii HongKong
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Nichii
BeijingNichiiShanghai

Nichii
Guangzhou
FY2015 1H Results Briefing

10

(Reference) Marketability of China in Comparison with JapanJapanChina

127 million people

Total population

1,360 million people

Approx. 32 million people

Elderly population

Approx. 131.61 million people

Approx. 4.62 million people

Number of the elderlywith dementia

19.74 million people (estimate)

Approx. 1 million people

Shortage of humanresources for longterm care

Approx. 12 million people

Approx. 1.03 million people

Number of annual
birthsApprox. 16.4 million people

Approx. 30,000 people

Number ofunemployed 4-yearcollege graduates

Approx. 930,000 people“Realization of the integrated community
care system”
Focusing on home care

Government policy

Approx. 7.8 trillion yen  21 trillion yen(2010)(2025)

Size of the long-termcare market“Realization of 90-7-3 method”
Focusing on home care
*1: Home care 90%, community care 7%, long-termcare facilities 3%

Approx. 16.4 trillion yen  82 trillion yen(2010)(2050)*Source: Data of the Statistics Bureau of the Ministry of Internal Affairs and Communications, the Ministry of Health, Labour and Welfare, and the National Bureau of Statistics ofChina, etc.
Copyright © 2014Nichii Gakkan Company. All rights reserved.

FY2015 1H Results Briefing

11

(Reference) No.1 Service Quality in the Asia-Pacific Region

Received the 2014 Best Practice Award fromFROST＆SULLIVAN in the Health Care Service section

Points rated highly• Contribution to the cultivation of human resources forlong-term care
• Provision of better services reflecting customer
voices and successful experiences of staff• Contribution to creating an environment for people tolive at ease
• Establishment of a position as the leading company
in Japan, a country with advanced long-term care
• Promotion of business operations in China

Copyright © 2014Nichii Gakkan Company. All rights reserved.

FY2015 1H Results Briefing

12

(Reference) Social Mission of the Zhihu Group

Contributing to solving social problems in China withthe best care services rooted in the Chinese culture.
China businessSocial effects

Building strong partnerships

Supporting the building of a long-term caresystem for the elderly in China
Healthy development of the long-term caremarket in China▼
Providing and guiding business know-how▼

Promoting employment of the younger generation
by creating jobs in domestic demand industries.

Developing culture-, life- andcommunity-based services

Expanding areas across China

Copyright © 2014Nichii Gakkan Company. All rights reserved.

Contributing to the development of the service
industry in China through business growth.

FY2015 1H Results Briefing13www.nichiigakkan.co.jp

株式会社ニチイ学館
Overview ofFinancial Results for the 1H
2014年３月期 通期決算
of the Fiscal Year ending March 31, 2015

参考資料

Copyright © 2014Nichii Gakkan Company. All rights reserved.

FY2015 1H Results Briefing

14

Financial Results for the 1H of the FY 2015

(Unit: million yen)

FY2015 2Q

FY2014 2Q
AmountNet Sales
Operating Income%Ordinary Income%Net Income%Copyright © 2014Nichii Gakkan Company. All rights reserved.

AmountYear on year

136,049

136,015(0%)

3,229

2,719(15.8%)

2.4%

2.0%

2,502

1,7761.8%

1.3%

1,660

593

1.2%

0.4%

(29.0%)(64.3%)FY2015 1H Results Briefing

15Consolidated Sales and Operating Income by Business for the 1H of the FY 2015
(Unit: million yen)

Net Sales

FY2014 2Q

FY2015 2Q
AmountMedical Support
Long-term &Health Care
Education
OthersElimination/
Corporate
Total

Year on year

52,77052,8590.2%

73,232

74,615

1.9%

9,873
651

8,421
752

(14.7%)

(478)

(633)

-136,049

136,015(0.0%)

15.4%(Unit: million yen)

OperatingIncome
Medical Support
Long-term &Health Care
Education
OthersElimination/Corporate
Total
Copyright © 2014Nichii Gakkan Company. All rights reserved.

FY2014 2Q

FY2015 2QAmountYear on year

3,900

4,493

15.2%

6,604

6,731

1.9%

(3,208)(30)(4,142)130-(4,036)

4,493-

3,229

2,719

(15.8%)-FY2015 1H Results Briefing

16

Major Factors for Changes in Sales for the 1H of the FY 2015
(Unit: million yen)

+1,383- Existing- Language education- Hospital- Clinics-1,750 million yen+300 million yen+400 million yen-300 million yen

136,049+101+890-1,452- Home care
- Facility care
- Health care

136,015-155-100 million yen+1,300 million yen+200 million yen

Decrease in sales of 34
million yen year on year
FY20142Q

MedicalSupport

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Long-term &Health Care

Education

OtherElimination/Corporate

FY20152Q
FY2015 1H Results Briefing17

Major Factors for Changes in Operating Income for the 1H of the FY 2015
(Unit: million yen)+127
- Existing- Language education

3,229-1,050 million yen+100 million yen+593+160- Home care
- Facility care- Health care-150 million yen+200 million yen+50 million yen-934

2,719-457

Decrease in profit of 510
million yen year on year
FY20142Q

MedicalSupport

Copyright © 2014Nichii Gakkan Company. All rights reserved.

Long-term &Health Care

Education

OtherElimination/CorporateFY2015
2Q

FY2015 1H Results Briefing18Segment Highlights

Strengthening collaborations between divisions andpromoting efficient operations
Medical Support BusinessNet sales

52,859 million yen (+0.2%)
Operating income 4,493 million yen (+15.2%)

Operating margin

8.5%

Long-term & Health Care BusinessNet sales

Operating margin

74,615 million yen (+1.9%)

Operating income 6,731 million yen (+1.9%)

Up 1.2 points year on year

 Focusing on expanding operations at existing hospitals andimproving business efficiency
 Strengthening the new development and sales of management
support services
 Enhancing the cultivation of human resources(Strengthening follow-up and career development systems, etc.)

Education BusinessNet sales

8,421 million yen (-14.7%)

Operating income (4,142 million yen) (–%)

Number of FC
classrooms244
Up 216 year on year

 Revising course curriculum to a more practical one
 Strengthening the supply capacity of human resources incooperation with business divisions
 Enhancing corporate sales
 Actively developing COCO Juku Junior through franchising

Copyright © 2014Nichii Gakkan Company. All rights reserved.

9.0%
Up 0 point year on year Preparing a system to build an integrated community care system(Dementia care, home-visit care, collaboration between medical and long-termcare services, etc.)

 Cultivating specialists, including dementia supporters
 Enhancing health care services (not covered by insurance).

Number of childcare
centers operated

Child Care BusinessNet sales

955 million yen (23.2%)

Operating income(339 million yen) (–%)

84
Up 7 year on year Strengthening collaboration with the language education business Preparing for operations in anticipation of the establishment of newchildcare system

FY2015 1H Results Briefing

19

FY2015 Earnings Forecasts(Unit: million y en)

FY2015FY2014

Net Sales
Operating Income%Ordinary Income%Net Income%Copyright © 2014Nichii Gakkan Company. All rights reserved.

FY2015（Initial Forecast）

FY2015（Revised Forecast)Amount Change(to initical forecast)

271,447

278,400274,300(4,100)

6,322

7,700

7,700

0

2.3%

2.8%

2.8%

-

4,940

5,700

5,700

01.8%

2.0%

2.1%

-2,831

3,000

3,0000

1.0%

1.1%

1.1%

-FY2015 1H Results Briefing20

FY2015 Earnings Forecasts – Net Sales and Operating Income by Business（単位：百万円）

Net Sales
Medical Support
Long-term Care
Health Care
Long-term Care
+ Health Care
Education
Other
Eliminations/ Corporate
Total

Operatingincome
Medical Support
Long-term Care
Health Care
Long-term Care
+ Health Care
Education
Other
Eliminations/ Corporate
Total

Copyright © 2014Nichii Gakkan Company. All rights reserved.

（単位：百万円）(Unit: million yen)

FY2014FY2015FY2015Result（Initial f orecast）（Revised f orecast）

105,974
143,019
3,724

106,800
148,100
4,300

106,200
146,300
4,100

(600)
(1,800)(200)

146,744

152,400

150,400(2,000)18,516
1,330(1,117)
271,447

19,1001,500(1,400)278,400

17,7001,600(1,600)274,300(1,400)100(200)(4,100)FY2014FY2015FY2015Result（initial f orecast）(to initical f orecast)Amount Change

Amount Change

8,660
12,549221

8,900
13,400400

9,500
13,500300

600100(100)

12,77013,80013,8000(7,269)
45(7,885)
6,322(7,200)
200(8,000)
7,700(7,600)
300(8,300)
7,700(400)
100(300)
0

FY2015 1H Results Briefing

21All performance targets and other forecasts, including numbers of contracts
and users, and goals, contained in this document are based on information
currently available to the Nichii Gakkan Group and will be affected byuncertain factors, including economic circumstances, the relaxation ofregulations, and employment conditions. Please note that actual results,numbers of contracts and users, and other data may be different from theforecasts.

Contact information
Nichii Gakkan Company

IR Division, Public Relations Department
Corporate Planning Headquarters
Address: 2-9 Kanda Surugadai, Chiyoda-ku, Tokyo
Tel: 03-3291-5637 (IR Division)
E-mail: nichii-ir@nichiigakkan.co.jp
Copyright © 2014Nichii Gakkan Company. All rights reserved.

FY2015 1H Results Briefing

22