www.nichiigakkan.co.jp

NICHIIGAKKAN CO., LTD.

Financial Results Briefing Document
for the 1H of the Fiscal Year Ending March 31, 2018

November 10, 2017

Financial Results Highlights（Unit: million yen）

FY2018.3

FY2017.3
2Q

2Q

Difference

137,751

141,426 +3,675

Operating Income

815

3,753 +2,938

%

0.6%

Net Sales

Ordinary Income%

Profit attributable toowners of parent%▲ 1,110▲ 0.8%▲ 1,240▲ 0.9%

2.7%+2.1pt

1,815 +2,926
1.3%+2.1pt918 +2,159
0.6%+1.5pt© 2017 NICHIIGAKKAN CO., LTD. All rights reserved.

1

2nd Quarter Financial Highlights- Updated record-high sales (141,426 million yen, increased by 3,675 million yen year-on-year)- Continued operating profits improvement trend (3,753 million yen, increased by 2,938 million yen
year-on-year)- Improved cash flow (record-high operating cash flow and free cash flow)-> operating cash flow: 9,927 million yen, free cash flow: 9,448 million yen-> improved long-short term loan ratio
Operating profit (quarterly transition)■ 2Q© 2017NICHIIGAKKAN CO., LTD. All rights reserved.

2

Consolidated Net Sales and Operating Income by Segment（Unit: million yen）

Net Sales

FY2017 2Q

FY2018 2Q

Change（Unit:millin yen）

OperatingincomeFY2017 2Q

FY2017.3 2Q

ChangeMedical Support

54,06853,738▲ 0.6%

Medical Support

3,641

4,499

23.5%

Long-term Care

72,291

74,613

3.2%

Long-term Care

5,007

7,378

47.3%

Child Care

2,560

3,922

53.2%

Child Care

▲ 497

▲ 728

-

Health Care

1,415

1,483

4.8%

Health Care

Education

6,347

6,385

0.6%

Education

Therapy ※

100

113

12.9%

China

949

1,136

Others433

Elimination

Total

276

166 ▲ 40.0%▲ 2,405▲ 2,125-

Therapy ※

▲ 130

▲ 202

-

19.8%

China

▲ 722

▲ 753

-

733

69.3%

Others

139

▲ 414

▲ 699

-

137,751

141,426

2.7%

Elimination

Total

96 ▲ 31.0%▲ 4,494▲ 4,576

-

815

3,753

360.4%※New segment display from the fiscal year ended March 31, 2018
© 2017 NICHIIGAKKAN CO., LTD. All rights reserved.

3

Major Changes in Net Sales（Unit：million yen）

Year on year Increase inSales of 3,675 million yen
Core businesses ＋3,355

Strategic businesses ＋116

Globalization businesses
+187
＋300

＋1,362

＋67

＋37

＋12

+187

141,426▲285＋2,322

137,751

・ Home Care▲100 36million yen
・ Facility Care
+2,570million yen
・ Care Education▲148million yen▲329
・ Hospitals+36million yen
・ Clinics▲201million yen
・ Medical Education ▲164million yen
FY2017.3
2Ｑ

MedicalSupportLong-term
Care

Child
Care

Health Care

Education

Therapy

China

OthersElimination

FY2018.3
2Ｑ© 2017 NICHIIGAKKAN CO., LTD. All rights reserved.

4

Major Changes in Operating Income
Year on year Increase in Operating
Income of 2,938 million yen
Core businesses ＋2,997

Globalization businesses
Strategic businesses ＋99▲31＋2,371

＋280
▲231

815

2Ｑ

MedicalSupport

▲71

▲110

3,753
▲31

▲43

▲81

OthersElimination

・ Home Care
+883million yen
・ Facility Care +1,545million yen
・ Care Education ▲57million yen＋857

FY2017.3（Unit：million yen）

Long-term
Care

Child
Care

Health Care

Education

Therapy

China

FY2018.3
2Ｑ© 2017 NICHIIGAKKAN CO., LTD. All rights reserved.

5

Changes in Cash flow
(Unit：million yen）

ＦＹ2017.3

FY2018.3

2Q

2Q

Difference

Cash flows from Operating activities

2,854

9,927

+7,073

Cash flows from Investing activities▲ 2,709▲ 479+2,230144

9,448+9,304

Cash flows from Financial activities▲ 1,387▲ 10,139▲ 8,752

Cash and cash equivalents at end of year

13,171

15,579+2,407

Free cash flow

© 2017 NICHIIGAKKAN CO., LTD. All rights reserved.

6

Segment Overview© 2017 NICHIIGAKKAN CO., LTD. All rights reserved.

7

Core Business Overview
Upswing trend continued due to the successful business efficiency improvement focusing on the facility sites
Net Sales
Medical Support
Business

54,0683,641
FY.2017.3 2Q

Operating Income (Unit million yen)
53,7384,499

FY.2018.3 2Q

Long-term Care
Business

72,291

74,613

5,007

7,378

FY2017.3 2Q- Further promotion of the contract optimization- Implementation of the customer attracting type seminars which
understand the needs of medical institutions-> Sales strengthening of the management support service- Personnel retention and recruitment capacity improvement throughtreatment improvements- Further improvement of the facility utilization rate
- Business model establishment conforming with regulation changes- Securing human resources through workplace environment
improvement and increasing job opportunities

Sales growth rate per hospital(year-over-year)+5.3％
Sales growth rate for residence typeservice (year-over-year)+9.3％

FY2018.3 2Q

3,922
ChildcareBusiness

2,560

(497)

(728)

FY2017.3 2Q

FY2018.3 2Q- Sales activities to strengthen on the corporate and regional limits forthe corporate-run childcare centers- Sales of childcare related supplies and products- Preparation of new establishments for the following fiscal year

Number of childcare facilities(year-over-year)

Increased by

81 facilities© 2017 NICHIIGAKKAN CO., LTD. All rights reserved.

8

Strategic Business Overview
Building business foundation to respond to social needs
Net Sales
Health Care
Business

1,415

276
FY.2017.3 2Q

Education
Business

6,347(2,405)FY2017.3 2Q

Therapy Business

100

Operating Income (Unit: million yen)
1,483

166

- Further promotion of the housekeeping service, "NICHII Life"- Strengthening of sanitary product sales- Market development of the housekeeping service-> Expand customers for “Nichii Life” and “Sunny Maid Service”

Number of Nichii Life users(year-over-year)+10.6％

FY.2018.3 2Q

6,385(2,125)- Strengthening of sales to the corporate enterprises, kindergartensand nursery schools- Focus to expand COCOJUKU Jr. satellites- Further improvement of the area promotion efficiency- Management resources sharing between the brands and businesssegments

FY2018.3 2Q

113

(130)

(202)

FY2017.3 2Q

FY2018.3 2Q- Focus on the customer acquisition activity for the existing grooming
salons- Promote to expand the grooming salons (aiming at up to 40)- Marketing activity in the area where existing salons are located- Focus on cooperation with the Nursing Care Business (dog therapy)

Number of the satellites (at theend of September)

23 facilities
Number of the existing A-LOVE (atthe end of September)

4 facilities© 2017 NICHIIGAKKAN CO., LTD. All rights reserved.

9

Globalization Business 【China】 Consolidation progress
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26

Company
北京三傑聖一人力資源有限公司
瀋陽日医助尓家庭服務有限公司
深圳市中家家庭服務有限公司
済南仁徳家庭服務有限公司
広州市正祥和家政服務有限公司
常州金蓓蕾健康諮詢服務有限公司
深圳市中家星級家政服務有限公司
深圳市中家華傭家政服務有限公司
深圳中家職業技能培訓学校
杭州天使家政服務有限公司
大連九鼎互聯科技発展有限公司
武漢尓邦家政有限公司
広西康之橋護理服務有限公司
南寧康之橋職業培訓学校
欽州康之橋職業訓練学校
柳州康之橋職業訓練学校
安徽賽菲家庭服務管理有限公司
合肥賽菲職業訓練学校
日医（珠海）健康服務有限公司
日医（仏山）健康服務有限公司
梅州市客家大嫂家政服務有限公司
梅州市華傭職業培訓学校
西安海鑫家政清潔工程有限公司
西安海鑫職業技術培訓学校
中福日医（上海）健康服務有限公司
日医恒基（北京）健康管理技術有限公司

SchoolＰＬ

ＢＳ（Unit : million yen）
2Q
（Jan.-Jun.）

Net Sales

1,136

Operating
Income▲753●
Amortization of goodwill●●●

18 companies
and 7 school
corporation
wereconsolidated

19 companies
and 7school
corporation
wereconsolidated

200

Includes wholly-owned subsidiaries of the Nichii Group（Unit : million yen）●

Total Assets

7,090

●

Net assets

6,426

●

Goodwill

1,217※4Q（expected）© 2017 NICHIIGAKKAN CO., LTD. All rights reserved. 10

Making a future investment - Creation of a workplaceenvironment allowing everyone to work without undue worries Nationwide sequential launch of the corporate-run childcare centers (70 facilities currently fixed)
Promote proactive expansion considering the future profit balance

Nationwide

70

facilities

Entered into an alliance with 54
companies offering the services
for employees
OpenedScheduled to open in 2017

© 2017 NICHIIGAKKAN CO., LTD. All rights reserved. 11

FY2018.3 Earnings Forecast© 2017 NICHIIGAKKAN CO., LTD. All rights reserved.

12

FY2018.3 Earnings Forecast（Unit:milion yen）

FY2017.3
AmountNet Sales
Operating income%

Ordinary Income%

Profit attributable toowners of parent%

Cash Dividends per
Share(yen)FY2018.3
Amountyoy（％）

276,659

300,000

8.4%

4,206

9,300

121.1%

1.5%

3.1%

-

1,429

6,000

319.9%

0.5%

2.0%

-

1,403

3,000

113.8%

0.5%

1.0%

-

21.86yen

46.73yen

-

22yen

22yen

-

© 2017 NICHIIGAKKAN CO., LTD. All rights reserved.

13

Consolidated Net Sales and Operating Income by Segment（Unit:millon yen）

Net Saleschange（Unit:million yen）
changeFY2017.3

FY2018.3

Medical Support

108,325

112,300

3.7%

Medical Support

8,012

9,200

14.8%

Lomg-term care

144,416

154,100

6.7%

Lomg-term care

11,18312,80014.5%Child Care

5,949

9,300

56.3%

Child Care

▲ 781

▲ 600

-

Health Care

2,926

4,600

57.2%

Health Care

615

600

▲ 2.5%

Education

12,771

15,00017.5%

Education▲ 4,647▲ 2,900-

Therapy ※

377

1,600

324.4%

Therapy ※

▲107

0

-

China

2,007

3,100

54.5%

China

▲ 1,416▲ 1,100

-

Other

1,303

1,600

22.8%

Other

285

Ellimination▲ 1,417▲ 1,600-

Total

276,659

300,000

8.4%

Oprerating Income(%）

Ellimination

Total

FY2017.3

FY2018.3(%）

200 ▲ 29.9%▲ 8,937▲ 8,900

-

4,206

9,300

121.1%※New segment display from the fiscal year ended March 31, 2018
© 2017 NICHIIGAKKAN CO., LTD. All rights reserved.

14

Management strategy© 2017 NICHIIGAKKAN CO., LTD. All rights reserved.

15

Visions of Nichii Gakkan at the end of FY 2020 (Mar. 2021)
Establish a balanced business mix which enables to achieve the target
management indexes by realizing the strategic triangle
Strategic triangle
SocialContribution

Strategy Policy
MedicalSupportUtilization ofhuman
resourcesCore
businesses

Long-term
Care

Child Care（Social）
Management
Philosophy

Strategic
businesses(Economic)
Return of profits

Globalization
businesses（Growth)Future-oriented

Establishment of the foundation for a stable growth ofCore Businesses by upturning the performance of themain businesses (Medical Support, Long-term Care)
Increased profitability of the strategic businesses by
positive turnaround of Education (Language)
Business, and Health Care Business promotion
Increasing future expectation by the businessexpansion scheme review. Gradual promotion of the
China business in a long-term perspective© 2017 NICHIIGAKKAN CO., LTD. All rights reserved.

16

Steps to realize visions
Core Businesses are on the right track.
Formulate the strategic triangle with the gradual positive turnaround of
the Language Education Business, and China Business

2021/Mar.
2020/Mar.
Strategic triangle formation

2019/Mar.
2015/Mar.
to2018/Mar.
Profitability improvement of
the Core Businesses

Positive turnaround of theLanguage Education Business
Positive turnaround of the
China regional operatingcompanies
Positive turnaround of theChildcare Business

Complete positive
turnaround of the China
business

Consolidated operating
profit ratio: 8%- Pursuing of social
responsibility of the corebusinesses- Focusing on economic
performance of the strategic
businesses- Expectation on the growthpotential of the China
business© 2017 NICHIIGAKKAN CO., LTD. All rights reserved. 17

Visions of Nichii Gakkan at the end of FY 2020 (Mar. 2021)
Going for a Business Mix equipped with the stability, profitability and growth potential
Target management indexes
Net Sales

Achieved double-digit growth

Operating profit ratio

Achieved 8% or more

Improvement of thebusiness composition
ratio
ROE

Composition
ratio

Core

Net Sales
Operating Profit

Strategy

Global

66%

30%

4%

47.5%

47.5%

5%

At least 8% or more, target to achieve 15%
グローバリゼーション事業
GlobalGlobalNet Sales

戦略事業
Strategy
Strategy

Aim to be an Excellent Company
filled with vitality

Vision

Core
Core
基幹事業

FY 2020 is a stepping stone toward the realization of our vision© 2017 NICHIIGAKKAN CO., LTD. All rights reserved.

18

Midterm management strategy- Core Businesses (Medical Support, Long-term Care, and Childcare) Building the stable growth foundation with generated profit reinvestment(HR and capital investment)
Tips to realize visions- Continuous implementation of the operation-oriented business reform (human resource
reinforcement, proposing capability enhancement and product capability strengthening)- New business sites expansion considering the regulation changes, social needs and profit balance(target sales growth rate: 5 to 6%)- Work saving of the on-site tasks utilizing AI and ICT
Operating profit ratio target for Core Businesses

8.9% to 9.4%

7.1%
Net Sales Target
300,000 million yen

2017/Mar.

2018/Mar.

2019/Mar.

2020/Mar.

2021/Mar.

© 2017 NICHIIGAKKAN CO., LTD. All rights reserved.

19

Midterm management strategy- Strategic Businesses (Health Care, Education and Therapy) Profitability improvement pursuit through focusing on the Health Care
Business and radical reform of the Education BusinessTips to realize visions- Focus on the foreign housekeeper, "Sunny Maid Service," at the National
Strategic Special Zones based on the "Nichii Life" platforms- Realize profitability with Education Business structural reforms (COCOJUKU and Gaba
integrated or paralleled)- Local community-oriented promotion of the satellites

18.0% to 18.5%

Operating profit ratio target for
Strategic Businesses(25.7%)
2017/Mar.

Net Sales Target
150,000 million yen

2018/Mar.

2019/Mar.

2020/Mar.

2021/Mar.

© 2017 NICHIIGAKKAN CO., LTD. All rights reserved.

20

Building the strategic promotion system for the Health Care Business
Quickly respond to market needs by constructing the prompt and agile promotion
system controlled directly by headquarters

Focusing on the National
Strategic Special Zones
Respond with the area dominant method
based on the experiences from livelihood
support (at-home care) and housekeeping
support (Nichii Life)

Designated zones of
the National StrategicSpecial Zone

[Strategic Promotion System]

AreaManager

Sendai City
Niigata City

Yabu City

Promote the Sunny Maid Service and grooming
service controlled directly by headquarters

HQ

Senboku City

Kansai area
(Osaka, Hyogo, and Kyoto
Prefectures)

Shops

Tokyo area
(Tokyo Metropolitan
Area, Kanagawa
Prefecture, Chiba
City, Narita City)

Imabari City,
Hiroshima Prefecture
Fukuoka/
Kitakyushu
City
Okinawa
Prefecture

Aichi
Prefecture
Zone 1
Zone 2 [Regional revitalization
special zones]
Zone 3 [Regional revitalization special
zones, Phase 2]© 2017 NICHIIGAKKAN CO., LTD. All rights reserved.

21

Deployment of Sunny Maid Service, Health Care Business
Building a new business growth pillar as a result of respond to diversifying social needs
Progress status of the service deployment- Expansion of the National Strategic Special Zones where theforeign housekeeper program is deployed
Authorized: Tokyo Metropolitan Area, Kanagawa Prefecture, andOsaka City
Applying: Hyogo Prefecture- Building the service providing system for convenience- Shop plan by area conforming with the market size
- Arrangement of the training programs and facilities before andafter moving into Japan
Installation of the kitchens, and Japanese houses training rooms

Overview of Sunny Maid Service- Service will be provided by staff who have housekeeping
support qualifications and over one year of practical experiencein the Philippines- Possible to speak in English- Implementation of training in Japanese cooking- Establishment of a system providing a unique service- Start up from January 2018 onward© 2017 NICHIIGAKKAN CO., LTD. All rights reserved.

22

Structural reforms in education Business- integrated system and paralleled brand Integration of the seniors in Gaba, and the juniors in COCOJUKU Jr.
Both brands paralleled at the former COCOJUKU classroom

SeniorJunior

COCOJUKU

COCOJUKU Jr.

- Nationwide: 80 facilities- Nationwide: 76 facilities- Group lesson- Group lesson

Gaba- Mainly in the metropolitan area:
44 facilities- One-to-one lesson

Integrated

Gaba
GABA
Nationwide deployment
of one-to-one lesson

Gaba kids- Mainly in the metropolitan area:
37 facilities- One-to-one lesson

Operationparalleled

Integrated

COCOJUKU Jr.

Local community-oriented
deployment of the group lessons* as of the end of© 2017 NICHIIGAKKAN
CO., LTD. All2017
rights reserved.
September

23

Advantages of integrated system and paralleled brand
Strive for earlier returning to profitable by the radical reform of cost
structure and by maximizing the ability to attract customers
Gaba- Reduces the initial costs accompanied with nationwide
opening- Streamlines the advertising expense- Expands shares through the corporate sales cooperation

COCOJUKU Jr.
- Improves the school management capability throughselection and concentration- Optimizes the area market by focusing on the juniors- Optimizes the cost structure by sharing the classrooms© 2017 NICHIIGAKKAN CO., LTD. All rights reserved.

24

Deployment of the Grooming Service in Therapy Business
Aiming at synergy generated with the other business segments, andcreating added value
Progress status of the promotion deployment- Grooming salons: 7 were opened and 21 are scheduled to
be opened by the end of the current fiscal year in Japan- Salon in Australia has started> Shop 1: scheduled to open in Adelaide in November
Shop 2: scheduled to open in Sydney> Popularization of Japanese-style trimming technique andresponse to customer needs> Knowhow sharing with domestic salons- Synergy with the Education Business> Establish the "trimmer course" in the language school,
SELC Adelaide (scheduled to open in spring 2018)- Name: A-LOVE DOG GROOMING SALONAND DAYCARE MORPHETTVILL- Opening date: Scheduled in November, 2017
- Neighboring environment: adjacent site to a
shopping center in a quiet suburban, residential areawith many parks- Basic menu/Fee (example):Cut by scissors, AUD 95 to 165

Adelaide
Shop appearance PH© 2017 NICHIIGAKKAN CO., LTD. All rights reserved.

25

Midterm management strategy - China Business Challenge the future growth by improving the business expansion
scheme and expanding the channel
Tips to realize visions- Win commissioned projects from local governments and facility owners- Customer aggregation and matching efficiency improvement through the deployment of facilities
specialized for dementia and day-care centers- Realize consistent localization and scale-up
Operating profit ratio target for China Business

15.5% to 16.0%

Net Sales Target
20,000 million yen(70.6%)
2017/Mar.

2018/Mar.

2019/Mar.

2021/Mar.
2020/Mar. © 2017 NICHIIGAKKAN CO., LTD. All rights reserved. 26

Progress status of the dementia specialized facilities for China Business
Deployment preparation of the facility specialized for dementia in Beijing

Progress status of the facility<Nichii Hangji (Beijing) Health Management
Technology Co., Ltd.>- The first facility specialized for dementia will be opened in
December this year in Chaoyang district, Beijing- The second facility will be opened by the end of 2018(newly constructed with 200 to 300 beds, lease-back method
is planned)- Facilities will be opened in Shenyang and Nanning in
February next year at earliest<ZhongFu Nichii (Shanghai) Health Services Co.,LTD>- Marketing activity is being strengthened for winning
contract of the first facility

Overview of "Itsu-un-in," a facility
specialized for dementia"Itsu-un-in" is a dementia facility run by Nichii Hangji- Chaoyang district, Beijing
Pre-opening scheduled in December 1, 2017
Official opening scheduled on December 18, 2017
- Nichii won the management of Floor 1 (northern wing with 23
rooms/23 beds) after the reconstruction of an existing facility,“Jian Sheng Asylum”- An facility specializing in dementia in China introducing themanagement experiences of the communal daily long-term carefor dementia patients (group home) in Japan, which is advanced
in China- Planned to assign nursing certificate holders, who are currently
participate in the specialized training course at the headquarters inJapan, as the leaders of the facility© 2017 NICHIIGAKKAN CO., LTD. All rights reserved. 27

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

Contact information

NICHIIGAKKAN Co ., LTD.
PR Division, Public Relations Department
Corporate Governance Headquarters
Address: 2-9 Kanda Surugadai, Chiyoda-ku, Tokyo
Tel: 03-3291-3954 (PR Division)
E-mail: nichii-ir@nichiigakkan.co.jp© 2017 NICHIIGAKKAN CO., LTD. All rights reserved.

28