NICHIIGAKKAN CO., LTD.

Financial Results Briefing Document
for the Three Months Ended Jun 30, 2018
August 9, 2018

Overviewof Financial Results
第1四半期概況© 2018 NICHIIGAKKAN CO., LTD. All rights reserved.

1

Financial Results Highlights（Unit:million yen）

FY2018.3

FY2019.3
Change1Q

1Q

70,31370,835

+522

1,519

1,263

▲255%

2.2%

1.8%

▲0.4ptOrdinary Income

560

139

▲420%

0.8%

0.2%

▲0.6pt

510

▲ 158

▲669

0.7%

▲0.2%

▲0.9ptNet Sales
Operating Income

Profit attributable toowners of parent%© 2018 NICHIIGAKKAN CO., LTD. All rights reserved.

2

Highlights of Financial Results
Net sales hit a record high. The focus was placed on increasing the top line.
1. In April 2018, the new medium-term management plan “VISION 2025” commenced.
 Commenced three reforms (organizational reforms, sales reforms and business structural reforms).
 Promotion of business reforms led by the site “Vision Progress Project (VIPRO)”2. Net sales hit a record high.
 Led by the child care business and the Health Care Segment, which are in charge of promoting theactive roles of women Decrease in net sales and income of the medical support business and the long-term care business,
which are the main businesses; however, progress in contract optimization, strengthening of theresponse to moderate and severe cases and other actions for changing to a robust business structure

3. Costs are incurred due to strengthening the base for achieving the medium-term
management plan.
 Improvement of treatment of staff
 Preparation for promotion in relation to the nationwide deployment of GABA and the deployment of thehousekeeping support business by foreign staff
 Extraordinary loss due to the restructure of the Group (150 million yen)
© 2018 NICHIIGAKKAN CO., LTD. All rights reserved.

3

Measures for sale expansion of the main business
Aim to increase the growth of the top line
through the accumulation of results.
[Product strength]- Response to customer needs and response to systemchange- Improvement of customer satisfaction[Sales capability]- Strengthening of sales system and comprehensive sales
management- Promotion of cooperation among groups and branches- Various approaches by cross-selling[Supply power]- Make workers into regular staff and change to indefiniteterm employment- Strengthening of sales of qualification courses andpromotion of work- Increase in the rate of operation of staff- Investment in human resources (improvement oftreatment)

Rise in sales per customer
Net sales per hospital
Unit price of home-visit long-term care

Increase in the number ofcorporate contracts
Nichii Life corporate contract

Improvement of KPI
Decrease in the number of people who
leave their jobs
Increase in the number of new workers
Increase in students of the medicaladministration courses© 2018 NICHIIGAKKAN CO., LTD. All rights reserved.

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

(Unit:million yen)

FY2018.3

FY2019.3

Change1Q1Q(%)

Medical Supoort

26,885

26,794▲ 90

Medical Support

2,201

2,119

▲ 81

Long-term Care

37,46237,448▲13Long-term Care

3,659

3,649

▲ 10

1,815

2,568753

Child Care▲ 571▲ 404167332381

48

Health Care74▲ 115

▲ 189

2,937

2,893

▲ 44▲ 1,030▲ 1,210▲ 179

Therapy

518837

Therapy▲ 68▲ 152▲ 83

Global802502▲ 300

Global▲ 480▲ 326

153Others398508109Others

4776

28Elimination

▲ 373

▲ 350

22▲ 2,312▲ 2,373▲ 60Total

70,31370,835

522

1,519

1,263

▲ 255

Net SalesChild Care
Health Care
Education

Operating income

Education

Eliminations

Total

FY2018.3

FY2019.3

Change1Q

1Q(%)© 2018 NICHIIGAKKAN CO., LTD. All rights reserved.

5Regarding the change of the segments- Transfer of PB product sales of the Health Care Segment to the Long-Term Care Segment(in-home care)- Concentration of profits of overseas subsidiaries in the new Global Segment
Old Segment
Long-term Care

New SegmentConventional long-term care

Health CareHousekeeping
Service

Education

Domestic

Therapy

Domestic

China

Private Brand
ProductsOverseas

Long-term Care

Conventional
long-term care

Private Brand
Products

Health CareHousekeeping ServiceOverseas

Education

Domestic

Overseas

Therapy

Domestic

Global
保 育Overseas© 2018 NICHIIGAKKAN CO., LTD. All rights reserved.

6

Summary of Balance Sheet (Consolidated)(Unit : million yen)
End of March 2018、

End of June 2018

Difference

Current assets

65,24965,29647

Fixed assets

124,990

123,344▲1,645

190,239

188,641▲1,598Current liabilities

60,45958,465▲1,993

Non-current liabilities

92,124

93,372

1,248

Total liabilities

152,583

151,838▲745

Total net assets

37,65636,803▲852

Total liabilities andnet assets

190,239

188,641▲1,598

Total assets© 2018 NICHIIGAKKAN CO., LTD. All rights reserved.

7

Summary of Cash Flows (Consolidated)(Unit : million yen)

FY2018.3

FY2019.3

1Q

1Q

Difference

Cash flows from Operating activities171▲ 1,463▲1,635

Cash flows from Investing activities▲722707

1,429

Free cash flow

▲550▲755▲205

Cash flows from Financial activities▲1,250156

1,406

Cash and cash equivalents at end of year

14,461

17,651

3,190© 2018 NICHIIGAKKAN CO., LTD. All rights reserved.

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Segment Overview© 2018 NICHIIGAKKAN CO., LTD. All rights reserved.

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Core businesses Overview (Medical Support business)
Steady improvement in productivity
per medical institution and per worker[Overview of financial results]
Net sales: 26,794 million yen (yoy -90 million yen)
Operating income: 2,119 million yen (yoy -81 million yen)

【Quarterly Net Sales &Operating Income】
Net Sales（Left axis）

Operating Income (Right axis)- Net sales declined due to a decrease in the number of contract medicalinstitutions.
Net sales per hospital increased.
- Due to a decrease in net sales, personnel expenses could not be
absorbed and thus income declined.

(Unit : million yen)

[Future actions]- Strengthening of proposal-based selling
Support for workstyle reforms of health care providers
Expansion of net sales of the clinic department andmedical administration education
Contract optimization in the next fiscal year
- Strengthening of the foundations of human resources

2018.3
1Q

2Q

3Q

4Q

2019.31Q© 2018 NICHIIGAKKAN CO., LTD. All rights reserved.

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Core businesses Overview (Long-term Care business)
By strengthening the capability to respond to moderate andsevere cases, focus is placed on business structure reforms.
[Overview of financial results]
Net sales: 37,448 million yen (yoy -13 million yen)
Operating income: 3,649 million yen (yoy -10 million yen)

【 Quarterly Net Sales &Operating Income 】
Operating Income (Right axis)

Net Sales（Left axis）- Decrease in net sales and income due to a decrease in users of in-homecare (needed support)- In the residential care services, both net sales and income increased due
to a rise in occupancy rates.

(Unit : million yen)

[Future actions]- Acquisition of users of the in-home care service- Strengthening of response to moderate and severe cases- Promotion of use of sharing-type day services through cooperation withmedical facilities- Large-scale repair of the day services center
The repair of 77 facilities is planned during this fiscal period.
- Strengthening of the foundations of human resources

2018.3
1Q

2Q

3Q

4Q

2019.3
1Q© 2018 NICHIIGAKKAN CO., LTD. All rights reserved.

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Core businesses Overview (Child Care business)
Active openings led the results of the Company.
The trend of the significant increase in net sales continued.
[Overview of financial results]
Net sales: 2,568 million yen (yoy +753 million yen)
Operating income: -404 million yen (yoy +167 million yen)

【 Quarterly Net Sales &Operating Income 】
Net Sales（Left axis）

Operating Income (Right axis)- Net sales increased due to new openings (+40 facilities, 242 facilities intotal) and the flexible management of facilities.
- The level of deficit reduced despite opening costs.

(Unit : million yen)

[Future actions]- Flexible management of facilities- Implementation of measures for community-based support for child care
- Promotion of placement of coordinators for child care with the aim ofachieving better services
2018.3
1Q

2Q

3Q

4Q

2019.3
1Q© 2018 NICHIIGAKKAN CO., LTD. All rights reserved. 12

Balance Supply businesses Overview（Health Care businesses）
Development of new customer groups through the deployment ofSunny Maid and cross-selling sales activities[Overview of financial results]【 Quarterly Net Sales &Operating Income 】

Net sales: 381 million yen (yoy +48 million yen)
Operating income: - 115 million yen (yoy -189 million yen)
- Net sales increased due to an increase in the number of users of thehousekeeping services.
- Due to the promotion of sales of Sunny Maid (the housekeeping support
business by foreign staff) and preparations for deployment in the Kansai
region, costs were incurred and thus income decreased.
- Before the end of June, 124 Philippine workers came to Japan.

[Future actions]- By strengthening sales, promotion of the use of the regular use plan
- By cross-selling sales, development of new customers- Improvement of the corporate plan
- Securing of human resources for the housekeeping services(domestically and in the Philippines)

Operating Income (Right axis)

Net Sales（Left axis）(Unit : million yen)
100

500
74
400
332

377

342

347

381

300

50
0(38)

200(50)
(115)

100
(124)

0
2018.3
1Q

2Q

3Q

(135)
4Q

(100)
(150)

2019.3
1Q© 2018 NICHIIGAKKAN CO., LTD. All rights reserved.

13

Balance Supply businesses Overview（Education businesses）
Brand reorganization/restructure and reforms are being promoted.
[Overview of financial results]
Net sales: 2,893 million yen (yoy -44 million yen)
Operating income: -1,210million yen (yoy -179 million yen)

【 Quarterly Net Sales &Operating Income 】
Net Sales（Left axis）

Operating Income (Right axis)- Net sales decreased due to the impact of the discount privilege for thepersons who took the courses of the former COCO Juku and continued
to take them, among other causes.
- Income decreased due to an increase in costs for promotion of newly
deployed GABA schools, among other causes.

(Unit : million yen)

[Future actions]
GABA- Promotion of collaborative management by making the best use of thegroup resources- Strengthening of the service support capability
Strengthening of instructor training and counselling capability

2018.3
1Q

2Q

3Q

4Q

2019.3
1Q

COCO Juku Junior- Community-based deployment of satellite classrooms© 2018 NICHIIGAKKAN CO., LTD. All rights reserved.

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Balance Supply businesses Overview（Therapy businesses）

The outlook of the deployment of salons became clear.
The acquisition of new/repeat customers was strengthened.
[Overview of financial results]
Net sales: 88 million yen (yoy + 37 million yen)
Operating income: -152 million yen (yoy -83 million yen)

【 Quarterly Net Sales &Operating Income 】
Net Sales（Left axis）

Operating Income (Right axis)(Unit : million yen)

- Net sales increased due to the new deployment of grooming salons.
In this first quarter, the number of facilities increased by one (20 facilities
in total).
- Income decreased due to an increase in management costs attributable
to the deployment of salons.

[Future actions]- Acquisition of new customers and retention of repeat customers-> Active promotion (social media, events)-> Review of the membership system, among other aspects

2018.3
1Q

2Q

3Q

4Q

2019.3
1Q© 2018 NICHIIGAKKAN CO., LTD. All rights reserved.

15

Global businesses
Efficient management was promoted through the restructure of the localcompanies with full ownership of capital/regional operating companies.
[Overview of financial results]
Net sales: 502 million yen (yoy -300 million yen)
Operating income: - 326 million yen (yoy +153 million yen)
- Through the restructure of the Chinese local companies, two regional
operating companies were excluded from the scope of the consolidated
results, and thus net sales decreased/income increased.
-> Trinity Human Resource Co.,Ltd(termination of joint venture)-> Shenyang Nichii Zhuer Family Services Co.,Ltd(termination of jointventure)[Future actions]【 Quarterly Net Sales &Operating Income 】
Net Sales（Left axis）(Unit : million yen)
1,2000

1,000
800

802

954

881(326)600

200(100)

937(200)400- Promotion of business in the Nichii brand-> Promotion of the undertaking of the nursing home that handles
dementia-> Strengthening of the deployment of the community old-age service
business (work entrusted by the Ministry of Economy, Trade andIndustry)-> Strengthening of external sales of nursing care training-> Pursuit of efficiency in the management of local subsidiaries

Operating Income (Right axis)

502

(400)

(344)
(405)

(500)

(436)

(480)

(300)

0(600)

2018.3
1Q

2Q

3Q

4Q

2019.3
1Q© 2018 NICHIIGAKKAN CO., LTD. All rights reserved.

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FY2019.3 Earnings Forecast© 2018 NICHIIGAKKAN CO., LTD. All rights reserved.

17

FY2019.3 Earnings Forecast(Unit :million yen)

FY2019.3

FY2018.3
AmountAmountyoy（％）

283,767

314,500

10.8%

7,630

14,700

92.7%

2.7%

4.7%

-

3,628

10,500189.4%

%

1.3%

3.3%

-

Profit attributable to854

6,300

637.3%

0.3%

2.0%

-

Net Sales
Operating Income%

Ordinary Income

owners of parent%© 2018 NICHIIGAKKAN CO., LTD. All rights reserved.

18

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

(Unit : million yen)

Net Sales

ChangeOperating Income

FY2018.3

FY2019.3

ChangeFY2018.3FY2019.3

Medical Support

107,272

113,200

5.5%

Medical Support

8,899

10,800

21.4%

Long-term Care

149,811

162,100

8.2%

Long-term Care

14,81015,0001.3%Child Care

9,365

13,00038.8%Child Care

▲ 564400-

Health Care

1,398

3,500

150.2%

Health Care

▲ 223

▲ 770

-

Education

12,06817,00040.9%

Education▲ 4,474▲ 900-

Therapy

373

1,400

275.1%

Therapy

▲ 340

40-

Global

3,574

4,400

23.1%

Global

▲ 1,665▲ 500-

Others

1,933

1,900-1.8%

Others

204

250

22.4%

Eliminations▲ 2,030▲ 2,000-▲ 9,014▲ 9,620-Total

283,767

314,500

10.8%

7,630

14,70092.7%(%)

Eliminations

Total(%)© 2018 NICHIIGAKKAN CO., LTD. All rights reserved.

19

All performance targets and other forecasts, including numbers ofcontracts and users, and goals, contained in this document arebased on information currently available to the Nichii Gakkan Groupand will be affected by uncertain factors, including economic
circumstances, the relaxation of regulations, and employmentconditions. 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© 2018 NICHIIGAKKAN CO., LTD. All rights reserved.

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