www.nichiigakkan.co.jp

NICHII GAKKAN COMPANY

Financial Results Briefing Document
for the First Three Months of the Fiscal Year Ending March 31, 2015
August 7, 2014

Financial Results Highlights
for the First Three Months of the Fiscal Year Ending March 31, 2015

(Unit: million yen)

FY2014 1Q
Amount

FY2015 1Q
AmountYear on year

Net Sales

68,161

67,720(0.6%)

Operating Income

1,727

1,258

(27.1%)

2.5%

1.9%

1,367

788

2.0%

1.2%

1,047

147

1.5%

0.2%

%

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

(42.3%)(85.9%)FY2015 1Q Results Briefing

1Consolidated Sales and Operating Income by Businessfor the First Three Months of the Fiscal Year Ending March 31, 2015
(Unit: million yen)

Net Sales

FY2014 1Q

FY2015 1Q
AmountYear on year

Medical Support
Long-term &Health Care

26,314

26,4120.4%

36,28837,057

2.1%

Education

5,466

4,176

(23.6%)

OthersElimination/
Corporate

382430

12.6%

(291)

(355)

-68,161

67,720(0.6%)

Total(Unit: million yen)

Operating
IncomeMedical Support
Long-term &Health Care
Education
OthersElimination/
Corporate
Total

Copyright © 2014Nichii Gakkan Company. All rights reserved.

FY2014 1Q

FY2015 1Q

1,855Amount
2,286

Year on year
23.3%

3,157(1,169)(9)

3,266(1,974)
102

3.4%
-(2,107)
1,727(2,421)
1,258(27.1%)FY2015 1Q Results Briefing2

Major Factors for Changes in Sales
for the First Three Months of the Fiscal Year Ending March 31, 2015
(Unit: million yen)・Hospitals
・Clinics

・Existing・Language education+769-1.5 billion yen+0.2 billion yen+0.2 billion yen-0.1 billion yen

68,161+98+48
・Home care +0.10 billion yen
・Facility care +0.6 billion yen
・Child care +0.05 billion yen

67,720-64-1,290

Decrease in sales of 441
million yen year on year
FY2014
1Q

MedicalSupport

Copyright © 2014Nichii Gakkan Company. All rights reserved.

Long-term &Health Care

Education

OtherElimination/Corporate

FY20151Q

FY2015 1Q Results Briefing3

Major Factors for Changes in Operating Income
for the First Three Months of the Fiscal Year Ending March 31, 2015
(Unit: million yen)・Home care+0.2 billion yen
・Facility care -0.05 billion yen
・Child care-0.05 billion yen
・Existing-1.0 billion yen
・Language education +0.2 billion yen+109+431

1,727+111

1,258-805-314

Decrease in profit of 469
million yen year on year
FY2014
1Q

MedicalSupportCopyright © 2014Nichii Gakkan Company. All rights reserved.

Long-term &Health Care

Education

Other

Elimination/
Corporate

FY20151Q

FY2015 1Q Results Briefing

4Segment Highlights (Medical Support Business)
Year-on-yearchange1Q(million yen)

Net sales

26,412+0.4%

Operatingincome

2,286+23.3%

Operating margin

8.7%■Quarterly net sales

Both sales and profit increased
due to expansion of operations at
hospitals already under contract andimprovement of operational
efficiency (retention of humanresources).

‒■Quarterly operating income

POINT

27,00026,31426,456

26,603

26,601

26,412

 Strengthening human resource base
Operating margin of 8.7％ (up 1.7
percentage points)

26,00025,0002,500

24,000
2,045

1,855

2,550

2,210

2,286

 Expanding medical management support
services- Diagnostic support and analysis services
utilizing IT- Various seminars relating to medicalmanagement- Support for collaboration between
medical and long-term care services- Medical management consulting

001Q

2Q

Copyright © 2014Nichii Gakkan Company. All rights reserved.

3Q

4Q

1Q

FY2015 1Q Results Briefing5Segment Highlights (Long-term and Health Care Business)
Year-on-yearchange1Q
Net sales

37,057+2.1%

Operating income

3,266

+3.4%

Operating margin

8.8%(million yen)

■Quarterly net sales

Both sales and profit increased,reflecting efforts to build businessbase for integrated community careand steady growth in services notcovered by long-term careinsurance system.

‒■Quarterly operating income

POINT

37,50036,28836,944

37,27036,24237,05735,00032,5003,500

30,000

3,157

3,447

3,343
2,823

3,266

00

1Q

2Q

Copyright © 2014Nichii Gakkan Company. All rights reserved.

3Q

4Q

1Q

 Providing services matching community
needsHome nursing services, dementia care, etc.
 Actively expanding number of long-termcare centers
Home-care services (22 facilities)
Facility-care services (6 facilities)→ Actively raising funds through public
offering for Nichii homes (fee-paying
nursing homes)
FY2015: Plan to open 3 facilities
FY2016: Plan to open 9 facilities Expanding services not covered by longterm care insurance system- Housekeeping services- Sale of sanitary products, etc.

FY2015 1Q Results Briefing

6Segment Highlights (Education Business)(million yen)

Sales decreased, reflecting
employment environment andchanges in qualification systems.
Decline in number of students
showed signs of bottoming out.
Language education earnings
were solid.

Year-on-yearchange1Q

Net sales

4,176

Operatingincome(1,974)‒

Operating margin(47.3%)‒■Quarterly net sales ■Quarterly operating(23.6%)

Postponed recognitionof previous period
helper course revenue

income

6,500

5,466
5,000

4,407

4,251

4,392

4,176

3,500

0

0-1,169
1Q-2,039-1,955-2,106-1,974

2Q

3Q

4Q

1Q

Copyright © 2014Nichii Gakkan Company. All rights reserved.

POINT
 Strengthening employment support
structure.
 Promoting improvement in classroom
operating efficiency.
 GABA sales and profit continuing to trend
upward.
 Actively expanding COCO Juku Juniorutilizing franchise.
Number of classrooms: 296* Including franchised classrooms Expanding COCO Juku sales channel
Strengthening sales to corporations andcollaborating with JSS-2,100

FY2015 1Q Results Briefing

7Status of Child Care BusinessYear-on-yearchange1Q(million yen)

Net sales

458

Operatingincome(192)‒

Operating margin(42.0%)‒Both sales and profit continued totrend upward through the promotionof total child care services in
anticipation of establishment of newchildcare system.

+23.5%■Quarterly operating income■Quarterly net sales

POINT

618

700

458

600

371

404

400

300

00-46

 Developing network of service centers inanticipation of new system.
Number of childcare service centers inoperation: 81(An increase of 13 year on year) Expanding services matching social needs.
- Actively winning contracts for in-officechildcare centers.
- Providing English conversation lessons
through collaboration with COCO Juku

-122

-148
1Q

-186

2Q

Copyright © 2014Nichii Gakkan Company. All rights reserved.

3Q

-192
4Q

-200

1Q

FY2015 1Q Results Briefing

8

FY2015 Earnings Forecasts(Unit: million yen)

FY2015 1Q

FY2015 1H（Forecast）

AmountAmount

FY2015 (Forecast)AmountYear on year

Net sales

67,720138,200

278,400

2.6%

Operating income

1,258

2,700

7,700

21.8%%

1.9%

2.0%

2.8%

Ordinary income

788

1,700

5,700%

1.2%

1.2%2.0%

Net income

147

600

3,000%

0.2%

0.4%

1.1%

Copyright © 2014Nichii Gakkan Company. All rights reserved.

15.4%
6.0%

FY2015 1Q Results Briefing

9FY2015 Earnings Forecasts – Net Sales and Operating Income by Business(Unit: million yen)

Net sales
Medical Support
Long-term &Health care
Education
OtherEliminations/CorporateTotal

FY2015
Q1FY2015
1H (Forecast）

FY2015(Forecast)Year-on-yearchange26,41253,300106,800

0.8%

37,0574,176
430

75,7009,100
800

152,400
19,100
1,500

3.9%

(355)
67,720(700)
138,200(1,400)278,400

3.2%
12.7%
－2.6%

(Unit: million yen)

Operatingincome
Medical Support
Long-term &Health care
Education
OtherEliminations/
Corporate
Total
Copyright © 2014Nichii Gakkan Company. All rights reserved.

FY2015 Q1

FY2015
1H (Forecast)

FY2015(Forecast)Year-on-yearchange

2,286

4,100

8,900

2.8%

3,266(1,974)
102

6,800
(4,200)100

13,800(7,200)200

8.1%(2,421)
1,258(4,100)
2,700(8,000)7,700－
340.3%－21.8%FY2015 1Q Results Briefing

10

Development of Strategic Businesses
Aiming to achieve long-term stable profit growth through awell-balanced business portfolio, and working to expand
strategic businesses in anticipation of diversifying social needs
and system developments.
Strategic businesses

Initiatives

Language education
business

Providing language-learning opportunities from early childhood, with COCO

Childcare business

Services not coveredby long-term careinsurance

Juku, COCO Juku Junior and support for studying abroad.

Actively developing total childcare services matching system developments andsocial needs.

Developing sales of healthcare products, housekeeping services, meal homedelivery services and long-term care staff dispatch services.

Aiming to make high quality and efficient nursing care more widespread in China

China businessand to form a nursing care market based on regional business diversification
strategy.

Copyright © 2014Nichii Gakkan Company. All rights reserved.

FY2015 1Q Results Briefing

11

Spotlight on Strategic Business Promotion of Regional Diversification
STEP1

Conclusion of strategic alliance agreement with China Planning Institute on Aging

Use conclusion of strategic alliance with China Planning Institute on Aging as a basis for establishing standard care model for the wholeof China and forming a high quality and efficient care market.

China Planning Institute on Aging
External organization of the Ministry of Civil Affairs of the People’s Republic of China. Working to establish sound care market in
China through research on innovative development projects in the care industry, promotion of care operator schemes, anddevelopment of care technology expertise.

STEP2Formation of Zhihu Group(i) Establishment of joint venture
Plan to establish Zhihu Service Management Co., Ltd. (tentative name), a joint venturewith Beijing Loved Hongyu Technology Co., Ltd., based on strategic allianceagreement. Amount of investment: 24.5 million yuan (Investment ratio: 49％)(ii) Acquisition of stake in local service providers
Nichii Hong Kong Limited will acquire stake in 10 corporations that provide care andhome services in 6 cities
Total amount of investment: 59,295,000 yuan (Investment ratio: 50.8％ -66.7%)

STEP3

Service rollout from the second quarter

Inclusion in consolidated results from the third quarter.
Company is carefully examining the impact on its operating results.

Copyright © 2014Nichii Gakkan Company. All rights reserved.

[Development of services of Zhihu Group]

Excellent humanresources
Training to develop
human resources

Excellent services

Excellent products

Care services,
home services,etc. TheSales of sanitary
products

FY2015 1Q Results Briefing

12Spotlight on Strategic Business Expansion of High Value-Added Services
Services not covered by long-term care insurance - Nichii Life (Housekeeping service) In June 2014, the Company relaunched its housekeeping services under the brand name “Nichii Life” as aservice to meet increasingly diverse daily life support needs.
We revised our service menu to cater not only for the elderly but all generations ranging from children to thechild-rearing generation.

● Cleaning service● Home help service● Child pickup and transport service● Housekeeping service beforeand after childbirth● Care service for the elderly andpersons with disabilities● Housesitting service, etc.

Net sales of Nichii Life
increased

+

17.6%

YoYTherapy dog activities at care centers
We provide dog therapy with Australian Labradors at our care centers, to improve ourcustomers’ QOL and help them enjoy life and feel at ease by providing them with a newtype of emotional comfort.
We are currently piloting this scheme in certain areas and making preparations for fullscale rollout.
Copyright © 2014Nichii Gakkan Company. All rights reserved.

FY2015 1Q Results Briefing

13

Business Environment Surrounding the Company

Act on Comprehensive Promotion of Community Medical Careand Long-term Nursing Care (enacted June 18, 2014)
1. Establishing new funds and strengthening collaboration between medical and long-term care services
2. Ensuring an efficient and effective medical provision structure in the community

3. Building integrated community care system and spreading the cost Shifting from national uniform preventive care benefits (home care/day care) to community-based support projects.
(Interim measure for 3 years starting from April 2015)
 Raising the charges for users whose incomes are above a certain level to 20% (from August 2015)
 Applies to one-person households with an annual income of 2.8 million yen or more and married couple householdswith an annual income of 3.59 million yen or more.
 Restricting the eligibility for special nursing care homes to “Nursing care required – Level 3” or higher, in principle (fromApril 2015)

Act on Improvement of Working Conditionsof Care Providers (enacted June 20, 2014)
 Examining measures, including securing funds, that will lead to improvement in wages and other working conditions andimplementing necessary measures by April 2015 to secure human resources to work in long-term care services andwelfare services for persons with disabilities.

Copyright © 2014Nichii Gakkan Company. All rights reserved.

FY2015 1Q Results Briefing

14

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 1Q Results Briefing

15