www.nichiigakkan.co.jp

NICHIIGAKKAN CO., LTD.

Financial Results Briefing Document
for the 1H of the Fiscal Year Ending March 31, 2017

November 15, 2016

Financial Results Highlights（Unit: million yen）

FY2017 2Ｑ

FY2016 2Q
AmountNet Sales
Operating Income%Ordinary Income%

Profit attributable toowners of parent%

AmountChange136,575

137,7510.9%▲ 473815-

▲0.3%

0.6%

▲ 1,701▲ 1,110

1.2%

▲0.8％

2,296

▲ 1,240

▲1.7％

▲0.9％

-© 2016 NICHIIGAKKAN CO., LTD. All rights reserved.

21H Financial Result Highlights
Sales reached a new record high (¥137,751 million, up ¥1,176 million year on year)• Sales in the Long-term Care segment increased (led by day service,specified facilities, etc.)• The increased sales were driven by strategic investment businesses(contribution of the Child Care and China businesses)• The Child Care business achieved a significant increase in sales.

Sales growth in Child
Care segment:

up

72.2%

The operating result shifted to profit (¥815 million yen, up ¥1,288 million yen year on year)• Revenue in the Long-term Care segment increased.
Home care: ¥822 million; Facility Care: ¥488 million; Education: ¥242 million• The management division was streamlined (SG&A expenses reduced by¥645 million).
SG&A expenses: ¥24,629 million (¥25,275 million in the same period of theprevious year)¥• Free cash flow become positive due to increased profit.
Free cash flow: ¥144 million (- ¥1,733 million in the same period of theprevious year)

Increased profit inLong-term Caresegment:

1,552million© 2016 NICHIIGAKKAN CO., LTD. All rights reserved.

3

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

Net Sales

FY2016 2Q

FY2017 2Q

Change（Unit: million yen）
Operating Income

FY2016 2Q

FY2017 2Q

Change(%）

Medical Support

54,39654,068 ▲0.6%

Medical Support

3,831

3,641

▲5.0%

Long-term Care

71,76872,004Long-term Care

3,383

4,935

45.9%

Health Care

1,949

1,802 ▲7.5%

Health Care

132

218

65.3%

Education

6,346

6,347

0.0%

Education▲ 2,862▲ 2,405-

Child Care

1,486

2,560

72.2%

Child Care

▲ 460

▲ 497-

China712949

33.2%

China

▲ 410

▲ 722-Others515433 ▲16.0%

140139▲0.2%▲ 4,227▲ 4,494-▲ 473815-

Elimination

Total

0.3%

▲ 600

▲ 414－136,575

137,751

0.9%

OthersElimination

Total© 2016 NICHIIGAKKAN CO., LTD. All rights reserved.

4

Year on year
Increase in sales ofMajor Changes in Net Sales
・Hospitals ＋0.15 billion yen
・Clinics－0.35 billion yen
・Medical Education－0.15 billion yen

1,176million yen

・Home Care －1.1 billion yen
・Facility Care ＋1.35 billion yen
・Care Education±0 billion yen＋1,074＋186 137,751＋237▲82（Unit: million yen）

136,575+236▲147▲328‘16.32Q

MedicalSupport+1Long-term
Care

HealthCareEducation

ChildCareChina

OtherElimination‘17.32Q© 2016 NICHIIGAKKAN CO., LTD. All rights reserved.

5

Major Changes in Operating Income＋457＋1,552▲37＋86▲312815▲1▲267・Home Care+ 0.8 billion yen
・Facility Care+ 0.5 billion yen
・Care Education ＋ 0.25 billion yen（Unit: million yen）

Year on Year
Increase in profit of 1,288million yen▲473‘16.32Q（improvement in Operating loss ）▲190
MedicalSupport

Long-term
Care

HealthCareEducationChildCareChina

OtherElimination ‘17.32Q© 2016 NICHIIGAKKAN CO., LTD. All rights reserved.

6Ordinary income and Profit attributable to owners of parent（Unit：million yen）

・Interest expenses
1,975million yen
・Rent expenses
18million yen
・Foreign exchange losses 452million yen[FY17.3 2Q]
・Other90million yen 前期比 4,907百万円減益

Ordinary Income ▲1,110million yen
Profit attributable to owners of parent▲1,240million yen

609

815

OperatingNonincome
operatingincome▲2,535▲1,1108Nonoperating
expenses

OrdinaryincomeExtraordinary
income▲26Extraordinarylosses▲1,127

Incomebeforeincometaxes

88▲1,240▲201

Total
incometaxes

Profit attributable
to non-controllinginterests

Profit attributableto owners ofparent© 2016 NICHIIGAKKAN CO., LTD. All rights reserved.

7

Summary of the balance sheet（Unit : millon yen）
End of March 2016

End of Sep 2016

Difference

End of Sep2015

Current assets

63,181

61,915▲1,266

61,906

Fixed assets

120,988

126,600

5,612

126,833

Total assets

184,170

188,516

4,346

188,740

Current liabilities

68,171

69,786

1,615

60,057

Non-currentliabilities

77,89682,385

4,489

75,450Total liabilities

146,068

152,171

6,103

135,508

Total net assets

38,101

36,344▲1,75753,232

Total liabilities
and net assets

184,170

188,516

4,346

188,740© 2016 NICHIIGAKKAN CO., LTD. All rights reserved.

8

Changes in Cash flow
Unit : millon yen）
FY2016.3

FY2017.3

2Q

2Q

Difference

Cash flows from Operating activities▲1,028

2,854

1,826

Cash flows from Investing activities▲2,761▲ 2,709▲ 51

Cash flows from Financial activities

1,718▲ 1,387▲ 3,105

Free cash flow

▲1,733144

1,877

Cash and cash equivalents at end of year

12,59913,171572© 2016 NICHIIGAKKAN CO., LTD. All rights reserved.

9

Revision of Full-year Plan
• The net sales forecast has been revised based on the result for the firsthalf of the fiscal year.
• Profit forecasts remain unchanged (some segments revised theiroperating income forecast).
2016.3
AmountNet Sales

2017.3
Previous

2017.3
Revised

RevisedAmount2017.3
2ＱAmount

273,583

294,700

282,000△12,700

137,751

Operating Income

△785

4,800

4,800

0815

Ordinary Income△3,6291,3001,3000△1,110

Profit attrubutableto owners ofparent△15,995500

5000△1,240© 2016 NICHIIGAKKAN CO., LTD. All rights reserved. 10

Segment net sales revised
The forecasts for the Medical Support and Long-TermCare segments have been revised.
（Unit : millon yen）
Net Sales
Medical Support
Long-term Care
Health Care
Education
Child Care
China
Other
Elimination
Total

FY2016.３
Amount108,787
143,040
4,062
13,003
3,433
1,604
943
▲ 1,291
273,583

FY2017.3
Forecast(Previous)

115,000
150,300
4,900
15,600
5,100
4,000
1,000
▲ 1,200
294,700

FY2017.3
Forecast(Revised)

108,200
144,400
4,900
15,600
5,100
4,000
1,000
▲ 1,200
282,000

Revised Amount▲ 6,800▲ 5,900000000▲ 12,700© 2016 NICHIIGAKKAN CO., LTD. All rights reserved.

11Segment operating income revised
The forecasts for the Medical Support, Long-Term Care, andEducation segments have been revised.
OperatingIncome
Medical Support
Long-term Care
Health Care
Education
Child Care
China
Other
Elimination
Total

FY2016.３
Amount

7,691
6,809
568
▲ 5,677▲ 883▲ 1,033274▲ 8,533▲ 785

FY2017.3
Forecast(Previous)

8,100
8,800800▲ 3,600▲ 500▲ 900300▲ 8,2004,800

FY2017.3Forecast(Revised)

7,600
9,700800▲ 4,000▲ 500▲ 900300▲ 8,2004,800(Unit : millon yen）
（単位：百万円）
RevisedAmount▲ 5009000▲ 40000000© 2016 NICHIIGAKKAN CO., LTD. All rights reserved.

12

The dividend forecast

A dividend of 22 yen per share is expected.

© 2016 NICHIIGAKKAN CO., LTD. All rights reserved. 13

For the Next
Breakthrough© 2016 NICHIIGAKKAN CO., LTD. All rights reserved. 14

Review of First Half of FY Ending March 2017
Penetration of profit-focused strategy based on area management
functionAchievements成果→ Expansion of the executive officer system based on five-branchstructure (28 executive officers)→ Improvement of company-wide management operations

IssuesGrowth recovery of Long-term Care segment
by acquiring human resources, etc.
Acceleration of growth of strategic investment
business→ Achieving profit in the language business at an early stage andbuilding the Nichii brand in the China business© 2016 NICHIIGAKKAN CO., LTD. All rights reserved. 15

For Growth Recovery of Long-term Care Segment• Restore the profit level to what it
was before the revision of thecompensation plan.
Aim for further upward shift

Continuous implementation ofprofit-growth strategy（millon yen）

Revision ofcompensation

6,674

4,935

4,892

Immediately share information about successful cases

3,383 3,426

Improve personnel placement among different services

1st 2ndhalf half
FY endedMar. 2015

Improve the profit management method in each office

1st 2ndhalf half
FY endedMar. 2016

Revised
4,765
Previous
4,500

1st 2ndhalf half
FY endedMar. 2017(increase employee productivity)

Improvements made during the first half
Directions of changes in operating income
CarePlanHome
CareHomevisit
Bathing

Disability
SupportDay
CareWelfare
GoodsHome
Nursing

Smallscale,multifunction

GroupNursingHome

SpecifiedFacilities

8/10
Number of service segments
targeted for profit growth© 2016 NICHIIGAKKAN CO., LTD. All rights reserved. 16

COCO Juku Sales Growth Strategy
Pursuing a customer-oriented approach to increase the number ofstudents

Accessibility
Promote the use of certification
courses
Promote franchisedevelopment

Learning facilitation
Increase learning opportunities(Promote double-learning throughclassroom and online lessons)Develop original textbooks

Familiarity
Hire native speakers of foreign
languages from Asia
Hold open-house events

Guarantee customer satisfaction(customer satisfaction guaranteeprogram)© 2016 NICHIIGAKKAN CO., LTD. All rights reserved. 17

COCO Juku Junior: Promotion Strategy
Development of effective andefficient regional communication
Periodically hold “Open House,” a regional
cultural exchange event[Open House]< Open House held on October 29 >Held periodically at all schools
Involves activities including seasonal events
Local people in the region are welcomed to join the students
Promotes the joy and importance of English communication throughcultural experience with native speakers of English
Aims to increase the recognition of COCO Juku based on regional
cultural exchanges© 2016 NICHIIGAKKAN CO., LTD. All rights reserved. 18

【 Global 】China Business Consolidation progressCompany（Unit：millions or Yen）
School1

広州市正祥和家政服務有限公司

2

北京三傑聖一人力資源有限公司

3

瀋陽日医助尓家庭服務有限公司

4

済南仁徳家庭服務有限公司

5

常州金蓓蕾健康諮詢服務有限公司

6

深圳市中家家庭服務有限公司

7

深圳市中家華傭家政服務有限公司

8

深圳市中家星級家政服務有限公司

9

深圳中家職業技能培訓学校

10

杭州天使家政服務有限公司

11

大連九鼎互聯科技発展有限公司

12

武漢尓邦家政有限公司

13

広西康之橋護理服務有限公司

14

南寧康之橋職業培訓学校●

15

欽州康之橋職業培訓学校●

16

安徽賽菲家庭服務管理有限公司

17

合肥賽菲職業培訓学校

18

梅州客家大嫂家政服務有限公司

19

梅州市華傭職業培訓学校

20

日医（珠海）健康服務有限公司

21

日医（仏山）健康服務有限公司

●

ＰＬＢＳ

13 companies 16 companies
and 4 schooland 5 school
corporation
corporation
werewereconsolidated.
consolidated

2Q（Jan.-Jun.）

Net Sales

949

Operating
Income▲722

Amortization of goodwill

177

Includes wholly-owned subsidiaries of the Nichii Group（Unit：millions or Yen）

2Q
2 companies
and 3school
corporation●●※3Q（expected）

Total Assets6,140

2Q

Net assets

2,706

3 companies
and 1school
corporation

Goodwill

1,414© 2016 NICHIIGAKKAN CO., LTD. All rights reserved. 19

List of Cities Where Nichii’s China
Business is Established* Includes nonconsolidated
subsidiaries

Advanced
into 23cities

Display
Color

Name of city

Name of Comnany

AlreadyPlans
Langfang/Taiyuan/Chongqing/Kunming

北京三傑聖一Beijing/Tianijin/Chengdu

瀋陽日医助尓

Shenyang/Changchun

済南仁徳

Jinan/Qingdao

Weihai/Yantai/Weifang

大連九鼎互聯DalianHarbin

常州金蓓蕾Changzhou

Suzhou/Nanjing/Wuxi/Nantong/Yangzhou/Xuzhou

杭州天使Hangzhou

Ningbo/Shaoxing/Huzhou

武漢尓邦

Wuhan

Jingzhou/Huangshi/Ezhou

安徽賽菲Hefe西安海鑫Xi’an

深圳市中家Shenzhen/Huizhou/Meizhou

広州市正祥和Guangzhou

広西康之橋

Nanning/Liuzhou/Qinzhou

Guilin

日医広州

Zuhai/Foshan

Zhongshan

中福日医Shanghai

Xiamen/Fuzhou/Zhengzhou/Changsha● Changchun●

Beijing

Shenyang●●●

Tianjin

Jinan

●

Xi’an

●

Hefei

●

●

Wuhan ●●

DalianQingdao
Changzhou●●●

ShanghaiHangzhouChengduLiuzhou●Nanning●●

Qinzhou

● ●●
●
●

●

Meizhou

Huizhou
ShenzhenZhuhai
Foshan Guangzhou© 2016 NICHIIGAKKAN CO., LTD. All rights reserved. 20

Growth Opportunities from Next FiscalYear (1)ChildCare0
MedicalSupport

Longtermcare

Language
Lessons

Establishment of employee child care centers using
company-led child care business
Located in proximity to branches with theaim of opening in April 2017
Provides language lessons in cooperation
with COCO Juku Junior

Number ofapplications forestablishment* As of November 15

33

centers[Characteristics of company-led child care business]
Users can use the facilities freely based on direct contracts with the child carecenters.
Can be developed separately from child care centers planned and developed by
local governments.
Subsidies for operational and development expenses are available, which canreduce the expenses paid by companies.
© 2016 NICHIIGAKKAN CO., LTD. All rights reserved.

21

Growth Opportunities from Next Fiscal Year (2)

0

中国
China

0 Long- 0termcare

Healthcare0

The plenary session of the House of Representatives passed two bills
related to increasing the number of foreign workers in long-term care.
Foreign technical intern training bill
Addition of technical intern training in long-term care industry.
Extension of training period from up to three years to five years.
Establishment of a new organization that oversees organizations and companies providing
training programs. (Prevention of violation of human right of trainees)Bill for revision of Immigration
Control and Refugee Recognition Act
Establishment of resident status for foreign long-term care givers who are Certified Care Workers withJapan’s national certification.
Addition of long-term care to the types of jobs eligible for the Technical Intern Training Programproviding on-the-job training.
© 2016 NICHIIGAKKAN CO., LTD. All rights reserved. 22

0Growth Opportunities from Next Fiscal Year (3) China0 Longtermcare

MedicalSupport

Contribution to inbound and outbound medicalservices and long-term care
Contribution to the China, Long-term Care, and Medical Support
businesses from the next fiscal year
Projects publicly offered by the Ministry of Economy, Trade and Industry (1)Substantive research for building a regional comprehensive
care system in China
A consortium with Paramount Bed (China) Co., Ltd., Zhangzhou Leatai Medical Instruments Co., Ltd., and P2P Bank Co., Ltd.
collects information used for Japan-based long-term care business operators to consider entry by demonstrating the Japanesestyle of the long-term care service model in the Chinese district and promotes the package export of regional comprehensive caresystems. The period is from October 2016 to February 2017.

Projects publicly offered by the Ministry of Economy, Trade and Industry (2)Fujita Health University Hospital project to promote the internationalization of medical
services to increase the acceptance of foreign patients
Verification of a scheme model for the development of comprehensive care systems including the increased acceptance ofpatients traveling from China, follow-ups for long-term care after returning home, etc. The period is from June 2016 to March2017.
© 2016 NICHIIGAKKAN CO., LTD. All rights reserved. 23Growth Opportunities from Next Fiscal Year (4)Longtermcare

0
Healthcare0

Government considering granting approval forMixed long-term care (Simultaneity used of insured and non-insured long-term care Services)in Tokyo strategic districts“The government is considering granting approval for mixed long-term careprovided in Tokyo special districts.” (Morning edition of The Nikkei on Nov. 10, 2016)“Tokyo governor Koike announces plans to approve mixed long-term care in specialdistricts.” (Morning edition of The Nikkei on Nov. 11, 2016)[Expected effect]• Increased user convenience, increased service quality• Improved treatment of care workers based on increased
revenue of business operators© 2016 NICHIIGAKKAN CO., LTD. All rights reserved.

24All performance targets and other forecasts, including
numbers of contracts and users, and goals, contained in thisdocument are based on information currently available tothe Nichii Gakkan Group and will be affected by uncertainfactors, including economic circumstances, the relaxation ofregulations, and employment conditions. Please note that
actual results, numbers of contracts and users, and otherdata 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© 2016 NICHIIGAKKAN CO., LTD. All rights reserved. 25