www.nichiigakkan.co.jp

NICHII GAKKAN COMPANY

Financial Results Briefing Document
for the First Half of FY2013
Ending March 2013
(April 1－September 30, 2012)
November 9, 2012

Overview of Financial Results

１. Overview of 1H FY2013 Financial Results(1) 1H FY2013 Financial Results(2) 1H FY2013 Highlights(3) 1H FY2013 Consolidated Net Sales and Operating Income by Business(4) Increases/Decreases in Net Sales (year-on-year)(5) Increases/Decreases in Operating Income (year-on-year)(6) 1H FY2013 Segment Highlights, Strategy for Business Scope Expansion

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P4
P5
P6
P7
P8-17

２. FY2013 Financial Results Forecast(1) FY2013 Financial Results Forecast(2) FY2013 Financial Results Forecast by Business(3) Factors of Revisions to FY2013 Financial Results Forecast by Business

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P20
P21

３. Medium- to Long-Term Management Strategy(1) Market Environment(2) Initiatives for 2025 under Medium- to Long-Term Strategy(3) Returns to Shareholders

Copyright © 2012Nichii Gakkan Company. All rights reserved.

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1H FY2013 Financial Results Briefing Document1

Overview of
1H FY2013 Financial Results

Copyright © 2012Nichii Gakkan Company. All rights reserved.

1H FY2013 Financial Results Briefing Document

2

1H FY2013 Financial Results(Millions of yen)

1H FY2013

1H FY2012
Amount(Initial Forecast)AmountNet sales
Operating income%

Ordinary income%

Net income%

EBITDA%

Copyright © 2012Nichii Gakkan Company. All rights reserved.

Amount(Result)

Year on Year

123,342
4,902

134,300
4,000

132,132
3,903

4.0%

3.0%

3.0%

4,855

3,600

3,491

3.9%

2.7%

2.6%

2,208

1,600

1,432

1.8%

1.2%

1.1%

7,299

－

6,639

5.9%

－

5.0%

7.1%
-20.4%-28.1%-35.1%-9.0%

1H FY2013 Financial Results Briefing Document

3

1H FY2013 Highlights
1. Record 1H net sales for 5th consecutive
year
160,000
・ Made GABA a subsidiary (Education Business net sales 140,000+72.1%)

120,000・ 5th consecutive record 1H net sales on contribution from 100,000
Health Care Business, including sales growth at Nichii
80,000Carepalace Company (Net sales +7.9%)
60,0002. Sales and profit growth at Medical Support 40,000
and Health Care Businesses
20,000・ Improved profitability from increased operational efficiency for 0

medical support staff led to highest operating margin in 5 years

8,000

Net sales
Operating income
112,643

132,132
123,342

119,623

105,958

6,000

4,902
3,903
3,401

4,000
2,000

2,398

0
-1,181
1H FY2009-2,0001H FY2010

1H FY2011

1H FY2012

1H FY2013

・ Steady growth in number of nursing care service users
absorbed impact of revisions to Long-Term Care Insurance Act
and to compensation for medical services and long-term care.
Operating income, operating margin both at record high

3. Strategic investment for stable, long-term

No. of language education business classrooms■ COCO Juku: 43 schools■ GABA: 36 schools
3
7 5

・ Opened 43 COCO Juku schools across Japan (as of Sep. 30,
・ Building operating base for nationwide language education
business led to profit decline

・ Earnings contribution from GABA continues
Copyright © 2012Nichii Gakkan Company. All rights reserved.

29

Tohokugrowth2012)1
Hokkaido

1
Chugoku
3
Kyushu

19

Kinki
4

5

2

Shikoku Chubu

Kanto
As of Sep. 30, 2012

1H FY2013 Financial Results Briefing Document

4

1H FY2013 Consolidated Net Sales and Operating Income by Business(Millions of y en)

Net Sales
Medical Support
Health Care
Education
Other
Eliminatons/Corporate
Total

1H FY2012

1H FY2013

Year on Year
Change51,44465,914
5,900
659
(576)
123,342

51,86970,060
10,152863(815)
132,132

%

425
4,146
4,251
204
-238
8,789

0.8%
6.3%
72.1%
31.1%
7.1%
(Millions of y en)

Operating Income
Medical Support
Health Care
Education
Other
Eliminatons/Corporate
Total
Copyright © 2012Nichii Gakkan Company. All rights reserved.

1H FY2012

1H FY2013

Year on Year
Change

3,884
4,758
358
(250)
(3,847)
4,902

4,100
5,587
(1,978)26(3,831)
3,903

216
829
-2,337
276
16
-998

%

5.6%
17.4%
―
―
―
-20.4%

1H FY2013 Financial Results Briefing Document

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Increases/Decreases in Net Sales (Year on Year)Net Sales(Millions of yen)
135,000+4,251+204

132,132-238

130,000+4,146125,000

123,342+425

120,000

1H FY2012

MedicalSupport

Health Care

Education

Other

Eliminations/
Corporate

1H FY2013

Net sales rose ¥8,789 million year on year on sales growth at all businesses,
including higher number of users at Health Care Business and addition of GABA toconsolidation at Education Business
Copyright © 2012Nichii Gakkan Company. All rights reserved.

1H FY2013 Financial Results Briefing Document

6

Increases/Decreases in Operating Income (Year on Year)
Operating Income(Millions of yen)
6,000

+829
+216

4,902
4,000

+276

+16

3,903

Other

Eliminations/
Corporate

1H FY2013-2,3372,000

MedicalSupport

1H FY2012

Health Care

Education

Operating income declined ¥998 million year on year
Growth continued at Medical Support and Health Care Businesses on increased efficiency,
but declined at Education Business on strategic investment for language education

Copyright © 2012Nichii Gakkan Company. All rights reserved.

1H FY2013 Financial Results Briefing Document

7

1H FY2013 Segment Highlights (Medical Support Business)
Consolidated Net Sales/Operating Income(Year on Year)Net Sales: ¥51,869 million (+0.8%)
Operating Income: ¥4,100 million (+5.6%)■ Net sales
51,444■ Operating income

51,8694,100
3,884

Consolidated Net Sales/
Number of Contracts with Hospitals(Year on Year)■ Net sales
45,15745,757■ Number of contracts(As of Sep. 30)

Further earnings improvement on higher operational efficiency▶ Net sales rose on acquisition of new contracts, primarily at
private hospitals▶ Trend of higher portion of sales from hospitals continued% of sales

1H FY2009

Hospitals

81.4%

88.4%

Clinics

18.6%

11.6%

▶ Earnings continued to improve on higher operational
efficiency from enhanced staff skills▶ Obtained patent for “DPC Revolution” DPC verification
system▶
Registered: May 11, 2012
Content: Method of deriving name for diseases in whichmost medical resources are administered.
Operating margin (1H) during period coveredby contract revision strategy promotion
7.9%

1,978
1,946

1H FY2013

7.4%

7.6%
7.3%
5.8%

1
2
FY2009FY2010

Copyright © 2012Nichii Gakkan Company. All rights reserved.

3
FY20114
5FY2012FY2013

1H FY2013 Financial Results Briefing Document8

Strategy for Business Scope Expansion (Medical Support Business)
Expansion of Management Support Services
Concluded contract for operational tie-up with Microsoft Japan Co., Ltd. on Oct. 1
Integrating Nichii’s human resource strengths and Microsoft’s IT capabilities to develop support
services for new medical practice environment
Details of tie-up
１．Provide services to support medical practice environmenta. Management support services b. Medical support services
c. Regional cooperation services

２．Joint implementation and mutual utilization for providing services
a. Sales and marketing b. Sharing of experience and expertise

Services

Joint press conference◆OPECT medical support service (launched Oct. 1)
Contactless image operating system for operating rooms
Reduces surgeon’s labor and stress during operation◆Medicloud management and medical support service (launchfrom late December)
Cloud-based groupware
E-mail, scheduling, and various functions to resolve issues unique
to medical institutions
Copyright © 2012Nichii Gakkan Company. All rights reserved.

OPECT

1H FY2013 Financial Results Briefing Document

91H FY2013 Segment Highlights (Health Care Business)
Consolidated Net Sales/Operating
Income (Year on Year)Net Sales: ¥70,060 million (+6.3%)
Operating Income: ¥5,587 million (+17.4%)■ Net sales
65,914■ Operating income

Maintaining sales growth on steady increase in
number of users and higher facility efficiency▶ Steady growth in number of home care and facility care users▶ Earnings contribution from Nichii Carepalace Company (¥83 million operating
loss → ¥509 million operating profit)▶ Absorbed impact of revisions to long-term care compensation▶ Solid trend in services not covered by long-term care insurance (sales 15.6%)▶ Transferred home helper dispatching service to Nihon Support Service Co.,
Ltd.

■Number of users

70,060

Sep 2011

5,587
4,758

Sep 2012

Year on year

Home care

133,573

139,649

4.5%

Facility care

8,780

9,643

9.8%

As of Mar 31, 2012

As of Sep 30, 2012

As of Mar 31, 2013
(Forecast)Care plan

737

749(+12)791(+54)

Home-visit long-term care

1,062

1,081(+19)

1,122(+60)

Welfare goods leasing

135

135

135

Day-care326

337(+11)356(+30)

Home-visit nursing care23

47(+24)66(+43)Hohoemi241

243(+2)245(+4)

Kirameki42

50(+8)

51(+9)

Nichii Home50

50

52(+2)■Facility openings

Net sales by division (year-on-year)■ Services covered by longterm care insurance■ Services not covered bylong-term care insurance

63,90860,593

5,321

6,152

Note: Home-visit long-term care include a bathing service.
Copyright © 2012Nichii Gakkan Company. All rights reserved.

1H FY2013 Financial Results Briefing Document

10

Health Care Business Operating Base
Providing “total long-termcare services” nationwide◆ Home-care services◆ Facility-care services

Nationwide development of Health Care Business
Number of long-term care service facilities: approx. 1,400
Number of long-term care staff: approx. 36,000◆ Services not covered
Number of long-term care service users: approx. 130,000
by long-term care insurance

Ranking by number of service facilities
Home-visit
long-term care*Home-visit
nursing care

Small, multifunction

As of August 31, 2012

Group homes

1st place

Nichii Gakkan

971
cases

Nichii Gakkan

40
cases

Nichii Gakkan

37
cases

Nichii Gakkan

243
cases

2nd place

Company A

276
cases

Company C

34
cases

Company G

25
cases

Company I

170
cases

3rd place

Company B

228
cases

Company E

31
cases

Company A

22
cases

Company J

103
cases

4th place

Company C

223
cases

Company A

18
cases

Company C

21
cases

Company K

74
cases

5th place

Company D

135
cases

Company F

16
cases

Company H

19
cases

Company G

57
cases

* Home-visit long-term careexcludes bathing service.
Copyright © 2012Nichii Gakkan Company. All rights reserved.

Note: Nichii Gakkan, from Elderly Press Newspaper data
1H FY2013 Financial Results Briefing Document

11

Strategy for Business Scope Expansion (Health Care Business)
Net Sales

Stabilize earnings throughexpansion of total long-term careservices
Strengthen base
■ = Not covered by insurance
1H FY2013 Results

Peripheral areas
Home-visit
long-termcare

Nursing
homes

Day-careGroup homes

Care plan

Welfareservices for
persons withdisabilities

Welfaregoods

Home-visit
bathingHomehelperdispatching

Small,
Life support
multifunction services

Food

Home-visit
nursing care

Privatebrand
products

Number of Service
Copyright © 2012Nichii Gakkan Company. All rights reserved.

1H FY2013 Financial Results Briefing Document

12

1H FY2013 Segment Highlights (Education Business)
Consolidated Net Sales/
Operating Income (Year on Year)Net Sales: ¥10,152 million (+72.1%)
Operating Income: -¥1,978 million (¥358 million in thesame period of the previous fiscal year)■ Net sales

Strategic, long-term investment▶ Strategic investment to build nationwide operatingbase for language business■ Operating income

10,152Net Sales: ¥5,261 million (-10.8% YoY)

5,900
358

Existing

・Medical education ¥2,342 million (-13.9% YoY)
・Social education ¥2,919 million (-8.2% YoY)
Operating Income: -¥478 million (¥157 million in
the same period of the previous fiscal year)-1,978Net Sales by Business (Year on Year)■ Existing■ Language education

5,900
5,261

COCO
Juku

Net Sales: ¥48 million
Operating Income: -¥2,153 million

4,890

Net Sales: ¥4,650 million

GABA

Operating Income: ¥537 million0
Copyright © 2012Nichii Gakkan Company. All rights reserved.

1H FY2013 Financial Results Briefing Document

13

Strategy for Business Scope Expansion (Education Business)
Issues and responses at COCO Juku

Major issues

Response going forward

Increase brand recognition

Effective, efficient advertising

Strengthen marketing capabilities

Share marketing expertise to increaseenrollment
Use short-term courses to introduce brand
Use Nichii’s operating base to strengthen
corporate marketing

Strengthen business
management structure

Enhance structure for recruiting andretaining instructors

FY2013 as starting point for building earnings baseＰＯＩＮＴ

2nd promotion campaign (Sept-Oct) vs. 1st promotion campaign (June-July)
Increase requests for information by 54%, number of students by 60%

Copyright © 2012Nichii Gakkan Company. All rights reserved.

1H FY2013 Financial Results Briefing Document

14

Strategy for Business Scope Expansion (Education Business)
Flow of Strategic Investment

Transforming Education Business’s Earnings Structure

Higherprice/course×

Maximize lifetime value for customer
Price/course

Increaseclasses×
Increasecourseofferings

r

c
In

se
a
e

co

se
r
u

s
g
rin
e
f
of

Classes
Copyright © 2012Nichii Gakkan Company. All rights reserved.

1H FY2013 Financial Results Briefing Document

15

Strategy for Business Scope Expansion (Education Business)
Flow of Strategic Investment

Flow of Strategic Investment at Language Education Business
Pursue synergies between businesses
Use strategic investment to organically connect businesses and deploy competitive
advantages
Raise level of students to
Combination of language and medical
support (International medical exchanges)
medical-related practitioners

Combination of language and child care (English conversation lessons for children)
Develop comprehensive child care services nationwide, beginning with in-officechild care
Work with COCO Juku to provide high value-added services like English
conversation lessons for children
Nichii Kids
Ariake Center
Ariake Center #2
Sangenjaya
Note: Child care centerscertified by Tokyo
Metropolitan Government

Copyright © 2012Nichii Gakkan Company. All rights reserved.

Work with COCO Juku to launch pilot program ofEnglish conversation lessons for children
Create system of activities, materials, and curriculumwith COCO Juku so that children will enjoy learning
English

1H FY2013 Financial Results Briefing Document

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Strategy for Business Scope Expansion (Education Business)
Strategic Advertising Expenditure(Millions of yen)

20,000Strategic advertising expenditure with 5-10 year timeframe
Advertising as source of quantitative growth at Education Business
Advertising expenditure leads to sales growth(Millions of yen)

■ Education Business full-year net sales◆

25,000Advertising expenditure

18,00020,00016,00014,00012,00015,00010,0008,000

10,000

6,000
4,000

5,000

2,000
0

0
FY2001

FY2002

FY2003

FY2004

FY2005

FY2006

FY2007

FY2008FY2009FY2010FY2011FY2012FY2013(Forecast)

Copyright © 2012Nichii Gakkan Company. All rights reserved.

1H FY2013 Financial Results Briefing Document17

FY2013 Financial Results Forecast

Copyright © 2012Nichii Gakkan Company. All rights reserved.

1H FY2013 Financial Results Briefing Document18

FY2013 Financial Results Forecast(Millions of yen)

FY 2013
Initial Forcast

Rev ised Forecast

Amount Change
Af ter Rev ision

Net Sales

274,000

266,800-7,200Operating Income

11,4007,200-4,2004.2%

2.7%

11,000

6,700

%

4.0%

2.5%

Net Income

5,800

2,900

%

2.1%

1.1%

%

Ordinary Income

Copyright © 2012Nichii Gakkan Company. All rights reserved.

-4,300-2,9001H FY2013 Financial Results Briefing Document19

FY2013 Financial Results Forecast by Business(Millions of yen)

Net Sales by Business

FY2013
Initial Forecast

FY2013
Revised Forecast

Amount Change After
Revision

Medical Support

103,800

104,100

300

Health Care

143,200

142,000-1,200

Education

26,60020,400-6,200

Other

1,400

1,700

300

Elimination/Corporation(1,000)(1,400)-400

274,000

266,800-7,200

Total(Millions of yen)

Operating Income
by Business

FY2013
Initial Forecast

FY2013
Revised Forecast

Amount Change After
Revision

Medical Support

7,900

8,400

500

Health Care

10,00010,600600

Education

700(4,800)-5,500

0

200

200

Elimination/Corporation(7,200)(7,200)0

Total

11,4007,200-4,200Other

Copyright © 2012Nichii Gakkan Company. All rights reserved.

1H FY2013 Financial Results Briefing Document

20

Factors of Revisions to FY2013 Financial Results Forecast by Business
Factors

Net Sales
Medical Support

Acquire new contracts, mainly at private hospitals

Health Care

Review of plan for service users, etc.

Revised Amount¥300 million-¥1,200 million

Decline in students for mainline courses: ¥990 million

Education

Delay in initial advertising plan for COCO Juku: ¥5,210 million-¥6,200 million

Medical Support

Increased operational efficiency from staff skill enhancement¥500 million

Health Care

Increased efficiency at home-care facilities etc.

¥600 million

Operating
IncomeEducation

Lower sales from mainline courses: -¥860 million
Delay in COCO Juku plan: -¥4,540 million

Copyright © 2012Nichii Gakkan Company. All rights reserved.

-¥5,500 million

1H FY2013 Financial Results Briefing Document

21

Medium- to Long-Term
Management Strategy

Copyright © 2012Nichii Gakkan Company. All rights reserved.

1H FY2013 Financial Results Briefing Document

22Market Environment

Comprehensive reform of social security and tax■ Consumption tax Decision to raise consumption tax in stages (to 8% in April 2014, to 10% in
October 2015)■ Social security system Passage of bills related to reform of social security system
With establishment of national committee on social security reform,
deliberations toward prioritizing and making benefits more efficient
Estimated future cost of social security benefits(after expanding services for child care, child rearing, medical,
Afterand long-term care services)
reformCurrent¥131.8projection
160
trillion¥118.7 ¥119.8(23.6%)¥109.5trillion140
trilliontrillion(23.5%)(23.3%)(22.8%)
120¥134.4
trillion(24.1%)¥144.8trillion(23.7%)¥148.9trillion(24.4%)

100

Cost of social security to increase 1.4 times by 2025

80

% of GDP
Other
Child rearing
Long-term care
Medical care

60
40

Pensions

200GDP

FY2013¥479.6 trillion

FY2016¥509.8 trillion

FY2021¥558.0 trillion

FY2026¥610.6 trillion

Note: Nichii Gakkan, from “Revisions to Future Projection of Costs Required for Social Security,” MHLW
Copyright © 2012Nichii Gakkan Company. All rights reserved.

1H FY2013 Financial Results Briefing Document

23

Initiatives for 2025 under Medium- to Long-Term Strategy
Operating margin

Sales growth rate ■ Sales growth from expansion of scope of business■ Sales growth from strengthening of operating base

Improve balance of businessstructure for stable, long-term growth
Expand scope of business

目標経営指標の達成
Achieve management
index targets
・ Double-digit year-on-year sales
growth・ Operating margin of 7% or higher
・ ROE of 15% or higher

・Strengthen development of medical
management support services
・Enhance services not covered by long-termcare insurance
Strengthen operating base ・Expand child care services
・Develop and expand language, lifelong
・Strengthen cooperation
learning, and professional accreditation courses
among businesses
・Strengthen human resource base・Aggressively develop multifunction facilities
・Strengthen job placement support function

FY2013: Strategic investment for new business development
FY2014 and beyond : Aiming for stable growth by investment recovery
in existing and new businesses

FY2013Copyright © 2012Nichii Gakkan Company. All rights reserved.

FY2017
1H FY2013 Financial Results Briefing Document24

Returns to Shareholders“Stable and continuous returns” is our basic principle

In anticipation of record profit going forward, dividend
increase for 4 consecutive years
Forecast for FY2013 : ¥18/share (¥9 interim, ¥9 year-end)
(Yen)

20

18.0
16.0

16
12

14.0
12.0
11.0

11.0

11.0

11.0

FY2006

FY2007

FY2008FY20098
40

FY2010FY2011FY2012FY2013(Forecast)
Note: The Company executed a 2-for-1 common stock split on April 1, 2009, and the figures were retroactively adjusted accordingly.
Copyright © 2012Nichii Gakkan Company. All rights reserved.

1H FY2013 Financial Results Briefing Document25

All the profit targets and other forecasts, including the number ofcontracts, number of users, and goals contained in thisdocuments, are based on the current information available to the
Nichii Gakkan Group. Such information is subject to the influenceof factors such as economic circumstances, relaxation ofregulations and employment conditions. Please understand that
actual business performance and other achievements, such as thenumber of contracts and number of users, may be substantiallydifferent form the forecasts.

<<Contact information>>
Nichii Gakkan Company
Corporate Planning Headquarters
Public Relations Department, IR Division
Address: 2-9 Kanda Surugadai, Chiyoda-ku, Tokyo
Tel: 03-3291-5637 (IR Division)
Mail: nichii-ir@nichiigakkan.co.jp