www.nichiigakkan.co.jp

NICHIIGAKKAN CO., LTD.

Financial Results Briefing Document
for the Fiscal Year Ended March 31, 2019

May 14,2019

Overview of Financial Resultsfor Fiscal Year Ended March 31, 2019

© 2019 NICHIIGAKKAN CO., LTD. All rights reserved.

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Financial Results Highlights
Focusing on structural reforms and the enhancement of businessfoundations in the first year of the medium-term management
plan VISION 2025
21
Record-high net sales achieved for 11
consecutive years

Operating income exceeded
10,000 million yen for the first time in 7 years

・Driven by Childcare and Long-term Care Businesses→ Childcare: Net sales exceeded 10,000 million yen→ Long-term Care: Achieved record-high net sales andcustomer satisfaction

・Income increased, driven by core businesses
・Childcare Business recorded a full-year surplus for the firsttime

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Structural reforms executed・Withdrew from COCO JUKU Business (excluding franchise)・Restructured the business companies in China→ Recorded structural reforms-related extraordinary
losses to contribute to an increase in income in thenext year

Target management indicatorachieved (ROE 8% to 15% or more)・The scope of the application of tax effect accounting expanded
due to improved profitability
・Income taxes-deferred -5,138 million yen
・Profit attributable to owners of the parent company ROE 16％© 2019 NICHIIGAKKAN CO., LTD. All rights reserved. 2

Financial Results Overview（Unit: million yen）

FY.2019

FY2018.3
4Q

Net Sales

4Q

Difference

Change283,767

287,882+4,115

1.5%

7,630

10,032+2,402

31.5%

2.7%

3.5%

+0.8pt

-

3,628

5,703

+2,074

57.2%%

1.3%

2.0%+0.7pt-Profit attributable to854

6,108+5,253

614.9%

0.3%

2.1%+1.8pt-Operating Income%Ordinary Income

owners of parent%© 2019 NICHIIGAKKAN CO., LTD. All rights reserved.

3

Impact of Structural Reforms of Businesses in theFiscal Year under Review

Implemented business restructuring for early monetization
aimed for positive results as soon as possible with structuralreforms of the Education Business and the China Business
Education

China Business・Withdrawal from COCO JUKU Business・Closed 66 LSs of Gaba LSs (former COCOJUKU 72 schools)

・Liquidation of joint ventures
・Integrated the functions of full ownershipof capital in Nichii China(4 full ownerships of capital → 1 fullownership of capital)[Extraordinary losses recorded]
・Structural reform expenses
・Impairment losses
・Provision of allowance forstructural reform
Total

193 million yen
181 million yen
486 million yen
860 million yen[Extraordinary losses recorded]
・Impairment losses
・Loss on sales of subsidiaries
Total

81 million yen
305 million yen
387 million yen© 2019 NICHIIGAKKAN CO., LTD. All rights reserved. 4

Overviews by Business Segment(Consolidated Net Sales)
Net Sales

FY2018.3 4Q

FY2019.3 4Q

Difference

Factor(yoy)

Medical Support

107,272

107,773

Long-term Care

149,811

151,444

Child Care

9,365

12,559Health Care

1,398

1,632

Education

12,068

11,941

373

547

Global

3,574

1,953

Others

1,933

1,410

Elimination▲ 2,030▲ 1,380+650

―

Total

283,767

287,882+4,115―

Therapy（Unit:million yen)+501 Increase in net sales per hospital
Increase in number of users of+1,633 residential services

Increases in number of childcare centers+3,194 and number of children using childcare
Increase in number of users of+234 housekeeping services

Decrease in number of students of▲127 former COCO JUKU

Increase in number of repeaters of dog+174 salons▲1,621 Disposal of unprofitable joint ventures▲523 Decrease in internal sales© 2019 NICHIIGAKKAN CO., LTD. All rights reserved.

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Overviews by Business Segment(Consolidated Operating Income ）（Unit:million yen)

Operating income

FY2018.3 4Q

FY2019.3 4Q

Difference

Profit rate

Factor(yoy)

Medical Support

8,899

9,246

+8.6%

+347 Impact of negotiations for more reasonable contracts

Long-term Care

14,81016,383+10.8%+1,573 increase in occupancy rate of residential service facilities

Child Care▲ 564

206+1.6%+770 Increased occupancy rate of childcare facilities

Health Care▲ 223▲ 1,148▲ 70.4%▲925 Prior investment to expand Sunny Maid Service▲ 4,474▲ 4,110▲ 34.4%+364 classes

▲ 340

▲ 383

▲ 69.9%▲43 Prior investment to open new salonsGlobal

▲ 1,665▲ 1,246▲ 63.8%+419 Disposal of unprofitable joint ventures

Others204228+16.2%▲ 9,014▲ 9,143-▲129―

7,630

10,032+3.5%+2,402―

Education
Therapy

Elimination

TotalImprovement of each staff member’s productivity andIncrease in number of students of conventional GABA

+24 Efficiency of indirect operations© 2019 NICHIIGAKKAN CO., LTD. All rights reserved. 6

Overviews by Business Segment（ Consolidated Ordinary Income ）（Unit:million yen)

OrdinaryIncome

FY2018.3 4Q

FY2019.3 4Q

Profit rate

Difference

Change(yoy)Medical Support

8,993

9,382+8.7%

4.3%+389

Long-term Care

10,43011,892+7.9%

14.0%+1,462Child Care▲ 667▲ 33▲ 0.3%-+634

Health Care▲ 223▲ 1,149▲ 70.4%-▲926▲ 4,401▲ 4,032▲ 33.8%

-+369

▲ 340

▲ 384

▲ 70.2%-▲44Global▲ 1,694▲ 1,342▲ 68.7%-+352

Other222

242+17.2%

9.0%+20▲ 8,690▲ 8,871--▲181

3,628

5,703

+2.0%

57.2%

+2,074

Education
Therapy

Elimination
Total© 2019 NICHIIGAKKAN CO., LTD. All rights reserved. 7

Summary of Balance Sheet (Consolidated)（Unit:million yen)

End of March 2018

End of March 2019

Difference

65,249124,990

65,684
127,955+435+2,965

190,239

193,640+3,40060,45960,664+204

92,124

91,898▲225

Total liabilities

152,583

152,562▲20

Total net assets

37,656

41,077+3,421

Total liabilities andnet assets

190,239

193,640+3,400Current assets
Fixed assets
Total assets
Current liabilities
Non-currentliabilities© 2019 NICHIIGAKKAN CO., LTD. All rights reserved.

8

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

FY2015.3

FY2016.3

FY2017.3

FY2018.3

FY2019.3

4Q

4Q

4Q

4Q

4Q

Cash flows from Operating activities

10,629

2,546

9,379

15,802

13,401

Cash flows from Investing activities▲ 8,085▲ 6,250▲ 3,567▲ 1,897▲ 2,928

2,543▲ 3,703

5,811

13,904

10,472▲ 3,198

5,381▲ 4,246▲ 11,792▲ 10,562

9,821

14,373

16,18918,267

18,075

Free cash flow

Cash flows from Financial activities

Cash and cash equivalents at end of year

© 2019 NICHIIGAKKAN CO., LTD. All rights reserved.

9

Future management policies～Achieve the targets of VISION 2025～© 2019 NICHIIGAKKAN CO., LTD. All rights reserved.

10

「VISION 2025」
Solving social issues, achieving stable long-term profit growth,and aiming to become an outstanding company that makes a
global contribution【Strategic triangle】
SocialContribution

Connect people with communities.
Support the future of communities.
・ We create environments where people can work and live near theirCoreresidences.

Buisinesses

・We support the activities of diversified human resources regardless of（Social）

Management
Philosophy
BS*Global

Business

Buisinesses（Economic）

Return ofprofits【Brand Promise】* BS＝Balance Supply(Growth)

Futureoriented

gender, age and nationality.
・ We create environments with social infrastructures supported byemployment where people can obtain the necessary services where they live.
・We support working generations through long-term care, childcare andeducation.
・We contribute to the creation of the future of people and communities.
© 2019 NICHIIGAKKAN CO., LTD. All rights reserved.

11VISION 2025: Target Management Indicators
The target weighting was changed associated with therestructure of the business portfolio.
We are aiming to achieve the targets of VISION 2025 centeredon the core businesses.
Net sales
5,00billion
yenTarget Management Indicators
Operating margin
10％ or more

Dividend payoutROEratio
8~15% or more
30%or more

[FY2025.3 Image of weighting by segment]
Beforecorrection

Salecompositi
on ratio

Profit ratio

Core70％

50％

BS25％

45％

5％

5％

Global※Composition ratio to total excluding eliminations company

Aftercorrection

Salecompositi
on ratio

Profit ratio

Core76％

58％

BS

22％

41％

2％

1％

Global© 2019 NICHIIGAKKAN CO., LTD. All rights reserved.

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Key Strategies for FY March 2020 (1)Increase net sales
・Returning to the roots of NICHII’s strengths→Strengthen area networks, strengthen human resources matchingcapabilities, and provide secure workplaces

・Marketing reform→Promote cross-selling and up-selling in accordance with the needs ofcustomers/communities

・Securing sustainability of growth businesses→Reasonable contracts with hospitals→Development of housekeeping services market→Opening childcare centers one after anotherTarget growth rate of net sales
in the fiscal year under review

5.3％© 2019 NICHIIGAKKAN CO., LTD. All rights reserved. 13

Key Strategies for FY March 2020 (2)Strengthen business portfolio
・Reconstruction of Education Business andGlobal Businessconcentration

throughselectionand<Gaba>
Strengthen the growth capacity of conventional
Gaba Learning StudiosStandardize the operations of former COCO JUKU
Learning Studios<Global>・Restructure the local system of China Business・Develop demand for long-term care in China

FY2020.3
Improvement in operating
income of Education andGlobal Businesses＋4,156
million yen© 2019 NICHIIGAKKAN CO., LTD. All rights reserved. 14

(Reference) Impact of Structural Reforms ofEducation on Operating Income
・Organic growth＋
10 million yen
・Reduced structural reform cost ＋3,200 million yen＋3,210 million yen*Entire company(excluding personnel transfer costs)＋2,000 million yen

Operation income
FY2019.3（Unit:million yen）
FY2020.3

Advertisement+800
Personnel
expenses+2,200▲4,110
Reduction▲900

Others+100

Growth+10▲900

House-rent+1,000© 2019 NICHIIGAKKAN CO., LTD. All rights reserved. 15

(Reference) Impact of Structural Reforms
in China on Operating Income
・Organic growth＋498 million yen
・Structural reform Cost Reduction ＋448 million yen＋946 million yen
Operating Income
FY2019.3（Unit:million yen）
FY2020.3

China
Growth+350

terminate a
joint venture＋331

Goodwill+63

ExceptChina
Growth＋148

Liquidation+54▲1,246▲300＊Global buisinesses segment© 2019 NICHIIGAKKAN CO., LTD. All rights reserved. 16

FY2019.3Earnings Forecast© 2019 NICHIIGAKKAN CO., LTD. All rights reserved.

17

FY2020.3 Earnings Forecast（Consolidated）（Unit:million yen)

FY2019.3
Net Sales
Operating Income%Ordinary Income%

Profit attributable toowners of parent%

FY2020.3

Difference

Change287,822

303,000+15,178

5.3%

10,032

15,200+5,168

51.5%

3.5%

5.0%

-

5,703

11,000+5,297

2.0%

3.6%-6,108

6,700

+592

2.1%

2.2%

-92.9%

9.7%© 2019 NICHIIGAKKAN CO., LTD. All rights reserved.

18Financial Results Forecasts for FY2020.3
1. Net sales: Exceed 300,000 million yen
・Driven by growth in net sales of core businesses→ Medical Support: Make Yao Medical PFI a consolidated subsidiary and contribute to the reform ofworking practices of medical workers→ Long-term Care: Achieve a net sales increase of in-home care services and a high occupancy rate ofresidential care services through the whole year
→ Childcare: Open new childcare centers and raise the occupancy rate of existing childcare centers

2. Achieve record-high operating income
・Operating income will be boosted with the impact of structural reforms of businesses
・The income of core businesses will grow due to an increase in net sales
・The income of the Health Care Business will decline due to prior investment in personnel* (Reference) Record-high operating income: FY 2004.3 13,869 million yen

3. Raise dividends per share by 5 yen to 40 yen for the year
・Interim dividend 20 yen, year-end dividend 20 yen(the dividend ratio is expected to be 38.4％)© 2019 NICHIIGAKKAN CO., LTD. All rights reserved. 19

Earnings Forecast by Business Segment（ Consolidated Net Sales)（Unit:million yen)

Net Sales

FY2019.3

FY2020.3

Difference

ChangeMedical Support

107,773

113,100+5,327+4.9%

Long-term Care

151,444

157,500+6,056+4.0%Child Care

12,55914,800+2,241+17.8%

Core Business

271,777

285,400+13,623+5.0%

Health Care

1,632

3,100+1,468+90.0%

11,941

11,300▲641▲ 5.4%

547

900

+353

+64.5%

14,12015,300+1,180+8.4%

Global

1,953

2,300+347+17.8%

Other

1,410

700

▲710

▲ 50.4%▲ 1,380▲ 700+680-287,882

303,000+15,118+5.3%

EducationTherapy
BS BusinessEliminationTotal© 2019 NICHIIGAKKAN CO., LTD. All rights reserved.

20

Earnings Forecast by Business Segment（ Consolidated Operating Income)（Unit:million yen)

OperatingIncome

FY2019.3

FY2020.3

Difference

ChangeMedical Support

9,246

9,600+354+3.8%

Long-term Care

16,38317,000+617+3.8%

206

700+494+239.8%

Core Business

25,83627,300+1,464+5.7%

Health Care

▲ 1,148▲ 2,000▲852-

Education▲ 4,110▲ 900+3,210-▲ 383▲ 100+283-

BS Business▲ 5,641▲ 3,000+2,641-

Global

▲ 1,246▲ 300+946-Other228200▲28▲ 12.3%▲ 9,143▲ 9,000+143-

10,032

15,200+5,168+51.5%

Child Care

Therapy

EliminationTotal© 2019 NICHIIGAKKAN CO., LTD. All rights reserved.

21Earnings Forecast by Business Segment（ Consolidated Ordinary Income)（Unit:million yen)

OrdinaryIncome

2019年3月期

2020年3月期

Difference

ChangeMedical Support

9,382

9,500+118+1.3%

Long-term Care

11,892

12,900+1,008+8.5%▲ 33500+533▲ 1,615.2%

Core Business

21,241

22,900+1,659+7.8%

Health Care

▲ 1,149▲ 2,000▲851-Education▲ 4,032▲ 700+3,332-▲ 384▲ 100+284-

BS Business▲ 5,565▲ 2,800+2,765-

Global

▲ 1,342▲ 300+1,042-

Other242200▲42▲ 17.4%▲ 8,871▲ 9,000▲129-5,703

11,000+5,297+92.9%

Child Care

Therapy

Elimination
Total© 2019 NICHIIGAKKAN CO., LTD. All rights reserved.

22

Trends of Dividends andTotal Shareholder Return (TSR)
Plans to increase dividends for two consecutive years byachieving income growth
Share price at the end of each fiscal year + Cumulative amount of dividends per share for theperiods from before the fiscal year under review through each fiscal year

＊ Share price on the last day of the fiscal year that is five years before the fiscal year under review

148.0
133.4

TSR5years＊
100
85.6

16.3

（forcast＋5yen）

94.7

35yen

Annuity22yen

15.3

2025: Aim to achieve an aggregate
market price of 1 trillion yen

40yen

22yen

17.3

18.3

19.3

20.3

(Forecast)(Forecast)

Payout ratio
30％ or more

25.3(Forecast)© 2019 NICHIIGAKKAN CO., LTD. All rights reserved.

23Allこの配付資料に記載されている業績目標および契約数・利用者数・目performance targets and other forecasts, including numbers ofcontracts
and users, and goals, contained in this document are
標等は、いずれも当社企業グループが現時点において把握している情報
based
on information currently available to the Nichii Gakkan Group
を基にした予想値であり、これらは経済環境、規制緩和、雇用情勢など
and will be affected by uncertain factors, including economicの不確実な要因の影響を受けます。
circumstances, the relaxation of regulations, and employment
したがって、実際の業績および契約数・利用者数等はこの配付資料にconditions. Please note that actual results, numbers of contracts and
記載されている予想とは異なる場合がありますことをご承知ください。
users, 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© 2019 NICHIIGAKKAN CO., LTD. All rights reserved.

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