www.nichiigakkan.co.jp

NICHII GAKKAN COMPANY

Financial Results Briefing Document
for the Fiscal Year Ended March 31, 2014

May 16, 2014

Financial Results Highlights for Fiscal Year Ended March 31, 2014
1. 6th consecutive year of revenue growth with record-breaking net sales
Record breaking net sales in the long-term care businessNet sales in FY2014Child care business up 70% year on year

271,447million yen

Net sales of 11.0 billion yen in the language education
business (up 14.5%)(up 1.6% year on year)

2. Record-breaking net sales and operating income in Nichii Care Palace and GABA
* The results of Nichii Care Palace exclude the effect of change in the closing of fiscal year made in FY2012 (15-month figures posted)

Net sales(million yen)

Pre-goodwill amortization
operating income(million yen)

Post-goodwill amortization
operating income(million yen)

Nichii Care Palace

18,309 (up 4.4% year on year)

1,736 (up 37.6% year on year)

1,557 (up 43.9% year on year)

GABA

10,119 (up 7.4% year on year)

2,297 (up 16.4% year on year)

1,462 (up 28.4% year on year)

3. Base for language education has almost been established
Strategic Investment ► The vast majority of the initiatives – the establishment of an operational base for COCO Juku Junior, thepreparation of classrooms to develop the language education business, the employment of teachers, etc. – hasbeen completed.

• COCO Juku

80 classrooms• COCO Juku Junior 235 classrooms• New York University School of Continuing and Professional Studies ALI Tokyo Center• York Global Study Center(incl. 140 classrooms franchised)
Copyright © 2014 Nichii Gakkan Company. All rights reserved.

FY2014 Results Briefing

1Financial Results Highlights for Fiscal Year Ended March 31, 2014

(Unit: million yen)

FY2013

FY2014
AmountAmountNet Sales
Operating Income%

Ordinary Income%

Net Income%

Copyright © 2014 Nichii Gakkan Company. All rights reserved.

(Revised forecast)AmountYear on year

267,191

273,200

271,447

1.6%

8,741

6,600

6,322

(27.7%)

3.3%

2.4%

2.3%

8,326

5,000

4,940

3.1%

1.8%

1.8%

4,383

2,800

2,831

1.6%

1.0%

1.0%

(40.7%)(35.4%)FY2014 Results Briefing2Consolidated Sales and Operating Income by Business for Fiscal Year
Ended March 31, 2014
(Unit: million yen)
GrowthFY2014
Net Sales

FY2013

Amount(Revised forecast)Amount%Medical Support

104,110

105,800

105,974

1.8%

Long-term &Health Care

141,311148,000

146,744

3.8%

Education

21,727

19,20018,516(14.8%)

Others

1,684

1,300

1,330

(21%)

Elimination/
Corporate(1,642)(1,100)(1,117)‒

Total

267,191

273,200

271,447

1.6%(Unit: million yen)

FY2014
Operating Income

FY2013

Amount(Revised forecast)

GrowthAmount%Medical Support

8,301

7,900

8,660

4.3%

Long-term Care &Health Care

11,183

13,40012,77014.2%

Education(3,338)(6,900)(7,269)

‒

128

100

45

(64.7%)

Elimination/
Corporate(7,534)(7,900)(7,885)

‒

Total

8,741

6,600

6,322

(27.7%)

OthersCopyright © 2014 Nichii Gakkan Company. All rights reserved.

FY2014 Results Briefing3

Major Factors for Changes in Sales for Fiscal Year Ended March 31, 2014
Contribution of the long-term care business and the
medical support business to increased sales

Year on year: Up 4,255 million yen(Unit: million yen)

+5,432• Hospitals• Clinics• Existing-4.7 billion yen• Language education +1.5billion yen+2.35 billion yen-0.5 billion yen+524-3,211+1,863

271,447-353

267,191• Home care
• Facility care
• Child care

FY2013

MedicalSupport

Copyright © 2014 Nichii Gakkan Company. All rights reserved.

+2.15 billion yen+2.65 billion yen+0.65 billion yen

Long-term &Health Care

Education

Other

Elimination/
Corporate

FY2014FY2014 Results Briefing

4

Major Factors for Changes in Operating Income for Fiscal Year Ended March 31, 2014
Contribution of the long-term care business. Decrease in operating
income owing to change in health workers’ qualification system andstrategic investment in a language business in the education business.

• Home care
• Facility care
• Health Care

8,741

+ 0.6 billion yen+1.05 billion yen-0.05 billion yen

Year on year:

Down 2,419
million yen+1,587+358(Unit: million yen)

6,322
• Existing-2.3 billion yen• Language education -1.6 billion yen

FY2013

MedicalSupport

Copyright © 2014 Nichii Gakkan Company. All rights reserved.

Long-term &health care

-3,931-83

Education

Other

-351

Elimination/
Corporate

FY2014FY2014 Results Briefing5Segment Highlights (Medical Support Business)

Net sales and operating income (million yen)

GrowthSolid performance in the hospital business.

Net sales

105,974+1.8%

Operations at new large-scale hospitals stabilized, leading toan increase in sales and profit.

8,660

+4.3%

Operating income▪ Contracts were acquired from large-scale hospitals andsales increased per hospital

105,974
104,110(+1.8%)

Growth rate for net sales of the hospital business: 2.6%
(increased sales for the 6th consecutive year)
8,660
8,301

Net Sales(4.3%)

Operating Income

Net sales related to hospitals and number ofcontracts (year-on-year change)▪ Return to increased profit owing to stabilized operations
at newly contracted hospitals
FY2014 Key challenges
Enhancement of management support services

94,157(+2.6%)

91,795

1,983

1,941

▪ Offering a new service, “Medical Concierge”(-2.1%)▪ Organizing a variety of seminars to address systemtrends▪ Developing services utilizing IT
Net Sales

Number of contracts(as of the end of March)

Copyright © 2014 Nichii Gakkan Company. All rights reserved.

FY2014 Results Briefing

6Segment Highlights (Long-term and Health Care Business)
Record-breaking sales and operating income.
Net sales and operating income (million yen) Growth
Net sales

146,744+3.8%

Operating income

12,770+14.2%

146,744
141,311(Net sales for 7 consecutive years and operating income for
5 consecutive years)▪ Facility efficiency improved owing to an increased
number of users of home care and facility careservices▪ Profitability of facility care bases improved(+3.8%)

12,770→ New bases became profitable within a short period(+14.2%)

11,183

Net sales

Operating income ratio for the long-term and healthcare business: 8.7% (up 0.8 point year on year)

Operating income

FY2014 Key Challenges
Promotion of comprehensive service initiatives meeting community
needs

Number of users of home care and facility careservices (year-on–year change)
142,381* As of March 31, 2014

▪ Strengthening of principal care services and home nursing services▪ Enhancement of dementia care
Offering of day care addressing GH and dementia (shared type)(+1.5%)

140,246

10,463
10,023(+4.4%)

Strengthening of services not covered by a long-term insurance system▪ Health care (PB) products: Sales 902 million yen (up 50.7% YoY)
House keeping services: Sales 867 million yen (up 15% YoY)
Home care services

Facility care services

Copyright © 2014 Nichii Gakkan Company. All rights reserved.

▪ Improved operations of long-term care staff dispatch business
FY2014 Results Briefing

7Segment Highlights (Long-term and Health Care Business)
Number of established care facilities

End of March 2013

End of March 2014
(Forecast)End of March 2014

Care plan

774

789+ α790 (+16)

Home visit

995

1,052 (+57)

1,007 (+12)

Day care353

383 (+30)

367 (+14)

Home nursing care59

100 (+41)

65 (+6)

Hohoemi247

262 (+15)

262 (+15)

Kirameki51

58 (+7)58 (+7)

Nichii Home52

54 (+2)54 (+2)* Figures in brackets show the increase from the same month of the previous year

Copyright © 2014 Nichii Gakkan Company. All rights reserved.

FY2014 Results Briefing8Segment Highlights (Education Business)
GrowthNet sales and operating income (million yen)

Net sales

18,516-14.8%

Operating income-7,269‒%21,727

18,516(-14.8%)Decreased sales reflecting a decline in the number ofstudents owing to changes in qualification systems
for existing courses.
▪ Increased sales for the language education business, with net sales
exceeding 11.0 billion yen.
Record-breaking net sales and operating income for GABA
Net sales growth 7.4% (expected market growth 4.3%)

FY2014 Key Challenges
Net sales-3,338-7,269Operating income

Establishment of an integrated system for providing
language education
・COCO Juku:
80 classrooms
・COCO Juku Junior:

235 classrooms* Including 140 classrooms franchised

Net sales by business (Year-on-year change)▪ Improvement of the support system for studying abroad andopening of NYU－SCPS ALI Tokyo Center

Strengthening of sales to corporations
11,0509,649(+14.5%)

11,611

Language education(COCO Juku+GABA)
Copyright © 2014 Nichii Gakkan Company. All rights reserved.

6,897(-40.6%)

Existing

Offering of courses meeting qualification systems andsocial needs“Basic training for staff working in care,” “Training courses for actualcare workers,” “Training courses for practical care work,” “Training
courses for aid workers for mothers before and after childbirth,” etc.
FY2014 Results Briefing

9Status of Child Care BusinessNet sales and operating income (million yen)

GrowthNet sales

1,793

70%

Operating income

-502

‒%

Increased sales owing to proactive development
reflecting the introduction of a new system▪ The in-office child care business drove an increase in earnings.
▪ Despite prior expenses, losses remained almost unchanged owing toan increase in facility operations through, among others, theprovisioning of English conversation.

1,793(+70.0%)

1,054

Number of child care centers: 94 (as of Mar. 31, 2014)* Includes the dispatching ofUp 28 year on year
care workers.

Net sales-499-502
Operating income

FY2014 Key Challenges
Promotion of total child care services

Net sales by business (year-on-year change)
1,523▪ Aggressive development of in-office and in-hospital child carecenters▪ Active sales activities to win contracts from local governments(+78.9%)Strengthening of an alliance with other businesses
270
203

851

(+33.0%)In-hospital child care・ Offering of English conversation lessons at child care centers
・ Holding of gatherings between centers’ children and the elderly

In-office child care

Copyright © 2014 Nichii Gakkan Company. All rights reserved.

FY2014 Results Briefing

10

FY2015 Earnings Forecasts
POINT 1Return to an increase in sales and profit

An increase in revenue for the 7th consecutive year with record-breaking net sales
Positive growth in all business sectors (the revenues of the education business sector start to rise)

POINT 2

Improvement in the balance between existing businesses and strategic businesses

Net sales of existing and strategic businesses (forecast) Existing businesses Strategic businesses

Medical support: 106,800 million yen (+0.8%)

Language education: 12,330 million yen (+11.6%)

Long-term & health care: 152,400 million yen (+3.9%)Child care: 2,370 million yen (+32.2%)

POINT 3

Regional business diversification

Launch of full-scale operations of long-term care in the Chinese market based on feedback from marketing
activities in cities such as Beijing and Shanghai Improvement of the systems for business promotion in China
 Participation in the international welfare exhibitions to be held in May in Beijing and Shanghai

Copyright © 2014 Nichii Gakkan Company. All rights reserved.

FY2014 Results Briefing

11

FY2015 Earnings Forecasts(Unit: million yen)

FY2014FY2015 (Forecast)AmountNet sales
Operating income%

Ordinary income%

Net income%

Copyright © 2014 Nichii Gakkan Company. All rights reserved.

AmountYear on year

271,447

278,400

2.6%

6,322

7,700

21.8%

2.3%

2.8%

4,940

5,700

1.8%

2.0%

2,831

3,000

1.0%

1.1%

15.4%

6.0%

FY2014 Results Briefing

12

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

FY2014GrowthFY2015 (Forecast)%

Medical Support

105,974

106,800

0.8%

Long-term &Health care

146,744

152,400

3.9%

Education

18,516

19,100

3.2%

Other

1,330

1,500

12.7%

Eliminations/
Corporate(1,117)(1,400)‒

Total

271,447

278,400

2.6%(Unit: million yen)
GrowthOperating income

FY2014FY2015 (Forecast)%

Medical Support

8,660

8,900

2.8%

Long-term &Health care

12,77013,800

8.1%

Education(7,269)(7,200)

‒

45

200

340.3%

Eliminations/
Corporate(7,885)(8,000)

‒

Total

6,322

7,700

21.8%

Other

Copyright © 2014 Nichii Gakkan Company. All rights reserved.

FY2014 Results Briefing

13

FY2015 Earnings Forecasts – Major factors for changes in net sales
Aim to achieve record-breaking net sales for the 7th consecutive year
by increasing sales in all business sectors

Year on year: Up 6,952 million yen(Unit: million yen)

+5,655+583+169

278,400-282• Hospitals• Clinics

271,447• Existing-0.8 billion yen• Language education +1.35 billion yen+1.0 billion yen-1.5 billion yen+825• Home care
• Facility care
• Health care
• Child care

FY2014

MedicalSupport

Copyright © 2014 Nichii Gakkan Company. All rights reserved.

Long-term &Health care

+1.6 billion yen+2.85 billion yen+0.55 billion yen+0.65 billion yen

Education

Other

Elimination/
Corporate

FY2015FY2014 Results Briefing

14

FY2015 Earnings Forecasts – Major factors for changes in operating income

Aim to achieve a positive increase in all business sectors by
improving the profitability of the education businessYear on year: Up 1,377 million yen(Unit: million yen)

• Home care
• Facility care
• Health care
• Child care

+0.3 billion yen+0.55 billion yen+0.15 billion yen+0.05 billion yen

7,700

+154
+1,029+69-114• Existing-1.0 billion yen• Language education +1.05 billion yen

+239

6,322

FY2014

MedicalSupport

Copyright © 2014 Nichii Gakkan Company. All rights reserved.

Long-term &health care

Education

Other

Elimination/
Corporate

FY2015FY2014 Results Briefing

15Capital Alliance with JSS Corporation (Announced on May 14, 2014)
Contributing to a comprehensive community care system through collaboration with a
top company managing swimming schools that produce numerous Olympic athletes
Registered Name
Commencement of Operations
Representative
Location

Business Types

JSS Corporation
Commenced operations in July 1976 under the concept of “Education throughswimming”
President & Representative Director: Takao Fujiki

Membership: Approx. 100,000

1-4-11 Tosabori, Nishi-ku, Osaka
Planning, management, and operations of swimming schools, tennis schools, fitness
clubs, etc.
Sales of sports goods, equipment, and accessories, as well as facilities

Principal Business

Sales of goods, elementary school child care, swimming programs for the elderly, etc.

Revenues

FY2014 Sales: 7,346 million yen, Ordinary income: 322 million yen, Net income:154
million yen

Stock Exchange Listing
Strengths

Includes child membership of
85,000
Number of schools: 84

Tokyo Stock Exchange JASDAQ (Security Code: 6074)
Overwhelming expertise in training, facility operation capabilities, membership &guardian networks

Details of capital alliance (equity method company)• Acquired 500,000 shares of JSS common stock (24.84%)• Acquisition cost: 475 million yen

Details of collaboration• Development and provisioning of long-term care prevention programs• Collaborative operations among child care centers, elementary school
child care, swimming, and English conversation• Living support services to guardians• Dispatch of an outside director: Nobusuke Mori (Senior Managing
Director)

Copyright © 2014 Nichii Gakkan Company. All rights reserved.

FY2014 Results Briefing

16Capital Alliance with JSS Corporation
Realizing the provisioning of seamless services through the collaboration of the two companies[Lifecycle management of customers]

Preschool

Elementary
schoolchildrenPreschool childcare

Nichii* Shows main target customers for each service

Juniorhigh &
highschoolstudents

COCO Juku Junior

1,000 children

University
students

AdultsElderly

COCO Juku (York Global Study Center)

Long-term careprevention, long-term care

5,000 students of language education classes
Social Education
37,000 students

150,000 users

Elementary school
child care

Programs for the elderly
Programs for women and maternity

JSS

Swimming
Child membership: 85,000

Ranking of lessons for children■Ranking of lessons taken by children
1stSwimming
2nd
Piano
3rd
English/English conversation
Copyright © 2014 Nichii Gakkan Company. All rights reserved.

15,000 adult members

Guardian membership: 85,000■Ranking of lessons that guardians want their children to take
1st
English/English conversation
2nd
Swimming
3rd
Calligraphy

Source：www.keikotomanabu.net
FY2014 Results Briefing

17Regional Business Diversification– Nichii’s medium-term management strategy and the business environment in China
Nichii’s medium-term management strategy

Achieve stable earnings over the long termby restructuring the business portfolio
Promote the diversification of businesscategories→
Provisioning of goods and services
for all generations, meeting changes in social
structure

Regional diversification→
Development of excellent
overseas market

Current status of China’s aging society

Rapidly aging population
Over 200 million people aged 60 years and over

Shortage of workers engaged in long-term
care
Shortage of 12 million long-term care personnel

Government policy emphasizing homecare
Ratio of home nursing care: 90%

Change in lifestyle associated witheconomic development
Growth of housekeeping services market

Facilitate the strengthening of marketing and the acceleration of businesses by
establishing local subsidiaries in major cities in China

Copyright © 2014 Nichii Gakkan Company. All rights reserved.

FY2014 Results Briefing

18Regional Business Diversification - China operations
Nichii Gakkan Company, Global business Headquarters
China Business Division
Location: Chiyoda-ku, Tokyo
Executive Officer in Charge: Tsuyoshi Terada, Managing Director,
General Manager of Global Business Headquarters

Nichii China Co., Ltd.
Location: Chaoyang District, Beijing
Representative: Kazuhiko Yamanaka
Capital: 9.50 million yuan
Ownership: Nichii Gakkan 100%NICHII CARENET CHINA Co., Ltd.
Location: Putuo District, Shanghai
Representative: Daisuke Terada
Capital: 22 million yuan
Ownership: Nichii Care Net 100%

Nichii Hong Kong Limited
Location: Central, Hong Kong
Representative: Tsuyoshi Terada (Director)
Capital: 25 million HKD
Ownership: Nichii Gakkan 100%

Copyright © 2014 Nichii Gakkan Company. All rights reserved.

FY2014 Results Briefing

19Regional Business Diversification – Participation in exhibitions in China

Promote Japanese nursing care education by participating in major exhibitions in China
In May 2014, the Company participated in the 3rd China International Senior Service Expo (Beijing) and the 9th China International
Exhibition of Rehabilitation, Nursing & Healthcare (Shanghai, participation planned), both of which are China’s largest exhibitionsof nursing care and welfare.
A variety of demonstrations were carried out in the Company’s booth under the main theme of “Three Excellences” (excellent
personnel, excellent services, and excellent products), which is the Company’s business concept for China.
Reflecting a high level of interest in Japanese nursing care, many people visited the Company’s booth, including businesspersonnel and local mass media.

Demonstration of a personnel
training program

Demonstration of nursing
care expertise

ダミー

Copyright © 2014 Nichii Gakkan Company. All rights reserved.

Demonstration ofsanitary products

ダミー

FY2014 Results Briefing

20Business Environment Surrounding the Company (1)April 2014: Increase in consumption tax
 April 2014 Revision to nursing care compensation +0.63%
22.1 x (108 / 105 - 1) ≈ 0.63%
Tax rate (*) x (108 / 105 - 1) = Add-on rate for a base unit[(*) Tax rate = 1.0 - Ratio of personnel cost - Ratio of other tax-free items]
 Effects on advances received in the education business Absorb additional costs by increasing compensation in the long-term care business

April 2015: Long-term care insurance will be revised(1) Promotion of collaboration between
home healthcare and long-term care

(5) Promotion of long-term care prevention(9) Further reduction of primary insurance
premiums for low income earners(2) Active implementation of measuresagainst dementia(6) Reinforcement of the function of thecommunity comprehensive support center(10) Raising the charges for users whose
incomes are above a certain level to 20%(3) Promotion of community-based longterm care(7) Review of prevention benefits along withreview of the community-based support
business(11) Raising the upper limit of charges for
expensive nursing care services(4) Enhancement of living support services(8) Restricting the eligibility for special nursing
care homes to “Nursing care required –Level 3 or higher” in principle(12) Inclusion of asset requirements insupplementary provisioning
Source: Nikkei Healthcare

Copyright © 2014 Nichii Gakkan Company. All rights reserved.

FY2014 Results Briefing

21

Business Environment Surrounding the Company (2)New child care support system (Implementation scheduled for April 2015)▪

Enhancement of preschool education and child care in terms of quantity and quality▪

Enhancement of support for child care reflecting community needs▪

Promote “Plans for accelerating the elimination of the waiting list of children for day care facilities” to securely complement childcare, and facilitate a smooth transition to the new system

Regulatory reform (Matters under review) Bill for amendment to the worker dispatching law▪

* Implementation scheduled for April 2015 subject to passage of the bill

Change the subject of a 3-year dispatch period from “assigned job” to “worker”→ By changing workers, companies can continue to accept dispatched workers in the same workplace.

 Discussion of use of foreigners▪

Study into broadening the eligibility for technical training to foreigners in addition to the acceptance of certified care worker candidates as
per the Economic Partnership Agreement (EPA).

▪

Study of the use of foreigners for housekeeping support from the perspective of facilitating the advance of women in society.

Copyright © 2014 Nichii Gakkan Company. All rights reserved.

FY2014 Results Briefing

22Distribution of Profits

The Company’s dividend policy: Distribution of stable and continuous returns
FY2015 forecast 20 yen (10 yen interim dividend + 10 yen year-end dividend)

20 yen20 yenFY2014FY201518 yen16 yen14 yen12 yen11 yen11 yen

FY2008FY2009FY2010FY2011FY2012FY2013(forecast)* The Company executed a 2-for-1 stock split on April 1, 2009, and the figures for the fiscal years before that are adjusted to reflect the effect of the stock spilt.

Copyright © 2014 Nichii Gakkan Company. All rights reserved.

FY2014 Results Briefing

23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 © 2014 Nichii Gakkan Company. All rights reserved.

FY2014 Results Briefing24