Company Research and Analysis Report
FISCO Ltd.
http://www.fisco.co.jp

Meiko Network Japan
4668 Tokyo Stock ExchangeFirst Section

5-Dec.-14

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato伪伪New businesses have been steadily expanded. Sales andcurrent net profit have surpassed their past records.
On October 9, 2014, Meiko Network Japan (4668) announced its consolidated results for the
fiscal year ended August 2014. Its consolidated sales increased by 1.9% YOY to ¥15,565mn,
its recurring profit decreased by 4.9% YOY to ¥3,537mn and current net profit increasedby 1.4% YOY to ¥2,199mn. While its Meiko Gijuku franchised schools business was sluggish,
new businesses such as Meiko Kids Schools business steadily expanded, and as a result theCompany's sales and current net profit surpassed their past records.
For the fiscal year ending August 2015, the Company is forecasting its sales increase by
24.8% YOY to ¥19,420mn and recurring profit increase by 2.3% YOY to ¥3,620mn. Its sales
are inflated as the Company acquired MAXIS Group, Meiko Gijyku's largest franchisee, into
its subsidiary. The sales increase would be by net 5% with this influence excepted. As its
steps to take for the current fiscal year, the Company will establish an appropriate structure
for making its slumping Meiko Gijyuku business regrow. Specifically, besides restructuring
the Company organization and improving its service quality, the Company will implement“Meiko-style! Self-supported Learning” thoroughly again as a differentiation strategy for
expanding the number of students. Further, the Company is developing new services one by
one for increasing students' motivation and supporting their learning management, which will
be tested step by step from the spring of 2015. As for new businesses, the Company will
advance foundations for business as all of Waseda Academy Kobetsu Schools, Meiko Soccer
Schools and Meiko Kids Schools are expecting to increase their numbers of schools.
The Company revised its medium-term three-year business plan at the time of announcementof its consolidated financial results. For its final fiscal year ending August 2016, the Company
revised sales from ¥18,720mn to ¥20,960mn and recurring profit from ¥4,500mn to ¥4,230mn.
This revision was made in view of the expected financial results for the preceding year and theinfluence of having acquired MAXIS Group as a subsidiary, but the Company has maintained
its basic strategies. Also, regarding dividend policy, its basic policy is to maintain continuous
dividends and the Company plans a dividend increase by ¥2 YOY to ¥34 per share for the
fiscal year ending August 2015. The Company also plans to raise gradually its dividend payout
ratio to about 50%. Thus, the Company will continue to attract attention as a corporation thatis aggressive about shareholder returns including its shareholder special benefit plan (a QUO
card worth ¥3,000 to be presented per share unit).

伪伪Check Point
・ Its sales and current net profit have surpassed the past records for two consecutive
fiscal years.
・ Its financial standing has been strengthened and its high profit structure has been
maintained.
・ From the latter half of the current fiscal year, the Company is expected to turn into
the trend of “increase of both sales and profit.”

We encourage readers to review our complete legal statement on “Disclaimer” page.
1

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Meiko Network Japan
4668 Tokyo Stock ExchangeFirst Section㻞㻜㻘㻜㻜㻜

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Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato㻜㻜㻲㼅㻤㻛㻝㻜

㻲㼅㻤㻛㻝㻝

㻲㼅㻤㻛㻝㻞

㻲㼅㻤㻛㻝㻟

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㻲㼅㻤㻛㻝㻢㻱伪伪Description of Businesses“Meiko Gijuku” as an industry leader in the private tutorial
schools industry is the primary source of sales“Meiko Gijuku,” the leading brand of the private tutorial schools industry, has both directly
operated schools and franchised schools and those are the primary sources of sales. Also,
it owns a subsidiary “Tokyo Ishin Gakuin” (Tokyo Medical School Preparatory Institute) that
operates preparatory schools for medical course examinations and other businesses.
Its other businesses include “Meiko Soccer Schools,” soccer schools for children, “Waseda
Academy Kobetsu Schools,” for individualized coaching preparatory schools for students
preparing for entrance examinations for competitive schools, “Meiko Kids Schools” for nurserycare, “Abrakadoodle Art Studios,” an art class for infants and elementary school childrenand “MEIKO PLUS Academy” as an private tutorial school for Korean students and othereducational service businesses. Its other businesses include publishing entrance examination
information magazines, designing trial examination questions, sales of educational materials andoffering private tutoring within ordinary schools by its subsidiary Youdec Co. Further, it has abusiness of publishing academic books by Koyo Shobo Co., Youdec's subsidiary.
The Company's segment-wise percentages are shown in the graphic chart below. Meiko Gijuku
accounts for most of its sales and profits. Its medium-term strategy is to grow the entire groupby expanding other educational service businesses on top of the sustained growth of Meiko
Gijuku businesses.

We encourage readers to review our complete legal statement on “Disclaimer” page.
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■Description■of Businesses㻼㼑㼞㼏㼑㼚㼠㼍㼓㼑㻌㼐㼕㼟㼠㼞㼕㼎㼡㼠㼕㼛㼚㻌㼎㼥㻌㼎㼡㼟㼕㼚㼑㼟㼟㼑㼟㻌㻔㻲㼅㻤㻛㻝㻠㻌㼍㼏㼠㼡㼍㼘㻌㼞㼑㼟㼡㼘㼠㼟㻕㻹㼑㼕㼗㼛㻌㻳㼕㼖㼡㼗㼡㻌㼐㼕㼞㼑㼏㼠㼘㼥㻌㼛㼜㼑㼞㼍㼠㼑㼐㻌㼟㼏㼔㼛㼛㼘㼟㻿㼡㼜㼜㼘㼑㼙㼑㼚㼠㼍㼘㻌㼑㼐㼡㼏㼍㼠㼕㼛㼚㻝㻜㻜㻑

Meiko Network Japan

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4668 Tokyo Stock ExchangeFirst Section

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Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

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伪伪Financial Results
Sales and current net profit have shown all-time record highs fortwo consecutive fiscal years(1) Consolidated financial results for the fiscal year ended August 2014
The consolidated financial results announced as of October 9, 2014 showed sales of ¥15,565mn
or 1.9% increase YOY, operating profit of ¥3,416mn or 4.6% decrease YOY, recurring profit of¥3,537mn or 4.9% decrease YOY and current net profit of ¥2,199mn or 1.4% increase YOY.
Although both sales and profit were short of its accounting plan with sluggish Meiko Gijuku
businesses as its main reason, sales and current net profit showed all-time highs for two
consecutive fiscal years.
Financial results for FY8/14 (Consolidated)
(¥mn)

Sales
Cost of goods sold
SGA
Operating profit
Recurring profit
Net extraordinary gain or loss
Current net profit

FY8/13
Actual
vs Sales15,279
8,995
58.9%
2,703
17.7%
3,580
23.4%
3,718
24.3%
-110
-0.7%
2,169
14.2%

Budget16,470
3,780
3,880
2,330

FY8/14
Actual
vs Sales
15,565
9,399
60.4%
2,750
17.7%
3,416
21.9%
3,537
22.7%
-24
2,199
14.1%

YOY
1.9%
4.5%
1.8%
-4.6%
-4.9%
1.4%

As of the end of August, the number of Meiko Gijuku schools was 2,137 (increased by 30 YOY)
and the number of registered students was 135,731 (decreased by 507 YOY). This was thefirst time its registered students had decreased from the previous year. This is due to severe
competitions among the private tutorial school operators under the continuing downward trend
in the birth rate. Particularly for the current fiscal year, students decreased sharply in the
Kyushu region by 1,784, which affected the total badly. Without the Kyushu region, the numberof students would have increased. The decline in the number of students in Kyushu could be
due to the student acquiring campaigns with lowered fees by a number of competing school
operators. However, such price-cutting competition with total disregard for profitability seems
to have calmed down as those school operators are said to be closing some of their schools.

We encourage readers to review our complete legal statement on “Disclaimer” page.
3

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Meiko Network Japan
4668 Tokyo Stock ExchangeFirst Section

5-Dec.-14

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Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato㻝㻡㻜㻘㻜㻜㻜

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Operating profit decreased by 4.6% YOY and operating profit margin turned to be 21.9% which
is down by 1.5 points YOY. This is due to the increased ratio of cost of sales by 1.5 points.
This cost increase was mainly caused by the increase in the fixed costs such as man power
and room rents for increased schools operated directly by Meiko Gijuku as well as changes
in the sector-wise. With regard to the cost of goods sold, there were expenses (plus ¥31mn)
due to the increased shareholders and expenses for equity offering, but owing to the expense
control measures across the Company, the total SGA ratio was maintained as 17.7%, same as
for the previous year.
For the current year, the Company sold all the shares of Life Support, an equity method
affiliate till the previous year, and Recorded ¥111mn as gain on sale of investment securities.
Business segment-wise trends are as follows:○Meiko Gijuku directly operated schools
Sales of Meiko Gijuku directly operated schools business increased by 3.6% YOY to ¥7,062mn
and the segment's profit decreased by 0.4% YOY to ¥1,455mn. The number of its schools as ofthe end of August 2014 increased by 7 YOY to 217 schools and the number of its registeredstudents as of the end of August 2014 increased by 66 YOY to 17,357 students. These
expansions were the factors for the increased sales. The reasons for a slight decrease in the
profit were increases in the fixed costs such as for manpower and room rents due to increased
number of schools and in the costs for seminars and other events for school principals andinstructors, which were implemented to strengthen school management.

We encourage readers to review our complete legal statement on “Disclaimer” page.
4

■Financial■
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Meiko Network Japan
4668 Tokyo Stock ExchangeFirst Section

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

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5-Dec.-14（¥㼙㼚）㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㻼㼞㼛㼒㼕㼠（㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟）

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The number of students per school and sales per student dropped slightly. The decrease insales per student seems to be attributed to a lowered ratio of senior high school students withhigher unit prices and also to lowered visits to the schools. But, as for the period of 4Q (Juneto August), it increased slightly from the same period a year ago, so the declining trend now
seems to have been curbed. On the other hand the number of students per school was 80.0.
Although this is a small decline from the same period a year ago, it has been kept on a high level
through the improved skills of school enrolling counseling and efforts for improved customer
satisfaction by intensive communications with students and parents.

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We encourage readers to review our complete legal statement on “Disclaimer” page.
5

■Financial■
Results

㻼㼞㼛㼜㼛㼞㼠㼕㼛㼚㻌㼛㼒㻌㼟㼠㼡㼐㼑㼚㼠㼟㻌㻔㼍㼢㼑㼞㼍㼓㼑㻌㼎㼥㻌㼒㼕㼟㼏㼍㼘㻌㼥㼑㼍㼞㼟㻕㻱㼘㼑㼙㼑㼚㼠㼍㼞㼥㻌㼟㼏㼔㼛㼛㼘㻌㼟㼠㼡㼐㼑㼚㼠㼟㻴㼕㼓㼔㻌㼟㼏㼔㼛㼛㼘㻌㼟㼠㼡㼐㼑㼚㼠㼟㻛㻳㼞㼍㼐㼡㼍㼠㼑㼐㻌㼟㼠㼡㼐㼑㼚㼠㼟㻶㼡㼚㼕㼛㼞㻌㼔㼕㼓㼔㻌㼟㼏㼔㼛㼛㼘㻌㼟㼠㼡㼐㼑㼚㼠㼟㻝㻜㻜㻑

Meiko Network Japan
4668 Tokyo Stock ExchangeFirst Section

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5-Dec.-14
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Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato㻜㻑

○Meiko Gijuku franchised schools
Sales of Meiko Gijuku franchised schools decreased by 0.7% YOY to ¥6,565mn and thesegment's profit also decreased by 6.2% YOY to ¥3,072mn. These have marked the second
consecutive declines in both sales and profit. As of the end of August 2014 the number ofschools increased by 23 YOY to 1,920. However, the number of registered students decreased
by 507 YOY to 135,731 under the fierce competition for acquisition of students due to thecontinued low birth rate.

㻿㼍㼘㼑㼟㻌㼍㼚㼐㻌㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㻼㼞㼛㼒㼕㼠㻌㼛㼒㻌㻹㼑㼕㼗㼛㻌㻳㼕㼖㼥㼡㼗㼡㻌㼒㼞㼍㼚㼏㼔㼕㼟㼑㼐㻌㼟㼏㼔㼛㼛㼘㼟㻔¥㼙㼚㻕㻿㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㻼㼞㼛㼒㼕㼠（㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟）㻝㻜㻘㻜㻜㻜

㻔¥㼙㼚㻕
㻠㻘㻜㻜㻜

㻟㻘㻟㻝㻟

㻟㻘㻞㻡㻢

㻟㻘㻞㻣㻢

㻤㻘㻜㻜㻜

㻟㻘㻜㻣㻞
㻟㻘㻜㻜㻜

㻢㻘㻜㻜㻜
㻞㻘㻜㻜㻜
㻠㻘㻜㻜㻜
㻢㻘㻣㻟㻢

㻢㻘㻠㻜㻞

㻢㻘㻢㻝㻟

㻢㻘㻡㻢㻡

㻝㻘㻜㻜㻜

㻞㻘㻜㻜㻜

㻜

㻜
㻲㼅㻤㻛㻝㻝

㻲㼅㻤㻛㻝㻞

㻲㼅㻤㻛㻝㻟

㻲㼅㻤㻛㻝㻠

Breaking down the sales would show the following: Sales of educational materials and equipment
to FC schools increased by 3.7% YOY to ¥2,123mn, but sales by royalties (a certain ratio of FC
school sales) decreased by 1.0% to ¥4,130mn and further, sales by contracts also decreased
owing to a decrease in the new accidence to the FC schools. In terms of profit, on topof the factors for decreased sales, there was reinforced manpower at the headquarters forstrengthening school management which has become a factor for decreased profit.

We encourage readers to review our complete legal statement on “Disclaimer” page.
6

■Financial■
Results

Meiko Network Japan
4668 Tokyo Stock ExchangeFirst Section

Decreases in the number of students per school and in the sales per student were direct
factors for decreased royalty sales. On the other hand, slowing down in the expansion of FC
schools can be considered as another factor. The number of FC schools had expanded by 90
to 100 schools yearly at average till the fiscal year ended August 2011, so even if the royalty
sales per school decreased, it used to be covered by the expansion of the number of schools.
However, for the last two fiscal years.
The increasing pace of the schools slowed down to about 30 schools per year, which would not
be able to cover decreases in royalty sales per school.

㻿㼍㼘㼑㼟㻌㼛㼒㻌㻾㼛㼥㼍㼘㼠㼥㻌㼜㼑㼞㻌㻿㼏㼔㼛㼛㼘㻘㻌㼍㼚㼐㻌㼚㼑㼠㻌㼕㼚㼏㼞㼑㼍㼟㼑㻌㼛㼒㻌㼚㼡㼙㼎㼑㼞㻌㼛㼒㻌㼒㼞㼍㼚㼏㼔㼕㼟㼑㼐㻌㼟㼏㼔㼛㼛㼘㼟

5-Dec.-14

㻞㻘㻡㻜㻜

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato㻺㼑㼠㻌㼕㼚㼏㼞㼑㼍㼟㼑㻌㼛㼒㻌㼒㼞㼍㼚㼏㼔㼕㼟㼑㼐㻌㼟㼏㼔㼛㼛㼘㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕㻭㼢㼑㼞㼍㼓㼑㻌㻿㼍㼘㼑㼟㻌㼛㼒㻌㻾㼛㼥㼍㼘㼠㼥㻌㼜㼑㼞㻌㻿㼏㼔㼛㼛㼘㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕
㻞㻘㻟㻡㻞
㻞㻘㻟㻜㻜
㻞㻘㻞㻝㻞

㻔¥㼀㼔㼛㼡㼟㼍㼚㼐㻕㻞㻘㻞㻢㻣（㼟㼏㼔㼛㼛㼘㼟）

㻞㻘㻝㻢㻜

㻝㻜㻜

㻞㻘㻜㻜㻜

㻤㻜

㻝㻘㻡㻜㻜

㻢㻜

㻝㻘㻜㻜㻜

㻤㻤㻌

㻤㻡㻌

㻠㻜

㻣㻢㻌

㻡㻜㻜

㻞㻜

㻟㻢㻌

㻞㻟㻌
㻜

㻜
㻲㼅㻤㻛㻝㻜

㻲㼅㻤㻛㻝㻝

㻲㼅㻤㻛㻝㻞

㻲㼅㻤㻛㻝㻟

㻲㼅㻤㻛㻝㻠

○Preparatory school business
Sales of the business operated by Tokyo Ishin Gakuin (Tokyo Medical School Preparatory
Institute) decreased by 0.8% YOY to ¥593mn while the segment's profit increased by 53.9%
YOY to ¥58mn. Although sales declined slightly due to lowered entries in the past spring,profit increased owing to the reduction of fixed costs (-¥23mn YOY) by the merger of schools(5 schools to 4 schools) implemented in the previous fiscal year. Meanwhile, the number ofstudents as of the end of August 2014 was 134 which is fewer by 10 YOY.

㻿㼍㼘㼑㼟㻌㼍㼚㼐㻌㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㻼㼞㼛㼒㼕㼠㻌㼛㼒㻌㻼㼞㼑㼜㼍㼞㼍㼠㼛㼞㼥㻌㼟㼏㼔㼛㼛㼘㼟（¥㼙㼚）㻿㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㻼㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕

㻢㻝㻜
㻢㻜㻜

（¥㼙㼚）
㻣㻜

㻡㻤
㻡㻥㻣

㻡㻥㻠㻌

㻢㻜
㻡㻥㻟㻌

㻟㻣

㻡㻥㻜

㻠㻜

㻡㻤㻜

㻡㻣㻜

㻡㻜

㻟㻜
㻞㻜
㻣

㻡㻡㻥㻌

㻝㻜

㻙㻣

㻜

㻡㻢㻜
㻡㻡㻜

㻙㻝㻜

㻡㻠㻜

㻙㻞㻜
㻲㼅㻤㻛㻝㻝

㻲㼅㻤㻛㻝㻞

㻲㼅㻤㻛㻝㻟

㻲㼅㻤㻛㻝㻠

We encourage readers to review our complete legal statement on “Disclaimer” page.
7

■Financial■
Results○Other businesses
Sales for other businesses increased by 7.4% YOY to ¥1,345mn and the segment resulted in
the loss of ¥44mn (the loss was ¥126mn for the previous fiscal year).
Other businesses(¥mn)

Meiko Network Japan
4668 Tokyo Stock ExchangeFirst Section

5-Dec.-14

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

FY8/12 FY8/13 FY8/14
Remarks
324
1,253
1,345
104
128
131 17 schools (incl.FC2, +3 YOY)

Sales
Meiko Soccer
Waseda Academy Kobetsu Schools

199

254

Kids
Meiko Plus Academy

12
-

39
1

Youdec/Koyo Shobo
Operating profit

-120

828
-126

24 schools(Direct 4, FC13, WA direct 7 +4 YOY)
70 3 schools (+2 YOY)
11 For tutorial institute for Korean students(2/13 ～)

258

871
-44

Meiko Soccer Schools had an increase of three schools for its direct operation, making thetotal increased to 17 schools including franchised schools. The number of students as ofthe end of FY August 2014 was 874 which is a decrease by 22 YOY. However, it maintained
increased sales owing to the increase of its directly operated schools. Operating loss increasedslightly to ¥20mn (loss was ¥13mn for the previous FY) due to increased costs for the newschools it acquired.
Waseda Academy Kobetsu Schools increased the number of schools by 4 YOY to 24 and thenumber of students by 412 YOY to 1,546 as of the end of FY8/14. The breakdowns of schools
for the type are as follows. Meiko Gijuku directly operated schools had an increase of 2 YOY
to a new total of 4 schools, Franchised schools had a decrease of 1 YOY to a new total of 13
schools and Waseda Academy's directly operated schools had an increase of 3 YOY to a new
total of 7 schools. This business was started in FY8/11 and has been increasing students as it
has been gaining recognition with its students' good results of passing entrance examinations
for competitive junior and senior high schools in the metropolitan region. This business had
sales of ¥258mn and operating profit of ¥4mn having moved into the black for the first timesince the start of its business.
Meiko Kids Schools opened 2 schools making the number of schools 3. Those newly opened
schools have making good progress with their capacities almost filled from the beginningwith the background of increased demand for after-school care for children. The number ofstudents at the end of FY8/14 increased by 254 YOY to 355 and its sales increased from
¥39mn to ¥70mn. It is yet below the surface in terms of profit as it is still at the stage of
upfront investments.
Consolidated subsidiary Youdec Co. ended FY8/14 with both sales and profit increased YOY as
results of continued strong sales of trial entrance examination questions and smooth sales of
educational materials for private tutoring schools and sales of private tutoring within ordinary
schools.

Financial standing further solidified, High profit structure maintained(2) Financial status and management indicators
As of the end of August 2014, the Company's total assets increased by ¥11mn YOY to¥16,568mn. As for its main factors, increased or decreased, current assets increased by¥409mn YOY due to increases in accounts such as cash and deposits and accounts receivable,
while fixed assets decreased by ¥398mn due to decreases in investment securities and longterm deposits.

We encourage readers to review our complete legal statement on “Disclaimer” page.
8

■Financial■
Results

Liabilities decreased by ¥1,366mn YOY to ¥3,377mn due to a decrease in interest-bearing debt
although overdue taxes increased. Net assets increased by ¥1,378mn YOY to ￥13,191mn due
to increased retained earnings.

Meiko Network Japan
4668 Tokyo Stock ExchangeFirst Section

In terms of management indicators, equity ratio increased from 71.2% for the previous FY to79.4% for the current FY due to decreased interest-bearing debt and current ratio increased
from 225.1% to 349.8%. That is to say, all of the factors for safety being increased, it can besaid that the Company's financial status has been further solidified. On the other hand, ROE
and operating profit on sales as indicators of profitability both decreased from the previous
fiscal year. However, they both far exceed 10% and therefore the Company still maintains its
high profit structure.

5-Dec.-14
Consolidated balance sheet and management indicators(¥mn)

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

Current assets(cash and deposits)

FY8/12 FY8/13 FY8/14 Changes
Factors for change
7,890
9,297
9,707
409 Accounts receivable +124
5,931
7,122
7,363
240
Investment securities ▲337,
Long term deposit ▲68

Fixed assets

7,304

7,259

6,860

-398

Total assets

15,195

16,557

16,568

11

Current liabilities

2,713

4,130

2,774

-1,355

Fixed liabilities(Interest-bearing debt)
Total liabilities
Net assets[Management indicators](Safety)
Equity ratio
Current ratio
Ratio of interest-bearing
debt to total assets(Profitability)
ROE
Operating profit margin

2,331
1,902
5,045
10,149

613
1,670
4,744
11,813

602
70
3,377
13,191-11-1,600-1,367
1,378 Retained profit +1,371

66.6%
290.8%

71.2%
225.1%

79.4%
349.8%

12.5%

10.1%

0.4%

20.9%
24.5%

19.8%
23.4%

17.6%
21.9%

Interest-bearing debt ▲1,600,
Payable taxes +221

伪伪Financial Outlook and Future Actions
Turning to “increased sales and increased profit” is expected inor after the latter half of the current fiscal year
(1) Financial outlook for fiscal year ending August 2015
Consolidated financial results for the fiscal year ending August 2015 are estimated as follows:
Sales will increase by 24,8% YOY to ¥19,420mn, operating profit will increase by 2.5% YOY to¥3,500mn, ordinary profit will increase by 2.5% YOY to ¥3,620mn and current net profit will
increase by 2.7% YOY to ¥2,260mn.
Meiko Gijuku acquired its largest franchisee MAXIS Group into its subsidiary last September,which is expected to increase sales by ¥2,998mn. Eliminating this factor, it would be a 5.5%
increase in real terms. Goodwill amortization expenses for the above acquisition is estimatedto be a little less than ¥180mn per year (10-year equal-installment depreciation) and thus, its
operating profit before such depreciation would see an about 8% increase in real terms.

We encourage readers to review our complete legal statement on “Disclaimer” page.
9

■Financial■
Outlook and Future Actions

MAXIS Group's business results and asset situation(¥mn)
FY8/11

Meiko Network Japan
4668 Tokyo Stock ExchangeFirst Section

FY8/12

FY8/13

Sales
2,790
2,813
2,663
Operating profit
45112
4
Recurring profit
69
125
23
Net profit
34
58
11
Net assets
562
606
618
Total assets
946
983
958
※ Meiko Gijuku Schools/87 schools, Waseda Academy Kobetsu Schools/2 schools, Share acquisition
expenses/¥1,800mn (100%)

Sales by Segment

5-Dec.-14
FY8/11

Important disclosuresand disclaimers appear
at the end of this document.

Meiko Gijuku directly operated
business
Meiko Gijuku FC business
MAXIS
Preparatory school business
Other businesses
Sales total

FISCO Ltd. Analyst
Yuzuru Sato

FY8/12

FY8/13

FY8/14(¥mn)
FY8/15 Plan

6,574

6,864

6,814

7,062

7,300

6,402

6,736
559
324
14,484

6,613
597
1,253
15,279

6,565
593
1,345
15,565

6,885
2,998
600
1,638
19,420594
143
13,715

Operating profit by Segment
FY8/11
Meiko Gijuku directly operated
business
Meiko Gijuku FC businessPreparatory business
Other businesses
Company-wide expenses,
Goodwill depreciation andothersOperating profit total

FY8/12

FY8/13

FY8/14

1,315

1,443

1,461

1,455

3,256
7
(174)

3,313
(7)
(120)

3,276
37
(126)

3,072
58
(44)

(1,041)(1,086)(1,068)(1,126)

3,363

3,543

3,580

3,416

(¥mn)
FY8/15 Plan

As for segment-wise sales prospects, an increase by 3.4% YOY is estimated for Meiko Gijuku
directly operated business and by 4.9% YOY for Meiko Gijuku FC business (royalty sales ofabout ¥300mn from MAXIS Group is included in the sales for Meiko Gijuku FC business). The
number of schools as the basis for sales estimation is assumed to increase by 60 YOY with
the Company's aggressive development policy. The number of students is also expected toincrease in two fiscal years. Sales per student are assumed to remain unchanged from theprevious year.
The preparatory school business is estimated to remain stagnant due to decreased students inthe first half of the fiscal year. However in the full fiscal year its sales is estimated to increaseby 1.2% YOY as results of improved popularity and increased students through aggressive
development of various events including information dispatch via internet and collaborations
with universities.
With regard to other businesses, at each of Meiko Soccer Schools, Waseda Academy Kobetsu
Schools and Meiko Kids Schools, the Company intends to increase the number of students
and thus plans increased sales by the expansion in number of students. Meiko Kids Schools, inparticular, is set to open three new schools in April, 2015 and can expect further sales growth. In
terms of operating profit for the segment of other businesses, a slight loss is estimated to continue
for the fiscal year ending August 2015 due to advance investment in opening new schools.

We encourage readers to review our complete legal statement on “Disclaimer” page.
10

■Financial■
Outlook and Future Actions

Meiko Network Japan
4668 Tokyo Stock ExchangeFirst Section

Meanwhile, business plan for the second quarter of this fiscal year includes increased sales
and decreased profit with an increase for sales by 22.2% YOY to ¥9,580mn and a decreasefor operating profit by 13.0% YOY to ¥1,730mn. On a half-year basis, it is estimated to moveinto the basic pattern of “increased sales and increased profit” in or after the latter half of
this fiscal year as it is believed that the management policies implemented in the past for
Meiko Gijuku Schools business are now beginning to elicit effects in stages. Further, it plans
to curb employment of new graduates next spring (20 for this spring → 5 for next spring) whileadvancing moderation in manpower for the purpose of improvement in productivity, which shouldcause an effect on curbing manpower costs in or after the third quarter of the fiscal year.

5-Dec.-14

Drastic firmer measures to be implemented for Meiko Gijuku
Schools business

Important disclosuresand disclaimers appear
at the end of this document.

(2) Measures toward the regrowth of Meiko Gijuku Schools business

FISCO Ltd. Analyst
Yuzuru Sato

The Company is starting to tackle drastic firmer measures which may include restructuringof its organization during the fiscal year ending August 2015 as a result of sluggish growth of
Meiko Gijuku Schools business for the past two years or so. As the background for the sluggish
growth of Meiko Gijuku business is cited intensified competition for acquisition of students as
results of increased competition among the tutorial types of private schools including large
discount offers seen in some districts in the context of the falling birth rates.
Under the circumstances, the Company is tackling such issues as vitalization of its organization
by restructuring, strengthening competitiveness by improved service quality and enhancementof management abilities. Also, the Company is taking strategies of initiating a renewed focus
on its educational policy of “Meiko-style! Self-supported learning” in an aim to increase thenumber of students. If the number of students per school is increased, it will give FC owners
extra reserve and it can be expected to see movements for added schools activated again
to be returned to a growing cycle after sluggish two years. Let us take a look at specificchallenges the Company is taking on.
○Vitalization by organizational restructureWith regard to organizational restructure, the Company has taken three actions if largely
grouped. First, it consolidated Meiko Gijuku directly operated business and Meiko Gijuku
franchised business, and has restructured it into seven areas (No. 1 ～ 7 Business Divisions).
Previously, there was no enough information sharing though there was some, so this time theCompany has laid out the organization for making information sharing thorough and working as
one on increasing numbers of schools and students. Previously, information was not speedilyshared as for instance area meetings were held separately for the directly operation businessand the FC business schools business, and there were few opportunities where FC owners
could exchange information. This time, the organizations were merged so that thorough andspeedy information sharing can be made for leading to increasing schools and students. Also,
one of the purposes of having acquired MAXIS last September as a subsidiary was to pass
MAXIS' know-how of FC operation to other FC owners, so its spreading effects are expected.

We encourage readers to review our complete legal statement on “Disclaimer” page.
11

■Financial■
Outlook and Future Actions

Meiko Network Japan
4668 Tokyo Stock ExchangeFirst Section

5-Dec.-14

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

The second action taken is the establishment of “Meiko Support Center” for improving
business efficiency and customer satisfaction. “Meiko Support Center” consists of Customer
Support Section, School Support Section and Policy and Manual Section. There were suchfunctions within the Company but now newly established as a specialized unit, it is expected toenhance its supporting functions. School Support Section is a section in charge of supporting
FC schools which supports newly opened FC Schools by sending its SV to each school for acertain period of time.
The third action was adequate repositioning of human resources for pushing forward organizational
vitalization and improvement of productivity. All executive officers' responsibilities have beenchanged and divisional heads have been transferred, which would make reengineering within
the Company be made more easily. Also, as has been explained previously, it is pursuing
improvement of productivity through curbing manpower.
○Strengthening competitiveness by way of improving quality of service
For strengthening competitiveness of Meiko Gijuku Schools business, improvement of qualityof service is most essential. Under the circumstances where competition is intensified andwhere there emerged competitors offering lowered prices to acquire more students, theCompany is taking a strategy of improving the quality of its service for increasing the number ofstudents. The first step is to bring forth the Company's educational policy “Meiko-style! Selfsupported learning” as a differentiating strategy in the very competitive private preparatory
school industry. The characteristics of “Meiko-style! Self-supported learning” are “to foster
students' ability to think and solve questions for themselves.” The lecturer is expected to givehis student, not the answer to the question, but a clue leading to the answer so that it will
foster the lecturer to extract the answer resulting in improving their motivation to learn.
To implement “Meiko-style! Self-supported learning,” it is necessary to improve the quality ofclasses and the quality of lecturers. Thus, the Company is trying to improve the quality levels
by giving lecturers group training seminars and streamlining its manuals.
Also, the Company plans to vitalize communications with students and parents. Besides
streamlining the aforementioned “Meiko Support Center,” the Company intends to improvecustomer satisfaction by closer communications with school heads and lecturers. The Company
has decided to conduct a customer satisfaction survey two times a year regularly from thisfiscal year, which used to be executed on an irregular basis previously.
○Improvement of FC school operating ability by enhanced training
Under the sluggish growth of its FC schools, the Company started to give a training seminar
to FC school owners from FY 2014 for the purpose of improving school operation ability.
In concrete terms, the Company compiles operational measures by successful excellent FC
school owners into manuals to convey the know-how to other FC owners through training
seminars. In FY 2014 it held a training seminar three times with the theme of “counseling forsigning up for FC school.” It is a training seminar for the know-how for making an inquiry forsigning up for enrollment in an aim to increase the enrollment ratio. It would not have instanteffects but it is surely expected to lead to an increased enrollment ratio.
The theme for the seminar is planned to be “Communications with students and parents”
for FY 2015 and “Lecturer management” for FY 2016. If communications with students andparents are improved, it could be expected to curb students' withdrawal from the school. Also,“Lecturer management” would increase lecturers' motivation, which in turn would improve thequality of classes.

We encourage readers to review our complete legal statement on “Disclaimer” page.
12

■Financial■
Outlook and Future Actions

Three-year medium-term business plan, sales to be increased
but profits to be slightly decreased(3) Three-year medium-term business plan revised

Meiko Network Japan
4668 Tokyo Stock ExchangeFirst Section

5-Dec.-14

At the time of announcement of its official financial results, the Company revised theperformance goal figures as per the table in its three-year medium-term business plan for thelast fiscal year ending August 2016. The revision was made because the results for FY8/2014
fell below those for the original plan and because consideration was given to the acquisitionof MAXIS Group into a subsidiary. Profits were all revised slightly downward. However, there
was no change in the basic business strategies and the Company intends to secure the stable
growth for Meiko Gijuku business and the establishment of sales bases for its new businesses
Medium-term business plan (3 years)

Important disclosuresand disclaimers appear
at the end of this document.

(¥mn)
FY8/13
Actual

FY8/15
Second year
Original Revised
plan
plan

FY8/16
Third year
CurrentPlanestimate

ActualOriginal
plan

ActualProgress

15,27916,47015,56594.5%

17,43019,42018,72020,96013,42814,387

13,62794.7%

15,03014,185

15,76814,908

Directly operated schools

6,814

7,437

7,062

95.0%

7,808

7,300

8,199

7,665

FC

6,613

6,950

6,565

94.5%

7,222

6,885

7,569

7,243

MAXIS

-

-

-

-

-

2,998

-

3,089

597

623

593

95.2%

740

600

870

870

1,253

1,460

1,345

92.1%

1,659

1,638

2,081

2,093

Operating profit

3,580

3,780

3,416

90.4%

4,030

3,500

4,380

4,120

Operating profit margin

23.4%

23.0%

21.9%

-

23.1%

18.0%

23.4%

19.7%

Recurring profit

3,718

3,880

3,537

91.2%

4,130

3,620

4,500

4,230

Recurring profit margin

24.3%

23.6%

22.7%

-

23.7%

18.6%

24.0%

20.2%

Net profit

2,169

2,330

2,199

94.4%

2,470

2,260

2,840

2,460

Net profit margin

14.2%

14.1%

14.1%

-

14.2%

11.6%

15.2%

11.7%

Sales

FISCO Ltd. Analyst
Yuzuru Sato

FY8/14First year

Meiko Gijuku businesses

Preparatory school business
Other businesses

For Meiko Gijuku Schools business, the Company is developing next-generation learning models.
It plans to develop such systems as would correspond to diversifying needs in education andsuch learning systems as would lead to increasing students' motivation, or such systems as
would support students' learning management, and it intends to begin operations tests in a
step-by-step manner from the spring of 2015.
As for new businesses, for Meiko Soccer Schools, creation of a support system is planned forextending it across the country and for Waseda Academy Kobetsu Schools it intends to expand
and upgrade FC schools in collaboration with Waseda Academy. For Meiko Kids Schools, theCompany will seek to establish a business base that will contribute to profits with a strategy ofaggressively expanding the number of schools toward dominancy benefiting from the increased
demand for after-school care for children.
For other issues, the Company will continue to positively study M&A opportunities. The target
will be the field of educational service. In other words, the candidate will be businesses forsenior citizens such as lifelong learning and care and behavior support which are blank areas.
Further, as an overseas project, the Company opened a kindergarten in Singapore for Japaneseliving there in spring, 2014. It is too small as a business scale to affect the Company's businessresults. But subject to demand, the Company has their eyes set on expanding it to eachcountry in Southeast Asia.

We encourage readers to review our complete legal statement on “Disclaimer” page.
13

■Financial■
Outlook and Future Actions

Image of business fields and customer segments

Meiko Network Japan
4668 Tokyo Stock ExchangeFirst Section

5-Dec.-14

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato
Source: HP

伪伪Shareholder Return Policy
With continued dividend increases as its basic policy, raising
dividend payout ratio to 50% is targeted as a policy
The Company has been recording continued dividend increases since it was listed on the stock
market, and for FY8/15 it plans an increase of ¥2 YOY to ¥34. Thus, the Company is highly
regarded as a company that is proactive for shareholder return. The Company has set up a
policy of raising its dividend payout ratio in steps to 50% with continuous increases in dividend
as its basic policy from now on.
Also, the Company has a shareholder special benefit plan of giving shareholders a QUO card
worth ¥3,000 per share unit. On the basis of the closing share price of ¥1,148 on October. 21,
2014, the gross investment rate per share unit is 5% or more, which far exceeds the averagegross investment rate of about 1.7% for the listed companies.
The Company has established stable high profitability and a sound financial standing throughits unique franchise system in the fiercely competitive educational service industry. Thus,
the Company is estimated to expand steady earnings and, at the same time, to increase its
dividends. Also, with regard to ROE (Return On Equity), which is gaining importance as aninvestment indicator, the Company's actual figure was 17.6% for the previous fiscal year which
far exceeds the average 8.5 % for the companies listed on the first section of the Tokyo Stock
Exchange and thus will gain continued attention as an attractive company to invest.

We encourage readers to review our complete legal statement on “Disclaimer” page.
14

■Shareholder■
Return Policy㼀㼞㼍㼚㼟㼕㼠㼕㼛㼚㻌㼕㼚㻌㼐㼕㼢㼕㼐㼑㼚㼐㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻌㼍㼚㼐㻌㼐㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻔¥㻕㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻰㼕㼢㼕㼐㼑㼚㼠㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕

㻠㻜

㻡㻜㻑
㻠㻜㻚㻞㻑

Meiko Network Japan
4668 Tokyo Stock ExchangeFirst Section

㻟㻜

㻟㻡㻚㻜㻑

㻠㻜㻑

㻟㻠㻚㻟㻑

㻟㻝㻚㻢㻑
㻟㻜㻑

㻞㻜

㻟㻞㻚㻜㻜

5-Dec.-14

Important disclosuresand disclaimers appear
at the end of this document.

㻠㻝㻚㻡㻑

㻝㻜

㻞㻡㻚㻜㻜

㻞㻞㻚㻜㻜

㻟㻠㻚㻜㻜㻌

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Consolidated Profit and Loss Statement

FISCO Ltd. Analyst
Yuzuru Sato
Sales
(YOY growth)
Cost of goods sold(Ratio on sales)
SGA(Ratio on sales)
Operating profit(YOY growth)(Ratio on sales)
Recurring profit(YOY growth)(Ratio on sales)
Extraordinary profit
Extraordinary loss
Profit before tax(YOY growth)(Ratio on sales)
Corporate taxes(Effective tax rate)
Current net profit(YOY growth)(Ratio on sales)

FY8/11
13,715
6.4%
7,922
57.8%
2,429
17.7%
3,363
8.2%
24.5%
3,477
7.2%
25.4%
26
169
3,334
3.9%
24.3%
1,411
42.3%
1,922
1.4%
14.0%

FY8/12
14,484
5.6%
8,403
58.0%
2,537
17.5%
3,543
5.3%
24.5%
3,727
7.2%
25.7%
24
166
3,585
7.5%
24.8%
1,616
45.1%
1,969
2.4%
13.6%

FY8/13
15,279
5.5%
8,995
58.9%
2,703
17.7%
3,580
1.1%
23.4%
3,718
-0.2%
24.3%
0
110
3,608
0.6%
23.6%
1,433
39.7%
2,169
10.2%
14.2%

[Key indicators]
Earnings per share (¥)
Dividend per share (¥)
Net asset per share (¥)
Dividend payout ratio (%)
ROE (%)

69.55
22.0
316.93
31.6
23.9

71.38
25.0
366.72
35.0
20.9

78.60
27.0
426.82
34.3
19.8

(¥mn)
FY8/14
FY8/15 (Plan)
15,565
19,420
1.9%
24.8%
9,399
60.4%
2,750
17.7%
3,416
3,500
-4.6%
2.5%
21.9%
18.0%
3,537
3,620
-4.9%
2.3%
22.7%
18.6%
111
24
3,623
0.4%
23.3%
1,413
39.0%
2,199
2,260
1.4%
2.7%
14.1%
11.6%

79.70
32.0
476.40
40.2
17.6

81.90
34.0
41.5
-

We encourage readers to review our complete legal statement on “Disclaimer” page.
15

Disclaimer
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This report is based on information that we believe to be reliable, but we do not confirm or
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We provide this report solely for the purpose of information, not to induce investment or any
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This report was prepared at the request of its subject company using information provided
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FISCO Ltd.