1 FY May- Business Result 4745 July 10, 2006 http://www.kobetsu.co.jp/
2 FY May-2006 Financial Summary P/L million yen 17,000 15,000 13,000 11,000 9,000 7,000 5,000 14,077 Sales 16,072 2,300 2,100 1,900 1,700 1,500 1,300 1,100 900 700 500 Recurring Profit Net Profit 1,300 1,100 900 700 500
3 Summary of FY May-2006 Business Result Recurring Profit; exceed plan + 12.7 Net Profit; exceed plan + 23.9 ; Achieved the first year goal of mid-term business plan Achieved Maximum performance In interim & Fiscal Year Enhancing corporate value Repurchased own stocks 400,000 stocks 1.84 share Interim dividend started in FY May-2006 Acquired the shares of Meiko Network Japan Selected loadable stock enhancing liquidity Stock split and increase dividends return to shareholders In terms of Information system Acquired International standard ISO27001:2005 through higher quality of ISMS(information Security Management System)
Sales Segmentation FY May-05 Sales 14,077 mil yen May-06 Sales 16,072 mil yen Average unit price per student increased by 24,084 yen (YOY) May-2005 @580,666 yen May-2006 @604,750 yen 4
5 FY May-2006 Financial Summary / Situation of cash flow Operating cash flow Cash flow from operation was 527 million yen Payment of corporate tax, and temporally increase of account receivable by the contract renewal with tuition collection traders Investment cash flow Cash for Investment was 2,483 million yen Reason for up & down of B/S Acquired stock of Meiko Network Japan for 2,359 and rent deposit of new school, 164 million Cash & deposit Down Investment security & Repurchasing stocks Account receivable Up Sales of spring workshop was shifted to June Investment security Up Purchased Meiko Network Japan Financial cash flow Accrued tax Down Due to the tax reform Municipal tax, per capita basis Cash for financing was 522 million yen Advanced by customer Down by receive money having been carried 345 million yen for stock repurchase 312 for dividend forward to the moon of attending 139 from sales of own stock a lecture by the contract renewals with the tuition collection trader
80.0% Financial Figures 60.0% 40.0% 20.0% Cost of sales ratio improved 1.1 SG&A ratio improved 1.4% Recurring profit ratio improved 2.6% 0.0% 05/5. 06/5. Cost of sales ratio 60.4% 59.3% SG&A ratio 27.5% 26.1% Recurring profit ratio 12.2% 14.8% Ney profit ratio 6.5% 8.4% Net profit ratio improved 1.9 6
7 Monthly students transition Total Students Average up +2,334 (YOY + 9.6 ) 30,000 25,000 20,000 15,000 10,000 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May FY May-05 21,288 23,542 24,822 25,324 25,700 26,096 26,752 24,778 22,615 22336 23495 24171 FY May-06 24,911 27,567 28,529 28,657 28,969 29,109 29,567 26,746 24,103 22791 23811 24169 Existing class students Average up +2,452 (YOY + 10.3 ) 30,000 25,000 20,000 15,000 10,000 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May FY May-05 21,040 23,157 24,374 24,836 25,306 25,703 26,274 24,273 22,339 21933 22977 23620 FY May-06 24,444 27,110 28,038 28,154 28,465 28,884 29,305 26,579 24,078 22,676 23,602 23,921
8 Monthly new students & Inquiry 3,500 2,500 1,500 500 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May FY May-05 853 2,719 1,521 1,148 1,119 1,287 1,691 868 1,256 2,525 2,416 1,366 FY May-06 1,287 3,373 1,610 988 1,153 1,235 1,575 681 1,129 1,920 2,338 1,049 New Students 2005 18,769 students 2006 18,338 students YOY 97.7 10,000 5,000 0 Efficiency of inquiry Inquiry 2005 49,135 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May FY May-05 3,268 9,419 1,892 2,666 3,184 2,710 4,761 2,709 4,134 6,255 5,988 2,149 FY May-06 3,544 9,696 2,073 2,587 3,506 2,579 4,409 2,632 4,188 5,667 5,638 2,043 2006 48,562 YOY 98.8
9 New school opening in FY May-06 New school opening 8 school, in total 185 school Kansai 34 +2 Fukuoka 4 +1 Nagoya 7 +1 Kanto 140 +4 New opening in FY May-06: 8 Kunitachi Tokyo Mar Yoga Tokyo Mar Kitayono Saitama Feb Saiin Kyoto Feb Seishinminami Hyogo Feb Fujisaki Fukuoka Feb Minamiosawa Tokyo Dec Ikeshita Aichi Dec
Forecast of FY May-2007 Recurring Profit 2,800 million yen YOY+18.3 Net Profit 1,540 million yen YOY+14.3 24. 58 yen million yen Sales 17,960 million yen YOY+11.7 17,960 4,667 10,521 2,800 10
11 Precondition for Forecast May-2007 Precondition New New Opening schools Opening month Six Six schools total total 191 191 schools Open Open in in the the First First Quarter Students number Average students 29,105 students YOY YOY + + 9.5 Sales Sales SG &A Sales; Expect +11.2% increase at at existing schools Workshop Summer Winter Spring 36 unite unite which is is the the same same level level as as last last FY SG SG & A; SG&A ratio ratio to to sales sales 26.0 Last Last FY FY 26.1 Advertisement 2,383 2,383Million yen to to sales sales13.3
12 Precondition for Forecast May-2007 In last fiscal year, first half was good performance due to the increased students. However in the second half was stall. If we kept good pace as the first half, we could achieve higher profit. In this fiscal year, We intent to keep favorable increase by increasing students annually. Plan to increase operating profit through making school to take more adopted average class unite and workshop unite We are confident in achieving recurring profit, 2,800 million yen
13 Recent condition June-2006, Monthly Report July July 10 10 announced Existing school Sales YOY YOY 106.7 +57,922,000 yen Total Total school Sales YOY YOY 106.1 +54,472,000 yen
14 Strategy in this fiscal year As As top top priority Focusing on on increasing average fees fees per per student student through increasing adopt adopt class class unit, unit, in in addition, increasing students also. also. Strengthen internal framework Improving quality of of school and and increasing students, which contribute to to keep keep profit profit growth and and differentiation with with competitors. Enhancing shareholders value value Increased shareholders number through financial policy in in last last FY( FY( stock stock split, split, dividends) Focusing dividends ratio ratio 25.42 Interim 33 yen yenend end of of year year 33 yen yen annually 66 yen
Medium term Management Projection 2006/5 2008/5 Sales Recurring Profit Net Profit 24,000 20,000 17,960 21,378 3,500 3,000 2,800 16,000 14,077 16,072 2,500 2,367 12,000 2,000 1,500 1,717 1,347 1,540 8,000 1,000 916 4,000 500 0 May-05 May-06 May-07(E) May-08(E) Sales 14,077 16,072 17,960 21,378 0 May-05 May-06 May-07(E) May-08(E) Recurring profit 1,717 2,367 2,800 3,350 Net Profit 916 1,347 1,540 1,850 is based on figures after stock split 15
Corporate Profile as of May 31, 2006 Established August 1985 Listing August 1, 2003 TSE 1st (code; 4745) CEO Shinji Baba Capital 642.15 million Yen Number of classrooms 185 Kanto 140, Kansai 34 Tokai 7, Kyushu 4 Enrollment 24,169 students (Primary school 3,692, Junior high school 9,321 Senior high school 11,156 Employees 340 (Part time teachers included 6,715) Share outstanding 21,756,500 Number of shareholders 6,320 (as of the end of May 2006) Financila Institution Own Shares 4.0% 1 Shinji Baba 6,992 32.1% 2 SB Asset Management 1,105 5.1% 3 Hikari Tsushin Inc 1,076 5.0% 4 TKG own (Company holdings) 871 4.0% 5 Nippon trusty service trust BK 852 3.9% 6 Clariden Bank 713 3.3% 7 Info Service Corporation 527 2.2% 8 Nippon Master Trust trusty bank 9 BNB Pariba securities service London 10 Nikko City Trust Bank 502 500 469 2.3% 2.3% 2.2% Individual & Others % 2.6% Trust Bank 12.1% Foreign Insttitution % Security house 0.4% Other company 13.9% As of the end of May 2006 1 for 3 stock split effective June 1 2006 16
17 Please contact to Executive Director Shoichi Funato TEL:03-5547-3759 e-mail:shoichi.funato@nifty.ne.jp syoichi_funato@em.tkg-jp.com This presentation was prepared to provide information on TKG s FY May-2006 results and management strategies. The purpose of these materials is not to solicit investments in TKG s stock or other securities. All information in this presentation is based on data that is current as of May 31, 2006. The company makes no guarantees regarding the accuracy or completeness of this information and retains the right to revise this information at any time with no prior notification.