NICHII GAKKAN COMPANY【9792】

Semiannual Financial Results
Briefing Document for theYear Ending March 2006

November 22, 2005

Table of Contents
Semiannual Financial Results Briefing Document for the Year Ending March 2006
1. Group Strategy◆Nichii Gakkan Group Business Strategy ・・・・ ・ ・・・・・ ・・・・・ ・・・・・ ・ ・ 2
2. Medical Support Business◆Current Business Strategy ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ ・ 3◆Medical Support Business Growth Strategy ・・・・・・・・・・・・・・・・・・・・・ ・ 4
3. Health Care Business◆Home5Home-visit Nursing Care Service Strategy ・・・・・・・・・・・・・・・・・・・・・・◆Approach to LongLong-term Care Insurance System Amendments (1) ・・・・・・・・・・・ 6◆Approach to LongLong-term Care Insurance System Amendments (2) ・・・・・・・・・・・ 7
4. Education Business◆Fundamental Review of Education Business ・・・・・・ ・・・・・・・・・・・・・・・ 8
5. Reference Materials◆LongLong-term Care Insurance System Amendments (1) ・・・・・・・・・・・・・・・・・・ 9◆LongLong-term Care Insurance System Amendments (2) ・・・・・・・・・・・・・・・・・ ・ 10
◆Capital Investment and Allowance for Depreciation (Non(Non-consolidated) ・・・・・・ ・ 11

All profit targets and other future data, including the number of contracts, number of users and goals contained
All profit targets and other future data, including the number of contracts, number of users and goals containedin this document, are forecasts based on current Nichii Group information. Such information is subject to the influencein this document, are forecasts based on current Nichii Group information. Such information is subject to the influenceof uncertain factors such as economic circumstances, relaxation of regulations and employment conditions.
of uncertain factors such as economic circumstances, relaxation of regulations and employment conditions.
Please understand, therefore, that actual outcome of business performance and other achievements, such as
Please understand, therefore, that actual outcome of business performance and other achievements, such as
the number of contracts and number of users, may be substantially different from those forecast.
the number of contracts and number of users, may be substantially different from those forecast.

Semiannual Financial Results Briefing Document
for the Year Ending March 20061【Group Strategy】 Nichii Gakkan Group Business Strategy
Strengthening Core Business and Approach to New Business and Services
ServicesBusinessGrowthStrategy【Medical Support Business】【Health Care Business】【Education Business】【Kobe Port Island Center】

Development and provision of management support services /Approach to Business solutions.
Approach to preventive care and strategy for approachingactive seniors.
Developing excellent human resources and supplying themsmoothly / Enforcement of new sales promotion strategy anddevelopment and provision of new training courses.
Enhancement of current services and research and developmentof new services.

【Fiscal 2003】
Ensuring operational efficiency and improving staff autonomy by implementing business
improvement projects.
【Fiscal 2004 】
Revitalizing the organization and fortifying management power based on a new
Organizational
management system covering branch shops, branch offices, and the headquarter.
Introduction of a new employment system.
Reform【Fiscal 2005 and Onward】
Reconstructing the headquarter management base under a new management setup.
Efficient operation and concentration of management resources by restructuring theNichii Gakkan group.
Increasing the sales staff and sharing sales know-how by reforming the sales system【Brand Strategy】

OtherStrategies

Constructing brand concepts by taking advantage of the synergy between
Nichii and Iris brands.
【Business Model】
Strategic utilization of the original business model.
【Human Resources and Organization】 Accumulation and enhancement of corporate culture,and recruitment of younger staff.
【IT Strategy】
Utilization of managerial information resources by promoting the “ITProject.”【Business Reform Strategy】 Company-wide business reform and promotion by expanding the solution
business and education business.

Semiannual Financial Results Briefing Document
for the Year Ending March 20062【Medical Support Business】 Current Business Strategy
Continuous and Enhanced Sales Promotion Activities
Sales Expansion among Existing Users(Millions of Yen)
4040

(Changes in Net Sales per User) 【Hospitals】
Hospitals】

Proactive Approach to Changes◆Revision of medical service payments in April 2006
◆Changes in medical management environment due tomedical system reforms

Increase in demand for payment revision-related business orinsurance system revision support business

3030

2020

101000

FY02.3

FY03.3

FY04.3

FY05.3

FY06.3(Forecast)Acquiring new users by using the revision-relatedbusiness as a steppingstone.
Intensification of sales expansion among existing users.

*Revision-related business: Payment revision-related,
Continuous and Enhanced Cost Improvement（％）(Changes in Cost Rate)insurance system reform-themed seminars, etc.

Concrete Efforts

85%
85

80
80%

First-half

上期Second-half
FY05.3下期

First-halfSemiannual Financial Results Briefing Document
for the Year Ending March 2006

上期

Second-half(Forecast)

FY06.3下期

1.

Improving operational efficiency bymanagement enhancement

2.

Continued improvement of contracts3.

New employment system3

【Medical Support Business】 Medical Support Business Growth Strategy“Management Support Business” Focused on Growth
Added Value

MedicalPeripheryBusiness

ManagementSupportBusiness◆Management Support Business Strategy◆
1. Expansion of medical management
analysis support services

BusinessExpansion forGrowth

2. Proactive approach to PFI business
3. Expansion of mutual support services
between medical and nursing care

Consignment of Medical Operations

4. Approach to Business solutions

GrowthSemiannual Financial Results Briefing Document
for the Year Ending March 20064

【Health Care Business】 Home-visit Nursing Care Service Strategy
Annual Growth Rate in Number of Users for FirstFirst-halfperiod (End of March through End of September)

FY 2005

FY 2004
Home-visit nursing care：
Number of users(Number of facilities)
Day care：Number of users(Number of facilities)
Welfare equipment rental：
Number of users(Number of facilities)*Home-visit nursing care service includes home-visit bathing service.

End of Mar.

End of Sep.

% Change

57,58659,430

3.2％

（672）

（764）

（13.7%）

15,147

15,346

1.3％

（184）

（185）

（0.5％）

26,00028,315

8.9％

（163）

（212）

（29.3％）

Home-visit nursing care：
Number of users(Number of facilities)
Day care：Number of users(Number of facilities)
Welfare equipment rental：
Number of users(Number of facilities)

End ofMar.

End ofSept.

% Change

60,69963,045

3.9％

（889）

（892）

（0.3%）

15,15915,889

4.8％

（191）

（213）

（11.5％）

29,614

31,660

6.9％

（223）

（211）

（－5.4％）First-half Results
Efforts were made to acquire new users for respective services.

Second-half Strategy
1. Enhancing the capabilities of the center manager and service leaders at each facility
2. Constructing an information sharing system at each facility
3. Continuing to promote the “Plus 1” program
Semiannual Financial Results Briefing Document
for the Year Ending March 20065【Health Care Business】 Approach to Long-term Care Insurance System Amendments (1)【As of the end of September 2005】

Progress of “Multi-functional Care Center”(Number of facilities)

Day Care Facility Development and Investment

100New day care facilities
Expanded day care facilities withpreventive care added

80603440

1120061 facilities

182

End of Mar. 2005
平成1 7 年3 月末

End of Sept. 2005
平成1 7 年9 月末

End of Mar. 2006 (Forecast)
平成1 8 年3 月末

Account

Interim figures for FYMar. 2006 (Result)

Figures for FY Mar.
2007 (Forecast)

Capital investment¥3,223 million¥9,100 million

6040

Development
Developmentofofday
daycarecarefacilities
facilities
isissteadilysteadilyprogressing.
progressing.
TheThenumber
numberofoffacilities
facilitiescapable
capableofof
providingprovidingpreventive
preventivecare
careservice
serviceisisexpected
toreach161
byexpected to reach 161 bythe
theendofMarch2006.
end of March 2006.
(Total(Totalday
daycarecarefacilities:facilities:244)
244)

Availability of New Day Care Facilities
60.0(Number offacilities)

50

100 facilities

50.0（％）

Number of new day carefacilities

40.0

Availability of new day
care facilities

3030.0Availability: About 50%2020.0

1010.00

Number of users of new day carefacilities has increased and theavailability (average) is also steadily
increasing.
Availability is expected to reachabout 50% as a profitable line ofbusiness.

0.0
End of Oct. 2004

End of Sept. 2005

Semiannual Financial Results Briefing Document
for the Year Ending March 2006

End of July 2006
(Forecast)6

【Health Care Business】 Approach to Long-term Care Insurance System Amendments (2)Total Preventive Care System【Our Total Preventive Care Service】
ExerciseNutrition

Providing services with bothfacilities (161 day carefacilities with exercise
machines) and people (Our2,500 preventive exercise
instructors). (To be constructedby the end of March 2006)

Providing nutrition advice by
securing an adequate
number of nationallyregistered dietitians, andnutrition management
utilizing our “Frozen Meals.”

Dental Care
Providing oral care with acoalition of dental
hygienists and dentists,
utilizing a network of
medical institutions

Establishment of a Comprehensive Service Infrastructure
We will support local municipalities by working on“new preventive benefits” and “community support projects.”
Semiannual Financial Results Briefing Document
for the Year Ending March 2006

7

【Education Business】 Fundamental Review of Education Business
Education BusinessWe support our group’s “Business Model” which isrecognized as the source of our business growth.

A fundamental business review has begun,
with the goal of further business expansion.

【Current Period】

1. Strengthening Our Local-Area Strategy

Strengthening community-based area marketing

2. Fundamental Review of Marketing Activities ～New Advertising Strategy～◆Maximizing contact opportunities with potential students by sales promotions
and diversification of sales channels◆Renewal of advertisements to be more fresh and appealing◆Improving the efficiency of course enrollment procedures utilizing the Web andmobile access.

3. Enhancement of Educational Business Sections

Planning and implementing a systematic and consistent strategy covering course
planning, acquiring students, and advertising, through manpower management.

Semiannual Financial Results Briefing Document
for the Year Ending March 20068

【Reference Materials】 Long-term Care Insurance System Amendments (1)Home-care support
officesElderlyrequiring
nursingcare 1 - 5:
2.8 million

Consignment

Elderlyrequiringsupport1 and 2:
1.8 million

Local comprehensive
support center

Specific
Elderly:
1.25 million

Semiannual Financial Results Briefing Document
for the Year Ending March 2006

Community Support Business Nursing Care Benefits Business

GeneralElderly:
19 million

Population approach(General business)

Consigned by
local governments

High risk approach(Specific business)

New preventive benefits
Wide area services

Community-based services

Designated by
prefecturalgovernments

Designated bymunicipalities

9【Reference Materials】 Long-term Care Insurance System Amendments (2)The Elderly

Preventive carescreening

People requiringsupport and nursing
care

People not requiringsuch care

People requiringsupport andnursing care

New People
Requiring Support
Current people
requiring support＋
Part of current nursing
care level 1＋○Checking on maintaining or
improving physical condition

Semiannual Financial Results Briefing Document
for the Year Ending March 2006

People Requiring
Nursing Care

Home-care Support
Organizations

Certification of Long-term
Care Needs○Nursing care levelscreening

Local Comprehensive Support Centers

Specific ElderlyCommunitySupport
BusinessNew
PreventiveBenefits

Nursing
CareBenefits

10【Reference Materials】Capital Investment and Allowance for Depreciation (Non-consolidated)
Changes in Capital Investment and Allowance for Depreciation(Billions of Yen)
18140

Allowance for Depreciation(Billions of Yen)FY Mar. 2006

120

16

Half-year: About 0.8 billion (Result)
Full-year: About 1.7 billion (Forecast)

14100
1280

Capital Investment
FY Mar. 2006

60

Half-year: About 3.7 billion (Result)
Full-year: About 9.1 billion (Forecast)

1086404

Capital20Investment

200
FY Mar. 2000

FY Mar. 2001

FY Mar. 2002

FY Mar. 2003

FY Mar. 2004

FY Mar. 2005

*Capital investment: only tangible fixed assets

Allowance forDepreciation

FY Mar. 2006
(Forecast)

Allowance of depreciation: includes tangibles, intangibles, and others◆FY Mar. 2000 – FY Mar. 2001
Accomplished capital investment with the implementation of long-term insurance, and acquired anoverwhelming share of the day care market.
◆FY Mar. 2002 – FY Mar. 2004
In this period we concentrated on payback from our aggressive capital investment, and therefore refrained
from excessive investment and focused on business development.
◆FY Mar. 2005 – FY Mar. 2006
Implemented the “Multi- functional Care Center Project” with the revision of long-term insurance, and willcontinue to promote prior investments.
Semiannual Financial Results Briefing Document
for the Year Ending March 200611