Nichii Gakkan Company

Interim Financial Results
Briefing Document
for the year ending March 2007

November 24, 2006

www.nichiigakkan.co.jp

Table of Contents◆ Interim Financial Highlights ..……………………………..... P2-3
◆ Medical Support Business …….....…………………………. P4-5
◆ Health Care Business ……………………………………..…. P6◆ Education Business ………………………………………..… P7◆ Reference Data ………………………………………………… P8-9

All the profit targets and other future data including the number of contracts, number of users and goals
contained in this document are forecasts based on the information that Nichii Group has at present. Suchinformation is subject to influence by factors such as economic circumstances, relaxation of regulations andemployment conditions.

Interim Financial Results Briefing Document for the year ending March 20071

Interim Financial Highlights
1. Net Sales

102,211 million yen

Liquidated a consolidated subsidiary to optimize the organization.
Influence of amendment to the long-term care insurance system.

2. Ordinary Income 1,371 million yen
Influence of amendment to the long-term care insurance system.
Pursuit of long-term strategies for Education Business.

3. Net Income 484 million yen
Extraordinary losses posted(1) Impairment losses on transactions of fixed assets: 52 million yen(2) Additional losses on liquidation of the subsidiary: 101 million yen
End of Sep. 2005

End of Sep. 2006

Short-term loans payable

7,959 million yen

395 million yen

Current redemption of bonds―

3,808 million yen

Bonds―

7,192 million yen

Interim Financial Results Briefing Document for the year ending March 20072Segmental Interim Financial Highlights
MedicalSupport

Net Sales 55,325 million yen
Operating Income
5,171 million yen
Enhanced management support services including DPC-related business.
Initiated recruitment system for permanent employees.
Set up for full-scale introduction of career improvement system.

HealthCare

Net Sales 39,695 million yen
Income 1,065 million yen

Operation

Providing preventive care services at about 250 facilities.
About 200 out of them are newly established or renovated facilities.
Promoted contracting for community support business.
Built up achievements in the preventive care program.

Education

Net Sales 6,750 million yen
Operation Income -640 million yen
Improved mixed media in advertisements

Interim Financial Results Briefing Document for the year ending March 20073

<Medical Support Business> Sales Increase Strategies[Changes in Net Sales Per Hospital](Thousands of yen)400
40,000300
30,00031,397

34,81534,836

16,32538,361[Changes in Net Sales Per Clinic]

17,68417,809■ Full year
■ Halfyear(Thousands of yen)

(Forecast)

2,000

1,679

1,500

200
20,00010,000100■ Full year
■ Half year

1,605

1,617

1,000

19,120813

500

001,754(Forecast)

849

797

8660FY04/3

FY05/3

FY06/3

FY04/3

FY07/3

FY05/3

FY06/3<Strategies>
Continue increasing Net sales per medical institution.
Improve contract rates.
Further promote expansion of contract business, focusing on spot operations and existing
contracted operations.
Intensify negotiations to begin charging for the current free services.
Interim Financial Results Briefing Document for the year ending March 2007

4FY07/3

<Medical Support Business> Developing and Securing Human Resources
Strategy
Strategy forfor “Positive“Positive GrowthGrowth Cycle”
Cycle”
byby activating
activating human
human resourcesresources

Higher motivation of staff
Retention of humanresources
Higher operational efficiency
Provision of high-quality services

Improvement of labor conditions
Enriching training system for improving skills

Positive
Positive Growth
Growth Cycle
Cycle

Higher customer satisfaction
Improved contract rates
Expansion of contract business

Interim Financial Results Briefing Document for the year ending March 20075

<Health Care Business> Sales Increase Strategies
Contracts for community support business achievedContract operations proposed
71 contracts
31.5%

Outsourcing rate as of the end of September 2006 was 13.1%.
Nichii achieved a share of 31.5% out of this.

Number of outsourcing
local governments 225■Nichii(Research by Nichii)■Other companies

Changes in sales from community support businessThousand yen223

Apr.
4月

1,293

May
5月

1,421

Jun.
6月

4,876

Jul.
7月

5,071

Aug.
8月

7,775

●Plan using Nichii’s classroom
Services are provided utilizing Nichii’s classroom, staffand program●Plan using government facilities(Entrusting type)Services are provided utilizing a location prepared by the
local government and Nichii’s staff and program.
(Dispatching type)
Location, staff and program are prepared by the local
government, and Nichii is dispatching support staff.

Sep.
9月
Sales increase strategies for the 2nd half

Results for the 1st half
●Developed infrastructure for preventive care services.
・Increased facilities providing preventive day care services (Approx. 250 facilities)
・Built up achievements in the preventive care program (See page 8).
●Number of community support business contracts achieved: 71 as of the end of Sep.
●Number of preventive care service users: 12,178 as of the end of Sep.
Interim Financial Results Briefing Document for the year ending March 2007

●Plan using Nichii’s day service
Services are provided utilizing Nichii’s day care facilities,staff and program.

●Aggressive promotion of preventive care plan contracts●Enhancing marketing efforts to local governments based on achievements
・Aggressive promotion of community support business contracts
・Acquiring users of preventive day care services.
●Preparation of application for qualification of specified service provider
6

<Education Business> Education Business Strategies

Revitalization and quantitative expansion strategies

Efficiency and quality improvement strategies

1. Enhancement of advertising activities◆Improve mixed media in advertisements

1. Improvement of class management
efficiency(Active development of TV commercials and internet advertisements)◆Develop classes in line with the target market◆Promote effective utilization of classrooms◆Conduct campaigns for revitalizing the market

2. Improvement of education course plans

2. Enhancement of product attraction◆Improve the content of courses (to match actual practice)◆Promote course plans based on student needs◆Establish a system to train instructors◆Run campaigns and provide a diversified (enriched) rangeof courses, to encourage existing students to take skillenhancement programs.

Interim Financial Results Briefing Document for the year ending March 2007

◆Introduce a new learning system to meet student needs.

7<Reference Data> Nichii’s Strength Training Evaluation Summary
Results of physical fitness measurement

Item<Implementation<Implementation method>
method>TheThe physicalphysical fitness
fitness measurement
measurement waswas carried
carried out
out basicallybasically bybypreventive
exercise
instructors,
basedontheCGT*1
programpreventive exercise instructors, based on the CGT*1 program ofofthethe TokyoTokyo Metropolitan
Metropolitan Institute
Institute ofof Gerontology.
Gerontology.

<Implementation<Implementation outline
outline >>BMI(Body Mass Index: degree of obesity)
Grip strength（kg）

Subjects
Subjects used
used thethe equipment
equipment ofof Nichii’s
Nichii’s day
day carecare service
service center.
center.
Leg extension power（kg）[Composition of users]
GenderAverage age

Number of users

Bending forward in the sitting position（cm）

GenderEffective number ※2(Number of people)

Value after
improvement

Male

189

1.35％

Female358

1.33％

Male201

5.28％

Female

370

4.17％

Male

149

16.28％Female

215

8.76％

Male

177

12.30％

Female

299

9.12％

Male

78.1

640

Female

81.5

1,370

Functional reach

Male

181

9.17％

Total

80.4

2,010（cm）

Female

482

6.80％

Male

182

39.68％

Female316

13.79％

Male

183

14.46％

Female

132

8.33％

Male

188

9.23％

Female328

11.11％

Male

159

6.45％

Female261

9.32％

Single-leg stand with eyes open(Sec.)[Breakdown of subjects]
Level of carerequired

Requiringsupport level 1

Requiringsupport level2

Requiring care(Transitional)

Requiring carelevel 1

Number ofusers

263

357

199

648

Level of carerequired

Requiring carelevel 2Requiring carelevel 3Requiring carelevel 4

Requiring carelevel 5

Number ofusers

243

164

91

45

Normal 5m walk
(Sec.)
Maximum 5m walk(Sec.)
Timed Up & GO(Sec.)

1. CGT: Comprehensive Geriatric Training. A method to improve muscle strength as well as flexibility, and sense of balance, in a comprehensive manner.
2. Effective number: Number of subjects who took the training, continued it for over 3 months, and had their values measured before and after the training.
Interim Financial Results Briefing Document for the year ending March 20078<Reference Data> Nichii’s shares by service (based on the number of times used)Long-term care service + Preventive care service
Nichii’s share (Units:number of times used)[All-Japan data: All-Japan Federation of National Health Insurance Organizations]

2005

2006

Apr.

May

Jun.

Jul.

Sep.

Dec.

Mar.

Apr.

May

Jun.

Jul.

All Japan

1,226,000

1,258,000

1,265,000

1,267,000

1,280,000

1,292,000

1,281,000

1,231,000

1,263,100

1,263,300

1,259,900

Year-on-year

7.0%

8.4%

7.6%

6.6%

6.3%

5.1%

4.0%

0.4%

0.4% ▲0.1% ▲0.6%

rate
Homevisit long- Nichii
term care

54,898 55,107 55,617 56,002 57,033 58,294 57,501 56,453 56,332 56,527 56,397

Year-on-year
rate
YoY ratevariance (All

7.1%

6.9%

7.3%

6.9%

5.4%

2.8%

2.2%

1.6%

0.7%

▲0.3% ▲1.2% ▲0.4%

0.2%

1.0%

1.8%

1.4%

2.4%

1.8%

1.8%

1.3%

All Japan

1,022,000

1,068,000

1,080,000

1,095,000

1,094,000

1,038,000

1,088,600

1,094,100

1,099,400

Year-on-year
rate

9.9% 10.9% 10.9% 10.3% 10.1%

8.7%9.1%

1.6%

4.0%

3.0%

2.9%

Day care Nichii

6.6%

7.1%
1,047,000

1,062,000

15,424 15,630 15,623 15,744 15,889 16,304 16,200 16,134 16,546 16,713 16,809

Year-on-year
rate
YoY ratevariance (All

6.9%

4.6%

5.9%

7.0%

6.8%

▲9.3% ▲8.6% ▲9.4% ▲8.3% ▲6.6% ▲2.6% ▲2.2%

3.0%

1.9%

4.0%

3.8%

All Japan

1,015,000

1,075,000

1,091,000

1,090,000

1,050,000

1,076,900

1,063,600

1,047,000

Year-on-year

10.7% 10.8% 11.2% 10.6% 10.4%

9.3%8.7%

3.4%

3.1%

0.7% ▲1.5%

rate
Welfareequipme Nichii
nt rental

Year-on-year
rate
YoY ratevariance (All

0.6%

2.3%
1,045,000

1.4%
1,056,000

2.0%
1,063,000

3.5%

6.2%

29,987 30,433 31,086 31,190 31,660 32,319 32,250 31,879 31,457 30,988 30,210

13.1% 12.3% 13.4% 11.8% 11.8% 10.4%

8.9%

6.3%

3.4% ▲0.3% ▲3.1%

2.4%

0.2%

2.9%

0.3% ▲1.0% ▲1.6%

1.5%

2.2%

1.1%

1.4%

1.1%

Monthly disclosed number of users of our home-visit long-term care service includes the users of home-visit bathing service. The above numberof users of our home-visit long-term care service, however, excludes those of the home-visit bathing service.
Interim Financial Results Briefing Document for the year ending March 20079