Financial Results Briefing Document
For the Second Quarterof the Year Ending March 2009
(2Q FY2009)
November 19, 2008

Contents
1. Overview of 2Q FY2009 and Mid-term Business Perspective(1) Overview of 2Q FY2009(2) Overview 1(3) Overview 2(4) Overview 3(5) Business cycle of Health Care Business(6) Mid-term business perspective

2. 2Q FY2009 Financial Highlights and FY2009 Forecasts(1) Summary of 2Q FY2009 financial results(2) 2Q FY2009 financial results(3) FY2009 quarterly segment information(4) Primary strategies
to performance improvement(5) FY2009 forecasts(6) Major factors to change FY2009 forecasts(7) Medical Support Business:
2Q FY2009 financial results(8) Medical Support Business:
Expanding management support service

2Q FY2009 Financial Results Briefing Document(9) Health Care Business: 2Q FY2009 financial results(10) Health Care Business: Sales by business type(11) Health Care Business:
Facility-care service performance(12) Education Business: 2Q FY2009 financial results(13) Education Business’
Business’s new course:
Medical Records Clerk Course(14) Other Businesses: 2Q FY2009 financial results(15) Balance sheets (as of Sept. 30, 2008)(16) Consolidated cash flows(17) Dividends and share buyback

1Overview of 2Q FY2009 andMid-term Business Perspective

President and Representative Director
Takashi Mori

2Q FY2009 Financial Results Briefing Document2

Overview of 2Q FY2009
2Q FY2009<Consolidated><Non-consolidated>

Net sales¥ 105,958 million¥ 88,540 million

Operating income¥ (1,181) million¥

207 million

Ordinary income¥ (1,313) million¥

381 million

Net income¥ (1,539) million¥

38 million

1. First increase in net sales in three years
Health Care Business – Sales grew at a double-digit pace, thanks to the increase infacility-care services sales
Education Business – Courses for medical office work expanded 7.9% year on year
2. Medical support business – Moving forward with standardization of contracts
Shift from a strategy focusing on sales to one focusing on profits
3. Improvement in the business environment
Health Care Business – 3% increase in long-term care payments in April 2009
Education Business – Employment environment and economic conditions
2Q FY2009 Financial Results Briefing Document3

Overview of 2Q FY2009 - 1- First increase in net sales in three years Health Care Business – Sales grew at a double-digit pace, thanks to the increase in facility-careservices sales
Consolidated net sales of
Health Care Business

2Q FY2009 net sales offacility-care companies(Million yen)

49,54914,52335,99335,026+37.7%

2Q FY2008

Facilitycare

Homecare(Million yen)

Nichii Care Palace
Nichii no Hohoemi
Nichii no Kirameki
Nichii Home

5,684
6,073
1,560
1,205

Total facility-care net sales

14,5232Q FY2009

Education business – Courses for medical office work expanded
Net sales of Medical OfficeWork Course(Million yen)

Number of students ofMedical Office Work Course
14,00012,000

2,802
2,598

+7.9%

12,96010,0008,000(Person)

9,070

6,000
4,000
2,000
0

2Q FY2008
2Q FY2009 Financial Results Briefing Document

Oct-Dec 2007

2Q FY20094

Jan-Mar 2008

Apr-Jun 2008

Jul-Sep 2008

Overview of 2Q FY2009 - 2- Moving forward with standardization of contracts Strategy to build an revenue base
FY2009FY2013

Improve profitability and establish market dominance
Third Stage
Promoted in the next five
year plan

Third stage
FY2009-Standardize contracts – review contracts

Second stage Differentiate the company in the market – expand sales support services
FY2008First stage
FY2007-

Invest in human resources – expand the career improvement system••

Improvementof working
condition
Augment
training system
to raise skills••

Raise motivation
Retain personnel

Virtuous cycle••

Standardize
contract fees
Expand contract
operations

2Q FY2009 Financial Results Briefing Document

•

•

•

Increasecustomersatisfaction

5

Improve
operational
efficiency
Provide highquality services

Overview of 2Q FY2009 - 3～ Improvement in the business environment ～Schedule for fee revisions
October 30

Additional economic stimulus package by the government
Improvement in compensation for care providers as a result of longterm care payment revision
Efforts are being made to improve the treatment of care providers basedon several measures including long-term care payment revision (+3.0%)
for FY2009 and sudden jumps in premiums for long-term care insurance
are being held down
November-December Debate in the Subcommittee on Long-term Care and Benefits of theSocial Security Council
Middle of December Organization and summary of basic opinion on payments and standards
Compilation of the 2009 government budget
End of January 2009 Advice and report on revision rate for long-term care payment

Main items under examination
Home-care support –Review of basic fees
Home-visit care –Review of requirements for assigning a service manager
Review of unit fee for each region – Review of rates of premium and employment cost for each region

2Q FY2009 Financial Results Briefing Document

6

Business cycle of Health Care Business
Upward trend in sales and profit after FY2009
FiscalFiscal year
year ofof LongLongterm
term care
care insurance
insurancesystemsystemHealthHealth Care
Care
Business
Business Cycle
Cycle

55555555
55555555
Trend of systems
555
555

FY2000FY2001First Stage

Long-term care insurance
system started

FY2002
FY2003

2003 fee revisions
Outline:

FY2005Focus on home care and support
for independence
Details:
Restructure nursing into two
categories – physical nursing andhousework support, etc.
Revision rate: -2.3%

FY2006

2006 fee revisions

FY2004

FY2007

Second Stage

Third Stage

FY2008Outline:Maintain the dignity and support
the independence of the elderly
Details:
Focus on preventive nursing, etc.
Revision rate: -2.4% (including the part for FY05)

5555
5555 Operating
Net sales
55555555555555 income¥20,346 million¥(11,760) million¥43,448 million¥(3,585) million¥60,557 million¥ 3,203 million¥71,004 million¥ 4,572 million¥75,889 million¥ 2,213 million¥80,902 million¥ 2,010 million¥78,272 million¥ 1,820 million¥79,702 million¥¥101,400 million¥(Forecast）

FY2009Focus on 2009 fee revisions

FY2010

1. Revise up 3%
2. Improve the compensation for care workers
3. Focus on major cities
4. Expand the services whose quality isevaluated

Forth StageFY20112Q FY2009 Financial Results Briefing Document

7••

190 million
400 million(Forecast）

Expansion of nonnon-insurance services
Expansion of inherited facility careservices

Create a business structure that is robust tochanges in the systemMid-term business perspective

1. Business environment
・ Hike in long-term care payments
・ Aging of society
・ Social security system reform

2. Shift to a business structure that is robust to changes
in the business environment
・Medical Support Business・Health Care Business– Strategy that stresses profits– Change in the sales composition ratio(Facility care service) –3. Upward trend in sales
・Health Care Business・Education Business

2Q FY2009 Financial Results Briefing Document

Two consecutive years of growing sales
First growth in sales in five years8

2Q FY2009 Financial Highlights
and FY2009 Forecasts

Vice President and Representative Director
Daisuke Terada

2Q FY2009 Financial Results Briefing Document9

Summary of 2Q FY2009 financial results
1. First increase in sales in three years
Maintain the upward trend on a quarterly basis

2. Health Care Business・Facility care service:
Moving as projected
・Home care service:
Improving cost ratio(2Q FY2008: 87.3% ⇒ 2Q FY2009: 84.2%)
・Total long-term care service

3. Development of new services
・Health Care Business:
・Education Business:

2Q FY2009 Financial Results Briefing Document

Homemaker service
Practical Dietary Education Course,
Medical Records Clerk Course

10

2Q FY2009 financial results
Consolidated
Consolidated(Million yen)

FY20082Q
AmountNet sales
Operating income%
Ordinary income%
Net income%

96,701
880
0.9%
966
1.0%
13
0.0%

FY20092Q
Amount（Forecast）

108,400
17
0.0%
(138)
(0.1)%(960)(0.9)%

Amount （ Result ）105,958(1,181)(1.1)%(1,313)(1.2)%(1,539)(1.5)%

Difference

Change9,257 9.6%
(2,061)(2,279)-(1,552)-(Million yen)

Non-consolidated
Non-consolidated

FY20082Q
AmountNet sales
Operating income%
Ordinary income%
Net income%
2Q FY2009 Financial Results Briefing Document

93,865
757
0.8%
888
0.9%
321
0.3%

FY20092Q
Amount (Forecast)

91,000
1,350
1.5%
1,600
1.8%
900
1.0%
11

Amount (Result)

88,540
207
0.2%
381
0.4%
38
0.0%

Difference

Change(5,325) (5.7)%(550) (72.7)%(507) (57.1)%(283) (88.2)%

FY2009 quarterly segment information（Million yen ）FY2007

Medical Support

Health Care
Education
Other
Elimination/Corporate

Net sales
Medical Support%
Health Care%
Education%

FY2008

1Q

2Q

3Q

4Q

AmountAmountAmountAmount1Q
Amount2Q
ChangeAmountAmount4Q
ChangeAmount1Q
ChangeAmount2Q
ChangeAmountChange3,471 3,279 2,992 2,736 2,856 (17.7)% 2,545 (22.4)% 2,432 (18.7)% 2,325 (15.0)% 2,736 (4.2)% 2,618 2.9%
1,029 667621
476
463 (55.0)% 502 (24.7)% 560 (9.8)%445 (6.5)%
596 28.7%
611 21.7%- (303)- (375)- 2,230- (470) (806) (451) (384) (321) (301)(407) 51,096 51,115 50,954 49,384 48,624 (4.8)% 48,077 (5.9)% 50,622 (0.7)% 52,474 6.3% 52,815 8.6% 53,143 10.5%

2,424 2,747 2,656 2,997

2,405 (0.8)% 2,711

9.9%

9.5%

10.8%

8.8%

265

800

532

223

238

1.3%

4.0%

2.7%

1.2%

1.3%

(315)

(325)

(605)

(464)

(351)

(9.1)%(9.9)%(20.2)%(17.0)%(12.3)%

Other

39

7

169

39

43 10.3%

(22)

%

3.8%

1.0%

27.2%

8.2%

9.3%

(2,153) (2,160) (1,990) (2,252) (2,107)

Operating income%

3Q
Change27,623 27,702 27,942 27,699 27,475 (0.5)% 27,470 (0.8)% 27,382 (2.0)% 26,890 (2.9)% 25,343 (7.8)% 25,380 (7.6)%
19,778 19,917 19,783 18,794 18,131 (8.3)% 17,862 (10.3)% 20,622 4.2% 23,087 22.8% 24,610 35.7% 24,939 39.6%

8.8%

Elimination/Corporate

FY2009260 1,068
0.5%

763

544

1.5%

1.1%

2.1%

(1.3)%

9.9%

203(10.2)%

9.6%
-

1.1%

(469)

-

2,625 (1.2)% 2,959 (1.3)% 1,791 (25.5)% 1,945 (28.3)%
1

11.0%
-

0.0%
-

(18.4)%

(372)

(252)

7.1%
-

(1.1)%-(15.3)%

(601)

(690)

7.7%
-

(2.8)%-(25.8)%

(281)

(143)

-

(10.3)%(606)-(23.1)%

164 (3.0)%30(4.4)%

29.3%

6.7%

9.2%

10.5%

- (1,771)- (1,501)- (1,760)- (1,756)- (1,560)

-

(300)

-

229 (11.9)%

651

0.5%

1.4%

-

-

916
1.8%

-

375
0.7%

(23.1)%(31.1)%

55 27.9%(881)(1.7)%-

64(0.6)%Net sales bottomed out in the second quarter of FY2008 and are on a upward trend
Operating income will bottom out in the first quarter of FY2009 and will be on arecovery trend
2Q FY2009 Financial Results Briefing Document-(0.6)%

12-

Primary strategies to performance improvement
The points to determine the degree of recovery from next fiscal year

Profitability(1)

Two consecutive years of profit growth for the parent company → Recovery in
the profitability of the whole company(2)

Medical Support Business – plan to standardize contracts → Stable
improvement in profitability and improvement in the quality and productivity ofoperations(3)

Facility care business – improvement in earnings → Maintain the increase inprofitability of the Health Care Business(4)

Health Care Business – increase in revenue → Business foundation that canbenefit from the favorable turn around in the business environment including
hikes in long-term care payments

2Q FY2009 Financial Results Briefing Document13

FY2009 forecasts
Consolidated
Consolidated(Million yen)

FY2008Operating income％

Ordinary income％

Net income％

Full year

Full year
Amount(Forecast at
beginningof the term)

AmountNet sales

FY20092,171

222,000
3,140

1.1%

1.4%

2,042

2,720

1.0%

1.2%

199,797(834)

50(0.4)%

0.0%

ChangeAmount(Revisedf orecast)

11.1%

215,000 (15,203)

44.6%

Dif f erence

Change7.6%

1,000 (1,171) (53.9)%
0.5%

33.2%

580 (1,462) (71.6)%
0.3%

-

(720)

114

-

(0.3)%(Million yen)

Non-consolidated
Non-consolidated

FY2008FY2009Full year

Full year

Am ount

Net sales

185,557

A mount(Forecast at
beginningof the term)

185,500 (0.0)%

2,660

4,700

1.4%

2.5%

2,983

5,140

％

1.6%

2.8%

Net income

954

2,730

％

0.5%

1.5%

Operating income％

Ordinary income

2Q FY2009 Financial Results Briefing Document

Chang e14

76.7%

A mount(Revisedf orecast)Difference

179,000(6,557) (3.5)%

2,750

90 3.4%

Chang e

1.5%
72.3%

3,140

157 5.3%

1.8%
186.2%

1,520
0.8%

566

59.3%

Major factors to change FY2009 forecasts
Net
Net sales
sales
Medical Support Business

Health Care Business

Education Business

Hospitals¥(2,050) million

Clinics, etc.

¥ (650) million

Home-visit care¥(2,800) million

Facility care

¥ (590) million

Medical Office Work Course¥ (100) million

Home Helper Course¥ (200) million

OperatingOperating income
incomeMedical Support Business¥(1,000) million

HealthHealth Care
Care BusinessBusiness¥ (300) million

Education Business¥ (300) million

2Q FY2009 Financial Results Briefing Document15

2Q FY2009 financial results

Medical Support Business
Consolidated
Consolidated

Net sales

2Q resultOperating income (Million yen)
Full year forecast

54,94554,945Major issues for FY2009

109,21750,723

101,700(6.9)%(7.7)%(1) Strengthen standardization of contracts
3,736(27.0)%

5,116

8,600

10,700• Review contracts based on a strategy ofstressing profits(19.6)%(2) Expand management support services
2Q FY2008

2Q FY2009

NumberNumber ofof contracted
contracted
medicalmedical institutions
institutions
10,285

FY2008Hospitals

FY2009 (Forecast)• Strengthen response to introduction of IT• Launch sales of Receipt Check 2.0

Clinics(3) Improve employee retention

10,232

9,400

9,397

• Augment career improvement system• Expand all the training system

2,227

Sep. 2007

2,204
Mar. 2008

2,014
Sep. 2008

2Q FY2009 Financial Results Briefing Document

2,015
Mar. 2009 (Forecast)16

Medical Support Business

Expanding management support service

Increase sales

Receipt Check Eye

Receipt Check Eye
Product details: Receipt Check system that incorporates Nichii’s knowhow related to receipt checks
Main target:
Hospitals with at least 200 beds

Improveprecision

Receipt Check 2.0
Product details: Detailed examination of receipt andcomparative analysis of examination scopewith other clinics
Main target:
Clinics specializing in internal medicine

Increase in
number ofpatients
Promotion

Marketing Eye

Marketing Eye
Product details: Comprehensive analysis of business conditions for
medical facilities by conducting surveys andcollecting data related to the number of patients
visiting the facility and shifting to a managementthat matches the area and environment.
Main target:

2Q FY2009 Financial Results Briefing Document

Receipt Check 2.0

17

Hospitals

Health Care Business
Consolidated
Consolidated

Net sales

2Q FY2009 financial results

Operating income (Million yen)
Full year forecast
101,400

2Q Result
49,549+27.2%+37.7%

35,993Major issues for FY2009

79,702Home care441

400+110.5%190(833)

2Q FY2008

2Q FY2009

FY2008

Numbers
Numbers ofof users
users byby service
service
Home care

FY2009 (Forecast)(Case)

106,960

Facility care

• Strengthen sales of the home-visit careand day care services• Create a network to provide services tosupport the independence of people withhandicaps• Expand non-insurance services(homemaker service)• Thoroughly implement compliance

6,840

Facility care
104,534

6,433

103,337
102,337

Sep. 2007

Mar. 2008• Quickly open facility care facilities• Create a nation-wide sales system• Introduce new occupancy payment
system• Thoroughly implement compliance

6,326

Sep. 2008 Mar. 2009
(Forecast)

2Q FY2009 Financial Results Briefing Document

Mar. 2008

Sep. 2008

Dec. 2009(Forecast)18

Health Care Business

Sales by business typein the bracket is a change from
Nichii Gakkan Co., Ltd. + 4 Facility-care companies *Figures
the same time of the previous year.

(Million yen)
50,000¥47,142 million（+39.9%）

Facility-care service
45,000Support for independence of people with handicaps
Other services
Welfare equipment, house renovation

40,000Day careHome-visit (including bathing)

35,00030,00025,000Care Plan

4 facility-carecompanies¥33,687million

30.8%

0.9%
11.2%

1.3%

9.0%

6.3%

22.7%

17.1%

5.6%

20,000Nichii
15,00010,000nonnon-consolidated
48.7%

33.5%

7.5%

5.5%

2Q FY2008

2Q FY2009

5,000

0

2Q FY2009 Financial Results Briefing Document

19

Health Care Business

Facility-care service performance(Million yen)

FY2008FY20092Q

Full year(Forecast at beginningof the term)

AmountAmountFull y ear

2Q(Forecast at beginning of(Result)

the term)

AmountAmountFull y ear(Rev ised forecast)AmountHohoemi

5,978

6,073

12,107

12,360Kirameki

1,627

1,560

3,917

3,570

Home

1,273

1,205

2,865

2,620

2,731

5,712

5,684

11,621

11,3602,731

14,59014,52330,51029,910

(92)

56

0

429

%

(1.5)%

0.9%

0.0%

3.5%

Kirameki

(592)

(797)

(972)

(1,330)(36.4)%(51.1)%(24.8)%(37.3)%

(318)

(449)

(469)

(745)

(25.0)%(37.3)%(16.4)%(28.4)%

Care Palace
Net sales
Hohoemi%Home%

Care Palace

(189)

(355)

(68)

(370)

5

%

(6.9)%(6.2)%(1.2)%(3.2)%

0.0%

Operating income(189)(1,357)(1,258)(1,811)(1,641)%(6.9)%(9.3)%(8.7)%(5.9)%-

2Q FY2009 Financial Results Briefing Document

20

Education Business
Consolidated
Consolidated

Net sales

Operating income (Million yen)

Major issues for FY2009

Full year forecast

2Q Result
5,401

2Q FY2009 financial results

5,354(0.9)%

10,158

11,200+10.3%• Develop new courses
Develop and introduce
Practical Dietary Education Courseand Medical Records Clerk Course(820)
2Q FY2008(887)
2Q FY2009

Net
Net sales
sales byby course
courseFY2008

5,354

464

414

2,338

2,598

2Q FY2008

FY2009 (Forecast)

Medical office work course
Home helper course

5,401(1,200)(1,793)

2,136

10,158

Other(Million yen)

11,100• Undertake effective advertising
Run cost-effective advertisements

850

844
4,292

4,600

• Promote education related to medical service
and care giving
Hold course explanatory meetings

2,802
5,022

2Q FY2009

2Q FY2009 Financial Results Briefing Document

FY2008• Promote job search for course graduates
Actively hold work consultations
Introduce a Manabi-Net Plus
Expand Career Net

5,650

FY2009 (Forecast)21

Education Business’s new course

Medical Records Clerk Course

Background for developing courses
1. An environment is necessary in which medical workers can solely focus on workrequiring specialization
2. From April 2008: Assignment of personnel to support clerical work at a doctor’s office iscovered in evaluations of medical service fees

Growing need for support work as the shortage of doctors becomes more serious

Summary of course
Doctors Office Work Support Education Course (course length – approx. 5.5 months; cost – 171,230 yen (tax included))* Participants who have taken a medical office work course or have actual experience will be exempted from parts of the course(course length – approx. 2.5 months; course cost – 89,250 yen (tax included))

After completing the medical office work course and doctors office work support course and becoming qualified,
graduates can register for temporary positions as medical office staff or doctor’s office work aid with Nichii

Making the most of Nichii’s business model of “Education creates Employment”

2Q FY2009 Financial Results Briefing Document

22

Other Businesses(Group-wide) Consolidated
Consolidated

2Q FY2009 financial results

Net sales

Operating income

2Q result(Million yen)

Full year forecast
1,207

2,400

+25.1%

965+21.8%

1,970

119

200

+466.7%21
2Q FY2008

215

2Q FY2009

FY2008(7.0)%
FY2009 (Forecast)(Group-wide) Consolidated
Consolidated subsidiaries
subsidiaries

Nihon Support Service
Co., Ltd.

・Information technology
・Storage and delivery
service

Nihon Credit Lease
Co., Ltd.

Leasing

Tokyo Marunouchi
Publishing Co., Ltd.

・Publishing and sale ofbooks
・Publishing and sale ofcourse materials

Roris Co., Ltd.

Production and sale offlowers, seeds, etc.

2Q FY2009 Financial Results Briefing Document23

Consolidated balance sheets (as of Sept. 30, 2008)(Million yen)

As ofMar. 2008
Current assets
Fixed assets

Total assets
Current liabilities
Fixed liabilities
Total liabilities
Net assets
Total liabilities
and net assets

2Q FY2009 Financial Results Briefing Document

Tangible
Intangible
Investment
and others

As ofSep. 2008

Differences

38,85037,42022,58038,75137,00523,168

(99)
(415)
588

22,432
121,284
31,00839,66670,67550,60922,389121,315
34,62338,38573,00848,306

(43)
31
3,615
(1,281)
2,333(2,303)

121,284

121,31531

24

Consolidated cash flows(Million yen)

OperatingCash Flows

InvestingCash Flows

Financing
Cash Flows
10,52011,000Term-endbalance
9,230

9,000

6,111

7,000
5,000
3,000
1,000

2,669

1,779
389

4,150

(826)

-1,000(1,077)-3,000(1,158)(2,472)-5,000-7,000-9,000-11,000-13,000-15,000(15,759)-17,000

2Q FY2007
2Q FY2009 Financial Results Briefing Document

2Q FY2008
25

2Q FY2009

Dividends and share buyback
Dividend (yen)

¥25
¥20
¥15

DOE（ % ）

22.0
17.5
1.3%

22.0

22.0

22.0

22.0

2.5%

17.5
1.2%

3.0%

1.5%

1.5%

1.5%

1.5%

1.5%

2.0%
1.5%

¥10

1.0%

¥5

0.5%

¥0

0.0%
FY2003

FY2004

FY2005

FY2006

FY2007

FY2008FY2009(Forecast)* This year an interim dividend will be paid (expected interim dividend is 11 yen/share)

Share buyback (based on articles of association as stipulated by article 165.2 of the Company Law)
1. Objective of buyback – in order to respond to changes in the business environment and implement a
flexible capital strategy
2. Target shares – Company’s common shares
3. Total number of shares that can be purchased and total amount – 500,000 shares (upper limit), 500 million
yen (upper limit)
4. Timing: (1) October 14-October 31, (2) November 20-January 31
5. The number of shares purchased and amount used for shares purchased during the above period – 74,300
shares, 73,355,000 yen

2Q FY2009 Financial Results Briefing Document26

All the profit targets and other forecasts, including the number of contracts, number ofusers, and goals contained in this document, are based on the current information
available to the Nichii Group. Such information is subject to the influence of factors
such as economic circumstances, relaxation of regulations and employment conditions.
Please understand that actual business performance and other achievements, such as
the number of contracts and number of users, may be substantially different from theforecasts.

2Q FY2009 Financial Results Briefing Document27