Financial Results
Briefing Document

for the Year Ended March 2010
(FY2010)May 26, 2010

Information Meeting of
Financial Report for theYear Ended March 31, 2010
President and Representative Director

Daisuke Terada

FY2010 Financial Results Briefing Document

1

Contents
1. FY2010 Overview of Financial Results
1) FY2010 financial results2) Overview of FY2010
3) FY2010 quarterly net sales and operating income by segment
4) Quarterly net sales and operating income by segment
5) FY2010 financial results
Medical Support Business
Health Care Business
Education Business6) Cash flows (consolidated)

P3
P4
P5
P6
P7
P8 – P9P10P11

2. FY2011 Forecast
1) FY2011 forecast
2) FY2011 key points in the results outlook
3) FY2011 net sales and operating income by segment
Medical Support Business
Health Care Business
Education Business4) Dividend policy

P13
P14
P15
P16 – P18
P19 – P21
P22 – P23
P24

3. Future Prospects
1) Business environment2) Future business outlook

P26 – P27
P28

FY2010 Financial Results Briefing Document2

FY2010 financial results

Consolidated
Consolidated(Million y en)

FY2010FY2009AmountAmountNet sales
Operating income%

Ordinary income%

Net income (loss)%

FY2010 Financial Results Briefing Document(Revised forecast
on Feb. 9)

Amount (Result)

213,601
1,013

235,000
6,400

235,352
6,864

0.5%

2.7%

2.9%

800

6,300

6,877

0.4%

2.7%

2.9%

(1,090)

2,700

3,154

(0.5)%

1.1%

1.3%

3

YoY

10.2%
577.1%
759.2%-

Overview of FY2010
1. Another record-high sales
Health Care Business:

Net sales reached record high of ¥118,074 million(up 18.3% year on year)
Education Business:
Growth in revenues for 2nd year running¥15,255 million (up 28.0% year on year)
Medical Support Business:Growth in revenues for the first time in three years¥101,553 million (up 0.3% year on year)

2. All businesses profitable for the first time in six years
Education Business:

Operating income moved into black since FY2005¥2,992 million (Profit margin: 19.6%)

3. Cash flow improved significantly
Operating cash flow:
Free cash flow:
FY2010 Financial Results Briefing Document¥11,726 million (FY2009 ¥2,337 million)¥10,988 million (FY2009 -¥1,802 million)
4

Quarterly net sales and operating income by segment
Consolidated net sales(Million yen)

FY20091Q
52,815596
2,736
24,61025,343(470)

2Q
53,143

FY20103Q
53,464

598
2,850

611
2,618

4Q
54,179

683
3,710

1Q
56,174

747
4,528

2Q
56,4693Q
64,050

694
3,533

593
3,805

24,93925,257

24,964

26,40925,38025,26025,30625,124

(407)

(500)

(484)

(635)

27,22325,311(463)

Eliminations

29,524

Education
Business
Health Care
Business

25,44925,669

(544)

(492)

Medical Support
Business(Million yen)

FY2009
2Q
(300)

569
3,389

Other Businesses

34,918

Consolidated operating income
1Q
(881)

4Q
58,659FY2010
3Q
789

4Q
1,405

1Q
1,046

2Q
1,352

3Q
2,412

4Q
2,054

156
153
55
1,791
(690)
(281)
(1,756)

64

137
342

86

1,945

2,376

2,672

(143)
(606)

(132)

(11)

(1,694)(1,733)(1,560)FY2010 Financial Results Briefing Document

53
401
1,290

76

109

668

1,319
97

604
634

1,565

1,667

2,013

2,192

2,309

(2,114)(2,009)(2,167)(2,001)

5

Eliminations
Other Businesses
Education
Business
Health Care
Business
Medical Support
Business

FY2010 net sales and operating income by segment
Consolidated net sales(Million yen)
FY2009 Result

FY2010 Result

YoY%

101,289
99,77011,914
2,488(1,861)
213,601

Medical Support Business
Health Care Business
Education Business
Other Businesses
Eliminations
Total

101,553
118,074
15,2552,603(2,134)
235,352

0.3%
18.3%
28.0%
4.6%
10.2%

Consolidated operating income(Million yen)
FY2009 Result

FY2010 Result

YoY

%

8,784
(758)
(677)
409
(6,743)
1,013

Medical Support Business
Health Care Business
Education Business
Other Businesses
Eliminations
Total

FY2010 Financial Results Briefing Document

6

8,181
3,586
2,992
394
(8,291)
6,864( 6.9)%( 3.7)%
577.1%

FY2010 financial results

Medical Support Business
Consolidated
Consolidated

Net sales

FY2010Net sales¥101,553 million
Operating income¥8,181 million

Operating income (Million yen)

101,553
101,289+0.3%

Overview of financial results for FY2010
8,784

 Growth in revenues for the first time in three
years

8,181

• Higher net sales per medical institution due tocontract revision• Medical institutions under contract on the rise
End-Jun. 2009:
10,787 cases
End-Dec. 2009:
10,861 cases
End-Mar. 2010:
10,964 cases-6.9%

FY2009FY2010FY2009FY2010 Improved working conditions of staff
NumberNumber ofof contracted
contracted
medicalinstitutions
medical institutions

Hospitals

9,364
1,970
1,977

Clinics• Benefits of contract revision applied to staff salaries

 Expanded medical management support
service(Cases)• New services applying voice-recognition technology(cyber clerk business) project launched• Established Nichii Research Institute Co., Ltd. toenhance medical management consulting

8,994
-3.9%

-0.3%

 Development and enhancement of thechildcare business

FY2009FY2010FY2009FY2010 Financial Results Briefing Document• Development and expansion of child-care services
within medical institutions• Opening of a new directly managed child-care
center in January 2010

FY20107

Health Care Business
Consolidated
Consolidated

Net sales

FY2010 financial results
FY2010Net sales¥118,074 million
Operating income¥3,586 million

Operating income (Million yen)

3,586

118,074+18.3%

Significant
growth!

99,770Overview of financial results for FY2010
 Home care, non-insurance services• Number of users exceeds 120,000• Care plan users increased
Approx. 5,000 cases increased for the year
Exceeded 40,000 for the first time in three years• Users of home-visit care and day care services
increased(758)
FY2009FY2010FY2009FY2010 Facility care service
NumberNumber ofof users
users byby service
service(Cases)Home care

7,867

121,261

Facility care

• Facility utilization rate increased
End-March 2009: 85.5%=> End-March 2010: 91.9%• New group homes opened (at five locations)

7,549

 Implementation of staff compensation
improvements

110,151
7,149

105,848

Mar. 2009

Sep. 2009

Mar. 2010

Mar. 2009

FY2010 Financial Results Briefing Document• Improved profitability, increased long-term carepayment by 3%, applied subsidies received for
improving staff compensation to staff salaries
Sep. 2009

Mar. 20108

Health Care Business– Facility care service –FY2010 financial results(Million yen)

FY2009FY2010

1Q

2Q

3Q

4Q

Full year

1Q

2Q

3Q

4Q

Full year

AmountAmountAmountAmountAmountAmountAmountAmountAmount (Result)Amount (Result)

Hohoemi

3,031

3,041

3,137

3,337

12,548

3,675

3,764

7,776

3,903

19,120Kirameki

743

816

942

1,101

3,605

1,176

1,316

2,831

1,483

6,808

Home

3,424

3,464

3,453

3,613

13,957

3,558

3,592

3,682

3,373
3,773

14,606

Net sales

7,200

7,323

7,535

8,052

30,111

8,410

8,673

14,2909,160

40,535Hohoemi%Kirameki%Home%
Gross profit
%

329

315

409

483

1,537

483

421

1,062

473

2,440

10.9%

10.4%

13.0%

14.5%

12.2%

13.1%

11.2%

13.7%

12.1%

12.8%

(264)

(300)

(246)

(129)

(940)

(93)

(20)

109

95

90

(35.5)%(36.8)%(26.1)%(11.7)%(26.1)%(7.9)%(1.5)%

3.9%

6.4%

1.3%

67

52

97

320

538

126

111

188

239

665

2.0%

1.5%

2.8%

8.9%

3.9%

3.5%

3.1%

5.1%

7.1%

4.6%

133

67

261

673

1,135

515

511

1,359

809

3,196

1.8%

0.9%

3.5%

8.4%

3.8%

6.1%

5.9%

9.5%

8.8%

7.9%

* With respect to the business results for the current period, results of Nichii no Hohoemi and Nichii no Kirameki for the 15month period between January 2009 and March 2010 are included, as a result of consolidation to Nichii Gakkan Co., Ltd. on
October 1, 2009 (their accounting periods have been changed).
* With respect to the Ohtohen, which was previously managed by Nichii Care Palace Co., Ltd. before merger, its brand namewas changed to “Nichii Home” in January 2010.
* Only net sales and gross profit are reported due to the mergers and restructurings of the transferred companies.
FY2010 Financial Results Briefing Document9

Education Business

FY2010 financial results
FY2010Consolidated
Consolidated

Net sales

2,992

15,255+28.0%Net sales
Operating income

Operating income (Million yen)

¥15,255 million¥2,992 million

Overview of financial results for FY2010

Moved into
the black Students increased particularly for 2 maincourses

11,914• Home Helper course:+24% YoY• Medical Office Work course: Unchanged YoY

 Pursuit of efficient advertising• Reduced promotion expenses per student by
pursuing ads focused on responses(677)
FY2009FY2010FY2009NumberNumber ofof students
students byby course
courseHome Helper course

FY2010 Promotion of “Emergency Job Creation
Program”(Students)• Promote accepting Human Resources
Development Assistance Program (subsidies for job
trainings) and “Study and obtain a qualification as acare worker while working at long-term carefacilities” program.

Medical Office Work course

83,365+24.3%

54,12554,39067,089

 Enhanced development of Medical Office
Clerical Workers course-0.5%• Actively offered new course options

 Development of e-learning courses
FY2009FY2010FY2009FY2010 Financial Results Briefing Document• Set up a new e-learning project, as part of our midto long-term strategies for business growth.
Currently in the development phase of the course.

FY201010Cash flows (consolidated)(Million yen)

24,000OperatingCash Flows

InvestingCash Flows

Free Cash
Flows

Financing
Cash Flows
23,316

14,00011,726

12,00010,98810,000
8,000
6,000
4,000

2,772

2,337

2,000
0
(2,000)

(289)

(738)

(1,802)(4,000)(4,139)(6,000)(8,000)(10,000)(12,000)(11,607)(14,000)(29,162)(29,451)(30,000)■ FY2008
FY2010 Financial Results Briefing Document■ FY2009
11■ FY2010

FY2011 Forecast

FY2010 Financial Results Briefing Document12

FY2011 forecast
Consolidated
Consolidated(Million y en)

FY2011FY2010
Amount(Result)
Net sales
Operating income%

Ordinary income%

Net income%

FY2010 Financial Results Briefing Document

Amount(Forecast)

YoY

235,352

240,000

2.0%

6,864

8,000

16.5%

2.9%

3.3%

6,877

8,300

2.9%

3.5%

3,154

3,500

1.3%

1.5%

13

20.7%
10.9%

FY2011 Key points in the results outlook
1 Another record-high sales{ Growth in revenues for 3rd year running{ Health Care and Medical Support Businesses will continue to increase net sales

2 Growth in profits for 2nd year running{ Contribution by improvement of Higher Health Care Business earnings

3 Expansion of existing businesses and entry into new business areas{ Expansion and strengthening of existing businesses responding to customer needs{ Further improvements in service quality(Improved training, introduction of a 24-hour system for the call center, redoubled efforts to deliversafe, reliable service, etc.)* Because of special circumstances related to the mergers of Nichii no Hohoemi Co., Ltd. and Nichii no Kirameki Co., Ltd. with Nichii
Gakkan Company, approximately ¥5.2 billion in excess net sales were recorded for the year ended March 31, 2010. While this will limit the
year-on-year growth for the year ending March 31, 2011 to only 2.0%, net sales are trending higher, mainly in the Health Care Business,and record net sales are forecast for the said year.
* Change in Allocation Standards due to New Management Approach{ Core System Expense Allocations
While expenses for the human resources system introduced last year have been treated as company-level expenses until now, thesystem is now operating smoothly and it has been decided that expenses should be allocated to the Medical Support, Health Care, and
Education Businesses.
{ Allocation of Advertising Expenses
Until now, newspaper, web, and other advertising expenses have been assigned to the Education Business. Under the new
management approach, however, it has been decided that these expenses should be allocated to the Medical Support and Health Care
Businesses.
FY2010 Financial Results Briefing Document14

FY2011 net sales and operating income by segment
Consolidated net sales(Million yen)YoY
FY2010 Result

FY2011 Forecast%

Medical Support Business

101,553

102,500

0.9%

Health Care Business

118,074

122,300

3.6%

Education Business

15,255

14,400(5.6)%

Other Businesses

2,603

2,700

3.7%

Eliminations(2,134)(1,900)-

Total

235,352

240,000

2.0%

Consolidated operating income(Million yen)
FY2010 Result(Existing standard)

Medical Support Business
Health Care Business
Education Business
Other Businesses
Eliminations
Total

YoY
(New standard)

FY2011 Forecast

8,181
3,586
2,992
394
(8,291)
6,864

8,200
6,200
2,000
200
(8,600)8,000(New standard)

7,000
5,300
2,700
200
(7,200)8,000%(14.4)%
47.8%(9.8)%(49.2)%
16.5%

From the year ending March 31, 2011, allocation standards related to the calculation of operating income by segment are changed.
FY2010 Financial Results Briefing Document15

FY2011 forecast

Medical Support Business
Consolidated
Consolidated

Net sales

Major issues for FY2011

Operating income (Million yen)Third year of contract revision

102,500
101,553• Increase net sales per medical institution

+0.9%

8,200
8,181

Improvement in frontline staff compensation

7,000

+0.2%

• Apply the benefits of contract
revision to staff salaries• Enhance training by applying e-learning-14.4%

Focus on efforts to gain new contracts‘Existingstandard

FY2010FY2011 (Forecast)

NumberNumber ofof contracted
contracted
medicalmedical institutions
institutions

FY2010

Hospitals• Make the most of the benefits of management
support service products and deliver added value
responding to the needs of medical institutions

New standard

Expansion of the childcare business

FY2011 (Forecast)Clinics• Actively promote child-care services within medical
institutions(Cases)Reduction of the administrative burden ofphysicians

9,050
8,994

+0.6%

• Develop the cyber clerk business• Move ahead with the placement of medical office
work assistants

1,990
1,977

+0.6%

Strengthening of local cooperation in medical
and long-term care services• Recommend receiving additional medical fees for
local cooperation

March 2010

March 2011
(Forecast)March 2010

FY2010 Financial Results Briefing Document

March 2011
(Forecast)16

Business Strategies

Medical Support Business- Formation of virtuous cycle through contract revision

Contract Revision
A five-year plan has been put together to revise contract fees to bring them to the appropriate levels in the interest ofproviding higher quality service. Higher revenues gained through contract revision will be used to improve staff salaries
in an effort to secure a stable supply of excellent human resources and provide medical institutions with higher quality
medical management support services. The year ending March 31, 2011 is the third year of this five-year plan.

Changes in net sales per medical institution
and the number of contracts
Net sales per user

Formation of virtuous cycle

Number of contracts(Thousand yen)(Contracts)

12,0002,500

10,000Highercustomersatisfaction

Revisedcontract fees
Expanded
contract
services

2,000

8,000

Greater
operational
efficiency
Higher quality
services

1,500
Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11

Improved staff
motivation
Higher humanresource
retention

Both the number of contracts and net sales
per medical institution are on the rise.
FY2010 Financial Results Briefing Document

17

Improved staff
compensation
Enhancedtraining
systemMedical Support Business

Future initiatives

Development of new management support services for medical institutions
Promotion of local cooperation in medical andlong-term care services
Medical Support
Business

Cooperation between Nichii
Gakkan care managers andcontracted medical institutions

Provision of medical office
work on consignment
Recommendation thatdischarge adjustment
departments be newly
established

Development of the cyber clerk businessWithin medical institutions

Health Care
Business

Creation of a digital record ofphysician comments on patient
cases and other matters using
voice-recognition technology

Outside medical
institutions
Checking and correction ofdata received

Cyber clerks

Provision of long-termcare services

DoctorApproach to medical
institutions
Data transmission via
data center• Patient ID, name• Physician comments• Instruction on where on
which in-house system
the record should becreated for

Admission/discharge support
Contracted medical
institutions

Home medical care,long-term care facilities,
etc.

Promote IT adoption in medical settings and develop services
capable of responding to a wide range of medical institution
needs (e.g. use of voice-recognition technology to reduce office
work for physicians).

Make the most of Nichii Gakkan’s strengths in developing both
medical and long-term care businesses to contribute even more
to society by building comprehensive service systems in local
medical service settings.
FY2010 Financial Results Briefing Document

18

Health Care Business
Consolidated
Consolidated

Net sales

Major issues for FY2011

Operating income (Million yen)

Further strengthening of home care services

6,200

122,300
118,074

FY2011 forecast• Increase the number of cases per care manager• Increase the usage rate of day-care services• Strengthen the development of home-visit bathing services
Move to establish these services in the 48 branches yet tooffer them
• Increase the usage rate of services where they are alreadybeing offered• Actively develop new service locations+72.9%

+3.6%

5,300
+47.8%

3,586

Further strengthening of facility care services
Existing standard
New standard

FY2010FY2011 (Forecast)

FY2010

NumberNumber ofof users
users byby service
service
Home careStronger efforts to develop services not covered byinsurance(Cases)• Actively develop welfare services for the handicapped andhomemaker services

Facility care
+4.7%

Strengthening of cooperation in long-term care andmedical services

8,100

127,000
121,261• Actively establish new facilities• Increase the usage rate of Care Palace Nichii Home facilities

FY2011 (Forecast)

7,867

+3.0%

• Move ahead with efforts to receive additional compensation
for long term care workers through cooperation with medical
institutions (medical cooperation additions, etc.)

Continued improvement in staff compensation• Continue applying higher revenues gained through contract
revision to staff compensation to improve staff retention
rates and service quality
March 2010

March 2011
(Forecast)March 2010

FY2010 Financial Results Briefing Document

March 2011
(Forecast)19

Health Care Business– Facility care service -FY2011 forecast(Million yen)

1Q

2Q

FY2010
3Q

AmountAmountAmountHohoemi

3,675

3,764

7,776

3,903

Kirameki

1,176

1,316

2,831

Home

3,558

3,592

Net sales

8,410

Hohoemi%Kirameki%Home%
Gross profit%

FY2011 (Forecast)
Full year
1H
Full year

4Q
Amount (Resut)

Amount (Result)AmountAmount19,1208,500

17,200

1,483

6,808

3,200

6,600

3,682

3,373
3,773

14,6067,500

15,4008,673

14,2909,160

40,535

19,20039,200

483

421

1,062

473

2,440

1,140

2,240

13.1%

11.2%

13.7%

12.1%

12.8%

13.4%

13.0%

(93)

(20)

109

95

90

300

600

(7.9)%(1.5)%

3.9%

6.4%

1.3%

9.4%

9.1%

126

111

188

239

665

270

960

3.5%

3.1%

5.1%

7.1%

4.6%

3.6%

6.2%

515

511

1,359

809

3,196

1,710

3,800

6.1%

5.9%

9.5%

8.8%

7.9%

8.9%

9.7%

* Only net sales and gross profit are reported due to the mergers and restructurings of the transferred companies.

FY2010 Financial Results Briefing Document

20

Health Care Business FY2011 forecast– Expand long-term care service network

 Number of facilities by service
Home care(Facilities)
2,500
2,000
1,500

1,923

+153

2,076

+110

673

669

2,186

Care planning708

Home-visit service

Number of service users
127,000(Forecast for March 31, 2011)

Home-visit bathing service
896

941

74
255
128

93
285
129

129
299
135

Mar. 2009

Mar. 2010

Mar. 2011 (Plan)

1,000

797
500
0

Facility careDay-care service

Further strengthen the provision of total long-term care services through offices and facilities
strongly rooted in local communities.
(Facilities)

350
300

272

250

49
32

191

200

Welfare equipment rental

+12

299

Pay nursing home

49
32

48
34

Nichii Home

203

217

284

+15

Pay nursing home

150
100

Nichii no Kirameki

50Group home0

Nichii no Hohoemi
Mar. 2009

Mar. 2010

FY2010 Financial Results Briefing Document

Mar. 2011(Plan)
21

Approx. 300
facilities
nationwide
Number ofservice users:
8,100(Forecast for
March 31, 2011)

Education Business
Consolidated
Consolidated

15,255Net sales

14,400FY2011 forecast
Major issues for FY2011

Operating income (Million yen)

Redouble development efforts for existingcourses

2,700

2,992

-9.8%

-5.6%

• Medical Office Work course: Use “hybrid learning”
incorporating e-learning to attract students• Enhance developing Medical Office Clerical Workers
course• Pursuit of efficient and effective advertising

2,000-33.2%‘Existingstandard

FY2010FY2011 (Forecast)

FY2010

7,357

6,800
-7.5%

FY2010FY2011(Forecast)

New standard• Develop lifelong learning markets, which areresistant to economic ups and downs• Develop and offer new courses based on e-learning

FY2011 (Forecast)(Million yen)Net
Net sales
sales byby course
courseHome Helper course

Development of new courses – Acquisition of a
new customer segment

Promote “Emergency Job Creation Program”

Medical Office Work course

6,989

FY2010FY2010 Financial Results Briefing Document

Actively promote accepting Human Resources
Development Assistance Program (subsidies for job
trainings)• Promote accepting students of “Study and obtain aqualification as a care worker while working at longterm care facilities” program• Pursue job creation businesses in key areas

6,700
-4.1%

FY2011(Forecast)22

Education Business Development approach for educational courses
 Hybrid learning incorporating existing courses
Make the most of Nichii Gakkan’s strengths to pursue “hybrid learning” incorporating existing courses
and e-learning and, thereby, create synergies that attract more students.

Development of e-Learning

Q&A sessions, career
counseling, etc.

Learning at
Schoole-Learning

Classroom

Students’
homes
Supplemental e-learningmaterials, specialized
courses, etc.

FY2010 Financial Results Briefing Document

Medical & Healthcare

Fusion with theclassroom

Other new courses

Take advantage of Nichii Gakkan’s 500
classrooms throughout the country to
pursue “hybrid learning.”

Development of future educational courses

Lifelong learning courses

Various learning courses
Existing courses

e-Learning
supplementary materials
Light courses

Traditional target

23

Target segment expansion

Dividend policy
Annual dividend for FY2011: 14 yen(7 yen interim dividend + 7 yen year-end dividend)

2 yen increase of annual dividends for FY2011
(Yen)

16
14
12

14.0
11.0

11.0

11.0

11.0

12.0

10
8
6
4
2
0
1

’06.3

2

’07.3

3

4

’08.3

’09.3

5

’10.3

6

’11.3 (Plan)

The Company executed a 2-for-1 common share split on April 1, 2009,
and the figures were retroactively adjusted accordingly.
FY2010 Financial Results Briefing Document24-

Future Prospects

FY2010 Financial Results Briefing Document25

Business environment (1) – Working environment
 Employees by industry

 Employees by major industries (As of Feb. 2010)(10 thousand)

Manufacturing

Types of industry
Total
Manufacturing
Wholesale and retail
Medical and welfare
Construction
Other services
Hotels and restaurants

Medical and welfare

No. of workers

Changes from a month ago

6,278
1,063
1,060
663
511
473
380

-25
7
-7
13
-15
-3
8

Source: Labour Force Survey, Ministry of Internal Affairs and Communications
Source:Labour Force Survey, Ministry of Internal Affairs and Communications

 Trend in
unemployment
rate

1,000

800

15.0%

Potential unemployment:
9.05 million(Potential unemployment rate: 13.7%)

12.5%

600

10.0%

400

7.5%

200

5.0%

0

2.5%

(200)

0.0%
Fully unemployed

Employment due to labor hoarding

Unemployment rate: right axis

Potential unemployment rate: right axis

(400)(2.5)%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
(Jan. - Mar.)FY2010 Financial Results Briefing Document26

Source: “Current Status and Key Issues Facing JapaneseIndustry”, Ministry of Economy, Trade and Industry
Note 1: “Employment due to labor hoarding” is calculated
as the difference between the “actual number ofpeople employed” and the “optimal number ofpeople required for production”. In addition,“optimal employment” means the number ofworkers who can achieve an appropriate level oflabor productivity with the average number of labor
hours (Here, labor productivity is measured at peakcapacity utilization.)
Note 2: “Potential unemployment” is expediently calculated
as the total of unemployed people and those
employed due to labor hoarding. The “potential
unemployment rate” is calculated by dividing
potential unemployment by the labor force.

Business environment (2)1. December 30, 2009: Cabinet Decision Approving “The New Growth Strategy (Basic Policies) Toward a
Radiant Japan”(Excerpt){ Aim to Achieve Real GDP Growth Above 2% by Fiscal 2020
Six growth areas making the most of Japan's strengths (The environment and energy, health, Asia, tourism and local
revitalization, science and technology, and employment and human resources)

Health(Medical andlong-term
care)

Employment
and human
resources[Targets to reach by Fiscal 2020][Principal Measures]• Foster industries that meet demand and create
jobs• Approx. ¥45 trillion in new markets and approx.
2.8 million new jobs

• Make medical, long-term care, and other healthrelated sectors into growth industries(Promote market entry by private sector entities,
etc.)• Promote expansion into Asian and otheroverseas markets• Halve the number of “freeters” (young people
subsisting on part-time employment); reduce thenumber of NEAT, people who are not employed,or pursuing an education or training; promote
employment of the elderly, and correct the Mcurve profile of female employment• Increase employment rates for young people,
women, the elderly, and the disabled• Create a “trampoline-style” safety net (a social
safety net that, instead of simply paying financial
benefits, equips those who lose their jobs withnew job skills to gain employment in a different
line of work)

2. May 18, 2010: Ministry of Economy, Trade and Industry “Industrial Structure Vision” outline proposal{ Five Strategic Industries for the Future(Infrastructure-related industries; next-generation energy solutions; culture-related businesses; medical, long-term, health,and child care services; and advanced areas)

Medical, Long-Term, Health, and Child Care Services(1) Creation of health-related industries separate from the public insurance scheme (Promotion ofpartnerships between medical institutions and private-sector service providers)(2) Development of child care services as a full-blown industry
FY2010 Financial Results Briefing Document27

Future business outlook
Change in theindustrial structure

Increasing demand forservices• Make the medical, long-term care,and health- related industries, which
are expected to grow rapidly andcreate jobs, into growth leaders forJapan.

Expanding needs for quantity andquality
Untapped market with spending
power

Expanding possibility for future
growth of the market→ emergence of new demands→ expansion into peripheralservices

Increased demand forhuman resource
development
The demand for humanresource development in
the medical, long-term care,and health-relatedindustries will continue toincrease• Our rapidly aging society will lead tothe expansion of the market (theaging pace will accelerate until 2030)

Nichii’s sustainability of growthand competitive advantage
z Expansion of the Nichii Group's business activities as the industrial structurechangesz As a leading company in the fields of medical support and long-term careservices, we will be able to realize a continuous healthy growth:<<Sustainable growth of our core business>>z Our strength of having a human development department:<<This will further sharpen our competitive edge>>
FY2010 Financial Results Briefing Document28

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.

FY2010 Financial Results Briefing Document29