Financial Results
Briefing Document

For the First Half of the Year Ending March 2011
(1H FY2011)
November 17, 2010

Information
Information Meeting
Meeting ofof
Financial
Financial Report
Reportforfor thethe First
First Half
Half ofof thethe YearYear
EndingEnding March
March 2011
2011
DaisukeDaisuke Terada
TeradaPresident
President andand Representative
Representative Director
Director

1H FY2011 Financial Results Briefing Document

1

Contents
1. 1H FY2011 Overview of Financial Results
1H FY2011 financial results
1H FY2011 financial results
Overview of 1H FY2011 (1)Overview of 1H FY2011 (2)1H FY2011 net sales and operating income by segment
Factors of changes in net sales
1H FY2011 financial results
Medical Support Business
Health Care Business
Education Business
Cash flows (consolidated)

P3
P4
P5
P6
P7
P8
P9 – P10P11P12

2. FY2011 Forecast
FY2011 forecast
FY2011 net sales and operating income by segment
FY2011 forecast
Medical Support Business
Health Care Business
Education Business
Reference
Dividend policy

P14
P15
P16
P17 – P20
P21
P22
P23

1H FY2011 Financial Results Briefing Document

2

1H FY2011 financial results

Consolidated
Consolidated(Million y en)

1H FY2011

1H FY2010
ResultForecast

ResultYoY

112,643
2,398

119,300
3,500

119,623
3,401

2.1%

2.9%

2.8%

2,293

3,500

3,727

%

2.0%

2.9%

3.1%

Net income

677

1,100

1,329

%

0.6%

0.9%

1.1%

Net sales
Operating income%

Ordinary income

1H FY2011 Financial Results Briefing Document

3

6.2%
41.9%
62.6%
96.1%

Overview of 1H FY2011 (1)– Summary of financial result 1. Another record-high of 1H net sales
Another record-high sales: ¥119,623 million (up 6.2% year on year)
Health Care Business:¥61,177 million (up 14.1% year on year)
Two consecutive years of record-high net sales

2. Two consecutive years of higher profits
Consolidated operating income for 1H FY2011: ¥3,401 million (up 41.9% year on year)-- the Health Care Business leading the way
Net sales rose ¥6,979 million (or 6.2% year on year), while growth in SG&A expenses
was held to ¥208 million (or 1.0% year on year)

3. Education Business: Employment program-related nursing care services
contributed to overall earnings
Continued strong performance in operations like outsourcing services provided inconnection with the government’s support program “Study and obtain a qualification asa care worker while working at nursing care facilities.”
Recorded ¥227 million as Commission on consignment for job creation business, andapprox. ¥300 million as Other on non-operating income.
1H FY2011 Financial Results Briefing Document

4

Overview of 1H FY2011 (2)– Expansion of existing businesses and entry into new
business areas –Constructing a robust business infrastructure to increase medium-to-long term profitability2) Invest in human resources

1) Invest in safety and security•Increase the retention rate through enhanced
compensation•Gain new employees through job-search support sites•Develop staff with advanced skills•Enhance training•Strengthen call center operations•Revamp day-care service transportation•Move forward with efforts to gain ISMS certification(ISO/IEC27001:2005)

3) Invest in operations

Develop high-added-value services to serve diversifying needs
Physician shortage leading
to more needs for medical
administration support

Diversification of demand for
professional qualifications,and lifestyles

Cyber clerk business

Web College

Development of medical
administration support services
applying voice-recognition
technology
1H FY2011 Financial Results Briefing Document

Development of new courses
Greater application of e-learning in
training systems
5

Growing need for nursing
care services
Increase in users of nursing
care services

Additional home-care andfacility-care locations(Mar. – Sep. 2010)
Care plan:
Home-visit care:
Day care:Group homes:

8 locations
14 locations
1 location
6 locations

1H FY2011 net sales and operating income by segment
Consolidated net sales(Million yen)

1H FY2010 Result

YoY

1H FY2011 Result%
Medical Support Business

50,43551,223

1.6%

Health Care Business

53,632

61,177

14.1%

Education Business

8,333

7,076

-15.1%

Other Businesses

1,340

805

-39.9%

Eliminations(1,098)

(660)

-

Total

112,643

119,623

6.2%

Consolidated operating income(Million yen)
1H FY2010 Result

1H FY2010 Result

Previous standard

Medical Support Business
Health Care Business
Education Business
Other Businesses
Eliminations
Total
1H FY2011 Financial Results Briefing Document

3,680
731
1,923
185
(4,123)
2,398

3,509
3,521
1,027
5
(4,662)
3,401
6

YoY(to new standard)

New standard

2,951
3,102
1,043
5
(3,700)3,401-19.8%
324.4%-45.8%-97.3%
41.9%

Factors of changes in net sales
Medical Administration course
Home Helper course¥0.75 billion

approx. -¥0.45 billion
approx. -Education-1,257

Home care approx. +¥5.2 billion
Facility care approx. +¥2.35 billion(Million yen)
Other

Health Care
+7,545-535

Elimination+438

Hospitals approx. +¥1.0 billion
Clinics approx. -¥0.2 billion

Medical Support

119,623+788

112,643+¥6,980 million (6.2%) year on year

1H FY2010

1H FY2011 Financial Results Briefing Document

1H FY20117

Medical Support Business
Consolidated
Consolidated

Net sales

1H FY2011 financial results

Operating income (Million yen)

Overview of financial results for 1H FY2011

51,22350,435

+1.6%

3,680

 1.6% increase in net sales

3,509• Growing net sales per medical institution will support
continuing revenue growth in 2H FY2010 and beyond• Even with higher health insurance rates and otherfactors pushing up personnel expenses, profits were
kept at about the same level as a year ago (based on
the previous standard)

-4.6%

2,951
-19.8%‘PreviousNew
standard standard
1H FY2010‘1H FY2011

NumberNumber ofof contracted
contracted
medicalinstitutions
medical institutions

1H FY2010

Hospitals

Clinics

8,899
1,902

 Reducing the administrative burden of physicians‘1H FY2011

1,918• Prepared to introduce the cyber clerk business• Accelerated deployment of medical office work
assistants(Cases) Development and enhancement of the childcare
business• Development and expansion of childcare services
within medical institutions and office

8,494
-4.6%

+0.8%

 Enhancing compliance• Gained ISMS (Information Security Management
System) certification for 20 branches

End-Sep. 2009

‘End-Sep. 2010

End-Sep. 2009

1H FY2011 Financial Results Briefing Document‘End-Sep. 20108

Health Care Business
Consolidated
Consolidated

1H FY2011 financial results

Net sales

Operating income (Million yen)

61,177

3,521

Overview of financial results for 1H FY2011
 Home care and non-insurance nursing services+381.7% 3,102+324.4%+14.1%

53,632• Care plan users increased• Growth in the number of users of home-visit, daycare and welfare equipment rental services=> Increases surpassing forecasts for these services

731‘Previous
standard
1H FY2010‘1H FY2011

1H FY2010

NumberNumber ofof users
users byby service
service
Home care
Facility care
125,244

September
2010

New
standard‘1H FY2011(Cases)(Result)

125,244 cases Facility care service• Higher facility utilization rate due to growth in thenumber of service users+8.3%

September 30, 2009: 88.6%
September 30, 2010: 94.6%

7,549
110,151

End-Sep. 2009

123,600 cases• Growth in the number of users of welfare services
for the handicapped

8,172+13.7%(Forecast) Implementation of staff compensation
improvements‘End-Sep. 2010

End-Sep. 2009

1H FY2011 Financial Results Briefing Document• Continuously improved staff compensation• Enhanced training for each job category‘End-Sep. 20109

Health Care Business

1H FY2011 results – Facility care service –(Million yen)

1Q

FY20102Q

1Q

FY20112Q

1H

1H

AmountAmountAmountAmountAmountAmountHohoemi

3,675

3,764

7,439

4,266

4,417

8,683

Kirameki

1,176

1,316

2,493

1,622

1,654

3,276

Home

3,558

3,592

7,150

3,688

3,816

7,505

Net sales

8,410

8,673 17,084

9,578

9,888 19,464

Hohoemi%Kirameki%Home%
Gross profit
%

483

421

904

557

647

1,204

13.1%

11.2%

12.2%

13.1%

14.6%

13.9%

(93)

(20)

(113)

165

202

367

-7.9%

-1.5%

-4.5%

10.2%

12.2%

11.2%

126

111

237

116

162

278

3.5%

3.1%

3.3%

3.1%

4.2%

3.7%

515

511

1,028

839

1,011

1,850

6.1%

5.9%

6.0%

8.8%

10.2%

9.5%

¾With respect to the Ohtohen, which was previously managed by Nichii Care Palace Co., Ltd. before merger, its brandname was changed to “Nichii Home” in January 2010.
¾Only net sales and gross profit are reported due to the mergers and restructurings of the transferred companies.
1H FY2011 Financial Results Briefing Document

101H FY2011 financial results

Education Business
Consolidated
Consolidated

8,333

Net sales

7,076

Operating income (Million yen)

Overview of financial results for 1H FY2011
 Students increased particularly for 2 maincourses

1,923
1,043

-15.1%

1,027• Medical Administration course: 25,209 students-16.4% YoY• Home Helper Level 2 course: 36,269 students-18.8% YoY-45.8%-46.6%

 Opened new Web College (e-learning)courses‘PreviousNew
standard standard
1H FY2010‘1H FY2011

1H FY2010(Students)

NumberNumber ofof students
students byby course
courseHome Helper course

44,66836,269• Offered newly-developed courses (34 courses as of
Sept. 30)
• Offered existing courses on the Web College• Effective PR to improve awareness‘1H FY2011

 Promotion of “Emergency Job Creation
Program”

Medical Administration course

30,180• Development Assistance Program (subsidies for job
trainings) and “Study and obtain a qualification as acare worker while working at nursing care facilities”
program.

25,209-16.4%-18.8%

 Enhanced development of Medical
Administrator course• Active introduction of courses including curriculums
for subsidized job training
1H FY2010‘1H FY2011

1H FY2010

1H FY2011 Financial Results Briefing Document‘1H FY201111

Consolidated cash flows(Million yen)

Operating CF

Investing CF

24,000Free cash flow

Financing CF

14,00012,00010,000
8,000

6,116

5,175

6,000

4,091

4,000
2,000

1,475

940

2,669
(1,367)0( 2,000)(826)(1,158)(2,615)(4,000)(1,984)(5,040)(6,000)(8,000)(10,000)(12,000)(14,000)(30,000)■ 1H FY2009
1H FY2011 Financial Results Briefing Document■ 1H FY201012■ 1H FY2011

FY2011 Forecast

1H FY2011 Financial Results Briefing Document13

FY2011 forecast
Consolidated
Consolidated(Million y en)

FY2011FY2010ResultNet sales
Operating income%

Ordinary income%

Net income%

1H FY2011 Financial Results Briefing Document

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%

14

20.7%
10.9%

FY2011 net sales and operating income by segment
Consolidated net sales(Million yen)
FY2011 Forecast

FY2010 Result

Initial forecast

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

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

102,500
122,300
14,4002,700(1,900)240,000

Revised forecast

102,400
123,500
13,0002,300(1,200)240,000

Consolidated operating income

Health Care Business
Education Business
Other Businesses
Eliminations
Total

0.8%
4.6%
-14.8%-1.6%
2.0%(Million yen)

FY2011 Forecast (New standard)

FY2010 Result

Medical Support Business

Y oY (to rev isedf orecast) (%)

Initial forecast

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

7,000
5,300
2,700
200
(7,200)8,000

Revised forecast

6,500
7,300
1,600
0
(7,400)8,000

Y oY (to rev isedf orecast) (%)-20.5%
103.6%-46.5%
16.5%

From the year ending March 31, 2011, allocation standards related to the calculation of operating income by segment are changed.
1H FY2011 Financial Results Briefing Document15

FY2011 forecast

Medical Support Business
Consolidated
Consolidated

Net sales

Operating income (Million yen)

Major issues for FY2011
102,400
101,553

+0.9％

7,700

8,181

-5.9％

6,500
-20.5％‘PreviousNew
standard standard
FY2010 ‘FY2011 (Revised)

NumberNumber ofof contracted
contracted
medicalmedical institutions
institutions

FY2010‘FY2011 (Revised)

Hospitals

8,994

Clinics(Cases)

8,520
-5.3％

◆ Enhancement of medical management
support services• Emphasis on sales of the Receipt Check
Eye system (clinic version), the DPC*
verification support system (DPC
Revolution), and other services• Develop a new analysis support system andother services*DPC=Diagnosis Procedure Combination

1,930
1,970

Expansion of high-value-added services◆ Introduction of cyber clerk business• Available since October in some areas as a
new medical administration support
business model-2.0%◆ Expansion of the childcare business• Actively promote childcare services within
medical institutions and offices

Mar. 31, 2010

‘Mar. 31, 2011
(Revised)

Mar. 31, 2010

1H FY2011 Financial Results Briefing Document

Mar. 31, 2011
(Revised)16

FY2011 forecast

Health Care Business
Consolidated
Consolidated

Net salesFurther enhancement of home-care and noninsurance nursing care services

8,200

123,500
118,074

Major issues for FY2011

Operating income (Million yen)

+128.7％

+4.6％

7,300
+103.6％• Focus on increasing the utilization rate of each service
location• Strengthen the development of welfare service for thehandicapped and housekeeping service

Further strengthening of service infrastructure• Develop new service centers tailored to regional
Group homecharacteristics

3,586

2,500

‘PreviousNew
standard standard
FY2010 ‘FY2011 (Revised)

FY2010‘FY2011 (Revised)

NumberNumber ofof users
users byby service
service
Home care
Facility care

2,000
1,500

(Cases)121,261

7,867

+8
+2
+27

217
82

Pay nursing home708

Home v isit

Care Planning
Day care

1,003

+67

1,070

286

+13

299

500

Sep. 30,2010
10年9月末

8,100

+5.3％

681

1,000

0

127,700

209
80

+3.0％

Mar.11年3月末（予）31, 2011(Revised)Strengthening of cooperation in nurisng care andmedical services• Move ahead with efforts to receive additional compensation
for nursing care workers through cooperation with medical
institutions (medical cooperation additions, etc.)

Continued improvement in staff compensation
Mar. 31, 2010

‘Mar. 31, 2011
(Revised)

Mar. 31, 2010

1H FY2011 Financial Results Briefing Document

Mar. 31, 2011
(Revised)17• Continue applying higher revenues gained through contract
revision to staff compensation to improve staff retention
rates and service quality

Health Care Business Developments regarding the revision of theLong-Term Care Insurance Act

Key Considerations and Decisions of the Social Security Council and Others
Jul. 26

Health, Labour and Welfare Ministry: Agenda items provided
Provision of benefits (home-care, facility-care); Issues regarding benefit provision and burden; Securement of care workers andimprovement of their compensation

Aug. 23

Extension of day-care service hours (including overnight stays) *Presently less than 10 hours (direction set)

Sep. 21

Special nursing homes and facilities for the elderly requiring long-term care
*Approval to construct facilities with both private and multiple-occupancy rooms to provide more meticulous care (direction set)
*Consideration of limiting subsidies to only private rooms

Sep. 27

Consideration of plans to secure care workers and improve their compensation, and whether to allow care workers and others
to suction sputum

Oct. 17

Interim report of the Health, Labour and Welfare Ministry’s committee on “24-Hour Visiting Care Service”~Creation of 24-Hour Visiting Care Service~*Consideration of the introduction of 24-hour visiting care services under a comprehensive fixed-fee system

Oct. 26

Cabinet approval of the FY2010 supplementary budget
Move up budget for “24-Hour Visiting Care Service and On-Demand of Visiting Care Service,” originally set in special reservesof FY2011 budget request, into this fiscal year

Oct. 28*Expansion of insurance premium collection scope*Consideration of fee hikes (up to 20%) for persons requiring assistance and for high earners*Collection of care plan fees

Nov. 5*Exclusion of housekeeping services from insurance coverage=> Introduction of housekeeping and other general services making use of local support operations (direction set)

Schedule
November 2010
Finalization of revision
proposals
1H FY2011 Financial Results Briefing Document

Spring 2011
Presentation of a bill in theregular Diet session

Fall/End of 2011
Consideration of revisions ofcompensation for long-term care
workers
18

FY2013Long-term care insurance system revision
Revision of compensation for long-termcare workers

Health Care BusinessInitiatives for safety and security

Safety measures for day-care service transportation vehicles
FY2010Nov. 2009•Revision of the manual for vehicle
drivers and implementation of a stricter
driving aptitude test

Dec. 2009•Formalization of physical examinations
for transportation staff

Jan. 2010•Implementation of safe driving classes

Feb. 2010•Formal designation of a “safe-drivingday” (19th of every month)

FY2011
Apr. 2010

May 2010•Strengthening of the system for promoting safe
driving(Stricter physical examinations, mandatory driving
aptitude test, etc.)•Launch of safer-driving month(May and November of each year)•Decision to limit drivers to those with Class-2
Passenger Vehicle Driver’s Licenses(Gradual implementation beginning in October)

Oct. 2010•Implementation of safe driving tests•Beginning of installation of “Drive Doctor*” systems
in vehicles*System for warning of unsafe driving practices andcreating video records of unsafe driving(Installation in all vehicles scheduled for completion
by November 19)•Installation of driver name stickers in vehicles•Decision to prohibit use of mini-vehicles fortransporting services(Enforcement begins with replacement of current
vehicles)1H FY2011 Financial Results Briefing Document

19

Health Care Business

FY2011 forecast of facility care service(Million yen)

FY2010
Full year
1H
AmountAmount1H
Amount(Result)

FY2011
Full year
Initial forecasts

Revised forecasts

Hohoemi7,439 19,120

8,683 17,200 17,600

Kirameki

2,493

3,276

Home

7,150 14,606

Net sales
Hohoemi%Kirameki%Home%
Gross profit
%

6,808

6,600

6,600

7,505 15,400 15,400

17,084 40,535 19,464 39,200 39,600
904

2,440

1,204

2,240

2,450

12.2%

12.8%

13.9%

13.0%

13.9%

(113)

90

367

600

760

-4.5%

1.3%

11.2%

9.1%

11.5%

237

665

278

960

960

3.3%

4.6%

3.7%

6.2%

6.2%

1,028

3,196

1,850

3,800

4,170

6.0%

7.9%

9.5%

9.7%

10.5%

¾With respect to the business results for FY2010, results of Nichii no Hohoemi and Nichii no Kirameki for the 15-month 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).
¾Only net sales and gross profit are reported due to the mergers and restructurings of the transferred companies.
1H FY2011 Financial Results Briefing Document

20

Education Business
Consolidated
Consolidated

15,255Net sales

13,000FY2011 forecast

Operating income(Million yen)Enhancement of existing courses

2,992• Stronger ties to the Web College-14.8％

1,600
1,400

-46.5％-53.2％‘PreviousNew
standard standard
FY2010 ‘FY2011 (Revised)

FY2010‘FY2011 (Revised)Net
Net sales
sales byby course
course(Million yen)Home Helper course

Medical Administration course

7,357

6,100
-17.1％FY2010 ‘FY2011 (Revised)
1H FY2011 Financial Results Briefing Document

6,989

6,100
-12.7％FY2010Major issues for FY2011‘FY2011 (Revised)
21• Wider development of the Medical Administrator
courseEnhancement of the Web College (elearning)• Expand course offerings (scheduled 13 courses
for the second half)• Enhance development and promotion of various
learning courses• Increase awareness through effective PR activities

Promote “Emergency Job Creation Program”
Actively promote accepting Human Resources
Development Assistance Program (subsidies for job
trainings)• Increase acceptance of students in thegovernment’s support program “Study and obtain aqualification as a care worker while working at
nursing care facilities”• Pursue job creation businesses in key areas

(Reference) Trends in the effective ratio of job offers to applicants
and the unemployment rate

Trends in the effective ratio of job offers to applicants<all jobs and nursing care field> and the unemployment rate
(January 2008 – July 2010)
2.8
2.6(times)(%)
5.8

Effective ratio of job offers to applicants
2.53<nursing care field>

5.6

5.4

2.4

5.4

2.2

Unemployment rate

5.2

2.0
5.0

1.8
1.6

5.0 4.8

1.4

4.6

1.23

1.2
1.0

4.4

1.02

1.14
4.2

End-2008 – Oct. 2009
• Significant worsening in
the unemployment rate
• Decline in the effective
ratio of job offers to
Applicants in the nursing
care field

Dec. 2009 –• Unemployment rate in
the 4.8 - 5.0% range

0.8
4.0

Effective ratio of job offers to applicants<all jobs>

0.6

0.50
3.8

0.4

0.40

0.2

3.6

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov . Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov . Dec. Jan. Feb. Mar. Apr. May Jun. Jul.
2008
1H FY2011 Financial Results Briefing Document

2009

2010
22

Source: Created by the Company based on thematerials by Labour Force Survey, Ministry ofInternal Affairs and Communications

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
10
8
6
4
2
0

14.0
12.0
11.0

11.0

11.0

11.0

1
06.3
’’06.32
07.3’’07.33
08.3’’08.3

4
09.3’’09.35
10.3’’10.3

6’11.3(Plan)’11.3(予)The Company executed a 2-for-1 common share split on April 1, 2009,
and the figures were retroactively adjusted accordingly.
1H FY2011 Financial Results Briefing Document23-

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.

1H FY2011 Financial Results Briefing Document24