Financial Results
Briefing Document

for the Year Ended March 2009
(FY2009)
May 28, 2009

Contents
1. FY2009 Financial Highlights(1) FY2009 Financial results(2) Overview of FY2009 (1)(3) Overview of FY2009 (2)(4) Sales breakdown(5) Financial results by quarter(6) Primary strategies to performance improvement(7) FY2009 Net sales and operating income by segment (consolidated)(8) Financial results by segment(9) Dividends

2. FY2010 Forecasts(1) FY2010 Forecasts(2) FY2010 Key points in the results outlook(3) FY2010 Net sales and operating income by segment (consolidated)(4) FY2010 Forecasts by segment(5) Japan’s social securities policies –From low welfare/low burden to
medium welfare/medium burden–(6) FY2001 – FY2012 The Challenge toward a new growth stage

FY2009 Financial Results Briefing Document

1

P3
P4
P5
P6
P7
P8
P9
P10-P14
P15
P17
P18
P19
P20-P24
P25
P26

Information Meeting of
Financial Report for theYear Ended March 31, 2009
President and Representative Director

Daisuke Terada

FY2009 Financial Results Briefing Document2

FY2009 Financial results
Consolidated
Consolidated(Million yen)

FY2009FY2008AmountAmountNet sales
Operating income

215,000
1,000

213,601
1,013

1.1%

0.5%

0.5%

2,042

580

800

1.0%

0.3%

0.4%

(834)

(720)

(1,090)(0.4)%(0.3)%(0.5)%%Net income (loss)

Amount (Result)

199,797
2,171%

Ordinary income(Revised forecast)

%

YoY

6.9%
(53.3)%(60.8)%(Million yen)

Non-Consolidated
Non-Consolidated

FY2009FY2008AmountAmount(Revised forecast)Amount (Result)

185,557
2,660

179,000
2,750

177,871
2,853

1.4%

1.5%

1.6%

2,983

3,140

3,301

%

1.6%

1.8%

1.9%

Net income

954

1,520

1,312

%

0.5%

0.8%

0.7%

Net sales
Operating income%

Ordinary income

FY2009 Financial Results Briefing Document3YoY(4.1)%
7.3%
10.7%
37.5%

Overview of FY2009 (1)1 Net sales hit a record-highHealth Care Business sales grew 25.2% year on year
Education Business sales grew 17.3% year on year

2 Health Care Business sales hit a new high of ¥99,770 million
Full-year facility care contribution
Operating income before goodwill amortization moved into the black

3 Education Business achieved first sales increase in five
years (reducing losses)
Fourth-quarter operating income moved into the black

FY2009 Financial Results Briefing Document

4

Overview of FY2009 (2)Net sales hit a record-highHealth Care Business Net sales ¥99,770 million, grew 25.2％
Education BusinessNet sales ¥11,914 million, grew 17.3％
250,000

200,000(Million yen)

Net sales
FY2009 ¥213,601 million
FY2008 ¥199,797 million

FY2006¥206,222 million

150,000

100,000

50,0000

FY1995 FY1996 FY1997 FY1998 FY1999 FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009
FY2009 Financial Results Briefing Document

5

Sales breakdown
Sales by business

Medical Support Business
Education Business

FY2001

FY2004¥114,226 million¥189,987 million

15,504
20,346

Health Care Business

FY2009¥213,601 million
11,914

17,44371,00475,527

96,982

Health Care Business

31.7%
31.7%

Sales by business type
7.3%
7.3%
15.7%
15.7%
18.6%
18.6%

5.4%
5.4%
6.4%
6.4%
1.4%
1.4%
16.9%
16.9%

68.7%
68.7%

52.1%
52.1%

32.7%
32.7%

5.0%
5.0%

6.3%
6.3%

5.5%
5.5%

6.2%
6.2%
14.2%
14.2%
5.9%
5.9%

FY2009 Financial Results Briefing Document

6

99,770101,289

Facility care service
Other services
Welfare equipment,house renovation
Welfare services forthe handicapped
Day care
HomeHome-visit(including bathing)
Care plan

Financial results by quarter
Net sales bottomed out in the second quarter of FY2008 and are on a
upward trend
Operating income bottomed out in the first quarter of FY2009 and areon a recovery trend(Million yen)

■Net sales■Operating income (loss)
48,62450,622

52,81552,47453,464

53,14354,1791,405

48,077
916

789

651
375

229
FY2008 1Q

2Q

3Q

FY2009 1Q

4Q

2Q

3Q

(300)

FY2008FY2009 Financial Results Briefing Document

(881)
7

FY20094Q

Primary strategies to performance improvement
Indicators showing upturn in performance
Point
Two consecutive years of profit
growth for the parent company
Recovery in the profitability of the whole
company

Medical Support Business – plan
to update contract terms
Stable improvement in operating income
to net sales and improvement in thequality and productivity of operations

Progress
FY2009 Operating income ¥2,853 million（YoY+7.3%）
FY2008 Operating income ¥2,660 million（YoY+6.1%）

Improved profitability in Education Business1st year of five-year plan
4th quarter operating income
improvement

2nd year→

Improved productivity
Greater profitability
Increase in staff compensation

Maintain the increase in profitability

4th quarter operating income before goodwill amortization moved
into the black
Transferred companies improved earnings

Health Care Business – increase
in revenue

Upward trend in customer numbers maintained
DUSKIN Zero-Care operations acquired

Facility care business –improvement in earnings

Business foundation that can benefit
from the favorable turn around in thebusiness environment including hikes inlong-term care payments
FY2009 Financial Results Briefing Document8

FY2009 Net sales and operating income by segment (consolidated)
Net sales
Medical Support Business
Health Care Business
Education Business
Other Businesses
Eliminations

Total(Million yen)

FY2008 Result FY2009 Result

109,21779,702
10,1581,970(1,251)
199,797

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

FY2008 Result FY2009 Result

Total
FY2009 Financial Results Briefing Document(7.3)%
25.2%
17.3%
26.3%
6.9%
(Million yen)

Operating income
Medical Support Business
Health Care Business
Education Business
Other Businesses
Eliminations

YoY%

10,700190(1,793)215(7,139)
2,171
9

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

YoY
%

(17.9)%
90.2%(53.3)%

FY2009 Financial results

Medical Support Business
Consolidated
Consolidated

Operating income (Million yen)

Net sales

Net sales¥101,289 million
Operating income ¥8,784 million

Full year result (Apr. 1, 2008 – Mar. 31, 2009)
25,34325,26025,380FY200925,306

Overview of financial resultsfor FY2009

1,791
1Q

2Q

NumberNumber ofof contracted
contracted
medicalmedical institutions
institutions
10,2852,227
Sep.2007

2,376

1,945

3Q

Hospitals

10,2322,204
Mar.2008

Sep.2008

FY2009 Financial Results Briefing Document

4Q・Implementation of contract updates inaccordance with selection andconcentration business strategy

Expand medical management
support service

Clinics

9,397

2,014

2,672

Stronger push to update contract
terms resulted in a temporary
decline in clients・Response to introduction of IT
strengthened
・Marketing service launched・Sales of Medical Receipt Check 2.0
launched
・Medical management consulting division
established

9,364

1,977
Mar.2009
10

Health Care Business
Consolidated
Consolidated

Net sales

FY2009 Financial results

Operating income (loss) (Million yen)

Full year result (Apr. 1, 2008 – Mar. 31, 2009)
25,257
24,93924,61024,964

FY2009Net sales
Operating loss

¥99,770 million¥(758) million

Overview of financial resultsfor FY2009
Home care, non-insurance services

(690)
1Q

86

(143)
2Q

(10)

3Q

4Q

NumberNumber ofof users
users byby service
service (Cases)
105,848

Home care

Facility care

104,534
6,326

Sep.2008

Mar.2009

FY2009 Financial Results Briefing Document

Mar.2008

Sep.2008

Facility care service(1) 20 in-progress facility care locations
opened(2) Nation-wide sales system implemented(3) Occupancy increased (10.1% increase)
Beginning of year (Jan. 2008): 74.0%
End of year (Dec. 2008): 84.1%

6,759

102,792

Mar.2008

7,149(1) Number of care plans increased(2) Home-visit care and day care service
customers increased(3) Welfare services for the handicapped
expanded(4) Homemaker service launchedMar.2009
11

Health Care Business FY2009 Financial results–Facility care service–(Million yen)

FY2008
3Q(Cumulative)

Full year

1Q

2Q

3Q

4Q

Full year(result)

Hohoemi

2,002

2,002

3,031

3,042

3,138

3,337

12,548

Kirameki

458

458

743

817

943

1,102

3,605

Home

394

394

560

645

664

748

2,617

2,731

2,797

5,528

2,863

2,821

2,791

2,865

11,340

2,731

5,652

8,383

7,200

7,323

7,535

8,052

30,110

Hohoemi

(11)

(11)

(9)

65

159

220

435

%

(0.5)%(0.5)%(0.3)%

2.1%

5.1%

6.6%

3.5%

Kirameki

(199)

(199)

(388)

(409)

(346)

(227)

(1,370)%(43.4)%(43.4)%(52.2)%(50.1)%(36.7)%(20.6)%(38.0)%

(94)

(94)

(257)

(192)

(193)

(175)

(817)

(23.9)%(23.9)%(45.9)%(29.8)%(29.1)%(23.4)%(31.2)%

Care Palace
Net Sales

Home%

Care Palace

(189)

(188)

(377)

(11)

(57)

6

56

(6)

%

(6.9)%(3.3)%(4.5)%(0.4)%(2.0)%

0.2%

2.0%(0.1)%

(189)

(492)

(682)

(667)

(591)

(374)

(127)

(1,759)(6.9)%(8.7)%(8.1)%(9.3)%(8.1)%(5.0)%(1.6)%(5.8)%

Operating income(loss)%

4Q

FY2009FY2009 Financial Results Briefing Document

12

Education Business
Consolidated
Consolidated

Net sales

FY2009 Financial results

Operating income (loss)(Millionyen)yen)(Million

+8.9%

-4.3%

(281)
1Q

Net
Net salessales
bycourseby course

Operatingincomemoved into
the black!
342

(132)

(606)
2Q

Reasons for swing black in FY2009+30.2%

2,850

2,618

3Q

◆Increase in students particularly for 2
principal courses● Recoveries for all courses in 2nd half
・ Medical Office Work course：
70% growth in March・ Home Helper course：
130% growth in March◆ Medical Office Clerical Workers course
started

4Q

Number of
students in 2
principal courses

Other

Home Helper course

Medical Office Work course (Million yen)

3,711
183

2,736
216

1,102

2,618
200

-6.2%

1,418

1,384

13,305
14,026

1,479

1,722
11,741

1Q

2Q

FY2009 Financial Results Briefing Document

3Q(Students)

26,670+16.4%

+6.9%

-2.4%

FY2008 FY2009

1,806

1,167

1,034

Home Helper course 200
Medical Office WorkcourseSteady rise in student
numbers beginning in
2nd half+54.8%

2,849

203 +12.9%¥11,914 million¥(677) million

Operating loss

Full year result（Apr. 1, 2008 – Mar. 31, 2009）
3,710
2,736

FY2009 Net sales

4Q

11,876

14,466

12,364

9,904
12,96013,286

1Q
13

12,648

11,526

2Q

9,072

11,2493Q

16,895
10,1954Q

Other Businesses
Consolidated
Consolidated

Net sales

FY2009 Financial results

Operating income (Million yen)

2Q (cumulative) result
1,207+25.1%
965

1,970

2,488
+26.3%

409

119+466.7%21
2Q FY2008

Full year result+90.2%

215

2Q FY2009

FY2008FY2009Consolidated
Consolidated subsidiaries
subsidiaries
Nihon Support Service
Co., Ltd.

• Information technology

Nihon Credit Lease Co.,Ltd.

• Storage and delivery

service• Publishing and sale ofTokyo Marunouchi
Publishing Co., Ltd.

Nichii Green Farm Co.,
Ltd.

books
• Publishing and sale of(former Roris Co., Ltd.)

course materials

Leasing

Production and sale offlowers, seeds, etc.

*On March 10, 2009, Roris Co., Ltd. changed its name to Nichii Green Farm Co., Ltd. Moving forward, Nichii
Green Farm Co., Ltd. will expand its business activities to include agricultural endeavors.
FY2009 Financial Results Briefing Document

14

Dividends
Annual dividends (yen)

¥30
¥25
¥20
¥15

DOE (%)

22.0

22.0

22.0

1.5%

1.5%

1.5%

*Given the share split, the annual pershare dividend will come to 24 yen.

22.0

1.6%

12.0

1.8%

2.0%
1.0%

¥10
¥5
¥0

3.0%

FY2006

FY2007

FY2008FY2009(Forecast)

FY2010(Forecast)

1. Share buyback (based on articles of association as stipulated by article 165.2 of theCompany Law)
Period of acquisition
Total number of shares purchased
Total amountOct. 14 - 22, Nov.20 - 30, and Dec.1 - 16, 2008
466,000 shares¥499,999,300

2. Share split
A 2-for-1 share split was executed on April 1, 2009 for shareholders of record as of March 31, 2009.
(Pre-split shares issued and outstanding: 36,508,976 shares)(Post-split shares issued and outstanding: 73,017,952 shares)

3. FY2010 ¥1 per share (post-split) dividend increase
FY2009FY2010

Annual dividend (¥11)
Annual dividend (¥12)

FY2009 Financial Results Briefing Document

15

0.0%

FY2010 Forecasts

FY2009 Financial Results Briefing Document16

FY2010 Forecasts(Million yen)

Consolidated
Consolidated

FY2009 Result
AmountNet sales
Operating income

213,601
1,013

236,000
5,470

0.5%

2.3%

800

5,350

0.4%

2.3%

(1,090)2,500(0.5)%

1.1%%

Ordinary income%

Net income (loss)%

Non-consolidated
Non-consolidated

Operating income

FY2009 Result

568.8%-FY2010 Forecast
Amount (Forecast)

177,871
2,853

200,900
5,500

1.6%

2.7%

3,301

5,700

1.9%

2.8%

1,312

3,100

0.7%

1.5%

%

Ordinary income%

Net income%
FY2009 Financial Results Briefing Document

10.5%
440.0%(Million yen)AmountNet sales

FY2010 Forecast
Amount (Forecast)
YoY

17

YoY

12.9%
92.8%
72.7%
136.3%

FY2010 Key points in the results outlook
1

Second consecutive year of record sales
Health Care Business: Sales reach ¥100,000 million (Double-digit
increase)
Education Business: Sales increase 21.7 % to ¥14,500 million

2

Operating income goes to ¥ 5,470 million (First
increase in six periods)
Higher sales and earnings in all three principal businesses

3

Health Care Business exceeds ¥100,000 million for
new record
Facility care operating income swings to black

4

Implementation of staff compensation increase

FY2009 Financial Results Briefing Document18

FY2010 Net sales and operating income by segment (Consolidated)(Million yen)

Net sales

FY2009Results

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

Medical Support Business
Health Care Business
Education Business
Other Businesses
Eliminations

Total

FY2010
Forecasts

102,000
119,000
14,5002,200(1,700)236,000

YoY
％

0.7%
19.3%
21.7%
(11.6)%
10.5%(Million yen)

Operating income

FY2009Results

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

Medical Support Business
Health Care Business
Education Business
Other Businesses
Eliminations

Total
FY2009 Financial Results Briefing Document19

FY2010
Forecasts

8,800
2,500
800
70
(6,700)
5,470

YoY
％

0.2%
(82.9)%
440.0%

FY2010 Forecast

Medical Support Business
Consolidated
Consolidated

Operating income (Million yen)

Net sales

2Q (cumulative) forecast

Major issues for FY2010

Full year forecast

54,94550,80050,723

+0.7%

＋0.2％

3,800
+1.7%

3,736
2Q FY2009

NumberNumber ofof contracted
contracted
medicalinstitutions
medical institutions
9,397

8,800
+0.2%

8,784

2Q FY2010 (Forecast)

FY2009Hospitals
9,364

2nd year for contract update plan

102,000

101,289

FY2010 (Forecast)

Promotion of medical management
consulting service• Establishment of Nichii Research Co., Ltd.
• Comprehensive service development andprovision

Improvement of medical services
quality

Clinics
9,340• Improved productivity• Greater profitability• Increase in staff compensation

・Management consulting
・Reinforcement of compliance efforts

9,380

Expansion of the childcare business
2,014
Sep.2008

1,977
Mar.2009

1,990

・Establishment of childcare business division
・Strengthening of sales efforts for child-care
centers within medical institutions and offices

2,010

Sep.2009 (Forecast) Mar.2010 (Forecast)

FY2009 Financial Results Briefing Document20

FY2010 Forecast

Health Care Business
Consolidated
Consolidated

Operating income (loss) (Million yen)

Net sales

2Q (cumulative) forecast
54,50049,549Major issues for FY2010

Full year forecast+10.0%

99,770570

119,000(758)+19.3%

Home care services

2,500(1) Increase number of care plans perperson(2) Strengthen sales of home-visit careservices(3) Enhance service delivery network

Non-insurance services(833)
2Q FY2009

2Q FY2010 (Forecast)

FY2009FY2010 (Forecast)

NumberNumber ofof users
users byby service
service (Cases)
40000

126,300

Home care

Facility care

7,500*

Facility care service

37443
110,500

35412
105,848(1) Strengthen development of welfare
services for the handicapped(2) Expand offering of homemaker services
to nationwide scale(1) Increase facility occupancy(2) Improve operational efficiency by
restructuring transferred operations

7,149

Increase in staff compensation
Mar.2009

Sep.2009 (Forecast) Mar.2010 (Forecast)

FY2009 Financial Results Briefing Document

Mar.2009

Mar.2010 (Forecast) *Figures for Nichii Home Co., Ltd. and Nichii Care Palace Co., Ltd.
are forecasts as of December 2008.

21

Health Care Business FY2010 Forecast –Facility care service–(Million yen)
FY20092Q(Cumulative)

FY2010
2Q(Cumulative)(Forecast)

Full year

Full year(Forecast)Hohoemi (Nichii Gakkan)

6,073

12,548

7,410

18,680Kirameki (Nichii Gakkan)

1,560

3,605

2,450

6,430

Home (Nichii Care Palace)

1,205

2,617

1,680

3,500

Care Palace

5,684

11,3405,590

11,57014,52330,11017,13040,180

Hohoemi (Nichii Gakkan)

56

435

460

1,300

%

0.9%

3.5%

6.2%

7.0%

Kirameki (Nichii Gakkan)(797)(1,370)

(220)

(190)

%

(51.1)%(38.0)%(9.0)%(3.0)%

Home (Nichii Care Palace)

(449)

(817)

(200)

(270)

%

(37.3)%(31.2)%(11.9)%(7.7)%

Care Palace

(68)

(6)

(80)

60

%

(1.2)%(0.1)%(1.4)%

0.5%(1,258)(1,759)(40)900(8.7)%(5.5)%(0.2)%

2.2%

Net sales

Operating income (loss)%*Nichii no Hohoemi Co., Ltd. and Nichii no Kirameki, Co., Ltd. are scheduled to be absorbed into
Nichii Gakkan Company, and Nichii Home Co., Ltd. is scheduled to be absorbed into Nichii Care
Palace Co., Ltd. on October 1, 2009.
FY2009 Financial Results Briefing Document

22

Health Care Business FY2010 Forecast–Breakdown of sales increase factor–

Consolidated
net sales

・Increase in residents under the traditional standard+¥4.9 billion

・Merger + 3 months (Hohoemi and Kirameki)+¥5.1 billion

Facility care: approx.
+¥10.0 billion
Home care: approx.
+¥9.2 billion

Facility care

・DUSKIN Zero-Care
Facility care ・Compensation revision¥30.1 billion ・Home care in 5 prefectures(6 months)
・Increase in traditional
home care customers＋¥1.5 billion＋¥1.6 billion＋¥2.0 billion＋¥4.1 billion

Home careHome care¥78.9 billion¥69.7 billion

FY2009Net sales ¥99.8 billion
FY2009 Financial Results Briefing Document¥40.1 billion

FY2010+ ¥19.2 billion
23

Net sales ¥119.0 billion

Education Business
Consolidated
Consolidated

Net sales

FY2010 Forecast

Operating income (loss) (Million yen)

Full year forecast
2Q (cumulative) forecast
7,700
5,354
+43.8%
11,914

14,500+21.7%◆Enhancement of existing courses
800

550
(677)

(887)
2Q FY2009

Net
Net salessales
byby course
course2Q FY2010 (Forecast)

Medical Office Work course

416

550
414
3,200

2,136

FY2010 (Forecast)

Text revision in connection with the long-termcare payment revision implemented in April
Active development of the Medical Office
Clerical Workers course
Sales development in line with thegovernment’s employment creation policies

Other

Home Helper course

7,600
5,354

FY2009Major issues for FY2010(Million yen)

14,50011,914802

5,109◆Course development-Expansion from medical and long-termcare services, to daily life services-

950

6,300
4,600

• Mental Training course(Started February 2008)• Practical Dietary Education course
2,802
2Q FY2009(Started June 2008)

3,850

6,003

7,250

2Q FY2010 (Forecast)

FY2009FY2010 (Forecast)

FY2009 Financial Results Briefing Document24

Japan’s social security policies–From low welfare/low burden to medium welfare/medium burden–

Social security policies
Oct. 2008

Decision to increase longlong-term care payment 3% in government’government’s supplemental economic stimulus
measuresNov. 2008

Final Report of the Government and Social Security Citizens’
Citizens’ Commission
Strengthening of social security functions, and “Medium Welfare/Medium Burden”
Burden” proposal

Dec. 24, 2008 Government/Cabinet Decision“MediumMedium-Term Program for Building a Sustainable Social Security and Securing
Securing Stable Financing”
Financing”
Apr. 2009LongLong-term care payment increased 3%
Decision to implement supplementary measures for the medical and longlong-term care service fields ingovernment’government’s supplemental economic stimulus measures

Forecast of social security expenses
Social security benefit expense (trillion yen)
Ratio against personal incom es (%)
Pension benefit expense (trillionf yen)
Ratio against personal incom es (%)
Medical insurance expense (trillion yen)
Ratio against personal incom es (%)
Long-term care insurance expense (trillion yen)
Ratio against personal incom es (%)
Personal incom es (trillion yen)

2006

2011

2015

81.5
21.7%
47.4
12.6%
27.5
7.3%
6.6
1.8%
375.6

95.0
21.9%
54.0
12.5%
32.0
7.4%
9.0
2.0%
433.0

106.0
23.1%
59.0
12.8%
37.0
8.0%
10.0
2.3%
461.0

(Change from
2006)

30.1%
24.5%
34.5%
51.5%
22.7%

(Note) Figures for 2006, 2011, and 2015 are from the Ministry of Health, Labour and Welfare’s Social Security Benefit Payments and Contributions Outlook(published May 2006).
FY2009 Financial Results Briefing Document25

FY2001 - FY2012 The Challenge toward a new growth stage

FY2001 – FY2004

FY2005 – FY2009

Business expansion
stage
Business area
expansion on
implementation of
long-term careinsurance• Construction of a nationwide
long-term care service
infrastructure• Active M&A and business
partnership initiatives

FY2009 Financial Results Briefing Document

FY2010 – FY2012

Selection andconcentration

New growth stage

Building of sales andearnings base permitting
flexible responses tobusiness environmentchanges• Organizational reform• Group company
restructuring• Execution of strategic
investments• Disposal of bad inventory• Brand strategy

26

Achieve strong sales and earnings
growth autonomously as a leading
provider of services in the medical
and health care fields

New management system
Sales, Earnings, Product competitiveness,
Employee compensation, Morality,
Industry leading position

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 suchas economic circumstances, relaxation of regulations and employment conditions. Please
understand that actual business performance and other achievements, such as thenumber of contracts and number of users, may be substantially different from theforecasts.

FY2009 Financial Results Briefing Document27