Financial Results for the Year Ended March 31, 2009
May 19, 2009
Listed on: Tokyo Stock Exchange 1st Section

Name of listed company: Nichii Gakkan Company

Securities code:
9792
URL: http://www.nichiigakkan.co.jp
Representative:
Daisuke Terada, President and Representative Director
Contact:
Shinsuke Mori, Director, General Manager of Public Relations
Scheduled date to hold the ordinary general meeting of shareholders: June 26, 2009
Scheduled date of filing annual securities report:
June 29, 2009
Scheduled date to start dividends distribution:
June 29, 2009

TEL: 03-3291-3954(Figures shown are rounded down to the nearest million yen.)

1. Consolidated financial results for the year ended March 2009 (April 1, 2008 - March 31, 2009)(1) Consolidated operating results(Percentage figures represent changes from the previous year.)

Net Sales

Operating Income

Millions of yen

Ordinary Income%

Millions of yen%

Millions of yen

Net Income%

Millions of yen%

Year ended March 31, 2009

213,601

6.9

1,013

(53.3)

800(60.8)(1,090)–Year ended March 31, 2008

199,797

(1.4)

2,171

(17.6)

2,042(24.6)(834)–

Net Income per
Share

Diluted Net Income
per Share

Yen

Yen

(31.10)Year ended March 31, 2009

Ordinary Income toTotal Assets

Return on Equity–

Year ended March 31, 2008
(23.69)–Reference: Equity-method investment profit (loss):Year ended March 31, 2009: - million yen

Operating Income to
Net Sales

%

%

%

(2.2)

0.7

0.5

(1.6)

1.9

1.1

Year ended March 31, 2008: - million yen(2) Consolidated financial position
Total Assets

Equity Ratio

Net Assets per Share

Millions of yen%

Yen

120,491

47,87339.6

1,372.06

121,284

50,60941.6

1,432.54

Year ended March 31, 2009
Year ended March 31, 2008
Reference: Shareholders’ equity:

Net Assets

Millions of yen

Year ended March 31, 2009: 47,682 million yen

Year ended March 31, 2008: 50,454 million yen(3) Consolidated cash flows
Cash Flows from Operating
Activities

Cash Flows from Investing
Activities

Cash Flows from Financing
Activities

Cash and Cash Equivalents
at End of Year

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Year ended March 31, 2009

2,337

(4,139)

2,772

4,436

Year ended March 31, 2008

(289)

(29,162)

23,3163,434

2. Dividends
Cash Dividends per Share
2Q-endAnnualYen

YenMillions of yen

22.00
11.00

22.00
22.00

774
769

(Record date)1Q-endYear ended March 31, 2008

–
–

0.00
11.00

–
–

–

6.00

–

6.00

12.00

Yen
Year ended March 31, 2009
Year ending March 31, 2010
(forecast)

3Q-endTotal Dividends
Paid (annual)

Yen

Year-end

Yen

Dividends to Net
Assets(consolidated)

Payout Ratio(consolidated)
%

%

–
–

1.5
1.6
33.4

3. Forecast of consolidated financial results for the year ending March 2010 (April 1, 2009 - March 31, 2010)(Percentage figures represent changes from previous year for full year figures and from same period of previous year for interim period figures.)

Net Sales

Operating Income

Ordinary Income%

Millions of yen%

Millions of yen

First six months

113,300

6.9

1,600

–

1,500

–

500

–

7.19

Full year

236,000

10.5

5,470

439.6

5,350

568.4

2,500

–

35.97

1

Millions of yen

Net Income
per Share

Net Income%

Millions of yen%

YenNichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2009

4. Others(1) Significant changes in subsidiaries during the fiscal year (Changes in specified subsidiaries resulting in changes inscope of consolidation): None
(2) Changes in accounting principles, procedures and method of presentation associated with preparation of theconsolidated financial statements (the matters to be included in the section, changes in basic important matters for
preparation of consolidated financial statements)
1) Changes due to revisions of accounting standards: Yes
2) Changes other than 1): None
(3) Number of shares outstanding (common stock)1) Number of shares outstanding at fiscal year-end (including treasury stock):
The year ended March 31, 2009 36,508,976 shares; The year ended March 31, 2008 36,508,976 shares
2) Number of shares of treasury stock at fiscal year end:
The year ended March 31, 2009 1,756,599 shares; The year ended March 31, 2008
1,288,636 shares(Reference) Overview of the non-consolidated business results
1. Non-consolidated financial results for the year ended March 31, 2009 (April 1, 2008 - March 31, 2009)(1) Non-consolidated operating results(Percentage figures represent changes from previous year.)

Net Sales

Operating Income

Ordinary Income

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Year ended March 31, 2009

177,871

(4.1)

2,853

7.2

3,301

10.7

1,312

37.5

Year ended March 31, 2008

185,557

(6.3)

2,660

6.2

2,983

11.2

954

11.5

Net Income per Share

Diluted Net Income per
Share

Yen

Yen

Year ended March 31, 2009

37.42

–

Year ended March 31, 2008

27.10

–

(2) Non-consolidated financial position
Total Assets

Equity Ratio

Net Assets per Share

Millions of yen

Millions of yen%

Yen

109,097

48,14744.1

1,385.43

107,363

48,51645.2

1,377.52

Year ended March 31, 2009
Year ended March 31, 2008
Reference: Shareholders’ equity:

Net Assets

Year ended March 31, 2009: 48,147 million yen

Year ended March 31, 2008: 48,516 million yen

2. Forecast of non-consolidated financial results for the year ending March 31, 2010 (April 1, 2009 - March 31, 2010)(Percentage figures represent changes from previous year for full year figures and from same period of previous year for interim period figures.)

Net SalesFirst six months
Full year

Operating Income

Ordinary Income

Net Income
per Share

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Yen

93,200200,900

5.3
12.9

2,000
5,500

866.0
92.8

2,100
5,700

451.0
72.7

1,100
3,100

–
136.2

15.83
44.60

* Explanation concerning the appropriate use of financial result forecasts and other special notes(Forward looking statements)
The above forecasts are based on information available as of time of this announcement. Actual results may differ due to various factors.
Please refer to page 4 of the attached materials for the forecasts.
(Regarding the share split)
Nichii Gakkan Company has executed a share split in which it has issued to the shareholders appearing on the list of shareholders and list of
beneficial shareholders as of March 31, 2009 two shares for each share held. The impact of this share split has been taken into account forconditions regarding the dividend (tentative) for the year ending March 2010 and the per-share net income information included in the results
forecast (consolidated and non-consolidated).

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Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2009

1. Business results(1) Analysis of business results1) Overview of business results
The Health Care Business experienced significant changes in its business environment during the year ended March 31,
2009. After the Long-Term Care Worker Compensation Improvement Law was passed in May 2008, numerous measures for
improving long-term-care employee compensation and securing human resources were considered. A decision to increase
compensation for these workers 3% was made in December, marking the first raise since the establishment of the long-termcare insurance system, and local governments, acting in accordance with national government objectives, took steps to
support professional training and help individuals obtain long-term care professional certifications. Given the downturn inexport-oriented industries and negative impacts on related employment caused by the global economic crisis, long-term care,welfare, and other areas of the social support services sector are now viewed as growth generators that contribute to the
expansion of internal demand.
For the year, Nichii Group reported record-setting net sales on the full-year contribution of the Health Care Business’s
facility care business, which was taken over in November 2007.
Results for the Medical Support Business suffered as the drive to revise contracts with medical institutions resulted in a
temporary drop in clients for the related services, and the opening of new nursing care facilities in the Health Care Businessnecessitated the incurrence of upfront expenses. The Education Business, however, experienced a major increase in students
for its Medical Office Work and Home Helper courses in the second half, and saw its profitability begin to improve.
As a result, net sales during the fiscal year were 213,601 million yen (199,797 million yen in the previous fiscal year),
operating income was 1,013 million yen (2,171 million yen in the previous fiscal year), ordinary income was 800 million
yen (2,042 million yen in the previous fiscal year), and net loss became 1,090 million yen (834 million yen of net loss in theprevious fiscal year).
[Medical Support Business]
In the Medical Support Business, based on a medium- and long-term perspective, we worked to update contract terms withmedical institutions outsourcing to the company, in order to stabilize the market for medical service provision going forward
and with a view to maximizing the income level per medical institution.
In sum, despite a temporary decline in medical institution clients and its significant earnings impact, the operating margin
has improved since the second quarter.
Regarding expansion of the medical management support services, sales of the Medical Receipt Diagnosis 2.0
management support product combining precise receipt examination and marketing services for clinics, and the MediClips
homepage creation service for medical institutions, got underway, a medical management consulting division wasestablished in November, and other steps were taken to build a comprehensive medical management support system.
As a result, the net sales of the Medical Support Business were 101,289 million yen (109,217 million yen in the previous
fiscal year), and operating income was 8,784 million yen (10,700 million yen in the previous fiscal year).
[Health Care Business]
In home care services, the downward trend in service users that began with the 2006 revision in the long-term care insurance
system continued through the first half, but a recovery marking year-on-year monthly increases began in July.
In facility care services, marketing activities seeking to make the most of the branch network resulted in a steady increase
in service users, particularly at the 19 new locations opened in the first half, and pushed operating income before goodwill
amortization into positive territory in the fourth quarter.
As for services not covered by long-term care insurance, nationwide development of Homemaker Services, which include
the performance of cleaning and a full range of other housework services, began in October in a bid to expand into the fieldof daily life support services.
As a result, net sales of the Health Care Business were 99,702 million yen (79,631 million yen in the previous fiscal year),and operating loss was 758 million yen (190 million yen of operating income in the previous fiscal year).
Since Nichii Care Palace Co., Ltd., which became a 100% subsidiary of the company in September 2007, and thesuccessor companies of the facility care services of COMSN, Inc. (namely, Nichii no Hohoemi Co., Ltd.; Nichii no
Kirameki Co., Ltd.; and Nichii Home Co., Ltd., and Nichii Kanto Co., Ltd.) close their annual accounts in December, theirfinancial results from January 1, 2008 to December 31, 2008 are included.

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Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2009

[Education Business]
In the Education Business, advertising focused on a high response rate and efficiency was continued and a career promotion
campaign aimed at recruiting personnel to work in the company’s nursing care facilities and simultaneously earn
professional qualifications was pursued. Trial classes were also held at 100 classrooms throughout the country to promote
medical and long-term care courses. These efforts and factors like the heightened demand for professional qualifications
resulted in significant year-on-year enrollment gains for the mainstay Medical Office Work and Home Helper Level 2
courses through the second half. The Education Business achieved its first year-on-year net sales gain in five years andpulled quarterly operating income into the black in the fourth quarter.
New courses for new areas and to meet existing medical and long-term care needs were actively developed and offered. In
a move to expand into daily-life-related areas, the Practical Dietary Education course was added in June and the Medical
Office Clerical Workers course in November, the latter in response to the addition of doctors’ office work aid in the April
medical service fee system revision.
As a result, net sales of the Education Business were 11,906 million yen (10,157 million yen in the previous fiscal year),and operating loss was 677 million yen (1,793 million yen of loss in the previous fiscal year).
[Other Businesses]
Attention was focused on core businesses and improving the group’s operational efficiency. Net sales were 702 million yen(790 million yen in the previous fiscal year), and operating income was 409 million yen (215 million yen in the previous
fiscal year).
2) Outlook for the year ending March 2010
With medical and long-term-care expense control policies at a turning point, the environment for social support services inJapan is about to undergo changes. In its November 2008 meeting, the government’s Social Security Committee
recommended the reinforcement of both social security functions and funding. And the supplemental economic stimulus
measures put forth in October 2008 and April 2009 focused on enhancing medical, long-term care, and child care services,
and increasing the compensation of people who work in these fields. As these measures and others like them demonstrate,
step-by-step initiatives aimed at strengthening social support for the Japanese people are being taken.
Responding to rapidly changing business conditions and diversifying customer needs, Nichii Group adopted a new
executive management system (Daisuke Terada, President and Representative Director) on April 1, 2009 to help ensure thecompany is capable of generating sustained growth.
Efforts to further strengthen the business based under the new executive management system are to begin during the year
ending March 2010.
Segment outlooks are given below.
[Medical Support Business]
The Medical Support Business will continue to offer products and services that help to address and resolve a broad range ofissues faced by medical institutions, and carry on with efforts to revise contracts with existing medical institution clients.
At the same time, it will strive to improve customer satisfaction by improving service quality. This will be done by
expanding the career-enhancement and staff training systems to help ensure that high-quality services are delivered byhigh-quality staff.
To strengthen medical management support services, a Consulting Business Department (the present New Company
Establishment Planning Office) was established in October 2007, and this unit will make the most of expertise developed in
medical office administrative services and PFI businesses to offer medical institutions comprehensive support in everythingfrom management consulting to personnel training, studies, and research.
Measures to strengthen units managing the child care businesses will be advanced in an effort to expand this business andstrengthen daily life support services.
[Health Care Business]
Conditions for the Health Care Business are expected to see ongoing efforts to revamp the long-term care insurance system
to make it sustainable. These will likely include the implementation of measures aimed at improving compensation for
long-term care workers, the supplementary economic stimulus measures passed by the government in April, and otherinitiatives for bringing about better compensation for care workers and more favorable business conditions for long-term
4

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2009care service providers.
Nichii Gakkan, for its part, will increase staff compensation and training to strengthen its workforce, and push ahead withefforts to promote appropriate facility operations and enhance compliance.
In mounting a more detailed response to consumer needs, the total long-term care service system ranging from minimizingcare needs to home care and facility care will be further strengthened, with the ultimate goal of providing ongoing services
tailored to the life stages of individual clients.
Efforts to gain facility care customers will continue for the long-term care business taken over in November 2007.
Furthermore, in pursuit of operational efficiency and synergies among the various services offered, non-consolidated
subsidiaries – Nichii Care Nagano Co., Ltd., Nichii Care Gifu Co., Ltd., Nichii Care Kyoto Co., Ltd., Nichii Care Aichi Co.,
Ltd., and Nichii Care Hyogo Co., Ltd. – providing home care services in five prefectures will be absorbed by Nichii Gakkan
Company in October 2009. Similarly, in the May 19, 2009 Board of Directors meeting, it was decided that Nichii no
Kirameki Co., Ltd., a consolidated subsidiary operating economically priced nursing homes; Nichii no Hohoemi Co., Ltd., agroup home operator; and Nichii Kanto, Co., Ltd, which provides day care services in the Tokyo metropolitan area, would
also be absorbed into Nichii Gakkan Company.
Nichii Home Co., Ltd., an operator of medium-priced nursing homes, and Nichii Living Co., Ltd., a provider of rental
housing specialized for the elderly, will be absorbed by Nichii Care Palace Co., Ltd., which operates medium-priced nursing
homes, for further business development and operational efficiency.
The mergers of Nichii Gakkan Company with eight of its subsidiaries will be submitted for approval in the 37th ordinary
general meeting of shareholders scheduled for June 26, 2009.
The financial impacts of these mergers are included in the results forecast for the year ending March 2010.
[Education Business]
Given the heightened interest in professional qualification courses in the medical and long-term care fields, the Education
Business is expected to turn in a solid performance. To achieve growth over the long-term, it will move forward with thedevelopment of daily-life support and health-related courses and strengthen development efforts for the Medical Office
Clerical Workers course and Care Worker Basic Training courses, which are seeing growing demand in the medical andlong-term care fields.
In response to growing student needs for alternative ways to take courses, attention will be focused on increasing
convenience for students and on efficient business development.
[Other Businesses]
Nichii Group is pursuing business development that makes the most of the group’s management resources and implementing
optimal group strategies. Nichii Green Farm Co., Ltd. is preparing facilities and organizational systems in pursuit ofagricultural operations linked to the Health Care Business.
In consideration of these environments and prospects, our outlook for the performance in the year ending March 31, 2010 is236,000 million yen for net sales (213,601 million yen for the current fiscal year), 5,470 million yen for operating income(1,013 million yen for the current fiscal year), 5,350 million yen for ordinary income (800 million yen for the current fiscal
year), and 2,500 million yen in net income (net loss of 1,090 million yen for the current fiscal year).

5

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2009

(2) Analysis of financial position
1) Overview of financial position
During the fiscal year, cash and cash equivalents (“cash”) increased by 1,001 million yen year on year to 4,436 million yen.
Cash flows from each activity and their factors are shown below.
[Cash flows from operating activities]
As a result of operating activities during the fiscal year, cash increased by 2,337 million yen.
This was primarily the result of non-cash expenses, in the form of depreciation and goodwill amortization, and progress inrecovering accounts and other operating receivables.
[Cash flows from investing activities]
As a result of investing activities during the fiscal year, cash decreased by 4,139 million yen
This was mainly due to purchase of intangible fixed assets such as software, and payments of loans receivable to relatedcompanies.
[Cash flows from financing activities]
As a result of financing activities during the fiscal year, cash increased by 2,772 million yen.
The primary factors producing this result included an increase in proceeds from short-term borrowings, and outlays forcorporate bond redemptions and dividend payments.
Trends in cash flow indicators for the group can be seen below.
Year ended March 31, 2008

Year ended March 31, 2009

Equity ratio (%)

41.6

39.6

Equity ratio based on present value (%)

41.7

45.6

Debt redemption (years)

–

16.9

Interest coverage ratio (times)–

4.0

Notes: Equity ratio: Shareholders’ equity/total assets
Equity ratio based on present value: Total present value of stock/total assets
Debt redemption: Interest-bearing liabilities/operating cash flow
Interest coverage ratio: Operating cash flow/interest payments
1. Each indicator was calculated from consolidated financial results.
2. Total present value of stock is the product of closing stock price at the end of period and the total number of outstanding sharesat the end of period (after deducting treasury stock).
3. Operating cash flow is equal to the cash flows from operating activities in the consolidated statements of cash flow.
Interest-bearing liabilities are all the liabilities on which interest is paid, out of the liabilities in the consolidated balance sheet.
Interest payments are the interest payments as shown in the consolidated statements of cash flow.

6

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2009(3) Basic principles of profit distribution and dividends for the current and next fiscal year
Our basic policy is to provide our shareholders with stable and continuous profit distributions. Considering businessperformance trends from a mid- to long-term standpoint, we formulated a consolidated dividend policy.
For the year under review, we are planning to pay a year-end dividend of 11 yen per share. For the year ending March
2010, we are looking forward to paying an annual dividend of 6 yen per share, which reflects the April 1, 2009 2-for-1 share
split and an increase in profit distribution in consideration of business performance.
(Yen)
Cash Dividends per Share
(Record date)2Q-endYear-end

Year ended March 31, 2009

11.00

(Actual)11.00 (Forecast)Year ending March 31, 2010

6.00

(Forecast)

6.00 (Forecast)

Annual22.00 (Forecast)
12.00 (Forecast)Given the share split, the annual
per-share dividend will come to 24yen.

(4) Business and other risks
Presented below are the potential risks to the operations of each business of Nichii Group. We work on to mitigate such risks
by dispersing and acknowledging them. However, in the event of an unforeseeable incident, such risks may cause serious
effect on our business performance and financial conditions of the group.
External factors and risk factors with low possibilities are also disclosed here from the standpoint of positive information
disclosure on the matters deemed important for those making investment decisions.
The following matters were determined to be potential risks by the group upon preparing this data as of the last day of the
fiscal year, and may not cover all the risks when making an investment decision on our stocks.
1) Business risks[Medical Support Business]
Nichii Group’s Medical Support Business provides, among other services, medical practice services other than medical
practice itself, medical-related duties, and medical service management consultation services.
Medical institutions will see major fluctuations in their medical revenues due to the biennial revision of the medical
service fee system and the medical insurance system reform (Article 2, Paragraph 2 of the Health Insurance Law Revision
Law).
The group provides services to medical institutions, so the contents of revision rate for medical service fees and medical
insurance system reform may affect our contract fees and the contents.
[Health Care Business]
The group’s Health Care Business is mainly attributed to services that are covered by Long-Term Care Insurance Law.
Therefore, reviewing the long-term care insurance system and payment can have a major effect on the net sales and profits ofthe business. These services are regulated by the Long-term Care Insurance Law (Law No. 123, December 7, 1997) andvarious other laws and ordinances.
The entire system is subject to review every five years (Article 2 of Supplementary Provisions of the Long-term Care
Insurance Law) and long-term care payment is subject to review every three years, so the decisions hereafter may have an
impact on the profitability of our Health Care Business. In the future also, revision of long-term care payment or review ofthe system may affect the revenue of the business.
In addition, we are promoting the community-based business by lease contract in our long-term care facilities such asgroup homes, pay nursing homes, and day care facilities. Since the contract term is 20 years in general, lowering inavailability of facility due to the decrease of residents or the fall of average residential charge may affect the revenue of thebusiness.
[Education Business]
The Home Helper Training Course, our major educational program, is subject to the “ordinance concerning home-visit careproviders” (Health, Labour and Welfare Ministry Ordinance No. 23), and is required to obtain certification from theprefectural government.
Changes in the qualification requirements (training hours, enhanced curriculum, etc.) for care workers taking the Home

7

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2009

Helper Level 1 Course are scheduled to take effect April 1, 2012. The future revision of various systems in terms of suchqualifications may affect net sales and revenue of this course.
2) Risks due to the internal management system
The Nichii Group is working to strengthen the self-directed operational management framework as well as internal check
functions, to prevent human errors and dishonesty of employees. However, future operational management problems could
cause a loss of trust by stakeholders, and could affect our business performance.
[Risks due to personal information]
Each business segment of the group handles personal information specified in the Act on Protection of Personal Information.
We recognize the protection of personal information as an extremely important business issue. Therefore, we haveestablished the Information Protection Committee to ensure appropriate acquisition and handling of information, and areworking to prevent leakage of personal information and reoccurrence of such problems through setting up privacy policies
and providing in-house training.
However, a personal information leak could cause loss of confidence in society, claims for damage, etc. to affect ourbusiness performance.
3) Official license and legal regulation in personnel business
For the personnel business carried out for Medical Support Business and Health Care Business, we already acquired thepermission of general workers dispatching business based on the “Act for Securing the Proper Operation of Worker
Dispatching Undertakings and Improved Working Conditions for Dispatched Workers (Labor Dispatch Law).”
As for “Labor Dispatch Law,” if a personnel service company is found to be disqualified or conducted illegal behaviors, it
may be deprived of the permission of personnel business or ordered to suspend the business.
Nichii Group continues to thoroughly implement the compliance. However, violating the law, if it should occur in ourgroup, may affect our group performance.
4) Risks due to natural disasters and accidents
Large-scale natural disasters such as earthquakes, tsunami or the spread of new influenza strains, etc. might impede staff andfacilities from operating properly. If this causes unavailability of our services to users, it could reduce sales and incur
extraordinary expenses.
5) Risks related to the application of impairment accounting
The Health Care Business uses land and buildings to provide a portion of its service offerings and has recorded goodwill inconnection with its takeover of facility care business in November 2007. If there are material profitability decreases in the
future, it will be necessary to record impairment losses that could impact Health Care Business earnings.

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Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2009

2. Overview of Nichii Group
Nichii Group consists of Nichii Gakkan Company, its 20 subsidiaries, and its one affiliate. Nichii Group is engaged in fourbusinesses (Medical Support Business, Health Care Business, Education Business, and Other Businesses). In the Medical
Support Business, the group primarily provides medical practice services to medical institutions and pharmacies; sales,
disinfection, and sterilization services for medical equipment; and medical affairs consulting. In the Health Care Business, thegroup provides home care services mainly under long-term care insurance system (home-visit care, home-visit bathing, andday care), care service for specified facility residents, care service for group home residents with dementia, sale and rental of
welfare equipment, catering, and other services. In the Education Business, the group provides educational programs primarily
for medical office workers and home helpers. In Other Businesses, Nichii Gakkan Company’s subsidiaries take the lead inproviding data processing, storage and delivery service, book publication and sale, production and sale of flowers, ornamental
plants, seeds and saplings, leasing, and personnel services.
Nichii Group’s businesses and positioning of each business are shown below. The business categories correspond to those in
the segment information by business category.
Business Category

Principal Businesses/Products

Principal Companies

Medical practice services such as reception, medical fee claims,
accounting,
Medical Support Businesscomputeroperations,andmedicalrecordmanagement, sale, disinfection and sterilization services (inside
the hospital) for medical equipment, medical affairs consulting,Nichii Gakkan Company
Nihon Support Service Co., Ltd.

etc.
Nichii Gakkan Company
Keihin Life Service Co., Ltd.
Nichii Carenet Co., Ltd.
Health Care Business

Home-visit care, home-visit bathing, day care, care service for

Nihon Support Service Co., Ltd.

specified facility residents, care service for group home residents

Nichii Care Palace Co., Ltd.

with dementia, sale and rental of welfare equipment, catering, etc.

Nichii no Hohoemi Co., Ltd.
Nichii no Kirameki Co., Ltd.
Nichii Home Co., Ltd.
Nichii Kanto Co., Ltd.

Education Business

Courses for medical office work, home helper training, babysitter
training, and sign language, etc.

Nichii Gakkan Company
Nihon Support Service Co., Ltd.

Other Businesses

Data processing, storage and delivery service, publication andTokyo Marunouchi Publishing Co., Ltd.

sale of books, production and sale of flowers, ornamental plants,

Nichii Green Farm Co., Ltd. (Former

seeds and saplings, leasing, personnel service, etc.

Roris Co., Ltd.)
Nihon Credit Lease Corp.

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Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2009

Health Care Business- Home-visit care
- Home-visit bathing- Day care
- Care service for specified facility residents- Care service for group home residents withdementia- Sale and rental of welfare equipment- Catering- Consultation and information provision- Welfare equipment / ASP

Health Care Business
Sales ofmerchandise

Consolidated subsidiaries
Keihin Life Service Co., Ltd.
Nichii Carenet Co., Ltd.
Nihon Support Service Co., Ltd.
Nichii Care Palace Co., Ltd.
Nichii no Hohoemi Co., Ltd.
Nichii no Kirameki Co., Ltd.
Nichii Home Co., Ltd.
Nichii Kanto Co., Ltd.
Non-consolidated subsidiaries
Hospica Co., Ltd. and 6 other companies
Affiliates not subject to the equity method
Life Care Partners Co., Ltd.

Sales of merchandise
Provision of services

Sales of merchandise
Provision of services

Other Businesses- Data processing, and storage anddelivery service- Publication and sale of books- Production and sale of flowers,
ornamental plants, seeds and saplings- Leasing- Personnel service

Customers
Local governments, etc.

Nichii Gakkan Company

Local governments
Medical institutions
Customers
Member stores

Medical Support Business
Nichii Gakkan Company
Nihon Support Service Co., Ltd.

Medical institutions, etc.
Provision of services

Storage and delivery service of teaching materials andproducts, and computer operations service
Leasing, personnel service

Education Business
Consolidated subsidiaries
Nihon Support Service Co., Ltd.
Tokyo Marunouchi Publishing Co., Ltd.
Nichii Green Farm Co., Ltd.
Nihon Credit Lease Corp.
Unconsolidated subsidiaries
Yao Medical PFI Co., Ltd. and 1 othercompany

Nichii Gakkan Company

Students

Educational programs and saleand lease of educational books

Health Care BusinessLeasing
Personnel
service

Nichii Gakkan Company
Keihin Life Service Co., Ltd.
Nichii Carenet Co., Ltd.
Nichii Care Palace Co., Ltd.
Nichii no Hohoemi Co., Ltd.
Nichii no Kirameki Co., Ltd.
Nichii Home Co., Ltd.
Nichii Kanto Co., Ltd.

Merchandise sales and childcare
Provision of services
Leasing
Personnel service

10

Customers
Local governments, etc.
Sales of merchandise
Provision of services

CustomersNichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2009

3. Management principles(1) Basic principles of management
Based upon the management philosophy of “aiming to help bring about the realization of a prosperous society andcomfortable living in business areas related to healthy lives, Nichii Group, through creative and constructive businessactivities, contributes to the good health and happiness of individuals in meaningful ways,” Nichii Group aims to berecognized as a trusted and appealing corporate group by contributing to improve the quality of life and society in the threefields; Education, Medical Support, and Health Care.
We also recognize that we must fulfill our social responsibilities as a corporate group, comply with corporate ethics, andincrease the corporate brand value in our activities while deepening our trusting relationship with our shareholders and otherstakeholders. In order to achieve this goal, we wish to share the idea of self-improvement to each organizational structureand employee as well as aggressively maximizing our corporate value based on the slogan, “Strength through kindness.”(2) Management goals
Nichii Group set the three long-term goals while taking the following points into consideration: a) The group is providing
personnel service. b) Medical support and welfare businesses are expected to expand in the future. c) The group focuses onshareholder value.
1) Net sales growth→ double-digit growth2) Operating income to net sales→ 7% or higher

3) ROE (return on equity)→ 15% or higher(3) Mid- to long-term strategies and issues to be addressed
Nichii Group, based on the management philosophy above, aims to achieve sustainable growth and contribute to the building
and development of social infrastructure in the fields of education, medicine, and long-term care. In addition, under the new
management system implemented in 2009, we are incorporating the views of employees as consumers in promoting thedevelopment and offering of high-value-added services that meet market needs. At the same time, we are moving tostrengthen the service expertise and networks developed through existing businesses and pursuing synergies through organic
connections within the group as we strive to provide a wide range of services covering the daily life support and other fields,
and meet corporate social responsibilities.
[Medical Support Business]
The environment surrounding the Medical Support Business, which includes factors like the medical care system reform
begun in 2008 and medical service fee revisions implemented in April 2008, is seeing the introduction and implementationof new policies, as well as changing needs in the medical services environment and customer needs.
As such, the Medical Support Business restructured its business systems in April 2009 to strengthen its earnings base andmove forward with the provision of products and services addressing market needs.
We will work to secure, and offer the stable provision of, outstanding human resources for the ongoing delivery ofhigh-quality services, and develop and provide services that help to improve the efficiency of medical institutions, marketingstrategy support, and other high-value-added Medical Management Support Services.
We will also actively develop and offer timely products and services. These are exemplified by: 1) Comprehensive
regional care services based on the seamless connection of medical and long-term care applying the operational base wehave built for our home care and facility care services, and 2) Expansion of child care businesses aimed at enhancing childcare support services.
[Health Care Business]
The operating environment for the Health Care Business is experiencing legal changes undertaken to address Japan’s rapidly
aging society. Long-term care payment, for example, was revised in April 2009, and changes in long-term care insurance arescheduled for 2011. In 2025, the ratio of “Only aged household” occupied among the all households is expected to be 70%.
To be prepared for the coming unprecedented aging society, the improvement of total social infrastructure for medical,
long-term care, and residential facilities is called for urgent attention.
Nichii Group strives to improve the quality of its broad range of existing services covering everything from minimizingcare needs to home care and facility care. However, we are also devoting significant attention to welfare services for thedisabled, homemaker services, and other services not covered by long-term care insurance in an effort to provide long term,

11

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2009

comprehensive services that meet diversifying customer needs.
We are working to expand our service system to cover the entire country by expanding the number of facility carelocations, and improving career-enhancement and staff training systems to help secure and educate care workers. Our
objective in this regard is to strengthen staff support systems within individual service offices and branches specialized forparticular business segments.
[Education Business]
Against the need to strengthen medical, long-term care, and other social welfare functions, the services offered by the
Education Business, which nurtures the development of human resources for these fields, are gaining in importance.
To solidify systems that provide human resources to our Medical Support Business and Health Care Business, we willfurther improve our course quality by using information gained through our medical and long-term care services as feedback
for course curricula. Furthermore, we will build systems that generate stable earnings by developing classrooms and classes
that balance student convenience and company earnings, and place effective ads in media with high response rates. To
expand our student target, we will actively develop and offer health-related courses, for which there is great societal demand,and other new courses outside our main offerings in a broad business development push.
[Other Businesses]

For Other Businesses, we will apply management resources normally used to deliver medical and welfare-related
services to start up agricultural operations and take other steps to strengthen operations that are useful to the fields of
medical and welfare services.
In the future also, we will continue to implement our group strategies with the ideal form of organization in order toincrease the value of the Nichii Group and develop efficiency of our business.
(4) Other significant matters for management
There are no applicable matters.

12

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2009

4. Consolidated financial statements(1) Consolidated balance sheets(Thousands of yen)
FY 2008(As of March 31, 2008)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable
Inventories
Merchandise and finished goods
Work in progress
Raw materials and supplies
Deferred tax assets
OthersAllowance for doubtful accounts
Total current assets
Fixed assets
Tangible fixed assets
Buildings and structures
Accumulated depreciation
Buildings and structures (net)
Machinery and vehicles
Accumulated depreciation
Machinery and vehicles (net)
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures (net)Land
Lease assets
Accumulated depreciation
Lease assets (net)
Construction in progress
Total tangible fixed assets
Intangible fixed assets
Goodwill
Software
Software in progress
Lease assets
OthersTotal intangible fixed assets
Investments and other assets
Investment securities
Long-term loans receivable
Long-term prepaid expenses
Guarantee deposit
Deferred tax assets
OthersAllowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets

13

FY 2009(As of March 31, 2009)

3,725,993
25,666,006
637,736–––
2,829,175
6,150,739(159,089)
38,850,562

4,727,904
25,720,516–
311,592
3,100
155,076
1,364,197
5,357,831(106,666)
37,533,553

39,605,167(11,090,332)
28,514,834
127,520(89,535)
37,9852,525,249(1,798,179)
727,069
8,140,738––––
37,420,628

39,886,406(12,853,105)
27,033,300
108,424(91,924)
16,4992,596,847(2,047,124)
549,723
8,085,288
690,493(64,202)626,290257,901
36,569,004

20,824,684
886,082––
869,982
22,580,749

19,920,273
2,022,521
1,451,054
476,080
185,860
24,055,790

1,076,664
8,589,315
826,328
8,785,984
1,561,377
2,284,143(690,939)
22,432,875
82,434,252
121,284,814

985,382
8,199,496
769,397
9,209,072
1,716,323
2,148,903(695,206)
22,333,369
82,958,164
120,491,717

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2009

Liabilities
Current liabilities
Notes and accounts payable
Short-term loans payable
Current portion of long-term loans payable
Current portion of bonds
Lease liabilities
Income taxes payable
Consumption taxes payable
Other accrued expenses
Allowance for employee bonuses
Allowance for directors’ bonuses
OthersTotal current liabilities
Long-term liabilities
Bonds
Long-term loans payable
Lease liabilities
Long-term advances received
Allowance for employees’ retirement benefits
Allowance for directors’ retirement benefits
OthersTotal long-term liabilities
Total liabilities
Net assets
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Unrealized gains and adjustments
Unrealized gain on other securities
Total unrealized gains and adjustments
Minority interests
Total net assets
Total liabilities and net assets

14

FY 2008(As of March 31, 2008)(Thousands of yen)
FY 2009(As of March 31, 2009)

1,751,233
313,000
20,9603,808,000–
690,768
772,838
16,199,170
3,019,660
36,0004,396,997
31,008,630

803,676
8,668,002
1,418,872
1,480,000
268,818
870,677
417,972
12,800,370
2,626,995
32,4007,709,067
37,096,853

1,480,000
28,025,416–
4,289,627
3,384,767
143,208
2,343,900
39,666,919
70,675,550–
26,622,366
928,326
3,839,160
3,704,320
142,044284,804
35,521,022
72,617,875

11,933,790
17,354,214
27,075,682(5,935,860)
50,427,827

11,933,790
17,354,214
24,820,390(6,436,143)
47,672,252

26,761
26,761
154,675
50,609,264
121,284,814

10,02810,028
191,560
47,873,842
120,491,717

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2009

(2) Consolidated statements of income
FY2008(from April 1, 2007
to March 31, 2008)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Advertising and promotion expenses
Directors’ compensation
Salaries and benefits
Provision for employees’ bonuses
Provision for directors’ bonuses
Provision for directors’ retirement benefits
Provision for employees’ retirement benefits
Legal welfare expenses
Travel and transportation expenses
Rent expenses
Depreciation and amortization
Amortization of goodwill
OthersTotal selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Commission on consignment for office work
Income from lease of facilities
Income from lease of fixed assets
Rent income
OthersTotal non-operating income
Non-operating expenses
Interest expenses
Bond interest
Compensation for damage
Loss on cancellation of guarantee deposit
Commission for syndicate loans
OthersTotal non-operating expenses
Ordinary income

15(Thousands of yen)
FY2009(from April 1, 2008
to March 31, 2009)

199,797,256
163,719,486
36,077,769

213,601,767
174,900,412
38,701,354

4,883,789
155,823
12,455,897
737,933
36,00010,964331,290
1,891,062
1,302,954
3,010,022
646,903421,574
8,021,560
33,905,776
2,171,993

5,275,990
182,634
13,683,434
720,125
32,4009,244
338,697
2,073,084
1,445,919
3,195,695
883,671
1,193,461
8,653,192
37,687,553
1,013,800

33,64788,76150,747
46,406–
129,946
349,51029,451
88,047––
222,955
133,471473,925

214,690
72,381
26,33333,012
120,153
12,364478,935
2,042,568

538,845
36,261–––
112,211687,318
800,407

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2009

FY2008(from April 1, 2007
to March 31, 2008)

Extraordinary income
Gain on sale of fixed assets
Gain on sale of shares of related companies
Gain on sale of investment securities
Gain on donation of fixed assets
Gain on liquidation of related companies
Gain on reversal of allowance for doubtful accounts
OthersTotal extraordinary income
Extraordinary losses
Loss on disposition of fixed assets
Loss on revaluation of inventories
Impairment loss
Loss on liquidation of business
Loss on liquidation of related companies
Loss on liquidation of employee mutual aid society
Litigation settlement
Expense for changing brand
OthersTotal extraordinary losses
Net income before income taxes and minority interests
Income taxes
Income taxes–deferred
Total income taxes
Minority interests income of consolidated subsidiaries
Net income (loss)

16(Thousands of yen)
FY2009(from April 1, 2008
to March 31, 2009)

489
20,99921,000218,130–
66,565–327,185

3,868
–
–
–
63,25026,1683,966
97,254

43,400694,157
93,739–––180,000
246,651
17,846
1,275,796
1,093,957
491,383
1,406,452
1,897,836
30,652(834,531)

29,229–
121,847
65,84874,837132,000––
19,954
443,717453,944675,701
827,375
1,503,076
41,384(1,090,516)

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2009

(3) Consolidated statements of changes in shareholders’ equity
FY2008(from April 1, 2007
to March 31, 2008)

Shareholders’ equity
Common stock
Balance at the end of the previous period
Changes of items during the period
Total changes during the period
Balance at the end of the current period
Capital surplus
Balance at the end of the previous period
Changes of items during the period
Total changes during the period
Balance at the end of the current period
Retained earnings
Balance at the end of the previous period
Changes of items during the period
Dividends from retained earnings
Net income (loss)
Disposal of treasury stock
Total changes during the period
Balance at the end of the current period
Treasury stock
Balance at the end of the previous period
Changes of items during the period
Purchase of treasury stock
Disposal of treasury stock
Total changes during the period
Balance at the end of the current period
Total shareholders’ equity
Balance at the end of the previous period
Changes of items during the period
Dividends from retained earnings
Net income (loss)
Purchase of treasury stock
Disposal of treasury stock
Total changes during the period
Balance at the end of the current period

17(Thousands of yen)
FY2009(from April 1, 2008
to March 31, 2009)

11,933,790

11,933,790–
11,933,790–
11,933,790

17,354,214

17,354,214–
17,354,214–
17,354,214

28,686,400

27,075,682(774,875)(834,531)(1,310)(1,610,717)
27,075,682(1,162,259)(1,090,516)(2,515)(2,255,292)
24,820,390(5,934,751)(5,935,860)(3,215)2,105(1,109)(5,935,860)(503,697)
3,414(500,282)(6,436,143)

52,039,654

50,427,827(774,875)(834,531)(3,215)795(1,611,826)
50,427,827(1,162,259)(1,090,516)(503,697)
899(2,755,575)
47,672,252

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2009

FY2008(from April 1, 2007
to March 31, 2008)

Unrealized gains and adjustments
Unrealized gains on other securities
Balance at the end of the previous period
Changes of items during the period
Changes other than shareholders’ equity during theperiod (net)Total changes during the period
Balance at the end of the current period
Total unrealized gains and adjustments
Balance at the end of the previous period
Changes of items during the period
Changes other than shareholders’ equity during theperiod (net)Total changes during the period
Balance at the end of the current period
Minority interests
Balance at the end of the previous period
Changes of items during the period
Changes other than shareholders’ equity during the period(net)
Total changes during the period
Balance at the end of the current period
Total net assets
Balance at the end of the previous period
Changes of items during the period
Dividends from retained earnings
Net income (loss)
Purchase of treasury stock
Disposal of treasury stock
Changes other than shareholders’ equity during the period(net)
Total changes during the period
Balance at the end of the current period

18(Thousands of yen)
FY2009(from April 1, 2008
to March 31, 2009)

56,826

26,761(30,065)(16,732)(30,065)
26,761(16,732)
10,02856,826

26,761(30,065)(16,732)(30,065)
26,761(16,732)
10,028150,729

154,675

3,946

36,884

3,946
154,675

36,884
191,560

52,247,210

50,609,264(774,875)(834,531)(3,215)795(1,162,259)(1,090,516)(503,697)
899(26,119)

20,152(1,637,946)
50,609,264(2,735,422)
47,873,842

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2009

(4) Consolidated statements of cash flows
FY2008(from April 1, 2007
to March 31, 2008)

Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in allowance for employee bonuses
Increase (decrease) in allowance for directors’ bonuses
Increase (decrease) in allowance for employee retirement
benefits
Increase (decrease) in allowance for directors’ retirement
benefits
Interest and dividends income
Interest expenses
Loss on cancellation of guarantee deposit
Amortization of goodwill
Loss (gain) on sale of investment securities
Loss on retirement of fixed assets
Loss (gain) on sale of fixed assets
Impairment loss
Loss (gain) on liquidation of related companies
Loss on liquidation of related companies
Loss on valuation of golf club memberships
Litigation settlement
Expense for changing brand
Loss (gain) on sale of shares of related companies
Gain on donation of fixed assets
Loss on revaluation of inventories
Decrease (increase) in accounts receivable
Decrease (increase) in inventories
Decrease (increase) in other current assets
Decrease (increase) in claims provable in bankruptcies
Increase (decrease) in accounts payable
Increase (decrease) in other current liabilities
Increase (decrease) in consumption tax payable
Decrease (increase) in other fixed assets
Increase (decrease) in other long-term liabilities
OthersSubtotalInterest and dividends received
Interest paid
Income taxes paid
Income tax refund
Loss on litigation settlement
Cash flows from operating activities

19(Thousands of yen)
FY2009(from April 1, 2008
to March 31, 2009)

1,093,957
2,291,512(81,141)(334,669)–

453,9442,778,966(48,155)(392,664)(3,600)277,825

319,552

10,964(1,164)(39,377)
287,072
33,012
421,574(21,000)
43,400(489)
93,739–––180,000
246,651(20,999)(218,130)694,157
1,402,522
147,064(1,883,515)
39,903(289,753)(3,715,182)(925,020)
431(592,149)–(857,639)
35,702(288,918)(222,218)
1,223,751(180,000)(289,322)(32,215)575,107–
1,193,461–
29,229(3,868)
121,847(63,250)
74,837
12,836
–
–
–
–
–
8,539
167,966
1,264,279(1,456)(947,557)(111,446)(354,866)
301,867(2,015,476)
19,9483,346,663
35,459(581,505)(469,205)
5,942–
2,337,354

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2009

(Thousands of yen)
FY2009FY2008(from April 1, 2007
to March 31, 2008)

Cash flows from investing activities
Payments into time deposits
Withdrawal of time deposits
Acquisition of shares of newly consolidated subsidiary
Expenditure for business transfer
Acquisition of shares of consolidated subsidiaries
Acquisition of tangible fixed assets
Proceeds from sale of tangible fixed assets
Acquisition of intangible fixed assets
Proceeds from sale of investment securities
Acquisition of shares of related companies
Proceeds from sale of shares of related companies
Proceeds from liquidation of related companies
Long-term prepaid expense paid
Payments of loans receivableCollection of loans receivable
Payments for guarantee deposit
Collection of guarantee deposit
Others (net)Cash flows from investing activities
Cash flows from financing activities
Proceeds from short-term loans
Repayments of short-term loans
Net increase (decrease) in short-term loans
Payments for redemption of bonds
Proceeds from long-term loans
Repayments for long-term loans
Proceeds from sale of treasury stock
Acquisition of treasury stock
Payments for dividends by parent company
Payments for dividends to minority shareholders
Repayments of lease obligations
Cash flows from financing activities
Increase (decrease) in cash and cash equivalents
Increase in cash and cash equivalents from newly consolidated
subsidiary
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

20

(from April 1, 2008
to March 31, 2009)(286,500)
297,500(4,591,675)(21,000,000)(15,000)(706,771)
88,983(603,990)
221,000(144,000)
41,000–(69,786)(778,566)
184,289(2,089,663)
347,653(57,007)(29,162,534)(562,500)
562,160–––(782,081)
18,976(2,339,198)
–
–
4,000
73,182(91,082)(1,053,560)
232,278(736,847)
292,331
243,143(4,139,198)

1,226,060,000(1,226,149,000)–(3,808,000)
28,028,091(34,011)795(3,215)(774,017)(4,500)–23,316,142(6,135,713)––
8,355,002(3,808,000)
16,614(21,751)899(503,697)(1,157,213)(4,500)(104,733)
2,772,619
970,775–

30,7959,570,547
3,434,833

3,434,833
4,436,404