Financial Results for the Year Ended March 31, 2012(J-GAAP)May 15, 2012
Name of listed company: Nichii Gakkan Company
Listed on: Tokyo Stock Exchange 1st Section
Securities code:
9792
URL: http://www.nichiigakkan.co.jp
Representative:
Masatoshi Saito, President and Representative Director
Contact:
Koichi Terada, Director, Manager of Accounting and Finance Division
TEL: 03-3291-2121
Scheduled date to hold the ordinary general meeting of shareholders: June 27, 2012
Scheduled date of filing annual securities report:
June 28, 2012
Scheduled date to start dividends distribution:
June 28, 2012
Supplementary materials prepared: Yes
Results information meeting held: Yes (for institutional investors and financial analysts)(Figures shown are rounded down to the nearest million yen.)

1. Consolidated financial results for the year ended March 31, 2012 (April 1, 2011 - March 31, 2012)(1) Consolidated operating results(Percentage figures represent changes from the previous year.)
Net Sales

Operating Income

Ordinary Income

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

257,340

6.9

11,672

48.3

12,674

31.2

5,897

69.5

3,478

10.3

Year ended March 31, 2012

240,827
2.3
7,868
14.6
9,660
40.5
Year ended March 31, 2011
(Note) Comprehensive income: Year ended March 31, 2012: ¥5,933 million (75.8%); Year ended March 31, 2011: ¥ 3,375 million (3.1%)
Net Income
per Share
Year ended March 31, 2012

Diluted Net Income
per Share

Ordinary Income
to Total Assets

Return on Equity

Operating Income
to Net Sales

Yen

Yen

%

%

%

85.27

―

10.8

8.9

4.5

6.9

7.9

3.3

50.37
―
Year ended March 31, 2011
Reference: Equity-method investment profit (loss):Year ended March 31, 2012: - million yen

Year ended March 31, 2011: - million yen(2) Consolidated financial position
Total Assets

Equity Ratio

Net Assets per Share

Millions of yen

Millions of yen%

Yen

157,816

57,44236.2

823.21

125,781

52,20041.3

752.15

As of March 31, 2012
As of March 31, 2011
Reference: Shareholders’ equity:

Net Assets

As of March 31, 2012: 57,166 million yen

As of March 31, 2011: 51,944 million yen(3) Consolidated cash flows
Cash Flows fromOperating 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, 201216,128(14,217)

3,077

8,741

Year ended March 31, 2011

9,795

(5,402)(4,518)3,755

2. Dividends
Cash Dividends per ShareYear ended March 31, 2011
Year ended March 31, 2012
Year ending March 31, 2013
(forecast)

Dividends to
Net Assets(consolidated)

1Q-end2Q-end3Q-endYear-end

AnnualTotal Dividends
Paid (annual)

Payout Ratio(consolidated)

Yen

Yen

Yen

Yen

Yen

Millions of yen

%

%

―
―

7.00
8.00

―
―

7.00
8.00

14.00
16.00

966
1,108

27.8
18.8

1.9
2.0

―

9.00

―

9.00

18.00

21.6

3. Forecast of consolidated financial results for the year ending March 31, 2013 (April 1, 2012 - March 31, 2013)(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

134,300
274,000

8.9
6.5

4,000
11,400(18.4)(2.3)

3,600
11,000(25.9)(13.2)

1,600
5,800

(27.6)
(1.6)

23.04
83.52

1

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2012

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 policies, changes in accounting estimates, restatements
1) Changes in accounting policies due to revisions of accounting standards, etc: None
2) Changes in accounting policies due to reasons other than those stated in 1): None
3) Changes in accounting estimates: None
4) Restatements: None
(3) Number of shares outstanding (common stock)1) Number of shares issued andoutstanding (including treasury stock)

As of March 31,
2012:

73,017,952 shares

As of March 31,
2011:

73,017,952 shares

2) Number of treasury stock

As of March 31,
2012:

3,574,673 shares

As of March 31,
2011:

3,956,331 shares

3) Average number of shares issued andoutstanding in each period

Year ended March
31, 2012:

69,156,306 sharesYear ended March
31, 2011:

69,062,089 shares(Reference) Overview of the non-consolidated business results
1. Non-consolidated financial results for the year ended March 31, 2012 (April 1, 2011 - March 31, 2012)(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, 2012

229,889

3.3

11,03130.0

12,395

18.0

6,288

31.2

Year ended March 31, 2011

222,565

11.0

8,484

14.8

10,502

34.9

4,791

19.5

Diluted Net Income
per Share

Net Income per Share
Yen

Yen

Year ended March 31, 2012

90.93

―

Year ended March 31, 2011

69.38

―

(2) Non-consolidated financial position
Total Assets

Equity Ratio

Net Assets per Share

Millions of yen%

Yen142,61060,45342.4

870.54

118,83154,84046.1

794.08

As of March 31, 2012
As of March 31, 2011
Reference: Shareholders’ equity:

Net Assets

Millions of yen

As of March 31, 2012: 60,453 million yen

As of March 31, 2011: 54,840 million yen

2. Forecast of non-consolidated financial results for the year ending March 31, 2013 (April 1, 2012 - March 31, 2013)(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

Net Income
per Share

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Yen

First six months

119,100

4.4

3,100

(41.0)

2,800(48.3)

1,400(51.0)

20.16

Full year

242,900

5.7

9,000

(18.4)

9,100(26.6)

4,900(22.1)

70.56* Implementation status of audit procedures

The audit procedure based on the Financial Instruments and Exchange Act does not apply to this Financial Report, and the audit procedure
based on the Financial Instruments and Exchange Act is in operation as of the release of this Financial Report.

* 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 3 of the attached materials for the forecasts.

2

Table of Contents for the Attached Document
1. Business results·················································································································································· 2(1) Analysis of business results··································································································································2(2) Analysis of financial position·······························································································································5(3) Basic principles of profit distribution and dividends for the current and next fiscal year··························6(4) Business and other risks·······································································································································6

2. Overview of Nichii Group ································································································································ 8

3. Management principles ·································································································································· 10(1) Basic principles of management························································································································10(2) Management goals ··············································································································································10(3) Mid- to long-term strategies and issues to be addressed················································································10(4) Other significant matters for management ····································································································· 11

4. Consolidated financial statements ················································································································· 12(1) Consolidated balance sheets ······························································································································12(2) Consolidated statements of income and comprehensive income···································································14(3) Consolidated statements of changes in shareholders’ equity·········································································17(4) Consolidated statements of cash flows ·············································································································19

1Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2012

1. Business results(1) Analysis of business results1) Overview of business results
The macro environment in which Japan’s social security system operates is moving toward an integration of the tax andsocial security systems, with the revisions to the long-term care insurance system and compensation for medical service fees
and for long-term care workers, both carried out in April 2012, laying the foundation for providing uninterrupted medical
and long-term care with a view toward 2025, when the aging of Japan’s society is expected to peak.
In addition, with regard to the establishment of a “new child care system” being proposed as a support program forraising children, related laws have been proposed in the Diet with the aim of their enactment in April 2013, and full-fledged
discussions toward the elimination of waiting periods for children to get into child care centers and the quantitative
expansion of child care services.
The Nichii Gakken Group has been working to achieve long-term profit growth by increasing operational efficiency andfurther strengthening existing businesses, while at the same time expanding our medical management support services at the
Medical Support Business, and striving to develop and provide new services at the Health Care Business, including the
expansion of services not covered by the long-term care insurance system and childcare services that address regulatory
developments.
The Education Business has fully entered the language education business by making the English conversation school
operator Gaba Corporation a wholly owned subsidiary (as of December 5, 2011) and the Australian language school SELC
a subsidiary, and preparations are being made to expand the Nichii Group’s COCO Juku English conversation schools in the
pursuit of further synergies between businesses and across the Group.
The Nichii Group’s business development in China has also taken a major first step with our group wholesaler oflong-term care products and welfare equipment, Nichii Carenet Company, establishing Riyi Fuli Qiju Maoyi (Shanghai) Co.,
Ltd., as a locally incorporated entity in February 2012.
In terms of operating results, we achieved record sales for the fourth consecutive year, and a third consecutive year of
growth in operating income, which exceeded 10 billion yen, reflecting solid growth in the number of users for both our
home-care and facility-care services, further improvements in operational efficiency at the Medical Services and HealthCare businesses, and a half-year earnings contribution from the addition of GABA to the scope of consolidation.
The Great East Japan Earthquake had the effect of reducing net sales in areas that suffered damage, but we were able toutilize the strength of our nationwide network to minimize the impact of the disaster.
As a result, net sales for the fiscal year totaled 257,340 million yen (compared with 240,827 million yen in the previous
fiscal year), with operating income of 11,672 million yen (7,868 million yen), ordinary income of 12,674 million yen (9,660
million yen), and net income of 5,897 million yen (3,478 million yen).
Results by business segment are as follows:<Medical Support Business>
The Medical Support Business expanded its scope of operations at hospitals under contract, and carried out sales activities
using collaboration between medical facilities and long-term care services, medical management analysis, and othermanagement support services as a foothold from which to obtain new contracts.
As a means of expanding management support services, we held "2012's Revision on Medical Service Fee Compensation
Seminar" nationwide, regarding the revisions carried out in April 2012, and strove to provide the comprehensive support to
medical institutions including support for collaboration between medical services and long-term care, and initial
preparations for support services for international medical exchanges.
The business also recorded large profit growth, through improved operational efficiency from continuous increases instaff compensation and higher staff retention and skill enhancement.
As a result, the segment recorded net sales of 103,299 million yen (103,217 million yen in the previous fiscal year) andoperating income of 8,547 million yen (7,042 million yen).
<Health Care Business>
The Health Care Business continued to work to open new long-term care facilities and increase utilization rates at existing
facilities, resulting in steady growth in the number of users for our home-care and facility-care services, and our mainline
home-visit care services maintained growth rates that outpaced the overall market.

2

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2012

The development of services not covered by the long-term care insurance system included stepped-up development ofprivate-brand equipment and the enhancement of services for handicapped persons, and the number of people withdisabilities using our services surpassed 10,000 in March 2012.
The business also recorded large profit growth, through improved operational efficiency from increases in the number ofservice users, which as a result absorbed prior investment costs for opening facilities.
Nichii Care Palace Company, which operates medium-priced nursing homes, has maintained profitability since June, andwith a change to the company’s fiscal year-end from December to March, contributed to revenue and profit growth with 15
months’ of results – from January 2011 to March 2012 – reflected in consolidated results.
In terms of new home-care service facilities opened during the fiscal year, we opened 43 new care plan facilities(bringing the total to 737), 40 new home-visit care facilities (1,062 (including home-visit bathing facilities), 32 newday-care facilities (326), 3 new care equipment leasing facilities (135), and 21 new home-nursing facilities (23). In the areaof facility-care services, we opened 24 new Nichii no Hohoemi facilities (bringing the total to 241), 8 new Nichii no
Kirameki facilities (42), and 2 new Nichii Home nursing homes (50).
As a result, segment sales for the fiscal year were 138,275 million yen (124,204 million yen in the previous year) andoperating income was 10,142 million yen (6,500 million yen).
<Education Business>
The Education Business continued to experience declines in enrollment for its mainstay Home Helper Level 2 Course andMedical Administration Course, despite a slight improvement in the active-job-openings-to-applicants ratio. And therefore
in the 4th quarter, the sign of ceasing this continuous decline has been observed.
In language education, student enrollment in GABA’s one-on-one English conversation lessons is running ahead of planon increased demand for language education associated with globalization, and this is already contributing to thestabilization of segment earnings.
In terms of new course development, we developed the Dispensing Pharmacy Administration Course, which we beganoffering in January 2012, and continued our efforts to develop and offer new Web College courses, in response to increased
needs for specialists in dispensing pharmacy administration. We also moved forward with preparations to expand our
COCO Juku English conversation schools.
As a result, segment sales totaled 15,450 million yen (12,904 million yen in the previous fiscal year) with operating
income of 715 million yen (1,596 million yen).
<Other Businesses>
In Other Businesses, Lakewoods Garden Himeharu no Sato (Mobara City, Chiba Prefecture) opened in April 2011. In
keeping with its mission to deliver “joy” and “healing,” the facility held a variety of events on its premises and moved
forward with preparations to develop dog therapy and gardening therapy services. The segment also worked to strengthen
sales of Lakewoods Garden-related and other products.
As a result, the segment recorded full-year sales of 314 million yen (501 million yen in the previous fiscal year), with a
334 million yen operating loss (a 68 million yen loss in the previous year).
2) Outlook for the year ending March 31, 2013
The Nichii Group launched a new medium-term management strategy from April 2012. Under this strategy, we will pursue
new growth strategies with the aim of improving the structural balance of our businesses, to eliminate the risk of earnings
fluctuations from actions like regulatory changes, and achieve stable, long-term profit growth.
At the same time, we have begun restructuring to create a competitive, flexible organization in line with this strategy. By
realigning the group organization, reviewing business and marketing structures, and developing human resources andstrengthening staff training, we will work under this new organization to expand existing businesses, and aggressively
develop new businesses to bolster our earnings strength.
In terms of new businesses, we will make maximum use of our management resources to address the increasing need for
language education spurred by globalization, by strengthening our development of English conversation schools, and stepup the development of our child care business with a view toward the enactment of a new child care system. We will also
pursue businesses in areas where synergies can be achieved across the Group and between businesses, and work to expand
our fields of business.
For the fiscal year ending March 31, 2013, we are forecasting a fifth consecutive year of sales growth from an increase in
the number of users of our health care services, a full-year earnings contribution from GABA, and client growth from the3

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2012

expansion of the language education business. Also taking into account the effect on profit from upfront investments tosecure long-term earnings and from revisions to compensation for long-term care workers, our forecasts for the fiscal year
ending March 31, 2013 are for sales of 274,000 million yen (from 257,340 million yen in the fiscal year to March 31, 2012),
with operating income of 11,400 million yen (11,672 million yen), ordinary income of 11,000 million yen (12,674 millionyen), and net income of 5,800 million yen (5,897 million yen).

4

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2012

(2) Analysis of financial position
1) Overview of financial position
During the fiscal year, cash and cash equivalents (“cash”) increased by 4,986 million yen year on year to 8,741 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 16,128 million yen.
This was primarily the result of growth in income before income taxes and an increase in depreciation and amortization.
[Cash flows from investing activities]
As a result of investing activities during the fiscal year, cash decreased by 14,217 million yen
This was primarily due to acquisition of tangible fixed assets, and for the acquisition of shares of a subsidiary andaffiliates resulting change in scope of consolidation of consolidation.
[Cash flows from financing activities]
As a result of financing activities during the fiscal year, cash increased by 3,077 million yen.
The primary factors producing this result included proceeds for long-term loans.
Trends in cash flow indicators for the group can be seen below.
Year ended March 31, 2011

Year ended March 31, 2012

Equity ratio (%)

41.3

36.2

Equity ratio based on present value (%)

35.9

48.8

Debt redemption (years)

3.2

2.9

Interest coverage ratio (times)

16.4

15.0

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.

5

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2012

(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 ended March 31, 2012, we are planning to pay a year-end dividend of 8 yen per share.
(Yen)
Cash Dividends per Share
Year-end

AnnualYear ended March 31, 2012

(Record date)2Q-end8.00 (Actual)

8.00 (Forecast)

16.00 (Forecast)Year ending March 31, 2013

9.00 (Forecast)

9.00 (Forecast)

18.00 (Forecast)(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 suchrisks by acknowledging and dispersing 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. 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, medical
insurance system reform and the progress of IT may affect our contract fees and the contents.
[Health Care Business]
The Nichii Group’s Health Care Business provides mainly services regulated under the Long-Term Care Insurance Law(Law No. 123 of December 7, 1997) and other relevant laws. Income from these services could be impacted by revision of
the long-term care insurance system, which occurs every five years, and revision of compensation for long-term care
workers, which occurs every three years. The company strives to diversify risks by providing non-insurance services and by
expanding its service offerings. Nevertheless, these efforts may not offset reduction in income arising from regulatory
tightening and a lowering of payments from the insurance system and other factors which could result in significant
negative impacts on income.
If future social security and tax system overhauls lead to changes in the way long-term care is provided, there could be
impacts on the Health Care Business's operations depending on how the changes were made.
[Education Business]
We will actively pursue the course development and offer the changes necessitated by any future changes in systems related
to qualification requirements for care workers including qualifications such as training hours, curriculum enhancement, etc.
for care workers who enroll in our mainstay Home Helper Level 2 Course or other course offerings. Despite our efforts,
however, there could still be impacts on the sales and income of these mainstay courses.
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.

6

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2012

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
The Nichii Group’s various businesses provide services in medical institutions under contract, long-term care facilities,
service centers and training facilities and other locations throughout Japan. It is conceivable that earthquakes, tsunamis, orother large-scale natural disasters, and the spread of novel forms of influenza or other infectious diseases could make it
impossible for staff and our facilities to operate in the affected areas. The Nichii Group will make efforts to maintain system
to provide its services by quickly restoring facility functions and dispatching support staff. However, if, despite these efforts,
service provision becomes impossible, there could be impacts on the Nichii Group’s business results and financial
condition.
In the wake of the Great East Japan Earthquake occurred on March 11, 2011, we will undertake a general review ofbusiness continuity risk management measures for emergencies in all of our branches and facilities, and strengthen our crisis
management systems to ensure user safety above all else.
5) Risks related to the application of impairment accounting
The Health Care Business’s day care services are provided using buildings owned by the Company. In addition, goodwill
was recorded when facility-care services were taken over. In both cases, significant declines in profitability in such facilities
could necessitate the recording of impairment loss and, by extension, could also have an impact on income of the HealthCare Business.
With regard to goodwill, in particular, if IFRS are adopted in the future, goodwill will become non-amortizable. A
simulation of the impact of impairment conducted at least once a year indicates that negative impacts on recoverable value
and book value, if they were to emerge, could result in the recording of impairment loss all at once.

7

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2012

2. Overview of Nichii Group
Nichii Group consists of Nichii Gakkan Company, its 19 subsidiaries, and two affiliates. 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 (inside hospitals); and medical affairs consulting.
The Health Care Business provides home-care services under the long-term care insurance system (home-care support,
home-visit care, home-visit bathing, day care services, etc.), facility care services (care service for specified facility residents,
care service for group home residents with dementia, and management of rental housing specialized for the elderly), sale andrental of welfare equipment, catering, and welfare services for the handicapped. Nichii Carenet Company established Riyi Fuli
Qiju Maoyi (Shanghai) Co., Ltd., as a locally incorporated entity in China in February 2012, and began to develop a wholesale
sales business for long-term care products and welfare equipment in China.
The Education Business develops courses mainly for training medical office workers and home helpers, and offers a broad
range of Web College and other Nichii e-learning programs for persons interested in pursuing self-development or hobbies.
The group has also become fully engaged in the language business with one-on-one English conversation lessons at GABA
Corporation, which was made a consolidated subsidiary in September 2011 (and a wholly owned subsidiary in December2011), and the commencement of group lessons at COCO Juku from April 2012.
In Other Businesses, Nichii Gakkan Company’s subsidiaries take the lead in providing data processing, storage and delivery
service, book publication and sale, production and sale of flowers, ornamental plants, seeds and saplings, leasing, personnel
services and the operation of Lakewoods Garden Himeharu no Sato in Mobara City, Chiba Prefecture.
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

Medical Support Business

Medical practice services such as reception, medical fee claims,
accounting, computer operations, and medical record
management; sale, disinfection and sterilization services (inside
the hospital) for medical equipment; medical affairs consulting,etc.

Nichii Gakkan Company

Health Care Business

Home-care support (creation of care plan), home-visit care,home-visit bathing, day care, care service for specified facility
residents, care service for group home residents with dementia,
sale and rental of welfare equipment, catering, and welfare
services for the handicapped, etc.
Courses for medical office work, Home Helper Level 2 Course,
babysitter training, clerk course of medical doctors and English
conversation schools etc.

Nichii Gakkan Company

Education Business

Other Businesses

Data processing, storage and delivery service, publication andsale of books, production and sale of flowers, ornamental plants,
seeds and saplings, leasing, personnel service and operation andmanagement of tourist facilities, etc.

8Principal Companies
Nichii Gakkan Company
Nihon Support Service Co., Ltd.

Nichii Carenet Co., Ltd.
Nihon Support Service Co., Ltd.
Nichii Care Palace Co., Ltd.
GABA Corporation
SELC AUSTRALIA PTY LTD.
Nihon Support Service Co., Ltd.
Tokyo Marunouchi Publishing Co., Ltd.
Nichii Green Farm Co., Ltd.
Nihon Credit Lease Corp.

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2012

Other Businesses(consolidated subsidiaries)
Nihon Support
Service Co., Ltd.
Data processing
Storage and delivery service

Tokyo Marunouchi
Publishing Co., Ltd.

Nihon Credit Lease
Corp.

Nichii Green FarmCo., Ltd.

Leasing

Production and sale offlowers, ornamental
plants, seeds and saplings

Publication and sale ofeducational books, etc.

Personnel services

Operation andmanagement of tourist
facilities

Nichii Gakkan
Company
Medical Support Business

Provision of medical
clerk services, etc.

Education Business
Provision of learning
courses
Support forjob-finding to ourmainstay businesses

Health Care Business

Provision of long-termcare services

Nichii Gakkan
Company

Nichii Gakkan
Company

Nichii Gakkan
Company

Nihon Support
Service Co., Ltd.

GABA Corporation

Nichii Carenet Co.,Ltd.

SELC AUSTRALIAPTY LTD.

Nichii Care Palace
Company

Provision of services

Customers
Long-term carefacilities
Medical institutions

Students
Users of long-termcare services

9Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2012

3. Management principles(1) Basic principles of management
Based on our management philosophy of “We will contribute to the enhancement of human life through the development ofour business”, the Nichii Group operates under a “Target Five Stars” management strategy that aims to make the Nichii
Group the industry leader in *Net sales, *Earnings, *Product strength, *Employee compensation, and *Corporate ethics.
By strengthening our human and other management resources and providing safe and secure services to establish afavorable cycle that leads to sales and profit growth, we aim to achieve the Target Five Stars, and also to be a company thatearns society’s trust by being able to contribute to social development and advances in areas closely tied to peoples’ daily
lives, namely medical services, health care, education, and child care.

(2) Management goals
The Nichii Group has established the three objectives given below.
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
The Nichii Group launched a medium-term management strategy from April 2012 with the aim of realizing our management
philosophy and achieving our management targets.
This medium-term management strategy aims to expand the areas of operations and strengthen the operating base of eachbusiness, to improve the balance in our business structure to increase earnings strength and minimize the risk of earnings
fluctuations, as a means of achieving stable, long-term profit growth.
Through the following activities, we intend to resolve the issues facing the company and achieve stable, long-term profit
growth:1) Improve the balance of our business structure
Among the issues to be addressed in our businesses, the Medical Services Business is faced with the situation that althoughstable earnings can be expected as a result of increases in operational efficiency, growth in the market for medical officeservices has reached a lull, and the business therefore needs to deal with how to increase its growth potential. At the HealthCare Business, although high market growth is a forecast going forward, the business is dealing with avoiding risks from
regulatory changes and increasing earnings strength. The Education Business is traditionally a highly profitable business, butwith our business model encompassing both general education and specialized accreditation, earnings are swayed by themacro economy and shifts in accreditation needs for medical and nursing-care workers. We are therefore addressing theissue of building a business portfolio to support stable, long-term growth.
To achieve this, we are addressing issues at each business by expanding existing businesses while also expanding into
peripheral business areas, to effectively use management resources for efficient business development that leads to increased
growth, earnings, and stability for the group.
<Expanding areas of business>
 Medical Support
Support medical exchanges, expand management support services including collaboration
between medical facilities and long-term care services
 Health Care
Expand services not covered by long-term care insurance, including welfare services for persons
with disabilities and daily life support services
Develop services in China
 Education
Expand language education business, where long-term demand is anticipated
Address the aging of society by expanding courses for older persons
 Child Care
Develop child care facilities in line with the enactment of the new childcare system

10Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2012

2) Strengthen the organizational baseWith growth expected going forward in social security services and other fields in which the group operates, it is essential
for us to secure medical office staff and long-term care staff, as well as registered nurses and certified child care workers,
and native instructors for language education. We will therefore strive to secure stable human resources by further
strengthening human resource development and our capacity to supply staffing, expanding various training programs,
continuously improving compensation, and utilizing management resources to quickly create channels for hiring at the
Education Business.
In addition, social security services are seeing the establishment of comprehensive regional care structures, as represented
by the regional medical service plans being promoted by various cities and prefectures, and we will emphasize swift
management responses to accurately address these regional needs.
3) Address globalization
As Japanese society becomes increasingly global, the market for language education is seen continuing to grow over thelong term. Along with strengthening both GABA and COCO Juku, we will work to expand the Australian language school
SELC’s operations into North America and Europe, to build a group structure that is able to secure study abroad destinations
and provide quality instructors.
Going forward, we will also strengthen collaboration across the group to develop services that address globalization byoffering language education to the elderly and to children, and at medical institutions.
In addition, with the Chinese population expected to experience significant aging, Nichii Carenet Company has established
Riyi Fuli Qiju Maoyi (Shanghai) Co., Ltd., as a locally incorporated entity in China to develop a welfare goods wholesaling
business. Working under an operational tie-up with Toyota Tsusho, we will strive to expand wholesale sales channels andpromote the use of high-quality welfare goods in China. Over the longer term, we aim to move beyond welfare goods anddevelop all of Nichii’s businesses in China.
4) Provide safe, secure, high-quality services
Nichii Gakken views the providing of safe and secure services as an important management issue, and we have established a“Compliance Committee” as part of our system for internal controls to promote the importance of regulatory compliance.
In addition, a Nichii Group Compliance Policy has been formulated, outlining the ethics and guidelines that form the basisof legal compliance by employees, and this policy is instilled in employees through various training and study programs.
We are also striving to ensure and enhance the safety of our services by ensuring safe driving of our vehicles used inlong-term care, installing safety equipment in care facilities, and sharing experiences of potentially dangerous incidents inthe services we provide.
Going forward, we will also strive to provide safe, secure, high-quality services by strengthening our call center
functionality to ensure that feedback from service users across Japan is appropriately reflected in our services.

(4) Other significant matters for management
There are no applicable matters.

11

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2012

4. Consolidated financial statements(1) Consolidated balance sheets(Thousands of yen)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable
Securities
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

12

FY2011(As of March 31, 2011)

FY2012(As of March 31, 2012)

3,912,556
29,891,605–
404,983
4,283
278,660
3,435,974
6,292,293(56,829)
44,163,528

8,699,654
31,802,791
1,599,880
599,236
5,810
333,724
2,721,057
8,378,019(38,293)
54,101,880

43,828,036(17,231,360)
26,596,675
90,064(82,071)
7,993
2,884,210(2,354,668)
529,5428,031,872
5,877,110(952,274)
4,924,836
235,983
40,326,903

46,573,130(19,576,751)
26,996,379
90,064(84,132)
5,931
3,693,465(3,087,984)
605,480
8,142,343
17,434,209(1,893,256)
15,540,953
878,952
52,170,041

13,564,666
3,862,956
281,603
1,116,584
192,648
19,018,460

21,918,063
3,183,700
610,315905,340
201,080
26,818,501

1,489,149
5,636,625
2,538,018
9,701,786
2,444,506
1,521,598(1,059,406)
22,272,279
81,617,643
125,781,172

1,758,191
6,561,118
2,602,576
11,353,637
2,060,822
1,397,283(1,007,711)
24,725,918
103,714,460
157,816,341

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2012

(Thousands of yen)

Liabilities
Current liabilities
Notes and accounts payable
Short-term loans payable
Current portion of long-term loans payable
Lease liabilities
Income taxes payable
Consumption taxes payable
Other accrued expenses
Advances Received
Allowance for employee bonuses
Allowance for directors’ bonuses
OthersTotal current liabilities
Long-term liabilities
Long-term loans payable
Lease liabilities
Long-term advances received
Allowance for employee retirement benefits
Allowance for directors’ retirement benefits
Asset retirement obligations
OthersTotal long-term liabilities
Total liabilities
Net assets
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets

13

FY2011(As of March 31, 2011)

FY2012(As of March 31, 2012)

979,919
1,318,002
4,781,871
936,059
3,538,277
743,978
14,457,396
3,270,247
4,223,744
35,1005,271,775
39,556,372

957,132
193,091
5,257,449
1,215,521
3,274,561
1,162,535
16,178,955,
9,560,434
4,775,256
36,5006,298,064
48,909,502

18,991,565
5,441,179
2,777,994
4,428,149
157,9211,233,067
994,525
34,024,403
73,580,776

24,990,175
15,833,977
2,694,117
4,719,843
162,923
1,542,245
1,521,252
51,464,536
100,374,038

11,933,790
17,354,214
29,492,922(6,789,290)
51,991,637

11,933,790
17,354,214
34,057,020(6,133,715)
57,211,311(46,849)(46,849)
255,608
52,200,395
125,781,172(45,042)(45,042)
276,034
57,442,302
157,816,341

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2012

(2) Consolidated statements of income and comprehensive income(Consolidated statements of income)(Thousands of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Advertising and promotion expenses
Directors’ compensation
Salaries and benefits
Provision for employee bonuses
Provision for directors’ bonuses
Provision for directors’ retirement benefits
Provision for employee retirement benefits
Legal welfare expenses
Travel and transportation expenses
Rent expenses
Provision for doubtful accounts
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
Rent income
Commission on consignment for job creation businesses
Subsidy income
OthersTotal non-operating income
Non-operating expenses
Interest expenses
Rent expenses
OthersTotal non-operating expenses
Ordinary income

14

FY2011FY2012(from April 1, 2010
to March 31, 2011)(from April 1, 2011
to March 31, 2012)

240,827,319
193,033,355
47,793,963

257,340,573
203,513,674
53,826,898

4,537,961
152,666
14,508,228
1,027,337
35,1008,699
324,608
2,360,699
1,490,276
3,019,626
24,451
1,889,429
965,7229,580,386
39,925,192
7,868,771

4,959,690
225,221
14,911,785
1,175,233
36,5008,192
383,168
2,508,927
1,504,077
2,985,100
3,912
2,079,553
1,471,455
9,901,765
42,154,584
11,672,313

113,596
115,971
200,810
1,628,650
194,894
283,188
2,537,111

142,107
115,638
243,793
1,190,729
284,934
226,0212,203,223

599,663
50,876
94,848745,389
9,660,493

1,074,869
60,211
65,6951,200,776
12,674,760

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2012

(Thousands of yen)

Extraordinary income
Gain on sale of fixed assets
Reversal of allowance for employees’ bonuses
Reversal of provision for loss on store closing
Reversal of provision for loss on disaster
OthersTotal extraordinary income
Extraordinary losses
Loss on retirement of fixed assets
Impairment loss
Provision of allowance for doubtful accounts
Loss on disaster
Provision of allowance for loss on disaster
Loss on adjustment for changes of accounting standard for asset
retirement obligations
Provision for loss on store closing
Loss on transfer of defined contribution pension plan
OthersTotal extraordinary losses
Net income before income taxes and minority interests
Income taxes-current
Income taxes for prior periods
Income taxes–deferred
Total income and other taxes
Income before minority interests
Minority interests in income
Net income (loss)

15

FY2011FY2012(from April 1, 2010
to March 31, 2011)(from April 1, 2011
to March 31, 2012)

210
111,148––
5,119
116,478––
14,64344,442
7,831
66,91843,157
23,742
316,000
260,264
382,800

44,749––69,940–504,813–––
157,413
1,688,190
8,088,781
4,200,699
114,000
259,450
4,574,150
3,514,631
36,214
3,478,416

42,345
148,117
6,178
311,331
12,430,347
5,263,532–
1,235,097
6,498,630
5,931,717
34,604
5,897,112

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2012

(Consolidated statements of comprehensive income)(Thousands of yen)

Income before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests

16

FY2011(from April 1, 2010
to March 31, 2011)
3,514,631

FY2012(from April 1, 2011
to March 31, 2012)
5,931,717(139,608)(139,608)
3,375,022

1,806
1,806
5,933,524

3,338,807
36,214

5,898,919
34,604

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2012

(3) Consolidated statements of changes in shareholders’ equity(Thousands of yen)

Shareholders’ equity
Common stock
Balance at the beginning of current 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 beginning of current 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 beginning of current 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 beginning of current 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 beginning of current 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

FY2011FY2012(from April 1, 2010
to March 31, 2011)(from April 1, 2011
to March 31, 2012)

11,933,790

11,933,790–
11,933,790–
11,933,790

17,354,214

17,354,214–
17,354,214–
17,354,214

26,912,370

29,492,922(897,810)
3,478,416(54)
2,580,551
29,492,922(1,035,921)
5,897,112(297,092)
4,564,098
34,057,020(6,788,705)(6,789,290)

(680)
96
(584)
(6,789,290)(540)
656,115
655,574(6,133,715)

49,411,670

51,991,637(897,810)
3,478,416(680)
412,579,967
51,991,637(1,035,921)
5,897,112(540)
359,0225,219,673
57,211,311

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2012

(Thousands of yen)

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Balance at the beginning of current 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 accumulated other comprehensive income
Balance at the beginning of current 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
Minority interests
Balance at the beginning of current 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 beginning of current 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

FY2011FY2012(from April 1, 2010
to March 31, 2011)(from April 1, 2011
to March 31, 2012)

92,759(46,849)(139,608)

1,806(139,608)(46,849)

1,806(45,042)

92,759(46,849)(139,608)

1,806(139,608)(46,849)

1,806(45,042)

223,893

255,608

31,71431,714
255,608

20,426
20,426
276,034

49,728,322

52,200,395(897,810)
3,478,416(680)
41(107,894)
2,472,073
52,200,395(1,035,921)
5,897,112(540)
359,022
22,2335,241,906
57,442,302

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2012

(4) Consolidated statements of cash flows(Thousands of yen)

Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Amortization of goodwill
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
Increase (decrease) in allowance for loss on disaster
Increase (decrease) in provision for loss on store closing
Interest and dividends income
Interest expenses
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Loss on retirement of fixed assets
Loss (gain) on sale of fixed assets
Impairment loss
Loss on disaster
Loss on adjustment for changes of accounting standard for asset
retirement obligations
Decrease (increase) in accounts receivable
Decrease (increase) in inventories
Decrease (increase) in other current assets
Decrease (increase) in claims provable in bankruptcies
Decrease (increase) in other fixed assets
Increase (decrease) in accounts payable
Increase (decrease) in consumption tax payable
Increase (decrease) in other current liabilities
Increase (decrease) in other long-term liabilities
OthersSubtotalInterest and dividends received
Interest paid
Income taxes paid
Cash flows from operating activities

19

FY2011FY2012(from April 1, 2010
to March 31, 2011)(from April 1, 2011
to March 31, 2012)

8,088,781
4,343,250
965,722
325,41723,886
1,100
295,099
8,699
382,800–(117,737)
599,663(5,119)–43,157
4,889
23,742
260,264

12,430,347
5,228,244
1,471,455(75,357)
456,476
1,400
291,694
5,002(382,800)
5,272(146,244)
1,074,869(4,111)
2,827
44,749––69,940504,813–(1,337,096)(139,788)(1,164,567)(24,654)499,699
39,127(201,228)
590,398(596,522)(15,726)
13,398,071
23,104(598,890)(3,026,906)
9,795,378(1,579,884)(118,222)
176,945
27,694590,994(48,796)368,2442,586,095
501,586(1,684)22,976,739
38,017(1,076,470)(5,809,468)
16,128,818

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2012

(Thousands of yen)

Cash flows from investing activities
Payments into time deposits
Withdrawal of time deposits
Purchase of short-term investment securities
Proceeds from sales of short-term investment securities
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 subsidiaries and affiliates
Purchase of investments in subsidiaries resulting in change inscope of consolidation
Payments of loans receivableCollection of loans receivable
Payments for guarantee deposit
Collection of guarantee deposit
Subsidy income
Others (net)Cash flows from investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans
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
OthersCash flows from financing activities
Effect of exchange rate change on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

20

FY2011FY2012(from April 1, 2010
to March 31, 2011)(from April 1, 2011
to March 31, 2012)(414,000)
420,000(100,000)
100,000(2,198,956)
21,328(1,903,155)
12,120–(508,000)
808,000(1,100,054)–(2,897,415)
765(1,006,606)
304,216(151,108)–(7,658,337)(1,305,605)
148,988(479,398)
421,887
229,251(355,245)(5,402,785)(1,330,949)
165,707(1,335,582)
414,889594,218(517,371)(14,217,627)

300,000
7,000,000(10,100,000)
41(680)(894,448)(4,500)(767,599)(51,092)(4,518,279)
15,977(109,708)
3,864,764
3,755,056(1,140,000)
17,950,000(11,531,200)
89(540)(1,034,825)(4,500)(1,071,057)(90,407)3,077,558(2,036)
4,986,713
3,755,056
8,741,769