Financial Results for the First Half of the Fiscal Year Ending March 31, 2008

November 22, 2007

Name of listed company: Nichii Gakkan Company
Location of headquarters: Tokyo
Exchange where listed: Tokyo Stock Exchange
Company code number: 9792
(URL: http://www.nichiigakkan.co.jp)
Representative: President and Representative Director: Takashi Mori
Contact: Director, Vice President of Accounting Division and General Manager of Accounting Department: Koichi Terada
Telephone: 03-3291-3954
Scheduled date of filing securities report: December 20, 2007
Amounts less than one million yen have been rounded down.

1. Consolidated Results for the Half-Year Ended September 30, 2007 (April 1, 2007 - September 30, 2007)(1) Consolidated Results(Percentage figures represent changes from same period of previous year.)

Net Sales
Half-Year ended
Sep. 30, 2007
Half-Year ended
Sep. 30, 2006
Year ended
Mar. 31, 2007

Operating Income

Millions of yen%

Millions of yen

Ordinary Income

Net Income%

Millions of yen%

Millions of yen%

96,701(5.4)

880(33.7)

966(29.6)

13(97.2)

102,211

(1.1)

1,328

(50.2)

1,371(50.9)

484(66.8)

202,549

-

2,635

-

2,709

-

774

-

Net Income per ShareNet Income Per Shareafter Adjusting for
Latent Shares

Yen

Yen

Half-Year ended
Sep. 30, 2007
Half-Year ended
Sep. 30, 2006
Year ended
Mar. 31, 2007

0.39

-

13.75

-

22.00

-

(Notes) Equity-method investment profit (loss): Half-year ended Sep. 30, 2007: ¥ - million; Half-year ended Sep. 30, 2006: ¥ - million;
Year ended March 31, 2007: ¥ - million(2) Consolidated Financial Position
Total Assets
Half-Year ended
Sep. 30, 2007
Half-Year ended
Sep. 30, 2006
Year ended
Mar. 31, 2007

Net Assets

Equity Ratio

Net Assets Per Share

Millions of yen

Millions of yen%

Yen

108,72151,48047.2

1,457.06

94,50551,95454.8

1,471.19

92,11552,24756.6

1,479.10(Notes) Shareholders’ Equity: Half-Year ended Sep. 30, 2007: ¥51,318 million; Half-year ended Sep. 30, 2006: ¥51,820 million;
Year ended March 31, 2007: ¥52,096 million(3) Consolidated Cash Flows
Cash Flow fromOperating Activities
Half-Year ended
Sep. 30, 2007
Half-Year ended
Sep. 30, 2006
Year ended
Mar. 31, 2007

Cash Flow from
Investing Activities

Cash Flow from
Financing Activities

Cash and Cash
Equivalents
at End of Year

Millions of yen

Millions of yen

Millions of yen

Millions of yen

1,779(15,759)

10,5206,111

389(1,077)(2,472)

9,230

2,656

(1,090)(4,386)

9,570

2. Dividends
Dividends per Share (Yen)
Year-end

Interim
Yen

Year ended Mar. 31, 2007
Year ended Mar. 31, 2008 (Result）
Year ended Mar. 31, 2008 (Forecast)

1

Full Year

Yen

Yen

22.00

22.00

22.00

22.00

3. Forecast of Consolidated Results for the Year Ending March 2008 (April 1, 2007 - March 31, 2008)(Percentage figures represent changes from previous year.)

Net Sales
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

200,300

(1.1)

1,700

(35.5)

1,800(33.6)

10(98.7)

0.28

4. Others(1) Changes in significant subsidiaries during the term (changes in specified subsidiaries resulting in changes in scope of
consolidation): None
(2) Changes in accounting principles, procedures and method of presentation associated with preparation of the consolidated
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 etc.: Yes
2) Changes other than 1): None
Note: Please refer to “Basis of Presenting Consolidated Financial Statements”, for details.
(3) Number of shares outstanding (common stock)1) Number of shares outstanding at the end of the term (including treasury stock):
Half-year ended Sep. 30, 2007: 36,508,976 shares; Half-year ended Sep. 30, 2006: 36,508,976 shares;
Year ended March 31, 2007: 36,508,976 shares
2) Number of shares of treasury stock at the end of the term:
Half-year ended Sep. 30, 2007: 1,288,314 shares; Half-year ended Sep. 30, 2006: 1,285,594 shares;
Year ended March 31, 2007: 1,287,351 shares(Note) Please refer to changes in basis for the calculation of net assets per share of consolidated financial statements, fordetails.
(Reference) Overview of the Non-Consolidated Business Results
1. Non-Consolidated Results for the Half-Year Ended September 30, 2007 (April 1, 2007 - September 30, 2007)(Percentage figures represent changes from the same period of previous year.)(1) Non-Consolidated Operating Results
Net Sales
Half-Year ended
Sep. 30, 2007
Half-Year ended
Sep. 30, 2006
Year ended
Mar. 31, 2007

Millions of yen

Operating Income

Ordinary Income

Net Income%

Millions of yen%

Millions of yen%

Millions of yen%

93,865(6.1)

757(42.1)

888(36.1)

321(35.8)

99,9722.1

1,307(50.0)

1,391(49.5)

500

9.7

198,099

-

2,506

-

2,682

-

856

-

Net Income
Per Share
Yen

Half-Year ended
Sep. 30, 2007
Half-Year ended
Sep. 30, 2006
Year ended
Mar. 31, 2007

9.12
14.22
24.30

(2) Non-Consolidated Financial Position
Total Assets
Half-Year ended
Sep. 30, 2007
Half-Year ended
Sep. 30, 2006
Year ended
Mar. 31, 2007

Net Assets

Equity Ratio

Net Assets Per Share

Millions of yen

Millions of yen%

Yen

97,01247,89949.4

1,359.98

90,31648,02853.2

1,363.53

86,811

48,36955.7

1,373.29(Notes) Shareholders’ Equity: Half-year ended Sep. 30, 2007:¥47,899 million; Half-year ended Sep. 30, 2006:¥48,028 million;
Year ended March 31, 2007: ¥48,369 million

2. Forecast of Non-Consolidated Results for the Year Ending March 2008 (April 1, 2007 - March 31, 2008)(Percentage figures represent changes from previous year.)

Net Sales
Millions of yen%

Operating Income

Ordinary Income

Millions of yen

Millions of yen%%

Net Income
Per Share

Net Income
Millions of yen%

Yen

Full Year
186,200 (6.0)
2,600 3.8
2,800
4.4
1,100 28.5
31.23
The amounts as above are rounded off to the nearest million yen.
The above projections are based on information available as of time of this announcement. Actual results may differ due tovarious factors.
2

1. Business Results(1) Analysis of Business Results1) Overview of Business Results
The Japanese economy over the first half of the current fiscal year 2008 has continued to be on track to recover due to the good
performance of domestic companies, resulting in increases in plant and equipment investments and the improvement of theemployment situation, though the economic outlook is somewhat uncertain because of the financial unrest triggered by the
global credit risk originating from the U.S. sub-prime loan problems.
Regarding the current market environment, the long-term care insurance system was amended in April 2006, and thissystem and other medical care systems will undergo step-by-step reform in the next and subsequent years.
Under these circumstances, in the first half of the fiscal year 2008, we have carried out radical organizational reforms toquickly address changes in the market. These reform activities included the establishment of “business segment-specific branchshops” that specialize in a particular type of business, and a transition to an “area-based management of operations” that allows
us to manage operations according to each of 18 areas. We have also made efforts to integrate our Group’s brand and establish a
structure with a more efficient and focused management.
In addition, we have attempted to develop our strategic products and services on a medium and long-term basis such as“Receipt Check Eye” which is a service of the Medical Support Business, and “Nurse Assistant Training Course”, a training
course for nursing care.
The Health Care Business has experienced an important turning point for creating a new business portfolio. In July, weestablished the "Nichii Living Company" that manages the business of rental housing for elderly people, as a first step in
implementing facility care services. In August and September, we decided to acquire all the facility care services and home careservices in five prefectures (Nagano, Gifu, Aichi, Kyoto and Hyogo) managed by COMSN, Inc.
In parallel with the acquisition of COMSN’s services, and in order to further strengthen the basis of our Health Care
Business, we acquired all shares of both Japan-Silver Inc. (now the Nichii Care Palace Co., Ltd.), which is an affiliatedcompany of the Goodwill Group, Inc. that manages pay nursing home “Outohen”, and COMSN Kanto, Inc. (now the Nichii
Kanto Company) that manages day-care centers mainly in the Kanto area. The Nichii Care Palace Co., Ltd. has become aconsolidated subsidiary.
Sales during the first half of the fiscal year 2008 decreased primarily due to the fact that the care business got morecompetitive than expected, and the number of students for our education programs decreased. Thus profits also decreased due
to fewer sales and other factors.
As a result of these activities, net sales during the term were ¥96,701 million (down 5.4% year on year), operating income
was ¥880 million (down 33.7% year on year), ordinary income was ¥966 million (down 29.6% year on year), and net income
was ¥13 million (down 97.2% year on year).

32) Business Results by Segment

Medical Support Business
As for the Medical Support Business, we tried to achieve efficient allocation of human resources by raising the sales per
hospital, and efficient management of services in hospital by providing existing users with new lines of services, for the
purpose of improving customer satisfaction and increasing profits.
In order to improve the profit-generating structure, we are making investments in human resource development andemployment, strengthening the career-enhancement system and training programs, improving labor conditions, improving staff
skills, and increasing the retention of the work force.
In view of medium and long-term business growth, we have strived to develop and provide new services in order toenhance our hospital support services and support computerization in medical institutions. One of these approaches includes therelease of the “Receipt Check Eye” which has been developed based on the medical service payment system experience wehave accumulated over the past 30 years.
As a result of these activities, sales during the term were ¥54,945 million (down 0.7% year on year) and operating income
was ¥5,116 million (down 1.1% year on year).

Health Care Business
Concerning the Health Care Business, in accordance with the amendment of the long-term care insurance system in April 2006,
we have been gradually changing the service for mild-level users (formerly users with a support/nursing care requirement oflevel 1) to preventive care service. The performance of the Health Care Business segment continued to be weak for reasons
such as a decrease in the average service fee per home-visit nursing care service, a decrease in the number of users who rent
welfare equipment through the long-term care insurance system, and a nationwide, simultaneous audit of the private businesses
who are providing nursing care services, which was conducted after violations of the law by some care service providers werediscovered.
Sales for this term were ¥35,954 million (down 9.1% year on year) and operating income was ¥441 million (down 58.6%
year on year).
The shift of the service to preventive care for the mild-level users has almost been completed, and the number of contracts
relating to local support business, as well as the number of preventive care users, has steadily increased. Thus we believe thatthe performance of the health care business segment in the second half of the fiscal year and subsequent periods is on the roadto recovery.
Profit from the day-care centers, which had temporarily declined because of prior investment, has shown a tendency toward
improvement, indicating a possible improvement in profit margins from services under long-term care insurance in the future.
We have transferred the welfare equipment wholesale service sector and the house repair service sector of the welfare
equipment rental service segment to the consolidated subsidiary Nichii Carenet Co., Ltd. We also have been involved inachieving efficient management of inventory, effective operations of the business activities in the group, and a structure thatallows us to provide services effectively.
Regarding compliance with laws covering standards for staff assignments, a “Long-term Care Service Audit Room” wasestablished on August 16, 2007 to provide a proper management system and training programs for staff members. Thisapproach will allow for more appropriate office management.

4

Education Business
Due to the lack of clarity of the home-helper qualification in the future and improvement in employment environment, thenumber of students enrolled in our main classes of “medical office administration” and “home-helper level 2” declined. Sales
for this term were ¥5,401 million (down 19.9% year on year) and operating loss was ¥820 million (operating loss of ¥640
million in the previous fiscal year).
The Education Business, which is the backbone of manpower supply to the Medical Support Business and the Health Care
Business, was strengthened in sales by simultaneously trying to increase recognition of our corporate brand and by ahighly-appealing advertising campaign in newspapers, magazines, and web sites.
In order to attract and develop talented employees, we have been frequently providing “work consultations” for applicants,
and also have been developing and providing training programs and seminars that will immediately improve personal skills,
including a “Nurse Assistant Training Course”.
From the viewpoint of efficient business processes, we are engaged in the reduction of labor costs and classroom rental feesby effectively managing training programs and seminars through a system of specialized branch shops. We believe that thisapproach will contribute to performance in the second half of the fiscal year and subsequent periods.

Other Businesses
In the Other Businesses, we are engaging in such businesses as information processes, storage and delivery service, andproduction and sale of flowers, ornamental plants, seeds, and saplings.
We are advancing our business growth strategy, primarily concentrating on strengthening existing business and approaches
to new business and services, and restructuring of group companies.
As a result, net sales for this segment were ¥400 million (down 35.4% year on year) and operating income was ¥21 million(down 53.2% year on year).

53) Outlook for the Full Year Performance

Medical Support BusinessIn view of the Medical Support Business, it is expected that, in the second half of the fiscal year and subsequent terms, medical
institutions will actively respond to changes caused by reforms of the health insurance system and the medical service payment
system, scheduled for April 2008.
As a result, we may receive inquiries or orders from medical institutions requesting short-term support for the reformed
medical service payment system and computer-based processes. It is also anticipated that such institutions or hospitals may
seek collaborative business opportunities with us in terms of our facility care services and home care services. For these reasons,
we will make efforts to obtain more contracts relating to various support activities, primarily with our existing medical
institution customers, in order to increase sales and improve customer satisfaction.
We will continue to develop the career-enhancement system, which will include improving labor conditions and promoting
the retention of staff members and the improvement of their skills, and at the same time improve the quality and efficiency of
our contracts, in order to strengthen the basis of our business and increase sales in the next fiscal year and subsequent periods.

Health Care Business
Concerning the Health Care Business, since the shift of the service to preventive care for mild-level users (those with thesupport/nursing care requirement of level 1) due to the amendment of the long-term care insurance system has almost been
completed, it is expected that the number of users who receive services will increase steadily, though slowly, in the second halfof the fiscal year and subsequent periods.
Maximizing use of our deep and extensive service infrastructures, by appealing to local governments and users with ourachievement records and response capabilities of preventive cure programs, we seek to acquire contracts for our regional
support business and new users of preventive cure services, in order to acquire users of services covered by long-term careinsurance.
Our aims also include nationwide implementation of “disabled independence support services”, the development of newservices, the acquisition of users of such services, and the enhancement of the quality and potential of other services.
As for the transfer of COMSN’s nursing care business, we plan to acquire all their facility care services (pay nursing homes
and group homes) and the home care services provided in Nagano, Gifu and Aichi prefectures from November 1, 2007. On andafter December 1, 2007, it is planned to acquire the home care services provided in Kyoto and Hyogo prefectures. Throughthese operations, we can expand the scope of our services and service areas.
Upon completion of the acquisitions, we will have 7,500 new employees, a total of 209 bases for facility care services, anda total of 95 bases for home care services, giving us the largest market share, providing about 130,000 users with such services.
Since the fiscal year of the companies transferred to us ends on December 31, the two months from November to December
will be taken into account for our consolidated fiscal year ending March 31, 2008.
The consolidated statements for this fiscal year ending March 31, 2008 will include the financial results of four subsidiaries:
Nichii Care Palace Co., Ltd. (that provides facility care services: for the first half of the fiscal year, only the balance sheet will
be included), Nichii-no Hohoemi, Ltd., Nichii-no Kirameki, Ltd., and Nichii Home, Ltd. Consequently, we have a total of 10
consolidated subsidiaries (out of 10 subsidiaries, six are in the Health Care Business) and the sales in the Health Care Businessin the next fiscal year and subsequent periods are estimated to be similar to that for the Medical Support Business.

6

Education Business
The performance of the Education Business is expected to remain weak under the current temporary decrease in the need for
qualification due to the economic recovery and other factors. However, we will strive to attract and enroll more students andimprove profitability through a multiple-media advertising technique that primarily uses the advertising media that generates
the highest response, class management that offers convenience and effectiveness for students, and a reformed curriculum.
Because the planned change in the requirements for care workers was postponed to April 1, 2012, we will develop anddeliver training courses that are more advantageous to students, such as those for home helper level 2 and actual care practices.
In addition, aiming at the next level of the Education Business, we will make efforts to further develop and enhance the“Nursing-Care Worker Basic Training Course”. At the same time, our plans include the development and delivery of a varietyof new courses that can broaden the student base, such as courses and seminars that are useful for elderly people and family
members who care for the elderly at home.
In order to attract and develop talented human resources, we will continue to actively provide “work consultations” for job
applicants, and will make efforts also in the second half of the fiscal year and subsequent periods, with the aim of launching an“Employment Support Site” at as early a stage as possible.

Other Businesses
In Other Businesses, this category will contribute to our group management by establishing a group network that can provide
better coordination and synergy effects with our core competence businesses, Medical Support Business, Health Care Businessand Education Business.

In consideration of these situations and prospects, our outlook for performance in the year ending March 31, 2008 is ¥200,300
million in net sales (down 1.1% year on year), ¥1,700 million in operating income (down 35.5% year on year), ¥1,800 million
in ordinary income (down 33.6% year on year) and ¥10 million in net income (down 98.7% year on year).

7(2) Analysis of Financial Position
1) Conditions of Assets, Liabilities and Net Assets
The total assets at the end of current consolidated fiscal term was ¥108,721 million, increasing by ¥16,606 million from theprevious fiscal year.
This is primarily due to an increase in short-term loans receivable, tangible fixed assets, and goodwill, etc. resulting fromthe acquisition of other companies as subsidiaries, including the COMSN-owned companies providing nursing care services(Nichii-no Hohoemi, Ltd., Nichii-no Kirameki, Ltd. and Nichii Home, Ltd.), Nichii Care Palace Co., Ltd., and Nichii Kanto
Company.
The total liabilities at the end of current consolidated fiscal term was ¥57,241 million, increasing by ¥17,373 million.
This is primarily due to an increase in short-term loans payable resulting from the acquisition of other companies as
subsidiaries, including the COMSN-owned companies providing nursing care services, Nichii Care Palace Co., Ltd., and Nichii
Kanto Company.
Additionally, bond decreased.
The net assets at the end of current consolidated fiscal term was ¥51,480 million, decreasing by ¥766 million from the previous
fiscal year. This is mainly due to decrease of retained earnings.

2) Conditions of Cash Flows
During the current accounting period, cash and cash equivalents (“funds”) amounted to ¥ 6,111million, down ¥3,119 million
year on year. Cash flow from each activity and their factors are shown below.

<Cash Flow from Operating Activities>
As a result of operating activities during the term, funds increased by ¥1,779 million (in the same period of the previous fiscal
year, funds increased by ¥389 million).
This is mainly due to refund of corporation tax, etc.

<Cash Flow from Investing Activities>
As a result of investing activities during the term, funds decreased by ¥15,789 million (in the same period of the previous fiscal
year, funds decreased by ¥1,077 million).
This is primarily due to an increase in expenditures, loans receivable, etc. resulting from the acquisition of other companies
as subsidiaries, including the COMSN-owned companies providing nursing care services (Nichii-no Hohoemi, Ltd., Nichii-no
Kirameki, Ltd. and Nichii Home, Ltd.), Nichii Care Palace Co., Ltd., and Nichii Kanto Company.

<Cash Flow from Financing Activities>
As a result of financing activities during the term, funds increased by ¥10,520 million (in the same period of the previous fiscal
year, funds decreased by ¥2,472 million). This is primarily due to an increase in short-term loans, etc. by the parent company.

8

Trends in cash flow indicators for the Group can be seen below.
Year ended
Mar.31, 2006
InterimYear-end
57.4
Equity ratio (%)
53.3
108.0
Equity ratio based on present value (%)
98.2
1.6
Debt redemption (years)
2.0
103.1
Interest coverage ratio (times)
114.5

Year ended
Mar.31, 2007
InterimYear-end
54.8
56.6
68.8
81.3
14.7
3.6
13.2
31.1

Year ending
Mar.31, 2008
Interim
47.2
64.2
5.9
28.3

(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 cash flow statement.
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 cash flow statement.
4. Calculation of Debt Redemption Years was based on multiplying the amount of operating cash flow by 2 to attain a one
year figure.

(3)Basic Principles of Profit Distribution
We make it a basic policy to provide our stockholders with stable and continuous profit distributions. Considering businessperformance trends from a mid- to long-term standpoint, we will promote a consolidated dividend policy.
Retained earnings will be invested to continue our business growth and increasingly upgrade our corporate value. The
investments include development of new businesses, backbone systems/software and M&A.

(4) Business Risks
Presented below are matters that may be of risk to the operations of each business of the Group. Although we mitigate suchrisks by dispersing and acknowledging them, in the event of an unforeseeable incident, such risks may cause serious effect on
the business performance or financial conditions of the Group.
External factors and risk factors with low potential are also mentioned here from the standpoint of positive information
disclosure on matters deemed important for those making investment decisions.
The matters below were determined to be potential risks by the Group upon preparing this data as of the end of the current
accounting period, and may not cover all the risks related to investment in our stocks.

1) Risks to Business

Medical Support Business
Our Group’s Medical Support Business provides, among other services, medical office administrative services other than
medical practice itself, medical-related duties, and medical business consulting services.
Medical institutions will see major fluctuations in their medical revenues due to the revision of the medical service payment
system approximately every two years and the medical insurance system reform (Article 2, Paragraph 2 of the Health Insurance
Law Revision Law).

9Health Care Business
Our Group’s Health Care Business is mainly attributed to services that are covered by public long-term care insurance.
Therefore, a review of the long-term care insurance system or compensation can have a major effect on net sales and profits.
These services are regulated by the Long-term Care Insurance Law (Law No. 123, December 7, 1997) and various otherlaws 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 compensation is subject to review every three years. These revisions hereafter may have an
impact on the profitability of our health care business.
Though the acquisition of COMSN-owned companies providing nursing care services will be subject to due diligence, we
may experience some unexpected problems.
Therefore, we have introduced a risk hedge safety measure by depositing 5% of the cost needed to acquire the COMSN
facility care companies into escrow.

Education BusinessOur major educational program, the home helper training courses, is subject to the “ordinance concerning home-visit careproviders” (Health, Labor and Welfare Ministry Ordinance No. 23), and is required to obtain certification from the prefectural
government.
The requirements for care workers are planned to change on April 1, 2012 (changes in training hours and curriculums thatworkers must take). This may have an effect on the sales and profits from the training courses for care workers.

2) Risks Due to the Internal Management System
The Nichii Gakkan 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 Personal Information Protection Law.
As we recognize the protection of personal information as an extremely important business challenge, we have establishedan “Information Privacy Committee” to ensure appropriate acquisition and handling of information, and are working to prevent
leakage of personal information and reoccurrence of such problems, setting up privacy policies and providing in-house training.
However, a personal information leak could affect our business performance due to loss of confidence, claims for damage,etc.

3) Risks Due to Natural Disasters and Accidents
Large-scale natural disasters such as earthquakes or tsunami might impede staff and facilities from operating properly.
If this causes unavailability of our services to users, it could reduce sales and incur special expenses.

10

2. Status of the Corporate Group
This consolidated corporate group consists of Nichii Gakkan Company, its 22 subsidiaries, and its 1 affiliate. The Group is
engaged in four businesses (Medical Support Business, Health Care Business, Education Business, and Other Businesses). In
Medical Support Business, the Group primarily provides medical office administrative services to medical institutions andpharmacies; sales, disinfection, and sterilization services (inside the hospital) for medical equipment; and medical affairs
consulting. In Health Care Business, the Group provides home care services mainly under long-term care insurance (home-visit
long-term care, home-visit bathing, day care), specified facility care service, sale and rental of welfare equipment, catering, andother services. In Education Business, the Group provides educational programs primarily for medical office workers and homehelpers. In Other Businesses, Nichii Gakkan Company’s subsidiaries take the lead in providing data processing, storage anddelivery service, book publication and sale, production and sale of flowers, ornamental plants, seeds and saplings, leasing, andmanpower services.
The Group’s businesses and positioning of each business are as shown below. The business categories correspond to thosein the segment information by business category.
Business Category

Principal Businesses/Products

Medical Support Business

Medical office administrative services such as reception,
medical fee claims, accounting, computer operations, andmedical record management, sell/disinfection/sterilization
services (inside the hospital) for medical equipment,
medical affairs consulting

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

Health Care Business

Home-visit long-term care, home-visit bathing, day care,
Keihin Life Service Co., Ltd.
specified facility care, sale and rental of welfare equipment, Nichii Carenet Co., Ltd.
Nihon Support Service Co., Ltd.
catering, etc.

Nichii Gakkan Company

Education Business

Other Businesses

Courses for medical office work, home helper training,babysitter training, and sign language
Information processing, storage and delivery service,
publication and sale of books, production and sale offlowers, ornamental plants, seeds and saplings, leasing,manpower service, etc.

11

Nichii Care Palace Co., Ltd.
Nichii Gakkan Company

Nihon Support Service Co., Ltd.
Tokyo Marunouchi Publishing Co., Ltd.
Roris Co., Ltd.
Nihon Credit Lease Co., Ltd.

The functions of the corporate group described above can be illustrated as shown below.

Health Care Business- Home-visit long-term care
- Home-visit bathing- Day care
- Specified facility care
- Sale and rental of welfare equipment- Catering- Consultation and information- Welfare equipment / ASP

Nichii Gakkan Company
Sales ofmerchandise

Consolidated subsidiaries
Keihin Life Service Co., Ltd.
Nichii Carenet Co., Ltd.
Nihon Support Service Co., Ltd.
Nichii Care Palace Co., Ltd.
Non-consolidated subsidiaries
Hospica Co., Ltd. / 12 other companies
Affiliates not subject to the equity method
Life Care Partners Co., Ltd.

Sales of merchandise
Provision of services

Local governments, etc.
Medical institutions
Customers
Member stores

Sales of merchandise
Provision of services

Medical Support Business

Other Businesses-Data processing, and storage anddelivery service-Publishing and sale of publications-Production and sale of flowers,
ornamental plants, seeds and saplings-Leasing-Manpower service

Customers
Local governments, etc.

Health Care Business

Provision of services

Nichii Gakkan Company
Nihon Support Service Co., Ltd.

Medical institutions, etc.

Storage and delivery service of teaching materials and products,
Computer operations service,
Leasing, Manpower service

Education Business
Consolidated subsidiaries
Nihon Support Service Co., Ltd.
Tokyo Marunouchi Publishing Co., Ltd.
Roris Co., Ltd.
Nihon Credit Lease Co., Ltd..
Non-consolidated subsidiaries
Yao Iryo PFI / 1 other company

Nichii Gakkan Company

Students

Courses, Sale and lease of
educational books, Leasing

Health Care BusinessLeasing,
Manpower
service

Nichii Gakkan Company
Keihin Life Service Co., Ltd.
Nichii Carenet Co., Ltd.
Nichii Care Palace Co., Ltd.

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

Customers
Merchandise sales, Childcare
Provision of services
Leasing, Manpower service

123. Management Principles(1) Basic Principles of Management
Based upon the management philosophy of “Contributing to the health and welfare of society”, our company aims to berecognized as contributing to the improvement and furthering the quality of life and society in three fields; the medical support
business, nursing care and education for daily living.
Nichii’s mission
1) Assist stable management of healthcare institutions in healthcare related fields.
2) Create an environment where people can live a full life through nursing care without worries.
3) Support educational activities, to encourage self-improvement.
We also recognize that we must “fulfill our social responsibilities as a company”, “comply with corporate ethics”, and “elevatethe 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 spread the idea of self-improvement to each organizational structure and employee aswell as aggressively maximizing our corporate value based on the slogan, “Strength through kindness.”(2) Management Goals
Our long-term goal includes taking the following three points into consideration 1) our core business is manpower dispatching
services, 2) the business of medical support and those businesses in the welfare field are expected to expand in the future and 3)
share value should be focused upon;
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
Japan is becoming a society that faces a decline in population due to a low birthrate and an aging population. Given the situation,
our Group is putting into effect a business growth strategy and organizational reform with an aim of establishing a robust
corporate structure that quickly and adequately responds to the changes in business environment.
Regarding our business growth strategy, the office is tackling the concepts of reinforcing existing businesses, expanding
business operations and creating new businesses for each division. The head office (Information and Strategy Headquarters) at thePort Island Center is now involved in the development of new services and products, including the development of “Receipt
Check Eye” which is a new product for the Medical Support Business.
Although multiple brands existed in our group, we integrated all these brands into one brand, “Nichii” and are carrying out
corporate activities aiming at improving our brand value.
The acquisition of the COMSN companies that provide nursing care services allows us to provide comprehensive careservices ranging from preventive care service to facility care service. Furthermore, synergistic effects with our existing business
operations will be achieved, enabling us to provide high-quality services and efficient delivery of services in all segments of ourbusiness.
While leveraging our know-how regarding facility care services, we are committed to develop and provide quality services,
and at the same time to improve the structure of the group, so that further synergetic effects and more efficient business
management will be achieved.

13

(4) Issues to be Handled
Medical Support Business
Because the law relating to the reform of the medical/health insurance system was passed in 2006, it is expected that
medical/health insurance system reform will begin in 2008, including “moderation in health care costs”, and “improvement of thelocal care system” and “the medical care system for ‘late elderly’ people”. This reform includes the strengthening of thecollaboration between medical care and long-term nursing care. As a result of the reform, medical institutions will be requested torealize optimal and effective management by taking full advantage of existing medical resources. We believe this situation will
facilitate the differentiation of functions (hospitals and care services) and the strengthening of the medical care and nursing
collaboration in local areas.
In order to support medical institutions as our partners, we will strive to build and develop collaboration between medicalcare and long-term nursing care by utilizing our business resources (facility care services and home care services).
To adequately deal with various problems faced by medical institutions, we aim to stabilize and improve utilization of humanresources, and enhance human resources development.
As a mid- and long-term business strategy, we will promote expansion of system resource related services aiming at
improving information technology such as online processing of receipts and the use of electronic medical charts for healthcare
institutions and will aggressively develop and provide “Healthcare management support services” to produce better value
services including the enhancement of staff members’ skills.

Health Care BusinessAs a result of the amendment of the long-term care insurance system in April 2006, the number of recipients of long-term careinsurance in 2006 decreased by 2.3% from the previous year. It was the first time that the number of recipients decreased since
the start of this insurance system, marking a significant turning point. It is expected that other reforms will be introduced in a
step-by-step fashion in order to provide care services that satisfy the needs of the elderly, including provision of housing, until theyear 2015 when all members of the “Dankai” generation will be 65 or older.
In order to address such changes, we are making efforts to effectively attract and retain service users, and develop services
that are not covered by the long-term care insurance, which are less subject to the changes and reforms of the medical/insurance
system.
To effectively attract and enroll users, we have built up an infrastructure for “preventive care service” at an early stage, andhave been consistently providing this service. Based on our results and experience, we will continue to focus on the development
and management of “Comprehensive Regional Support Centers” and pursue more contracts for local support business.
Our efforts will also include further development and strengthening of services for the handicapped, in order to promote
disabled independence support services, and the strengthening of services covered by long-term care insurance, including
preventive care services.
The market for services covered by long-term care insurance is most likely to grow, so we will endeavor to expand the use ofsuch services and improve the profitability of this business segment by increasing the quality of services.
As one of the services not covered by long-term care insurance, we offer “facility care service”. We have already establishedthe “Nichii Living Co., Ltd.”, that provides rental residences for the elderly, and we are aiming to build this type of facilities
primarily in the Tokyo metropolitan area.
As a result of the acquisition of the COMSN companies and Japan-Silver Inc. (now the Nichii Care Palace Co., Ltd.), we have
183 group homes and 63 pay nursing homes, and one home for the elderly, in Japan. We will ensure smooth management of thesefacilities and provide quality services, and at the same time will try to complete the 23 in-progress facilities promptly.
14

By leveraging five types of service infrastructure (preventive care, home care, rental residence for the elderly, group homes
and pay nursing homes), we will provide seamless services for all users, from those who do not require immediate nursing care to
those who require a nursing level of middle or high. We endeavor to provide high-quality services that satisfy our users.
In parallel with organizational reform, we will continue to train and educate our employees at all facilities to ensurecompliance with applicable laws, including the standards/rules for personnel allocation. Our efforts also include the proper
management of offices and facilities, the improvement and expansion of our services, and an increase in customer satisfaction.
By providing consistent services covered by long-term care insurance and contributing to the development of the nursing-careindustry, we will maintain our position as the leading company in the field.

Education BusinessWith the declining birthrate and aging population, the number of workers in nursing care and social services totaled about
3,280,000 in 2005, about 4.6 times that in 1994, 710,000 workers. The Cabinet Office estimates that we will see a society where
one out of every twenty workers must be engaged in nursing care services by 2030. If the number of long-term care beds in
hospitals is further reduced according to official policies, “family caregivers” are likely to increase. Under these conditions, it isexpected that even people who do not wish to work as a care worker will have to gain nursing care knowledge and skills.
We are developing and providing several training courses related to nursing care and welfare, all of which are based on our
long-term care services know-how, changes in legal frameworks and policies, and information on the purposes and skills of thepeople involved in nursing care. We are also creating and providing training courses that deal with the medical field, which are
popular among those who seek employment in medical institutions, including a medical office worker course that concentrates on
the computerized processing of medical records, and a nursing assistant training course. We will continue to attract more students
to take these courses.
The Education Business is operated on the basis of our unique concept “education will lead to employment,” and, in thatsense, it serves as a source of employees for our business segments. Our education business maintains its lead against competitors
under the situation where staffing shortages are getting worse in the medical and nursing care fields.
We have positioned the Education Business as a fundamental strategic service that also supplies us with human resources. For
this reason, we will execute promotional activities through the prioritized use of advertising media that can achieve high response
rates, including TV commercials and the Web, and, at the same time, will implement effective classroom/course management best
suited for the scheme of specialized branch offices and a specific area, in order to improve the profitability of this businesssegment.

Other Businesses
The Other Businesses focus on support operations such as publication of books on medicine and welfare, taking advantage of ourmanagement resources in the medical and welfare services.
The publication business is making a contribution through improving the quality of personnel by providing the latest
specialized information through publication of magazines specializing in medicine and welfare, and textbooks for the Education
Business.
We will continue to implement our group strategies with the ideal form of organization in order to increase the corporate
value of the Nichii Gakkan group.

(5) Matters Concerning Parent Company
There are no relevant matters.

15

4. Consolidated Financial Statements(thousands of yen)

(1) Consolidated Balance Sheets
Half-Year ended
Sep. 30, 2006
Category

Note
No.

AmountShare(%)

Half-Year ended
Sep. 30, 2007
Share
Amount(%)

Year ended
Mar. 31, 2007
Share
Amount(%)

44.3

6,402,420
25,031,145
1,233,228
10,325,600
3,423,444
2,882,191(93,066)
49,204,962

45.3

9,872,547
24,124,838
1,475,298
900
3,766,302
3,329,580(105,039)
42,464,428

46.1

37.5

29,413,803
8,205,304
736,416
38,355,524

35.3

26,351,745
7,681,997
440,157
34,473,899

37.4

4.2

6,149,280
1,093,079
7,242,360

6.6

2,670,896
1,133,609
3,804,505

4.1(ASSETS)I

II

Current assets
1. Cash and deposits
2. Notes and accounts receivable
3. Inventories
4. Short-term loans receivable
5. Deferred tax assets
6. Other current assets
7. Allowance for doubtful accounts
Total current assets
Fixed assets(1) Tangible fixed assets
1. Buildings and structures
2. Land
3. Other tangible fixed assets
Total tangible fixed assets(2) Intangible fixed assets
1. Goodwill
2. Other intangible fixed assets
Total intangible fixed assets(3) Investments and other assets
1. Investment in securities
2. Long-term loans receivable
3. Guarantee money deposited
4. Deferred tax assets
5. Other investments and otherassets
6. Allowance for doubtful accounts
Total investments and other assets

*2

*1
*3
*3

9,414,600
25,512,929
1,877,408
2,330,274
2,824,452(109,616)
41,850,049

26,830,136
7,828,496
783,00735,441,640
2,774,831
1,237,157
4,011,988
921,848
2,463,168
4,955,686
3,412,716

1,298,575
3,032,733
5,246,133
1,578,469

1,201,807
2,444,542
4,763,833
1,525,228

3,981,483

3,462,763

2,169,636(2,532,638)
13,202,266

14.0(700,005)
13,918,670

12.8(732,681)
11,372,368

12.4

Total fixed assets

52,655,895

55,7

59,516,555

54,7

49,650,772

53.9

Total assets

94,505,944

100.0

108,721,517

100.0

92,115,200

100.0

*1

16

(thousands of yen)

CategoryI

II(LIABILITIES)Current liabilities
1. Notes and accounts payable
2. Short-term loans payable
3. Current installments oflong-term debt
4. Current redemption of bonds
5. Accrued expenses
6. Consumption tax payable
7. Income taxes payable
8. Allowance for employee
bonuses
9. Allowance for directors’
bonuses
10. Other current liabilities
Total current liabilities
Long-term liabilities
1. Bonds
2. Long-term loans payable
3. Long-term advance received
4. Allowance for employee
retirement benefits
5. Allowance for directors'
retirement benefits
6. Other long-term liabilities
Total long-term liabilities

Total liabilities
I

II(NET ASSETS)
Shareholders’ equity
1. Common stock
2. Capital surplus
3. Retained earnings
4. Treasury stock
Total shareholders' equity
Unrealized gains and adjustments
1. Unrealized gains on othersecurities
Total unrealized gains andadjustments

III Minority interests

Note
No.

Half-Year ended
Sep. 30, 2006
Share
Amount(%)

Half-Year ended
Sep. 30, 2007
Share
Amount(%)

Year ended
Mar. 31, 2007
Share
Amount(%)

1,425,359
395,000

931,780
13,613,000

1,144,987
402,000

49,54623,28733,1783,808,000
16,282,914
1,309,096
598,5883,808,000
16,704,525
1,360,771
556,077

3,808,000
16,011,429
1,574,166
154,193

3,428,992

3,554,612

3,320,330-

22,68036,0004,918,485
32,215,984

34.1

5,060,849
45,635,584

42.0

4,891,422
31,375,708

7,192,000
27,110-3,384,000
20,732
4,654,523

5,288,000
19,118-2,867,891

3,262,066

2,941,991

128,006

136,346

132,243

34.1

120,683
10,335,692

10.9

147,861
11,605,531

10.6

110,927
8,492,282

9.2

42,551,677

45.0

57,241,115

52.6

39,867,990

43.3

11,933,790
17,354,214
28,396,360(5,931,686)
51,752,679

12.6
18.4
30.0
(6.2)
54.8

11,933,790
17,354,214
27,924,858(5,936,267)
51,276,596

11.0
16.0
25.7
(5.5)
47.2

11,933,790
17,354,214
28,686,400(5,934,751)
52,039,654

13.0
18.8
31.1
(6.4)
56.5

67,4370.1

42,1280.0

56,826

0.0

67,4370.1

42,1280.0

56,8260.0

134,1510.1

161,6770.2

150,729

0.2

Total net assets

51,954,267

55.0

51,480,402

47.4

52,247,210

56.7

Total liabilities and net assets

94,505,944

100.0

108,721,517

100.0

92,115,200

100.0

17

(thousands of yen)

(2) Consolidated Statements of Income
Half-Year ended
Sep. 30, 2006
Note
No.

Half-Year ended
Sep. 30, 2007

Year ended
Mar. 31, 2007

AmountShare(%)

AmountShare(%)

AmountShare(%)

I Net sales
II Cost of sales

102,211,719
82,224,638

100.0
80.4

96,701,923
78,699,549

100.0
81.4

202,549,097
163,310,893

100.0
80.6

Gross profit

19,987,080

19.6

18,002,373

18.6

39,238,203

19.4

Category

III Selling, general and administrative
expenses
1. Advertising and promotion
expenses
2. Directors’ compensation
3. Salaries and benefits
4. Transfer to allowance for bonuses
5. Transfer to allowance fordirectors’ bonuses
6. Retirement benefit expenses
7. Transfer to allowance fordirectors’ retirement benefits
8. Directors’ retirement benefits
9. Legal welfare expenses
10. Travel and transportation
expenses
11. Rent
12. Transfer to allowance for
doubtful accounts
13. Depreciation expenses
14. Amortization of goodwill
15. Others
Total selling, general andadministrative expenses
Operating income
IV Non-operating income
1. Interest income
2. Dividend income
3. Commission on consignment for
office work
4. Income from lease of fixed assets
5. Interest on refund of income taxes
and others
6. Income from lease of facilities
7. Others
Total non-operating income
V Non-operating expenses
1. Interest expenses
2. Bond interest
3. Compensation for damages
4. Bond issue cost
5. Loss on disengagement ofguarantee money deposited
6. Others
Total non-operating expenses
Ordinary income

3,486,948

2,758,168

6,938,565

76,7985,993,677
809,974

73,636
5,668,484
858,511

152,406
12,621,856
808,351--

36,000

164,007

157,644

326,118

4,264

4,102

8,501

86
917,868

942,71786
1,857,519

680,723

661,483

1,362,105

1,730,481

1,542,018

3,439,362

5,372

-

29,184316,417
103,820
4,368,069

315,074
103,533
4,036,426

662,828
207,389
8,152,111

18,658,508

18.3

17,121,801

17.7

36,602,387

18.1

1,328,571

1.3

880,572

0.9

2,635,815

1.3

16,562
12,49339,383
5,292

26,342
12,83844,09543,71490,90415,756

18,33730,985-30,210-47,755
136,663

23,16634,323
194,427

137,690298,762

0.1

0.2

28,72015,158
3,833
32,94024,81039,128
5,943-

40,451
57,40927,262
32,940-34,60741,063

12,841
93,493
1,371,741

18

0.1
1.3

4,207
108,696966,3030.1
1.0

25,500224,627
2,709,950

0.1

0.1
1.3

(Thousands of yen)Half-Year ended
Sep. 30, 2006
Category
VI Extraordinary income
1. Gain on sale of fixed assets
2. Gain on sale of investment insecurities
3. Reversal of allowance for
doubtful accounts
4. Other extraordinary income
Total extraordinary income
VII Extraordinary losses
1. Loss on retirement of fixed assets
2. Loss on sale of fixed assets
3. Loss on revaluation of
inventories
4. Loss on impairment
5. Loss on disengagement of lease
6. Cost for the settlement
7. Expenses for change of brands
Total extraordinary losses
Income before income taxes
Income, inhabitants and business
taxes
Adjustments for income and othertaxes
Minority interests
Net income

Note
No.

Amount

*1

(%)

*2

AmountYear ended
Mar. 31, 2007(%)

Amount

(%)

-

489

29,320

-

-

2,850

-

62,377-*1*1

Half-Year ended
Sep. 30, 2007

0.0

62,8660.1

634
32,804

17,393-25,468-59,472
22,147-

216,258

274,665

52,56096,300166,253
1,205,487

180,000
34,580456,307572,862

52,560103,395
512,2422,230,512

0.1
1.2

0.5
0.6

252,118

242,451

510,409454,223

299,698

912,722

14,667484,478

19

0.0
0.5

16,986
13,7250.0
0.0

32,612774,768

0.1

0.3
1.1

0.0
0.4

(3) Consolidated Statements of Changes in Shareholders’ Equity

The current consolidated fiscal term (April 1, 2007 to September 30, 2007)(Thousands of yen)
Shareholders’ equity

Balance as of March 31, 2007

Common stock

Capital surplus

11,933,790

17,354,214（5,934,751）

Total
shareholders’equity52,039,654（391）（2,184）668（774,875）
13,725（2,184）276

Retainedearnings
28,686,400

Treasury stock

Amount of fluctuation during theconsolidated fiscal term
Dividends from retained earnings
Net income
Purchase of treasury stock
Retirement of treasury stock
Amount of fluctuation of items otherthan shareholders’ equity during theconsolidated fiscal term
Total amount of fluctuation during theconsolidated fiscal term
Balance as of September 30, 2007

（774,875）
13,725--（761,541）（1,516）（763,057）

11,933,790

17,354,214

27,924,858（5,936,267）

51,276,596

Minority
interests

Total net
assets

Unrealized gains andadjustments
Total
unrealized
gains andadjustments
56,826

Unrealized
gains on othersecurities
Balance as of March 31, 2007

56,826

150,729

52,247,210

Amount of fluctuation during theconsolidated fiscal term
Dividends from retained earnings
Net income
Purchase of treasury stock
Retirement of treasury stock
Amount of fluctuation of items otherthan shareholders’ equity during theconsolidated fiscal term

(774,875)
13,725(2,184)276(14,698)(14,698)

10,947(3,750)Total amount of fluctuation during theconsolidated fiscal term

(14,698)(14,698)

10,947(766,808)

Balance as of September 30, 2007

42,12842,128

161,677

51,480,402

20

(Thousands of yen)

(4) Consolidated Statements of Cash Flows

Category
I

Note
No.

Cash flows from operating activities
1. Income before income taxes
2. Depreciation expenses
3. Decrease in allowance for doubtful
accounts
4. Increase (decrease) in allowance for
employee bonuses
5. Increase(decrease) in allowance fordirectors’ and auditors’ bonuses
6. Increase in allowance for employee
retirement benefits
7. Increase (decrease) in allowance fordirectors’ and auditors’ retirement benefits
8. Interest and dividends income
9. Interest expenses
10. Loss on disagreement of guarantee money
deposited
11. Amortization of goodwill
12. Gain on sale of investment in securities
13. Other incomes
14. Loss on retirement of fixed assets
15. Loss on sale of fixed assets
16. Gain on sale of fixed assets
17. Loss on impairment
18. Cost for the settlement
19. Loss on revaluation of inventories
20. (Increase) decrease in accounts receivable
21. Decrease in inventories
22. Increase in other current assets
23. Decrease in claims provable inbankruptcies
24. Decrease in accounts payable(Decrease) increase in other current
25.
liabilities
26. Decrease in consumption tax payable
27. Decrease in other fixed assets
28. Increase in other long-term liabilities
29. Directors’ and auditors’ bonuses paid
SubtotalInterest and dividends received
Interest paid
Income and other taxes paid
Income and other taxes refundedAmount of the settlement
Cash flows from operating activities

21

Half-Year ended
Sep. 30, 2006

Half-Year ended
Sep. 30, 2007

Year ended
Mar. 31, 2007

AmountAmountAmount1,205,487
986,683

572,862
1,001,775

2,230,512
2,021,741(31,862)(65,188)(1,836,397)(46,901)

200,282(155,563)-(13,320)

36,000100,028

157,125

174,129(1,202)

4,102

3,034

(29,056)
43,878(44,676)
63,939(39,181)
97,860-34,607-

103,8200
17,39352,560(176,568)
66,483(164,542)

103,533
1
25,468(489)
180,000
216,258(54,818)
29,472(236,598)

207,389(2,850)(8,148)59,472
22,147(29,320)
52,560274,665
1,135,841
193,928(718,806)-

12,215

1,842,880（311,367）（213,206）(591,739)

717,230(717,040)

513,686(433,569)
506
18,350(36,000)
2,085,353
28,279(29,408)(1,694,691)
389,532(337,087)
431
1,534
921,182
26,753(62,909)(148,918)
1,223,751(180,000)
1,779,859(168,499)
73
8,593(27,850)
5,296,163
38,253(85,398)(2,592,692)
2,656,325

(Thousands of yen)

Category

Note
No.

Cash flows from investing activities
1. Payments for time deposits
2. Proceeds from time deposits
Acquisition of new consolidated
3.
subsidiaries
Acquisition of shares of consolidated
4.
subsidiaries
5. Acquisition of tangible fixed assets
6. Proceeds from sale of tangible fixed assets
7. Acquisition of intangible fixed assets
8. Purchases of investment in securities
Proceeds from sale of investment in9.
securities
10. Proceeds from sale of shares of relatedcompanies
11. Acquisition of shares of related companies
12. Long-term prepaid expenses paid
13. Loans payable
14. Proceeds from return of loans
15. Payments for guarantee money deposited
16. Proceeds from collection of guaranteemoney deposited
17. Other investments (net)Cash flows from investing activities
III Cash flows from financing activities
1. Proceeds from short-term loans
2. Repayments of short-term loans
3. Proceeds from bond issued
4. Payments for redemption of bonds
5. Proceeds from long-term loans
6. Repayments for long-term loans
7. Proceeds from sale of treasury stock
8. Acquisition of treasury stock
9. Payments for dividends by parent company
10. Payments for dividends to minority
shareholders
Cash flows from financing activities

Half-Year ended
Sep. 30, 2006

Half-Year ended
Sep. 30, 2007

Year ended
Mar. 31, 2007

AmountAmountAmountII(58,000)
40,000(255,000)
266,000(396,000)
300,000-(4,591,675)-(6,000)(1,000)(7,000)(1,225,579)(221,587)-(554,098)
1,326(142,688)-(1,340,623)
160,977(132,451)(300,000)

300,000-

305,000-

20,000-(10,346)(25,600)
119,829(150,004)(140,000)(10,928)(10,349,100)
66,370(226,517)(47,022)(61,400)
173,355(210,196)

171,549

158,581423,594(11,956)(1,077,695)(600)(15,759,331)

41,359(1,090,406)

86,240,000(98,908,000)
11,000,000
11,933(29,793)643(2,891)(780,035)

204,990,000(191,779,000)(1,904,000)
12,144(20,421)276(2,184)(771,968)

170,540,000(183,201,000)
11,000,000(1,904,000)
15,689(57,909)808(6,370)(769,594)(4,500)(4,500)(4,500)(2,472,642)

10,520,345(4,386,876)

(0)

(1)

(1)

V Change in cash and cash equivalents(3,160,805)(3,459,127)(2,820,958)

VI Cash and cash equivalents at beginning of
the year

12,391,506

9,570,547

12,391,506

VII Cash and cash equivalents at end of the year

9,230,700

6,111,420

9,570,547

IV Effect of exchange rate changes on cash andcash equivalents

22Basis of Presenting Consolidated Financial Statements
Half-Year ended Sep. 30, 2006
1. Scope of Consolidation
The accompanying consolidated financial
statements include the account of thefollowing 7 subsidiaries:
Tokyo Marunouchi Publishing Co., Ltd.,
Nihon Support Service Co., Ltd., Roris
Co., Ltd., Keihin Life Service Co., Ltd.,
Reha Team Japan Co., Ltd., Nihon
Credit Lease Co., Ltd., Power Bank Co.,Ltd.
“Hospica Co., Ltd.” and 6 othersubsidiaries are not included in the scopeof consolidation because their total assets,
net sales, net income and loss
(corresponding to respective equity) andretained earnings (corresponding torespective equity) are all small, and havelittle effect on the financial statements as awhole.

Half-Year ended Sep. 30, 2007
1. Scope of Consolidation
The accompanying consolidated financial
statements include the account of thefollowing 7 subsidiaries:
Tokyo Marunouchi Publishing Co.,
Ltd., Nihon Support Service Co., Ltd.,
Roris Co., Ltd., Keihin Life Service
Co., Ltd., Nichii Carenet Co., Ltd.,
Nihon Credit Lease Co., Ltd., Nichii
Care Palace Co., Ltd.
Please note that the financial results for
the Nichii Care Palace Co., Ltd. have been
included in the results for the first half ofthe current consolidated fiscal year ending
March 31, 2008, because it became aconsolidated subsidiary by the acquisitionof stock in September 2007. Also note that
only the balance sheet for Nichii Care
Palace Co., Ltd. has been included in thefirst half of the current consolidated fiscal
year, since the deemed date of acquisitionis the last date of the first half period.
“Hospica Co., Ltd.” and 14 othersubsidiaries are not included in the scopeof consolidation because their total assets,
net sales, net income and loss
(corresponding to respective
equity) and retained earnings(corresponding to respective equity) are
all small, and have little effect on thefinancial statements as a whole.

Year ended Mar. 31, 2007
1. Scope of Consolidation
The accompanying consolidated financial
statements include the account of thefollowing 6 subsidiaries:
Tokyo Marunouchi Publishing Co., Ltd.,
Nihon Support Service Co., Ltd., Roris
Co., Ltd., Keihin Life Service Co., Ltd.,
Nichii Carenet Co., Ltd. (renamed from
“Reha Team Japan Co., Ltd.”), Nihon
Credit Lease Co., Ltd.
Having liquidated Power Bank Co., Ltd.
as of March 27, 2007, we have only
consolidated its income and loss in thesestatements.
“Hospica Co., Ltd.” and 5 othersubsidiaries are not included in the scopeof consolidation because their total assets,
net sales, net income and loss
(corresponding to respective equity) andretained earnings (corresponding torespective equity) are all small and havelittle effect on the financial statements as awhole.

2. Application of the Equity Method
Investments in “Hospica Co., Ltd.” and6 other unconsolidated subsidiaries and
1 affiliate are not covered by the equity
method because their net income andloss (corresponding to respective
equity) and retained earnings(corresponding to respective equity)
have little effect on the financial
statements, and have little importanceas a whole.

2. Application of the Equity Method
Investments in “Hospica Co., Ltd.” and14 other unconsolidated subsidiaries and
1 affiliate are not covered by the equity
method because their net income andloss (corresponding to respective
equity) and retained earnings(corresponding to respective equity)
have little effect on the financial
statements, and have little importanceas a whole.

2. Application of the Equity Method
Investments in “Hospica Co., Ltd.” and 5
other unconsolidated subsidiaries and 1
affiliate are not covered by the equity
method because their net income and loss
(corresponding to respective equity) andretained earnings (corresponding torespective equity) have little effect on thefinancial statements, and have little
importance as a whole.

3. The Balance Sheet Dates of Consolidated
Subsidiaries
Shown below are interim accounting
closing dates for some of the company’s
consolidated subsidiaries.
Keihin Life Service Co., Ltd.
The end of Jun.
Nihon Credit Lease Co., Ltd.
The end of Jun.
Tokyo Marunouchi Publishing Co., Ltd.
The end of Jul.
Nihon Support Service Co., Ltd.
The end of Aug.
For the purpose of preparing these
consolidated financial statements, we haveused financial statement data for thesecompanies as of their respective balance
sheet dates. However, appropriate
adjustments were made for materialtransactions during the periods from theirrespective balance sheet dates to
September 30.

3. The Balance Sheet Dates of Consolidated
Subsidiaries
Shown below are interim accounting
closing dates for some of the company’s
consolidated subsidiaries.
Keihin Life Service Co., Ltd.
The end of Jun.
Nihon Credit Lease Co., Ltd.
The end of Jun.
Nichii Care Palace Co., Ltd.
The end of Jun.
Tokyo Marunouchi Publishing Co., Ltd.
The end of Jul.
Nihon Support Service Co., Ltd.
The end of Aug.
For the purpose of preparing these
consolidated financial statements, we haveused financial statement data for thesecompanies as of their respective balance
sheet dates. However, appropriate
adjustments were made for materialtransactions during the periods from theirrespective balance sheet dates to
September 30.

3. The Balance Sheet Dates of Consolidated
Subsidiaries
Shown below are accounting closing dates
for some of the company’s consolidated
subsidiaries.
Keihin Life Service Co., Ltd.
The end of Dec.
Nihon Credit Lease Co., Ltd.
The end of Dec.
Tokyo Marunouchi Publishing Co., Ltd.
The end of Jan.
Nihon Support Service Co., Ltd.
The end of Feb.
For the purpose of preparing these
consolidated financial statements, we haveused financial statement data for thesecompanies as of their respective balance
sheet dates. However, appropriate
adjustments were made for materialtransactions during the periods from theirrespective balance sheet dates toMarch 31.

23

Half-Year ended Sep. 30, 2006
4. Summary of Significant Accounting
Policies(1) Valuation standard and method forsignificant assets(a) Securities
Other Securities
Securities with available fair market
values are stated at fair market value
based on the quoted market price asof the end of the interim consolidated
period. The related valuation differences
are directly charged or credited to the
net assets, and cost of securities sold iscomputed using the moving averagemethod.
Securities without available fair market
values are stated at a cost determinedusing the moving average method.
(b) Inventories
1) Merchandise is stated at a cost
determined using the moving averagemethod.

Half-Year ended Sep. 30, 2007
4. Summary of Significant Accounting
Policies(1) Valuation standard and method forsignificant assets(a) Securities
Other Securities
Securities with available fair market
valuesSame as on the left.

Securities without available fair market
valuesSame as on the left.
(b) Inventories
1) Same as on the left.

Year ended Mar. 31, 2007
4. Summary of Significant Accounting
Policies(1) Valuation standard and method forsignificant assets(a) Securities
Other Securities
Securities with available fair market
values are stated at fair market value
based on the quoted market price as ofthe end of the consolidated fiscal year.
The related valuation differences are
directly charged or credited to the net
assets, and cost of securities sold iscomputed using the moving averagemethod.
Securities without available fair market
valueSame as on the left.
(b) Inventories
1) Same as on the left.

2) Teaching materials are stated at a cost
determined using the moving averagemethod.

2)Same as on the left.

2)

Same as on the left.

3) Other inventories are mainly stated ata cost determined using the specificcost method.

3)

Same as on the left.

3)

Same as on the left.

(2) Depreciation method for significant
depreciable assets(a) Tangible fixed assets
Tangible fixed assets are depreciatedusing the declining balance method.
However, buildings (except forbuilding attachments) and day carefacilities’ building attachments,
structures and fittings acquired on andafter April 1, 1998 are depreciatedusing the straight-line method.
The range of useful lives is as follows:
Buildings and structures: 10 to 50 years
Other assets (fittings):
3 to 6 years(2) Depreciation method for significant
depreciable assets(a) Tangible fixed assets
Tangible fixed assets are depreciatedusing the declining balance method.
However, buildings (except forbuilding attachments) and day carefacilities’ building attachments,
structures and fittings acquired on andafter April 1, 1998 are depreciatedusing the straight-line method.
The range of useful lives is as follows:
Buildings and structures: 10 to 50 years
Other assets (fittings):
3 to 6 years(Change in Accounting Policy)
In line with amendments to the
Corporation Tax Law, and effective as of
the first half of the current consolidated
fiscal year, Nichii Gakkan Company andits domestic consolidated subsidiaries
have changed the depreciation method
applied to tangible fixed assets acquiredon or after April 1, 2007, according to
the change in the depreciation method
stipulated by the revised Corporation
Tax Law. This change has had only aslight influence on profit and loss.

24(2) Depreciation method for significant
depreciable assets(a) Tangible fixed assets
Tangible fixed assets are depreciatedusing the declining balance method.
However, buildings (except forbuilding attachments) and day carefacilities’ building attachments,
structures and fittings acquired on andafter April 1, 1998 are depreciatedusing the straight-line method.
The range of useful lives is as follows:
Buildings and structures: 10 to 50 years
Other assets (fittings):
3 to 6 years

Half-Year ended Sep. 30, 2006

Half-Year ended Sep. 30, 2007

Year ended Mar. 31, 2007

(Additional Information)
In line with amendments to the
Corporation Tax Law, Nichii Gakkan
Company and its domestic consolidated
subsidiaries record the assets acquired
on and before March 31, 2007, in such a
way that the difference between an
amount equivalent to 5% of theacquisition price and the memorandum
value is depreciated equally over five
years from the fiscal year following theyear in which the remaining value
reached 5% of the acquisition pricecalculated based on the depreciation
method under the previous Corporation
Tax Law. The resulting depreciation
amount is included in the allowance fordepreciation account. This change has
had only a slight influence on profit andloss.
(b) Intangible fixed assets
Intangible fixed assets are depreciatedusing the straight-line method.
Software for internal use is amortizedusing the straight-line method overthe expected available period (5years).

(b) Intangible fixed assets
Same as on the left.

(b) Intangible fixed assets
Same as on the left.

(3) Accounting for significant allowancesand reserves(a) Allowance for doubtful accounts
In the case of bad debt loss foraccounts receivable, generalallowances are provided using a rate
determined by past bad debt
experience for general accounts, andalso specific allowances are provided
in the estimated amounts considered
to be uncollectible after reviewing
certain doubtful accounts.

(3) Accounting for significant allowancesand reserves(a) Allowance for doubtful accounts
Same as on the left.

(3) Accounting for significant allowancesand reserves(a) Allowance for doubtful accounts
Same as on the left.

(b) Allowance for employee bonuses
To provide for payment of bonuses to
employees, allowance for employee
bonuses are recorded as the amount
expected to be paid.

(b) Allowance for employee bonuses
Same as on the left.

(b) Allowance for employee bonuses
Same as on the left.

(c) Allowance for directors’ bonuses―(c) Allowance for directors’ bonuses
The amount set aside for the allowancefor directors’ bonuses is based on theestimated amount appropriate for theHalf-Year ended September 30, 2007.

(c) Allowance for directors’ bonuses
The amount set aside for the allowancefor directors’ bonuses is based on theestimated amount appropriate for theYear ended March 31, 2007.
(Change in accounting policy)
Effective including the Year ended
March 31, 2007, the Company has
adopted the “Accounting Guidelines for
Directors’ Bonuses” (BusinessAccounting Guideline No.4, November
29, 2005). When compared with theprevious accounting policy, operating
income, ordinary income and net
income before tax decreased by ¥36,000
thousand, respectively.

25

Half-Year ended Sep. 30, 2006(d) Allowance for employees’ retirement
benefits
To provide for employees’ retirement
benefits, a reserve for retirement
benefits deemed accrued at the end of
the interim consolidated accounting isrecorded, based on the projected
retirement benefit obligations andrelated plan assets as of the end ofyear ended Mar. 31, 2007.
Actuarial differences are amortized ona straight-line basis over certain years(5 years for regular and junioremployees and managing service staff,
and 4 years for non-managing service
staff) within the average remaining
years of service of employees,
allocated proportionately starting fromthe year following the respective
consolidated fiscal year of occurrence.

Half-Year ended Sep. 30, 2007(d) Allowance for employees’ retirement
benefits
Same as on the left.

Year ended Mar. 31, 2007(d) Allowance for employees’ retirement
benefits
To provide for employees’ retirement
benefits, a reserve for retirement
benefits deemed accrued at the end of
the consolidated accounting year isrecorded, based on the projected
retirement benefit obligations andrelated plan assets as of the end of year
ended Mar. 31, 2007.
Actuarial differences are amortized ona straight-line basis over certain years(5 years for regular and junioremployees and managing service staff,
and 4 years for non-managing service
staff) allocated proportionately startingfrom the year following the respective
consolidated fiscal year of occurrence.

(e) Allowance for directors' retirement
benefits
To provide for benefits for retired
directors and auditors, reserve forretirement benefits is recorded for thenecessary payment amount as of theend of the interim consolidated
accounting period based on internal
regulations.

(e) Allowance for directors' retirement
benefits
Same as on the left.

(e) Allowance for directors' retirement
benefits
To provide for benefits for retired
directors, reserve for retirement
benefits
is recorded for thenecessary payment amount as of the endof the consolidated fiscal year based oninternal regulations.

(4) Accounting of deferred assets
Bond issue costs are recorded in full at
the time of occurrence.

(4) Accounting of deferred assets―(4) Accounting for deferred assets
Bond issue costs are recorded in full at
the time of occurrence.

(5) Accounting for significant leases
Finance lease transactions, other thanthose that are deemed to transfer theownership of the leased assets tolessees, are accounted for using themethod that is applicable to ordinary
operating leases.

(5) Accounting for significant leases
Same as on the left.

(5) Accounting for significant leases
Same as on the left.

(6) Other significant issues for presenting
interim consolidated financial statements
Accounting for consumption taxes
National and local consumption taxes
are accounted for based on the tax
exclusion method. Nondeductible
consumption taxes are treated as
selling, general and administrative
expenses.

(6) Other significant issues for presenting
interim consolidated financial statements
Accounting for consumption taxes
Same as on the left.

(6) Other significant issues for presenting
consolidated financial statements
Accounting for consumption taxes
Same as on the left.

5. Scope of Cash and Cash Equivalents in theInterim Consolidated Statement of Cash
Flows
The cash and cash equivalents
consists of cash on hand, deposits
with banks withdrawable on demand,and short-term investments which arereadily convertible to cash subject toan insignificant risk of any change intheir value and which were purchasedwith an original maturity of 3 months
or less.

5. Scope of Cash and Cash Equivalents in theInterim Consolidated Statement of Cash
Flows
Same as on the left.

5. Scope of Cash and Cash Equivalents in theConsolidated Statement of Cash Flows
Same as on the left.

26

Change in Basis of Presenting Consolidated Financial Statements
Half-Year ended Sep. 30, 2006
(Accounting Standard for Presentation of
Net Assets on Balance Sheet)
Effective from the interim consolidated
accounting period ended September 30, 2006,
the Company has adopted the “AccountingStandard for Presentation of Net Assets in the
Balance Sheet” (Accounting Standard Boardof Japan, Statement No. 5, December 9, 2005)
and the “Implementation Guidance for
Accounting Standard for Presentation of Net
Assets in the Balance Sheet” (AccountingStandard Board of Japan, Guideline No. 8,
December 9, 2005).
The latest total shareholders' equity isequivalent to ¥51,820,116 thousand.
Net assets are shown on the consolidatedbalance sheet for the interim consolidated
accounting period in line with amended
guidelines for the preparation of interim
consolidated financial statements.

Half-Year ended Sep. 30, 2007―

Year ended Mar. 31, 2007
(Accounting Standard for Presentation of
Net Assets on Balance Sheet)
Effective including the year ended March
31, 2007, the Company has adopted the“Accounting Standard for Presentation of
Net Assets on Balance Sheet” (AccountingStandards Board of Japan, Statement No.5,
December 9, 2005) and the“Implementation Guidance for Presentationof Net Assets on Balance Sheet”(Accounting Standards Board of Japan,
Guidance No.8, December 9, 2005).
The amount corresponding to the previous
sum of Shareholders’ Equity in the balance
sheet is ¥52,096,481 thousand.
Net assets are shown on the consolidatedbalance sheet for the consolidated
accounting year in line with amended
guidelines for the
preparation of consolidated financial
statements.

Changes in Listing Method
Half-Year ended Sep. 30, 2006

Half-Year ended Sep. 30, 2007

(Interim Consolidated Balance Sheets)
The item named “Consolidated adjustment account” in the financial
statements for the previous interim consolidated accounting period ispresented as “Goodwill” from thecurrent interim consolidated accounting period.

―(Interim Consolidated Statements of Income)(Interim Consolidated Statements of Income)The item named “Amortization of consolidated adjustment
account” in the financial statements for the previous interim
consolidated accounting period is presented as “Amortizationof goodwill” from the current interim consolidated accounting
period.

In the previous interim consolidated accounting period, the “intereston refund of income taxes and others” and the “income from lease of
fixed assets” were collectively included in “Others” under the
non-operating income section. However, because the amount of eachof these accounts in the current interim consolidated accounting
period has exceeded 10% of the total amount of the non-operating
income, they have been recorded as separate accounts. The amountsof ”interest on refund of income taxes and others” and “income fromlease of fixed assets” in the previous interim consolidated accounting
period were ¥130,000 and ¥9,761,000, respectively.
In the previous interim consolidated accounting period, the “loss on
disengagement of guarantee money deposited” was included in“Others” under the non-operating expenses section. However,
because the amount of this account in the first half of the current
consolidated fiscal year has exceeded 10% of the total amount of the
non-operating expenses, it has been recorded as a separate item. The
amount of this account in the previous interim consolidated
accounting period was ¥402,000.

(Interim Consolidated Statements of Cash Flows)
The item named “Amortization of consolidated adjustment
account” in the financial statements for the previous interim
consolidated accounting period is presented as “Amortization of
goodwill” from the current interim consolidated accounting period.

(Interim Consolidated Statements of Cash Flows)―27

Notes(Consolidated Balance Sheets)
Half-Year ended Sep. 30, 2006

Half-Year ended Sep. 30, 2007

*1. Accumulated depreciation related totangible fixed assets¥8,050,370 thousand
Accumulated depreciation related toother investments and other assets(assets leased to others)¥264,240 thousand*1. Accumulated depreciation related totangible fixed assets¥11,496,161 thousand
Accumulated depreciation related toother investments and other assets(assets leased to others)¥292,489 thousand*1. Accumulated depreciation related totangible fixed assets¥8,621,106 thousand
Accumulated depreciation related toother investments and other assets(assets leased to others)¥278,690 thousand*2. Accounting for notes matured at the endof the interim consolidated
accounting period
The notes receivable to be matured
on the book closing date at the end of
the interim consolidated accounting
period are settled on the date of bankclearing. As the end of the interim
consolidated accounting period was abank holiday, the following notes
matured at the end of the interim
consolidated accounting period areincluded in the balance as of the end of
the interim consolidated accounting
period.
Accounts receivable¥1,224 thousand*2. Accounting for notes matured at the endof the interim consolidated
accounting period
The notes receivable to be matured
on the book closing date at the end of
the interim consolidated accounting
period are settled on the date of bankclearing. As the end of the current
interim consolidated accounting period
was a bank holiday, the following notes
matured at the end of the interim
consolidated accounting period areincluded in the balance as of the end of
the interim consolidated accounting
period.
Accounts receivable¥690 thousand*2. Accounting for note matured at the endof the consolidated accounting year
The notes receivable to be matured
on the book closing date at the end of
the consolidated accounting year are
settled on the date of bank clearing. As
the end of the consolidated accounting
year was a bank holiday, the following
notes matured at the end of theconsolidated accounting year are
included in the balance as of the end of
the consolidated accounting year.

*3. Due to the receipt of governmental
subsidies related to tangible fixed
assets, accumulated advanced
depreciation amounts to ¥161,570
thousand for buildings andstructures, ¥18,856 thousand forothers, and ¥180,426 thousand in total.

*3. Due to the receipt of governmental
subsidies related to tangible fixed
assets, accumulated advanced
depreciation amounts to ¥304,077
thousand for buildings andstructures, ¥21,422 thousand forothers, and ¥325,499 thousand in total.

*3. In the year ended March 31, 2007, theCompany carried out advanced
depreciation for ¥142,506 thousand
worth of buildings and structures and¥2,565 thousand worth of others by
accepting governmental subsidies.
The cumulative total of advanced
depreciation of tangible fixed assets
through acceptance of governmental
subsidies amounts to ¥304,077 thousand
for buildings and structures, ¥21,422
thousand for others, and ¥325,499
thousand in total.

4. Guarantee liabilities
The company is liable as guarantor for
indebtedness of non-consolidated
companies as follows:
Keihin Recycle Jigyo-Kumiai¥222,530 thousand

4. Guarantee liabilities
The company is liable as guarantor for
indebtedness of non-consolidated
companies as follows:
Keihin Recycle Jigyo-Kumiai¥182,070 thousand

4. Guarantee liabilities
The company is liable as guarantor for
indebtedness of
non-consolidated companies as follows:
Keihin Recycle Jigyo-Kumiai¥202,300 thousand

5. Overdraft contract
The company and its consolidated
subsidiaries (Nihon Support Service
Co., Ltd. and 1 other company) havean overdraft contract from five banks
in order to perform efficient financing.
Based on these contracts, total unused
credit available at the end of thisinterim consolidated accounting period
was as follows:(Thousands of yen)
Total credit available 24,500,000
Total credit used
388,000
Balance
24,112,000

5. Overdraft contract
The company and its consolidated
subsidiaries (Nihon Support Service
Co., Ltd.) have an overdraft contractfrom five banks in order to perform
efficient financing.
Based on these contracts, total unused
credit available at the end of thisinterim consolidated accounting period
was as follows:(Thousands of yen)
Total credit available 24,300,000
Total credit used
13,598,000
Balance
10,702,000

5.Overdraft contract
The company and its consolidated
subsidiaries (Nihon Support
Service Co., Ltd. and 1 other company)
have an overdraft contract from fivebanks in order to perform efficientfinancing. Based on these contracts,
total unused credit available at the endof the consolidated accounting year was
as follows:(Thousands of yen)
Total credit available 24,470,000
Total credit used
380,000
Balance
24,090,000

28Year ended Mar. 31, 2007

Accounts receivable¥749 thousand

(Consolidated Statement of Income)Half-Year ended Sep. 30, 2006

Half-Year ended Sep. 30, 2007

Year ended Mar. 31, 2007

*1. Losses on retirement of fixed assets is
itemized as follows:
Losses on retirement of fixed assets(Thousands of yen)
Buildings and structures
14,454
Other tangible fixed assets 2,622
Other intangible fixed assets 316
Total
17,393*1. Gains on sales of fixed assets, losses onretirement of fixed assets are as follows:*1. Gains on sales of fixed assets, losses onretirement of fixed assets and losses onsales of fixed assets are as follows:

Gains on sales of fixed assets(Thousands of yen)
Other tangible fixed assets
38
Land
450
Total
489
Losses on retirement of fixed assets(Thousands of yen)
Buildings and structures 23,361
Other tangible fixed assets 2,107
Total
25,468

Gains on sales of fixed assets(Thousands of yen)Land
29,320Losses on retirement of fixed assets(Thousands of yen)
Buildings and structures
32,526
Other tangible fixed assets
5,189
Other intangible fixed assets 21,756
Total
59,472Losses on sales of fixed assets(Thousands of yen)
Buildings and structures451
Land
21,695
Total
22,147*2. Impairment losses
The group recorded the following
impairment losses in the interim
consolidated accounting period.

―*2. Impairment losses
The group recorded the following
impairment losses in the consolidated
accounting year.

Location
Airis CareShop(Kamakura-shi, Kanagawa)
Use
Shop
Category and amount(Thousands of yen)
Buildings and structures
36,570Land
15,831Others158

Location
Airis CareShop(Kamakura-shi, Kanagawa)
Use
Shop
Category and amount(Thousands of yen)
Buildings and structures
36,570Land
15,831Others158

The group categorizes assets andapplies asset-impairment accounting
based on the smallest business units thatgenerate cash flow independently.
The headquarters and properties suchas training facilities are recognized asshared assets, as they do not generatecash flow by themselves.
The above-listed assets scheduled forsale have been accounted for as
impaired assets, and the carrying
amount was reduced to a recoverable
value. Recoverable value is measured
using net sale value. The calculation isbased on the remaining balance of
the amount equivalent to theappraised value by a real estateappraiser after deducting estimateddisposal cost.

The group categorizes assets andapplies asset-impairment accounting
based on the smallest business units thatgenerate cash flow independently.
The head office and properties such as
training facilities are recognized asshared assets, as they do not generatecash flow by themselves.
The above-listed assets scheduled forsale have been accounted for as
impaired assets, and the carrying
amount was reduced to a recoverable
value. Recoverable value is measured
using net sale value. The calculation isbased on the remaining balance ofappraised value by a real estateappraiser after deducting estimateddisposal cost.

29

(Consolidated Statements of Changes in Shareholders’ Equity)
The current consolidated fiscal term (April 1, 2007 to September 30, 2007)
1. Items regarding the type and total number of issued outstanding shares and the type and number of shares of treasury stocks
Increased number ofshares in Half-Yearended Sep. 30, 2007

Number of sharesat the end of FY2007
Issued and outstanding stock
Common stock
Total
Treasury stock
Common stock*
Total

Decreased number ofshares in Half-Yearended Sep. 30, 2007

(Shares)Number of Shares at theend of Half-Year ended
Sep. 30, 2007

36,508,976
36,508,976--

36,508,976
36,508,976

1,287,351
1,287,351

1,108
1,108

145
145

1,288,314
1,288,314(Notes)1. The increase in the number of common stock for treasury stock by 1,108 resulted from acquisition of fractional stock.
2. The decrease in the number of common stock for treasury stock by 145 resulted from additional acquisition of fractional stock.

2. Items regarding stock acquisition rights and treasury stock acquisition rights.

Category

Companysubmitting thesestatements(parent company)
Consolidated
subsidiaries
Total

Number of shares (shares)

Breakdownof stockacquisitionrightsType ofshares

FY2003*

Commonstock

Stock option-

Balance atthe end of
Half-Year
ended Sep. 30,
2007

Increased in
Half-Year
ended Sep. 30,
2007

Decreased in
Half-Year
ended Sep. 30,
2007

247,500-

247,500

-

-

-

-

-

-

-

-

-

-

-

-

-

247,500-

247,500--

At the end of
FY2007At the end of
Half-Year
ended Sep. 30,
2007(Millions of yen)-

(Note) The decrease in stock acquisition rights in FY2003 resulted from termination of the period for the exercise of the rights.

3. Items regarding dividends(1) Amount of paid dividends(Resolutions)Type of shares

Total amount ofdividends(Thousands of yen)Amount ofdividends per share(yen)June 27, 2007
Annual meeting ofshareholders

Common stock

774,8752230

Base date

Effective date

March 31, 2007

June 28, 2007

(Consolidated Statements of Cash Flows)
Half-Year ended Sep. 30, 2006

Half-Year ended Sep. 30, 2007

Year ended Mar. 31, 2007

1. The reconciliations of cash and cash
equivalents at the end of the interim
period, and accounts in theconsolidatedbalance sheets as of September 30, 2006
are as follows.
(Thousands of yen)
Cash and deposits
9,414,600
Time deposits maturing after 3months(224,000)
Marketable securities
40,099Cash and cash equivalents 9,230,700

1. The reconciliations of cash and cash
equivalents at the end of the interim
period, and accounts in the consolidatedbalance sheets as of September 30, 2007
are as follows.
(Thousands of yen)
Cash and deposits
6,402,420
Time deposits maturing after 3 months(291,000)
Cash and cash equivalents 6,111,420

1. The reconciliations of cash and cash
equivalents at the end of the fiscal year,
and accounts in the consolidated balance
sheets as of March 31, 2007 are as
follows.
(Thousands of yen)
Cash and deposits
9,872,547
Time deposits maturing after 3months(302,000)
Cash and cash equivalents 9,570,547

Half-Year ended Sep. 30, 2006
1. Finance lease transactions other thanthose that are deemed to transfer theownership of the leased assets to lessees(1) Acquisition cost, accumulated
depreciation, accumulated impairment
loss and period ending balance ofleased assets.

Half-Year ended Sep. 30, 2007
1. Finance lease transactions other thanthose that are deemed to transfer theownership of the leased assets to lessees(1) Acquisition cost, accumulated
depreciation, accumulated impairment
loss and period ending balance of leased
assets.

Year ended Mar. 31, 2007
1. Finance lease transactions other thanthose that are deemed to transfer theownership of the leased assets to lessees(1) Acquisition cost, accumulated
depreciation, accumulated impairment
loss and period ending balance of leased
assets.

(Thousands of yen)
Buildings and structures
Acquisition cost
42,809
Accumulated depreciation
20,147
Period ending balance
22,661Other tangible fixed assets
Acquisition cost
13,760,059
Accumulated depreciation 6,942,739
Period ending balance
6,817,319
Other intangible fixed assets
Acquisition cost
2,144,290
Accumulated depreciation 1,244,216
Period ending balance
900,073(Thousands of yen)
Buildings and structures
Acquisition cost
25,010
Accumulated depreciation
15,473
Period ending balance
9,536
Other tangible fixed assets
Acquisition cost
12,324,806
Accumulated depreciation 6,942,649
Period ending balance
5,382,156
Other intangible fixed assets
Acquisition cost
1,372,059
Accumulated depreciation 785,831
Period ending balance
586,227(Thousands of yen)
Buildings and structures
Acquisition cost
25,120
Accumulated depreciation
13,303
Period ending balance
11,817
Other tangible fixed assets
Acquisition cost
12,278,706
Accumulated depreciation 6,525,034
Period ending balance
5,753,671
Other intangible fixed assets
Acquisition cost
1,967,320
Accumulated depreciation 1,252,832
Period ending balance
714,487

Total acquisition cost
15,947,158
Total accumulated depreciation 8,207,104
Total period ending balance
7,740,054

Total acquisition cost
13,721,876
Total accumulated depreciation 7,743,955
Total period ending balance
5,977,920

Total acquisition cost
14,271,146
Total accumulated depreciation 7,791,170
Total period ending balance
6,479,976(2) Outstanding balance of future lease
payments at the end of the period(2) Outstanding balance of future lease
payments at the end of the period(2) Outstanding balance of future lease
payments at the end of the period(Lease Transactions)

Within one year
Over one year
Total

(Thousands of yen)
3,006,066
4,918,663
7,924,730(Thousands of yen)
2,546,815
3,598,833
6,145,649

Within one year
Over one year
Total

Within one year
Over one year
Total

(Thousands of yen)
2,609,739
4,045,305
6,655,044(3) Lease fee payments, reversal of theimpairment of lease property,
depreciation expenses, interest
expenses and impairment losses(Thousands of yen)
Lease fee payments
2,137,420
Depreciation expenses
1,989,065
Interest expenses
127,992(3) Lease fee payments, reversal of theimpairment of lease property,
depreciation expenses, interest expenses
and impairment losses(Thousands of yen)
Lease fee payments
1,530,768
Depreciation expenses
1,421,999
Interest expenses
91,417(3) Lease fee payments, reversal of theimpairment of lease property,
depreciation expenses, interest expenses
and impairment losses(Thousands of yen)
Lease fee payments
3,862,102
Depreciation expenses
3,601,903
Interest expenses
235,552(4) Accounting method for depreciation
expenses
Calculated by assuming the lease termis the depreciable life and depreciating
the remaining amount to zero using thestraight-line method.

(4) Accounting method for depreciation
expensesSame as on the left.

(4) Accounting method for depreciation
expensesSame as on the left.

31Half-Year ended Sep. 30, 2006
(5) Accounting method for interest
expenses
Interest expenses for leased assets arecalculated as the difference between the
total lease payments and the acquisition
price of the leased assets, and theamount is allocated to each periodusing the interest method.

Half-Year ended Sep. 30, 2007
(5) Accounting method for interest
expensesSame as on the left.

Year ended Mar. 31, 2007
(5) Accounting method for interest expenses
Same as on the left.

(6) Subleasing
The above listed finance leasetransactions as a lessee include thosewhere the leased assets are subleased torelated companies under generally
identical conditions. In regard to suchtransactions, the outstanding balance of
future lease payments as a less orat the end of the interim period is asfollows:(6) Subleasing
Same as on the left.

(6) Subleasing
The above listed finance leasetransactions as a lessee include thosewhere the leased assets are subleased torelated companies under generally
identical conditions. In regard to suchtransactions, the outstanding balance of
future lease payments as a less orat the end of the interim period is asfollows:

Within one year
Over one year
Total

(Thousands of yen)
258,937
475,966
734,904

2. Operating lease transactions
Future lease payments
Within one year
Over one year
Total

(Thousands of yen)
25,804
41,18866,993(Loss on impairment)
There is no impairment loss allocatedto lease assets.

(Thousands of yen)
175,888
335,079
510,967

Within one year
Over one year
Total

2. Operating lease transactions
Future lease payments(Thousands of yen)
29,20225,921
55,124

Within one year
Over one year
Total

(Loss on impairment)
Same as on the left.

32

Within one year
Over one year
Total

(Thousands of yen)
205,500
393,163598,663

2. Operating lease transactions
Future lease payments
Within one year
Over one year
Total

(Thousands of yen)
29,40838,61568,024(Loss on impairment)
Same as on the left.

(Marketable Securities)(Half-Year ended September 30, 2006)(Thousands of yen)

1. Other Marketable Securities with Market Value
Half-Year ended Sep. 30, 2006
Value stated on interim
consolidated balance sheet

Acquisition cost

Stock

20,776
20,776

Total

Difference

134,480
134,480

113,703
113,703(Thousands of yen)

2. Marketable Securities without Market Value

Half-Year ended Sep. 30, 2006
Value stated on interim consolidated balance sheet
Other marketable securities
Unlisted stocks

787,368(Half-Year ended September 30, 2007)(Thousands of yen)

1. Other Marketable Securities with Market Value
Half-Year ended Sep. 30, 2007
Value stated on interim
consolidated balance sheet

Acquisition cost

Stock

20,776
20,776

Total

Difference

91,80891,80871,031
71,031(Thousands of yen)

2. Marketable Securities without Market Value

Half-Year ended Sep. 30, 2007
Value stated on interim consolidated balance sheet
Other marketable securities
Unlisted stocks

742,212(Year ended March 31, 2007)(Thousands of yen)

1. Other Marketable Securities with Market ValueYear ended Mar. 31, 2007
Value stated on consolidatedbalance sheet

Acquisition cost

Stock

20,776
20,776

Total

116,590
116,590

Difference

95,813
95,813(Thousands of yen)

2. Marketable Securities without Market ValueYear ended Mar. 31, 2007
Value stated on consolidated balance sheet
Other marketable securities
Unlisted stocks

1,085,217(Derivative Transactions)
The group did not have any derivative transactions in the Half-Year ended September 30, 2006, Half-Year ended September 30, 2007, andYear ended March 31, 2007.

33

(Stock Options)
There are no relevant matters in the Half-Year ended September 30, 2006 and Half-Year ended September 30, 2007.

Year ended March 31, 2007 (April 1, 2006 to March 31, 2007)
1. Contents, scale and changes of stock options(1) Contents of stock options
FY2001
Classification and number of persons for grant

Director
Employee

Number of stock option*1
Date of grantCondition of vested rightCommon stock
207,408 shares
June 28, 2001
Holders of stock acquisition rights are
required to act as directors, executive
officers, auditors or employees of theCompany or affiliated companies at theexecution of such stock acquisitionrights.
This requirement however, does not
apply to those holders who resigned as
directors or auditors of the Company oraffiliated companies at the expiration of
their term of office or to those holders
who retired as employees of theCompany or affiliated companies at thecompulsory age of retirement.

16
323

Requisite service period*2
Exercise period
July 1, 2003 to June 30, 2006
(Notes) 1. The number of stock options is indicated as the converted number of shares.
2. Requisite service period was not specified.

FY2003
Director
16
Employee
586
Subsidiaries’ director
11
Subsidiaries’ auditor
1
Subsidiaries’ employee
14
Common stock
247,500 shares
June 27, 2003
Holders of stock acquisition rights are
required to act as directors, executive
officers, auditors or employees of theCompany or affiliated companies at theexecution of such stock acquisitionrights.
This requirement however, does not
apply to those holders who resigned as
directors or auditors of the Company oraffiliated companies at the expiration of
their term of office or to those holders
who retired as employees of theCompany or affiliated companies at thecompulsory age of retirement.
July 1, 2005 to June 29, 2007

(2) Scale and changes of stock options
This section covers stock options existent in the Year ended March 31, 2007, and the number of stock options is indicated as the converted
number of shares.
1) Number of stock option(Shares)
FY2001

Before the right is vested
End of the previous fiscal year
Right granted
Invalidation
Right vested
Unvested stock options
After the right is vested
End of the previous fiscal year
Right vested
Exercise of right
Invalidation
Unexercised stock options

FY2003--

207,408
207,408-

247,500
247,500

2) Unit information(Yen)
FY2001Price at execution of rightMarket average at execution of right
Fair assessed unit price (date of grant)

FY2003
4,930
-

34

5,746
-

(Segment Information)a. Information by Business Segment
Half-Year ended Sep. 30, 2006 (April 1, 2006 to September 30, 2006)

Net sales and operating income
Net sales(1) Net sales to external customers(2) Inter-segment net sales or transfer
amounts
Total
Operating expenses
Operating income(Thousands of yen)

MedicalSupportBusiness

Health Care
Business

Education
Business

55,316,834

39,532,497

6,741,968

620,418

8,967

162,680

8,972

1,076,559

55,325,802
50,154,570
5,171,231

39,695,178
38,629,575
1,065,602

6,750,941
7,391,563(640,622)

1,696,978
1,650,838
46,139Elimination
or
UnallocatedConsolidated

102,211,719-

102,211,719

1,257,181(1,257,181)-

103,468,900
97,826,548
5,642,351(1,257,181)
3,056,598(4,313,779)

102,211,719
100,883,147
1,328,571

Other
Businesses

Total

Half-Year ended Sep. 30, 2007 (April 1, 2007 to September 30, 2007)

Net sales and operating income
Net sales(1) Net sales to external customers(2) Inter-segment net sales or transfer
amounts
Total
Operating expenses
Operating income(Thousands of yen)

MedicalSupportBusiness

Health Care
Business

Education
Business

Other
Businesses

54,945,566

35,954,011

5,401,841

400,503

Elimination
or
UnallocatedConsolidated

96,701,923-

96,701,923

Total

-

39,130130564,853

604,114(604,114)-

54,945,566
49,829,155
5,116,410

35,993,142
35,551,834
441,3075,401,972
6,222,579(820,607)

965,357
943,751
21,60597,306,038
92,547,320
4,758,717(604,114)
3,274,030(3,878,145)

96,701,923
95,821,350
880,572

Year ended March 31, 2007 (April 1, 2006 to March 31, 2007)
MedicalSupportBusiness(Thousands of yen)

Health Care
Business

Education
Business

Other
Businesses

Total

Elimination
or
UnallocatedConsolidated

Net sales and operating income
Net sales(1) Net sales to external customers
110,956,722
78,027,908
12,469,297
1,095,168
202,549,097
202,549,097(2) Inter-segment net sales or transfer
9,723
245,007
9,216
1,698,138
1,962,085(1,962,085)
amounts
Total
110,966,445
78,272,916
12,478,513
2,793,307
204,511,182(1,962,085)
202,549,097
Operating expenses
100,141,959
76,452,322
14,187,667
2,538,341
193,320,291
6,592,990
199,913,281
Operating income
10,824,486
1,820,593(1,709,154)
254,965
11,190,891(8,555,075)
2,635,815(Notes) 1. The group’s operations are classified into the above business segments with regard to the type of business and other similarities.

2. Principal businesses and products of each business segment
Business Segment
Medical Support
Health Care
Education
Other

Principal Businesses / Products
Medical practice services such as reception, medical fee claims, accounting, computer operations, and medical
record management, sales/disinfection/sterilization services for medical equipment, medical affairs consulting
Home-visit long-term care, home-visit bathing, day care, rental/sale of welfare equipment, catering, etc.
Courses for medical office work, home helper training, babysitter training, and sign language
Information processing, storage and delivery service, publication and sale of books, production and sale offlowers, ornamental plants, seeds and saplings, leasing, manpower service, etc.

3. Unallocatable operating expenses
The unallocatable operating expenses included in the “Elimination or Unallocated” account of the operating expenses for
Half-Year ended Sep. 30, 2006, Half-Year ended Sep. 30, 2007 and Year ended March 31, 2007 are ¥4,378,438 thousand,¥3,923,210 thousand, ¥8,595,030 thousand, respectively. They mainly consist of expenses for the parent company’s
administrative sections such as general administration division and accounting division.
b. Information by Geographical Segments
Geographic segment information is not presented because the company has had no overseas consolidated subsidiaries or significant
ranches in Half-Year ended Sep. 30, 2006, Half-Year ended Sep. 30, 2007 and Year ended March 31, 2007.

c. Overseas Sales
Overseas information is not presented because the company has had no overseas sales in Half-Year ended Sep. 30, 2006, Half-Year ended
Sep. 30, 2007 and Year ended March 31, 2007.

35

(Per Share Information)
Half-Year ended Sep. 30, 2006
Net assets per share¥1,471.19
Net income per share¥13.75

Half-Year ended Sep. 30, 2007
Net assets per share¥1,457.06
Net income per share¥0.39

Year ended Mar. 31, 2007
Net assets per share¥1,479.10
Net income per share¥22.00

Diluted net income per share is notpresented because there were no potential
stocks with dilutive effect.

Diluted net income per share is notpresented because there were no potential
stocks.

Diluted net income per share is notpresented because there were no potential
stocks with dilutive effect.

Note: Shown below is the basis for calculation of net income per share and diluted income per share.
Net income per share
Net income(Thousands of yen)Amount not attributable to common
stockholders (Thousands of yen)
(Directors’ and auditors’ bonuses
through profit distribution included)
Net income relating to common
stock(Thousands of yen)
Average number of shares during
the fiscal year (Thousands of shares)
Net income per share – diluted
Dilution of net income(Thousands of yen)
Increase in amount of common
stock (Thousands of yen)
(Stock acquisition rights included)
Outline of stock not included indiluted net income per share due tolack of dilutive effectHalf-Year ended Sep. 30, 2006

Half-Year ended Sep. 30, 2007

484,478

13,725

774,768

-

-

-

-

-

-

484,478

13,725

774,768

35,22335,22135,223

-

-

-

-

-

-

Stock acquisition rights
Number of shares for the stockacquisition rights based on the
resolution of the annual
meeting of shareholders heldon June 27, 2003: 2,250 shares-

Stock acquisition rights
Number of shares for the stockacquisition rights based on the
resolution of the annual
meeting of shareholders heldon June 27, 2003: 2,250 shares(Important Subsequent Events)
There are no relevant matters.

36

Year ended Mar. 31, 2007