Financial Results for the Year Ended March 31, 2010
May 17, 2010
Name of listed company: Nichii Gakkan Company
Listed on: Tokyo Stock Exchange 1st Section
Securities code:
9792
URL: http://www.nichiigakkan.co.jp
Representative:
Daisuke Terada, President and Representative Director
Contact:
Koichi Terada, Director, Vice President of Accounting and Finance Division TEL: 03-3291-2121
Scheduled date to hold the ordinary general meeting of shareholders: June 25, 2010
Scheduled date of filing annual securities report:
June 28, 2010
Scheduled date to start dividends distribution:
June 28, 2010
(Figures shown are rounded down to the nearest million yen.)

1. Consolidated financial results for the year ended March 31, 2010 (April 1, 2009 - March 31, 2010)(1) Consolidated operating results(Percentage figures represent changes from the previous year.)

Net Sales

Operating Income

Ordinary Income

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Year ended March 31, 2010

235,352

10.2

6,864

577.1

6,877

759.2

3,154

―

Year ended March 31, 2009

213,601

6.9

1,013

(53.3)

800(60.8)(1,090)―Return on Equity

Ordinary Income
to Total Assets

Net Income
per Share
Year ended March 31, 2010

Diluted Net Income
per Share

Operating Income
to Net Sales

Yen

Yen

%

%

%

45.64

―

6.5

5.7

2.9

(31.10)
―
(2.2)
0.7
0.5
Year ended March 31, 2009
Reference: Equity-method investment profit (loss):Year ended March 31, 2010: - million yen
Year ended March 31, 2009: - million yen
Note: Since we have executed a 2-for-1 common share split on April 1, 2009, the figure of net income per-share for the year ended March 31, 2009 did notreflect the split.

(2) Consolidated financial position
Total Assets

Net Assets

Equity Ratio

Net Assets per Share

Millions of yen

Millions of yen%

Yen

119,081

49,72841.6

716.81

As of March 31, 2010

120,491
47,87339.6
1,372.06
As of March 31, 2009
Reference: Shareholders’ equity:
As of March 31, 2010: 49,504 million yen
As of March 31, 2009: 47,682 million yen
Note: Since we have executed a 2-for-1 common share split on April 1, 2009, the figure of net assets per share for the year ended March 31, 2009 did notreflect the split.

(3) Consolidated cash flows
Cash Flows fromOperating Activities

Cash Flows from
Investing Activities

Cash Flows from
Financing Activities

Cash and Cash Equivalents
at End of Year

Millions of yen

Millions of yen

Millions of yen

Year ended March 31, 2010

11,726(738)(11,607)

Millions of yen

3,864

Year ended March 31, 2009

2,337

(4,139)

2,772

4,436

2. Dividends
Cash Dividends per Share
1Q-end2Q-end3Q-end

Yen

Yen

Yen

―
―

11.00
6.00

―
―

Year ended March 31, 2009
Year ended March 31, 2010

Dividends to
Net Assets(consolidated)

AnnualTotal Dividends
Paid (annual)

Yen

Yen

Millions of yen

%

%

11.00
6.00

22.00
12.00

769
831

―
26.3

1.6
1.7

Year-end

Payout Ratio(consolidated)Year ending March 31, 2011
―
7.00
―
7.00
14.00
27.6
(forecast)
Note: Since we have executed a 2-for-1 common share split on April 1, 2009, the figure of dividend per share for the year ended March 31, 2009 did not reflect
the split.

3. Forecast of consolidated financial results for the year ending March 31, 2011 (April 1, 2010 - March 31, 2011)(Percentage figures represent changes from previous year for full year figures and from same period of previous year for interim period figures.)

Net Sales

Operating Income

Ordinary Income

Net Income
per Share

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Yen

First six months

119,300

5.9

3,500

45.9

3,500

52.6

1,100

62.3

15.93

Full year

240,000

2.0

8,000

16.5

8,300

20.7

3,500

10.9

50.68

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Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2010

4. Others(1) Significant changes in subsidiaries during the fiscal year (Changes in specified subsidiaries resulting in changes inscope of consolidation): None
(2) Changes in accounting principles, procedures and method of presentation associated with preparation of theconsolidated financial statements (the matters to be included in the section, changes in basic important matters for
preparation of consolidated financial statements)
1) Changes due to revisions of accounting standards: Yes
2) Changes other than 1): None
(3) Number of shares outstanding (common stock)1) Number of shares outstanding at fiscal year-end (including treasury stock):
The year ended March 31, 2010 73,017,952 shares;
The year ended March 31, 2009
2) Number of shares of treasury stock at fiscal year-end:
The year ended March 31, 2010 3,955,469 shares;
The year ended March 31, 2009

36,508,976 shares
1,756,599 shares

Note: Since we have executed a 2-for-1 common share split on April 1, 2009, above figures representing the number of shares issued andoutstanding (including treasury stock) and the number of treasury stock as of March 31, 2009 did not reflect the split.

(Reference) Overview of the non-consolidated business results
1. Non-consolidated financial results for the year ended March 31, 2010 (April 1, 2009 - March 31, 2010)(1) Non-consolidated operating results(Percentage figures represent changes from previous year.)

Net Sales

Operating Income

Millions of yen

Ordinary Income

Net Income%

Millions of yen%

Millions of yen%

Millions of yen%

Year ended March 31, 2010

200,483

12.7

7,389

159.0

7,785

135.9

4,009

205.6

Year ended March 31, 2009

177,871

(4.1)

2,853

7.2

3,301

10.7

1,312

37.5

Net Income per Share

Diluted Net Income
per Share

Yen

Yen

Year ended March 31, 2010

57.78

―

Year ended March 31, 2009

37.42

―

(2) Non-consolidated financial position
Total Assets

Equity Ratio

Net Assets per Share

Millions of yen

Millions of yen%

Yen

110,50251,08746.2

739.73109,097

48,14744.1

1,385.43

As of March 31, 2010
As of March 31, 2009
Reference: Shareholders’ equity:

Net Assets

As of March 31, 2010: 51,087 million yen

As of March 31, 2009: 48,147 million yen

2. Forecast of non-consolidated financial results for the year ending March 31, 2011 (April 1, 2010 - March 31, 2011)(Percentage figures represent changes from previous year for full year figures and from same period of previous year for interim period figures.)

Net Sales

Operating Income

Ordinary Income

Net Income
per Share

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Yen

First six months

109,800

18.1

3,850

32.0

4,000

31.9

1,800

17.4

26.06

Full year

221,000

10.2

8,400

13.7

8,900

14.3

4,400

9.7

63.71

* Explanation concerning the appropriate use of financial result forecasts and other special notes(Forward looking statements)
The above forecasts are based on information available as of time of this announcement. Actual results may differ due to various factors.
Please refer to page 4-5 of the attached materials for the forecasts.

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Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2010

1. Business results(1) Analysis of business results1) Overview of business results
During the year ended March 31, 2010, the key development in the medical field in Japan was the decision to implement a
0.19% increase in medical service fees (the first overall increase since 2000) beginning in April 2010. This measure isintended to help improve conditions in emergency and obstetric medicine, lighten the burden on physicians, and improve
management conditions for medical institutions. In the long-term care field, improvement of compensation for long-termcare workers has been enhanced by an upward revision of 3% in compensation for long-term care workers, effective in April
2009, and the payment of subsidies to further improve the compensation for long-term care workers beginning in October.
These service fee and compensation increases were undertaken with the overall aim of enhancing the social security
functions of both fields.
Under these circumstances, the Nichii Group, under its revitalized administrative organization, established new companies,
restructured subsidiaries, and took other actions to reorganize the Group. More specifically, we took these actions in order toimprove the efficiency and strengthen the management of individual businesses, build organizational structures for creatingsynergies between individual businesses, and respond to diversifying customer needs with comprehensive services tailored
to a wide range of life stages.
As for our business results, stable enrollment numbers for the Education Business and steady increases in users of bothhome-care and facility -care services in the Healthcare Business produced earnings increases significant enough for all of ourbusinesses to end the year in the black for the first time in six years.
As a result, net sales during the fiscal year were 235,352 million yen (213,601 million yen in the previous fiscal year),
operating income was 6,864 million yen (1,013 million yen in the previous fiscal year), ordinary income was 6,877 million
yen (800 million yen in the previous fiscal year), and net income became 3,154 million yen (1,090 million yen of net loss inthe previous fiscal year).
[Medical Support Business]
In the Medical Support Business, we continued our marketing efforts to focus on adjusting contract terms to more reasonableconditions and gaining new contracts. As a result, we increased the number of hospitals under contract and boosted revenue
per medical institution. That made it possible to also improve staff compensation and retention, and, by extension, strengthen
the foundation for qualitative improvements in service, and customer satisfaction.
We also took steps to: 1) Build a system for providing comprehensive management support services to medical
institutions, which face particularly difficult business conditions; 2) Significantly strengthen existing services; and 3) Begindeveloping and offering new services applying voice-recognition technology, which is expected to lighten the burden on
physicians. These steps included the establishment of Nichii Research Institute Co., Ltd. in May 2009, the formation of abusiness tie-up with Advanced Media, Inc. in August, and the establishment of Cyber Clerk Institute Co., Ltd. in December.
As a result, the net sales of the Medical Support Business were 101,548 million yen (101,289 million yen in the previous
fiscal year), and operating income was 8,181 million yen (8,784 million yen in the previous fiscal year).
[Health Care Business]
In home-care services, we have seen both our revenue and profit improve due to the increase in the number of care planusers (up approximately 5,000 for the year, pushing the total above 40,000 for the first time in three years) and the steadyincrease in the number of users of individual services (increase of approximately 15,000 users of home-visit care, home-visit
bathing, day-care, care equipment leasing over the year).
In facility-care services, an improved sales system produced steady increases in capacity utilization at all facilities andhigher income as a result.
In the area of non-insured long-term care services, we are developing mainly housekeeping services but also otherservices that promptly respond to diversifying needs and will expand these services to cover the daily life support field
moving forward.
Regarding the number of locations through which long-term care services are provided, all five of the former
non-consolidated home-care subsidiaries were incorporated into the operations of the parent company in October 2009, andKeihin Life Service Co., Ltd. was absorbed in January 2010. With these changes, the number of home-care service offices
increased by 120 and the number of care facilities increased by seven group homes.
Separately, five new group homes were established, bringing the total to 285 (including pay nursing homes).

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Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2010

As a result, net sales of the Health Care Business were 117,995 million yen (99,702 million yen in the previous fiscal
year), and operating income was 3,586 million yen (758 million yen of operating loss in the previous fiscal year).
[Education Business]
Enrollment for our Home Helper Level 2 Course and Medical Office Work Course, our main education offerings, continued
to grow steadily due to rising demand for professional qualifications (since last year), advertising emphasizing efficiency,
and teaching facility development focused on convenience. As a result, these two courses led our Education Business withsolid increases in both revenue and income.
As the government advances emergency job creation projects (the emergency human resource development support
project implemented in April 2009 and the support program “Study and obtain a qualification as a care worker whileworking at long-term care facilities” implemented in October 2009) aimed at boosting the number of jobs for care workers, it
is imperative that we implement our "Education-to-Work" business model to the greatest extent possible. Toward that end,
we are making the most of the scale advantage we enjoy with 500 classrooms throughout the country and actively
participating in these projects.
Furthermore, the government’s efforts to lighten the administrative burden on physicians by adding Medical Assistants tothe service fee calculation (included in the April 2008 revision in medical service payment system) and implementing theApril 2010 revision, which not only increased service fees but also enlarged the range of medical institutions eligible for the
expanded service fee calculation, have significantly boosted the expectations for our Education Business. Our Medical
Office Clerical Workers Course, established in October 2008, is training and supplying human resources that respondperfectly to medical administration needs. And we will continue to actively develop and offer training courses across a broad
range of medical, long-term care, and daily living assistance fields.
As a result, net sales of the Education Business were 15,255 million yen (11,906 million yen in the previous fiscal year),and operating income was 2,992 million yen (677 million yen of operating loss in the previous fiscal year).
[Other Businesses]
To more efficiently expand our main businesses, we are developing various operations within the Group. One of theseprojects, “Himeharu no Sato,” is being developed by Nichii Green Farm Co., Ltd. in Mobara City, Chiba Prefecture (opening
planned for the latter half of July in 2010). This project is being undertaken to promote the creation of new added value by,
and further expand the operations of, our main businesses through gardening.
Net sales of Other Businesses were 553 million yen (702 million yen in the previous fiscal year), and operating income
was 394 million yen (409 million yen in the previous fiscal year).

2) Outlook for the year ending March 31, 2011
In the face of a falling birthrate and rapidly aging population, Japan is redoubling its efforts to expand its social security
functions. As such, the Nichii Group is heading toward a new growth stage and focusing on building a solid foundation for
its main Medical Support, Health Care, and Education Businesses; restructuring for further growth, and developing newservices.
In preparation for growth in the fiscal year ending March 31, 2011 and beyond, we are working to expand quantitatively,
mainly by building new care facilities through which to provide facility-care services, and improve service quality byincreasing medical and long-term care staff compensation to improve retention rates and enhancing training.
We are also devoting significant attention to improving operational efficiency and innovating in the medical, long-termcare, and education fields by effectively applying voice-recognition technologies and e-learning systems.
Segment outlooks are given below.
[Medical Support Business]
Aiming to make the most of synergies between existing and new services, we will continue to expand and enhance ourcomprehensive management support services for medical institutions and adjust contract terms to more reasonableconditions, and will work to improve staff compensation.
In addition, we will improve our sales activities, gain new customers, expand existing contracts, and ultimately increase
our sales, by restructuring our sales staff training system.
The child care business, for which the social need is elevated, will be expanded to strengthen daily life support services.

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Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2010

[Health Care Business]
The Nichii Group, with its fundamental focus on consumer-oriented business development, will move forward with efforts
to strengthen its earnings base by working to further expand its home-care and facility-care services, and non-insured
long-term care services, to build a broad range of services that respond to the needs of individual users.
In addition, we will work to greatly increase the earnings of our Health Care Business by making the most of the positive
growth trends in users for our care plans and other services and increasing capacity utilization at both new and existing
facilities.
As we act to further improve the operational efficiency of our Group post-restructuring, we will move forward with thebuilding of management systems aimed at qualitative improvements in properly managed operations and services on afoundation consisting of the provision of safe and reliable services rooted in individual communities.
Regarding the establishment of new care facilities during the coming fiscal year, we will actively build new offices andfacilities, reapportion existing facilities, and take other infrastructure measures based on local strategies to increase revenues.
For the development of facility-care facilities, which is being undertaken in light of the 4th long-term care plan, we willplace greater emphasis on group homes. As for home-care service locations, our plans are to pursue efficient development inaccordance with local needs.
[Education Business]
In our Education Business, we will continue to actively develop our two main offerings – the Home Helper Level 2 Courseand Medical Office Work Course. Furthermore, we will add greater emphasis to our Medical Office Clerical Workers
Course, which aims to train Medical Assistants for which there is a growing need in medical service environments. We will
also develop training courses addressing everyday needs in general, expanding our course offerings across fields spanningeverything from medical and long-term care to hobbies and cultural topics. In developing educational services capable ofresponding to a wide variety of learning needs, we plan to incorporate and develop e-learning and other new education
systems.
[Other Businesses]
The Nichii Group, with the businesses of each of its member companies serving as management resources, is strategicallydeveloping connections among businesses throughout the Group. Nichii Green Farm Co., Ltd., for example, is actively
developing new services aimed at forming connections with our core businesses.
In consideration of these environments and prospects, our outlook for the performance in the year ending March 31, 2011 is
240,000 million yen for net sales (235,352 million yen for the current fiscal year), 8,000 million yen for operating income(6,864 million yen for the current fiscal year), 8,300 million yen for ordinary income (6,877 million yen for the current fiscal
year), and 3,500 million yen in net income (3,154 million yen for the current fiscal year).

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Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2010

(2) Analysis of financial position
1) Overview of financial position
During the fiscal year, cash and cash equivalents (“cash”) decreased by 571 million yen year on year to 3,864 million yen.
Cash flows from each activity and their factors are shown below.
[Cash flows from operating activities]
As a result of operating activities during the fiscal year, cash increased by 11,726 million yen.
This was primarily the result of an increase in income before income taxes and minority interests, allowance for employee
bonuses, and non-cash expenses, in the form of adjustment for amortization of goodwill.
[Cash flows from investing activities]
As a result of investing activities during the fiscal year, cash decreased by 738 million yen
This was primarily due to acquisition of tangible fixed assets such as facilities.
[Cash flows from financing activities]
As a result of financing activities during the fiscal year, cash decreased by 11,607 million yen.
The primary factors producing this result included an increase in payments for short-term and long-term loans, and outlays
for corporate bond redemptions and dividend payments.
Trends in cash flow indicators for the group can be seen below.
Year ended March 31, 2009

Year ended March 31, 2010

Equity ratio (%)

39.6

41.6

Equity ratio based on present value (%)

45.6

47.7

Debt redemption (years)

16.9

2.7

Interest coverage ratio (times)

4.0

21.2

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

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Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2010

(3) Basic principles of profit distribution and dividends for the current and next fiscal year
Our basic policy is to provide our shareholders with stable and continuous profit distributions. Considering businessperformance trends from a mid- to long-term standpoint, we formulated a consolidated dividend policy.
For the year ended March 31, 2010, we are planning to pay a year-end dividend of 6 yen per share.
(Yen)
Cash Dividends per Share
(Record date)2Q-endYear-end

AnnualYear ended March 31, 2010

6.00 (Actual)

6.00 (Forecast)

12.00 (Forecast)Year ending March 31, 2011

7.00 (Forecast)

7.00 (Forecast)

14.00 (Forecast)(4) Business and other risks
Presented below are the potential risks to the operations of each business of Nichii Group. We work on to mitigate such risks
by dispersing and acknowledging them. However, in the event of an unforeseeable incident, such risks may cause serious
effect on our business performance and financial conditions of the group.
External factors and risk factors with low possibilities are also disclosed here from the standpoint of positive information
disclosure on the matters deemed important for those making investment decisions.
The following matters were determined to be potential risks by the group upon preparing this data as of the last day of the
fiscal year, and may not cover all the risks when making an investment decision on our stocks.
1) Business risks[Medical Support Business]
Nichii Group’s Medical Support Business provides, among other services, medical practice services other than medical
practice itself, medical-related duties, and medical service management consultation services.
Medical institutions will see major fluctuations in their medical revenues due to the biennial revision of the medical
service fee system and the medical insurance system reform (Article 2, Paragraph 2 of the Health Insurance Law Revision
Law).
The group provides services to medical institutions, so the contents of revision rate for medical service fees and medical
insurance system reform may affect our contract fees and the contents.
[Health Care Business]
The group’s Health Care Business is mainly attributed to services that are covered by Long-Term Care Insurance Law.
Therefore, reviewing the long-term care insurance system and payment can have a major effect on the net sales and profits ofthe business. These services are regulated by the Long-term Care Insurance Law (Law No. 123, December 7, 1997) andvarious other laws and ordinances.
The entire system is subject to review every five years (Article 2 of Supplementary Provisions of the Long-term Care
Insurance Law) and long-term care payment is subject to review every three years, so the decisions hereafter may have an
impact on the profitability of our Health Care Business. In the future also, revision of long-term care payment or review ofthe system may affect the revenue of the business.
In addition, we are promoting the community-based business by lease contract in our long-term care facilities such asgroup homes, pay nursing homes, and day care facilities. Since the contract term is 20 years in general, lowering inavailability of facility due to the decrease of residents or the fall of average residential charge may affect the revenue of thebusiness.
[Education Business]
The Home Helper Level 2 Course, one of the main course offerings of our Education Business, is subject to the “ordinanceconcerning home-visit care providers” (Health, Labour and Welfare Ministry Ordinance No. 23 of March 10, 2000), and isrequired to obtain certification from the prefectural government.
The future revision of various systems in terms of qualifications, such as, changes in the qualification requirements(training hours, enhanced curriculum, etc.) for care workers taking the Home Helper Level 2 Training Course may affect net
sales and revenue of this course.

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Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2010

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

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Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2010

2. Overview of Nichii Group
Nichii Group consists of Nichii Gakkan Company, its 11 subsidiaries, and one affiliate. Nichii Group is engaged in fourbusinesses (Medical Support Business, Health Care Business, Education Business, and Other Businesses). In the Medical
Support Business, the group primarily provides medical practice services to medical institutions and pharmacies; sales,
disinfection, and sterilization services for medical equipment (inside hospitals); and medical affairs consulting. In the HealthCare Business, the group provides home-care services under long-term care insurance system (home-care support, home-visit
care, home-visit bathing, and day care services), facility care services (care service for specified facility residents, care service
for group home residents with dementia, and management of rental housing specialized for the elderly), sale and rental of
welfare equipment, catering, and other services. In the Education Business, the group provides educational programs primarily
for medical office workers and home helpers. In Other Businesses, Nichii Gakkan Company’s subsidiaries take the lead inproviding data processing, storage and delivery service, book publication and sale, production and sale of flowers, ornamental
plants, seeds and saplings, leasing, and personnel services.
Nichii Group’s businesses and positioning of each business are shown below. The business categories correspond to those in
the segment information by business category.
Business Category

Principal Businesses/Products

Medical Support Business

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

Health Care Business

Home-care support (creation of care plan), home-visit care,home-visit bathing, day care, care service for specified facility
residents, care service for group home residents with dementia,
sale and rental of welfare equipment, catering, etc.

Education Business

Courses for medical office work, Home Helper Level 2 Course,
babysitter training, and sign language, etc.

Other Businesses

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

Principal Companies
Nichii Gakkan Company
Nihon Support Service Co., Ltd.
Nichii Gakkan Company
Nichii Carenet Co., Ltd.
Nihon Support Service Co., Ltd.
Nichii Care Palace Co., Ltd.
Nichii Gakkan Company
Nihon Support Service Co., Ltd.
Tokyo Marunouchi Publishing Co., Ltd.
Nichii Green Farm Co., Ltd.
Nihon Credit Lease Corp.

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Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2010

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

Health Care Business
Sales ofmerchandise

Consolidated subsidiaries
Nichii Carenet Co., Ltd.
Nihon Support Service Co., Ltd.
Nichii Care Palace Co., Ltd.
Non-consolidated subsidiaries
Hospica Co., Ltd. and 1 other company
Affiliates not subject to the equity method
Life Care Partners Co., Ltd.

Provision ofservices

Customers
Local governments, etc.

Local governments
Medical institutions
Customers
Member stores

Sales of merchandise
Provision of services

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

Nichii Gakkan Company

Sales ofmerchandise

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

Provision ofservices

Medical institutions, etc.

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

Education Business
Consolidated subsidiaries
Nihon Support Service Co., Ltd.
Tokyo Marunouchi Publishing Co., Ltd.
Nichii Green Farm Co., Ltd.
Nihon Credit Lease Corp.
Non-consolidated subsidiaries
Yao Medical PFI Co., Ltd. and 2 othercompanies

Students

Nichii Gakkan Company
Educational programs and saleand lease of educational books

Health Care BusinessLeasing
Personnel
service

Nichii Gakkan Company
Nichii Carenet Co., Ltd.
Nichii Care Palace Co., Ltd.

Merchandise sales and childcare
Provision of services
Leasing
Personnel service

10

Sales ofmerchandise
Provision ofservices

Customers
Local governments, etc.

CustomersNichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2010

3. Management principles(1) Basic principles of management
Based on Nichii Group’s management philosophy of “We will contribute to the enhancement of human life through thedevelopment of our business”, we are developing our businesses with the aim of contributing to the progress anddevelopment of society in areas deeply connected to medical support, health care, and education, and earning the trust ofsociety.
We also recognize that we must fulfill our social responsibilities as a corporate group, comply with corporate ethics, andincrease the corporate brand value in our activities while deepening our trusting relationship with our shareholders and otherstakeholders. In order to achieve this goal, we wish to share the idea of self-improvement to each organizational structureand employee as well as aggressively maximizing our corporate value based on the slogan, “Strength through kindness.”(2) Management goals
The Nichii Group has established the three long-term objectives given below. These performance indicators were selected
given: 1) Our business as a provider of human resource services; 2) The expectation that markets will continue to grow in thebusiness areas the Group is pursuing – medical support, health care, and education; and 3) Our emphasis on increasing
shareholder value.
1) Net sales growth→ double-digit growth2) Operating income to net sales→ 7% or higher

3) ROE (return on equity)→ 15% or higher(3) Mid- to long-term strategies and issues to be addressed
Nichii Group, based on the management philosophy above, aims to achieve sustainable growth and contribute to the building
and development of social infrastructure in the fields of education, medicine, and long-term care. In addition, under the new
management system implemented in 2009, we are promoting the development and offering of high-value-added services thatmeet market needs. At the same time, we are moving to strengthen the service expertise and networks developed throughexisting businesses and pursuing synergies through organic connections within the group as we strive to provide a wide
range of services covering the daily life support and other fields, and meet corporate social responsibilities.
[Medical Support Business]
Given factors like the compensation revision aimed at lightening the burden on physicians and promoting ties to local
communities, which was included in the April 2010 medical service fee revision, conditions with regard to the medical
support and long-term care businesses, and customer needs, are undergoing major changes.
Under this environment, the Medical Support Business is strengthening its earnings base and moving forward with theprovision of products and services addressing market needs.
In the future as well, we will continue to develop outstanding personnel, and stably supply human resources, capable ofproviding high-quality services. We will also strengthen our development and provision of comprehensive support products,
like doctors’ office work support services applying voice-recognition technology.
We will also actively develop and offer timely products and services. These are exemplified by: 1) Comprehensive
regional care services based on the seamless connection of medical and long-term care applying the operational base wehave built for our home care and facility care services, and 2) Expansion of child care businesses aimed at enhancing childcare support services.
[Health Care Business]
The operating environment for the Health Care Business is experiencing legal changes undertaken to address Japan’s rapidly
aging society. Long-term care payment, for example, was revised in April 2009, and changes in long-term care insurance arescheduled for 2011. In 2025, the ratio of “Only aged household” occupied among the all households is expected to be 70%.
To be prepared for the coming unprecedented aging society, the improvement of total social infrastructure for medical,
long-term care, and residential facilities is called for urgent attention.
Nichii Group strives to improve the quality of its broad range of existing services covering everything from minimizingcare needs to home care and facility care. However, we are also devoting significant attention to welfare services for thedisabled, homemaker services, and other services not covered by long-term care insurance in an effort to provide long term,
comprehensive services that meet diversifying customer needs.

11Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2010

We are working to expand our service system to cover the entire country by expanding the number of facility carelocations, and improving career-enhancement and staff training systems to help secure and educate care workers. Our
objective in this regard is to strengthen staff support systems within individual service offices and branches specialized forparticular business segments.
[Education Business]
Against the need to strengthen medical, long-term care, and other social welfare functions, the services offered by the
Education Business, which nurtures the development of human resources for these fields, are gaining in importance.
To solidify systems that provide human resources to our Medical Support Business and Health Care Business, we willfurther improve our course quality by using information gained through our medical and long-term care services as feedback
for course curricula. Furthermore, we will increase our earnings potential by agilely and efficiently undertaking initiatives
like improving instructor development and developing classrooms in service facilities.
In line with our resolve to consider the fiscal year ending March 31, 2011 one for a new beginning of our Education
Business, we began on May 10, 2010 to develop new course offerings that apply e-learning and are intended to generate
med- to long-term growth for our Education Business.
Looking ahead, we aim to expand our business activities and build a solid business position by efficiently developing theexisting classroom-based and correspondence courses, and e-learning courses, that provide students with more convenient
alternatives, and developing and offering various lifelong learning courses that are relatively unaffected by economic ups
and downs.
[Other Businesses]
For Other Businesses, we will apply management resources normally used to deliver medical and welfare-related services tostart up agricultural operations and take other steps to strengthen operations that are useful to the fields of medical andwelfare services.
In the future also, we will continue to implement our group strategies with the ideal form of organization in order toincrease the value of the Nichii Group and develop efficiency of our business.
(4) Other significant matters for management
There are no applicable matters.

12

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2010

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

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable
Merchandise and finished goods
Work in progress
Raw materials and supplies
Deferred tax assets
OthersAllowance for doubtful accounts
Total current assets
Fixed assets
Tangible fixed assets
Buildings and structures
Accumulated depreciation
Buildings and structures (net)
Machinery and vehicles
Accumulated depreciation
Machinery and vehicles (net)
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures (net)Land
Lease assets
Accumulated depreciation
Lease assets (net)
Construction in progress
Total tangible fixed assets
Intangible fixed assets
Goodwill
Software
Software in progress
Lease assets
OthersTotal intangible fixed assets
Investments and other assets
Investment securities
Long-term loans receivable
Long-term prepaid expenses
Guarantee deposit
Deferred tax assets
OthersAllowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets

13

FY2009(As of March 31, 2009)

FY2010(As of March 31, 2010)

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

4,128,264
28,554,508
341,091
2,356
204,690
3,118,120
4,853,347(72,066)
41,130,312

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

41,257,776(15,094,123)
26,163,653
89,509(79,251)
10,2582,654,167(2,228,546)
425,6217,950,899
2,293,300(435,635)
1,857,665
800,822
37,208,921

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

14,530,389
2,821,940
368,889
1,127,471
181,873
19,030,562

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

1,731,538
4,649,163
1,892,089
9,813,349
2,926,032
1,417,868(718,751)
21,711,288
77,950,773
119,081,085

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2010

(Thousands of yen)

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

14

FY2009(As of March 31, 2009)

FY2010(As of March 31, 2010)

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

940,792
1,018,002
2,869,789–
703,260
2,350,522
945,206
13,906,413
4,199,857
34,0007,526,000
34,493,845

26,622,366
928,326
3,839,160
3,704,320
142,044284,804
35,521,022
72,617,875

24,002,119
2,493,828
3,636,254
4,133,049
149,221444,443
34,858,917
69,352,763

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

11,933,790
17,354,214
26,912,370(6,788,705)
49,411,670

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

92,75992,759223,893
49,728,322
119,081,085

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2010

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

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Advertising and promotion expenses
Directors’ compensation
Salaries and benefits
Provision for employee bonuses
Provision for directors’ bonuses
Provision for directors’ retirement benefits
Directors’ retirement benefits
Provision for employee retirement benefits
Legal welfare expenses
Travel and transportation expenses
Rent expenses
Provision for doubtful accounts
Depreciation and amortization
Amortization of goodwill
OthersTotal selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Commission on consignment for office work
Rent income
Compensation for damage received
OthersTotal non-operating income
Non-operating expenses
Interest expenses
Bond interest
Rent expenses
OthersTotal non-operating expenses
Ordinary income

15

FY2009FY2010(from April 1, 2008
to March 31, 2009)(from April 1, 2009
to March 31, 2010)

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

235,352,317
188,499,309
46,853,007

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

4,713,698
178,474
14,487,746
1,033,029
34,354
8,011
1,316
383,268
2,265,332
1,456,619
3,126,623
15,685
1,573,625
1,268,693
9,442,398
39,988,878
6,864,129

29,451
88,047
222,955–
133,471473,925

23,273
121,171
146,357
141,101
246,184
678,087

538,845
36,261–
112,211687,318
800,407545,559
3,307
54,42061,836665,124
6,877,093

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2010

(Thousands of yen)

Extraordinary income
Gain on sale of fixed assets
Gain on prior periods bad debts recovered
Gain on liquidation of subsidiaries and affiliates
Gain on reversal of allowance for doubtful accounts
OthersTotal extraordinary income
Extraordinary losses
Loss on retirement of fixed assets
Loss on sales of investment securities
Adjustment for amortization of goodwill
Impairment loss
Loss on liquidation of business
Loss on consolidation of subsidiaries and affiliates
Loss on liquidation of employee mutual aid society
OthersTotal extraordinary losses
Net income before income taxes and minority interests
Income taxes
Income taxes–deferred
Total income and other taxes
Minority interests in income
Net income (loss)

16

FY2009FY2010(from April 1, 2008
to March 31, 2009)(from April 1, 2009
to March 31, 2010)

3,868–
63,25026,1683,966
97,254

43,52898,015––
16,333
157,878

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

47,986
120,945
4,121,190
89,751–––
151,1074,530,981
2,503,989
2,332,930(3,020,388)(687,457)
36,832
3,154,614

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2010

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

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

17

FY2009FY2010(from April 1, 2008
to March 31, 2009)(from April 1, 2009
to March 31, 2010)

11,933,790

11,933,790–
11,933,790–
11,933,790

17,354,214

17,354,214–
17,354,214–
17,354,214

27,075,682

24,820,390(1,162,259)–(1,090,516)(2,515)(2,255,292)
24,820,390(796,653)(265,515)
3,154,614(466)
2,091,979
26,912,370(5,935,860)(6,436,143)(503,697)
3,414(500,282)(6,436,143)(353,461)
899(352,562)(6,788,705)

50,427,827

47,672,252(1,162,259)–(1,090,516)(503,697)
899(2,755,575)
47,672,252(796,653)(265,515)
3,154,614(353,461)
432
1,739,417
49,411,670

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2010

(Thousands of yen)

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

18

FY2009FY2010(from April 1, 2008
to March 31, 2009)(from April 1, 2009
to March 31, 2010)

26,761

10,028(16,732)

82,730(16,732)
10,02882,73092,75926,761

10,028(16,732)

82,730(16,732)
10,02882,73092,759154,675

191,560

36,88436,884
191,560

32,33232,332
223,893

50,609,264

47,873,842(1,162,259)–(1,090,516)(503,697)
899
20,152(2,735,422)
47,873,842(796,653)(265,515)
3,154,614(353,461)
432
115,0631,854,480
49,728,322

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2010

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

Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in allowance for employee bonuses
Increase (decrease) in allowance for directors’ bonuses
Increase (decrease) in allowance for employee retirement benefits
Increase (decrease) in allowance for directors’ retirement benefits
Interest and dividends income
Interest expenses
Gain on prior periods bad debts recovered
Loss (gain) on sales of investment securities
Adjustment for amortization of goodwill
Compensation for damage received
Loss on retirement of fixed assets
Loss (gain) on sale of fixed assets
Impairment loss
Loss (gain) on liquidation of subsidiaries and affiliates
Loss on consolidation of subsidiaries and affiliates
Loss on valuation of golf club memberships
Decrease (increase) in accounts receivable
Decrease (increase) in inventories
Decrease (increase) in other current assets
Decrease (increase) in claims provable in bankruptcies
Increase (decrease) in accounts payable
Increase (decrease) in other current liabilities
Increase (decrease) in consumption tax payable
Decrease (increase) in other fixed assets
Increase (decrease) in other long-term liabilities
OthersSubtotalInterest and dividends received
Interest paid
Income taxes paid
Compensation for damage received
Income tax refund
Cash flows from operating activities

19

FY2009FY2010(from April 1, 2008
to March 31, 2009)(from April 1, 2009
to March 31, 2010)

453,9442,778,966
1,193,461(48,155)(392,664)(3,600)319,552(1,164)(32,215)575,107––––
29,229(3,868)
121,847(63,250)
74,837
12,836
8,539
167,966
1,264,279(1,456)(947,557)(111,446)(354,866)
301,867(2,015,476)
19,9483,346,663
35,459(581,505)(469,205)–
5,942
2,337,354

2,503,989
3,634,337
1,268,693(12,024)
1,572,173
1,600
428,729
7,177(25,015)
548,866(98,015)
120,945
4,121,190(141,101)
47,986(43,528)
89,751–––(2,184,188)(77,046)(222,665)(25,345)
120,290
514,549
526,589
560,782(114,590)
4,959
13,129,093
25,764(553,526)(1,016,236)
141,101–
11,726,195

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2010

(Thousands of yen)

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

20

FY2009FY2010(from April 1, 2008
to March 31, 2009)(from April 1, 2009
to March 31, 2010)(562,500)
562,160(782,081)
18,976(2,339,198)
–
–
–
–
4,000
73,182(91,082)(1,053,560)
232,278(736,847)
292,331
243,143(4,139,198)(405,500)
433,500(1,228,500)
397,694(445,748)(160,667)(608,667)
32,055(250,000)–––(228,775)
2,136,329(678,605)
323,962(55,437)(738,361)

8,355,002(3,808,000)
16,614(21,751)899(503,697)(1,157,213)(4,500)(104,733)
2,772,619
970,775(7,650,000)(1,480,000)
265,573(1,434,904)
432(1,588)(808,997)(4,500)(493,363)(11,607,346)(619,512)

30,795––47,872

3,434,833
4,436,404

4,436,404
3,864,764