Financial Results for the Year Ended March 31, 2011(J-GAAP)May 16, 2011
Name of listed company: Nichii Gakkan Company
Listed on: Tokyo Stock Exchange 1st Section
Securities code:
9792
URL: http://www.nichiigakkan.co.jp
Representative:
Masatoshi Saito, President and Representative Director
Contact:
Koichi Terada, Director, Vice President of Accounting and Finance Division TEL: 03-3291-2121
Scheduled date to hold the ordinary general meeting of shareholders: June 28, 2011
Scheduled date of filing annual securities report:
June 29, 2011
Scheduled date to start dividends distribution:
June 29, 2011
Supplementary materials prepared: Yes
Results information meeting held: Yes (for institutional investors and financial analysts)(Figures shown are rounded down to the nearest million yen.)

1. Consolidated financial results for the year ended March 31, 2011 (April 1, 2010 - March 31, 2011)(Percentage figures represent changes from the previous(1) Consolidated operating results
year.)Net Sales

Operating Income

Ordinary Income

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

240,827

2.3

7,868

14.6

9,660

40.5

3,478

10.3

3,154

―

Year ended March 31, 2011

235,35210.2
6,864 577.1
6,877 759.2
Year ended March 31, 2010
(Note) Comprehensive income: Year ended March 31, 2011: ¥3,375 million (3.1%); Year ended March 31, 2010: ¥ 3,274 million (–%)
Net Income
per Share
Year ended March 31, 2011

Diluted Net Income
per Share

Ordinary Income
to Total Assets

Return on Equity

Operating Income
to Net Sales

Yen

Yen

%

%

%

50.37

―

6.9

7.9

3.3

6.5

5.7

2.9

45.64
―
Year ended March 31, 2010
Reference: Equity-method investment profit (loss):Year ended March 31, 2011: - million yen

Year ended March 31, 2010: - million yen(2) Consolidated financial position
Total Assets

Net Assets

Millions of yen

Equity Ratio

Net Assets per Share

Millions of yen%

Yen

As of March 31, 2011

125,781

52,20041.3

752.15

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

119,081

49,72841.6

716.81

As of March 31, 2011: 51,944 million yen

As of March 31, 2010: 49,504 million yen(3) Consolidated cash flows
Cash Flows fromOperating Activities

Cash Flows from
Investing Activities

Cash Flows from
Financing Activities

Cash and Cash
Equivalents at End of Year

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Year ended March 31, 2011

9,795

(5,402)(4,518)

3,755

Year ended March 31, 2010

11,726(738)(11,607)

3,864

2. Dividends
Cash Dividends per Share
1Q-endYear ended March 31, 2010
Year ended March 31, 2011
Year ending March 31, 2012
(forecast)

Dividends to
Net Assets(consolidated)

AnnualTotal Dividends
Paid (annual)

Yen

Yen

Millions of yen

%

%

6.00
7.00

12.00
14.00

831
966

26.3
27.8

1.7
1.9

2Q-end3Q-endYear-end

Yen

Yen

Yen

―
―

6.00
7.00

―
―

―

8.00

―

8.00

16.00

Payout Ratio(consolidated)

24.6

3. Forecast of consolidated financial results for the year ending March 31, 2012 (April 1, 2011 - March 31, 2012)(Percentage figures represent changes from previous year for full year figures and from same period of previous year for interim period figures.)

Net SalesFirst six months
Full year

Operating Income

Ordinary Income

Net Income
per Share

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Yen

123,700
250,000

3.4
3.8

3,600
9,000

5.8
14.4

3,500
9,300

(6.1)
(3.7)

1,400
4,500

5.3
29.4

20.27
65.16

1

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2011

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
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 issued andAs of March 31,
outstanding (including treasury stock)2011:2) Number of treasury stock
As of March 31,

As of March 31,
2010:
As of March 31,
3,956,331 shares
2010:
Year ended March
69,062,089 shares
31, 2010:
73,017,952 shares

2011:
Year ended March
31, 2011:

3) Average number of shares issued andoutstanding in each period

73,017,952 shares
3,955,469 shares
69,123,403 shares(Reference) Overview of the non-consolidated business results
1. Non-consolidated financial results for the year ended March 31, 2011 (April 1, 2010 - March 31, 2011)(Percentage figures represent changes from previous year.)(1) Non-consolidated operating results
Net Sales

Operating Income

Ordinary Income

Net Income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Year ended March 31, 2011

222,565

11.0

8,484

14.8

10,502

34.9

4,791

19.5

Year ended March 31, 2010

200,483

12.7

7,389

159.0

7,785

135.9

4,009

205.6

Net Income per Share

Diluted Net Income
per Share

Yen

Yen

Year ended March 31, 2011

69.38

―

Year ended March 31, 2010

57.78

―

(2) Non-consolidated financial position
Total Assets

Equity Ratio

Net Assets per Share

Millions of yen%

Yen

118,83154,84046.1

794.08110,50251,08746.2

739.73As of March 31, 2011
As of March 31, 2010
Reference: Shareholders’ equity:

Net Assets

Millions of yen

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

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

2. Forecast of non-consolidated financial results for the year ending March 31, 2012 (April 1, 2011 - March 31, 2012)(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

114,000

2.9

3,800

(0.9)

3,900

(8.3)

1,900

(9.2)

27.51

Full year

230,500

3.6

8,900

4.9

9,500

(9.5)

5,000

4.4

72.40

* Implementation status of audit procedures

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

* Explanation concerning the appropriate use of financial result forecasts and other special notes(Forward looking statements)
The above forecasts are based on information available as of time of this announcement. Actual results may differ due to various factors.
Please refer to page 3 of the attached materials for the forecasts.

2

Table of Contents for the Attached Document
1. Business results·················································································································································· 2(1) Analysis of Business Results ································································································································2(2) Analysis of Financial Position······························································································································6(3) Basic principles of profit distribution and dividends for the current and next fiscal year···························7(4) Business and Other Risks ····································································································································7

2. Overview of Nichii Group ································································································································ 9

3. Management principles ···································································································································11(1) Basic principles of management························································································································ 11(2) Management goals ·············································································································································· 11(3) Mid- to long-term strategies and issues to be addressed················································································ 11(4) Other significant matters for management ·····································································································124. Consolidated Financial Statements ··············································································································· 13(1) Consolidated Balance Sheets ·····························································································································13(2) Consolidated Statements of Income and Comprehensive Income ································································15(3) Consolidated Statements of Changes in Shareholders’ Equity ·····································································18(4) Consolidated Statements of Cash Flows ··········································································································20

1Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2011

1. Business results(1) Analysis of business results1) Overview of business results
It has been determined that when the Great East Japan Earthquake occurred on March 11, 2011, a total of 30 users of day
care and facility-care services, all at our facility of Nichii Care Center Ishinomaki, lost their lives as a result of the disaster.
Throughout the affected areas, the disaster also took the lives of eight employees. The whereabouts of one employee have
yet to be determined.
We pray that all those who lost their lives in the earthquake and tsunami are resting in peace and express our deepest
sympathies for everyone else affected by this tragedy.
During the consolidated fiscal year under review (April 1, 2010 - March 31, 2011), the Japanese economy, spurred bycorporate earnings rising on the strength of factors like growing exports on the back of an expansion of emerging economies
and by improving employment conditions, had begun to show signs of a recovery. After the Great East Japan Earthquake
occurred on March 11, 2011, however, Japan is once again facing an unpredictable economic future.
With the economy facing the impacts of a declining birthrate, aging, and shrinking population, discussions of reforms
aimed at unifying the country’s social security and tax systems are moving ahead. In the lead up to the revision of thelong-term care insurance system in 2012, a bill comprising a revision of the Long-term Care Insurance Law was approvedby the Cabinet on March 11, 2011. That has given rise to prospects that the system will be restructured to createcomprehensive regional systems that will allow everyone to live with peace of mind in their own communities.
Within these social and business conditions, the Nichii Group focused its attention on sales activities and building theinfrastructure that will support construction of a Nichii service network that leverages synergies among core businesses ineach region to generate additional growth for existing businesses.
Regarding the development of new services, we concentrated on enhancing our service line to meet diversifying service
needs. Our activities in this respect included preparations for the full-scale launch of our new “cyber clerk” model for
doctors’ office work support using voice-recognition technology, expansion of our offerings of Nichii e-learning Web
College courses, and preparation for the April 6, 2011 grand opening of Lakewoods Garden Himeharu no Sato in Mobara
City, Chiba Prefecture. The latter was a step toward the development of therapy services in long-term care and otherfacilities.
Our business results were highlighted by increases in both net sales and income, with net sales setting a record for thethird year in a row. These results were supported by continuing sales growth in our Medical Support Business, and byongoing steady increases in the number of users of our home-visit, day care, and other home-care services in the HealthCare Business, and higher utilization rates for our service centers and training facilities. The Education Business, meanwhile,
saw higher non-operating income from steady growth in local government orders for the government’s support program“Study and obtain a qualification as a care worker while working at long-term care facilities”.
Regarding impacts of the Great East Japan Earthquake on our ability to provide services, of the 54 home care facilities
located in the affected areas of Iwate, Miyagi, and Fukushima prefectures, one facility is unable to provide some services asa result of structural damage by tsunami. One other facility is located within the evacuation area surrounding the damaged
nuclear plants and is unable to provide services.
Damages to buildings and facilities, restoration costs, allowances (estimated) for cancellations of vehicle and officeequipment leases, and other expenses resulted in extraordinary losses totaling 643 million yen.
As a result, net sales during the fiscal year were 240,827 million yen (235,352 million yen in the previous fiscal year),
operating income was 7,868 million yen (6,864 million yen in the previous fiscal year), ordinary income was 9,660 million
yen (6,877 million yen in the previous fiscal year), and net income became 3,478 million yen (3,154 million yen in theprevious fiscal year).
Situation by segment are given follows.
Beginning with the current fiscal year, we have partially revised the standard for the allocation of expenses among
segments.
[Medical Support Business]
In our Medical Support Business, net sales continued to rise steadily as advancement of our contract revision strategy
expanded net sales per hospital, business with existing medical institutions under contract increased, and the number ofhospitals (mainly private) newly under contract grew steadily. Income, on the other hand, declined due to higher health2

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2011

insurance rates and an increase in staff compensation. In the second half, however, operational efficiency improvements
gave rise to a slow but rising trend in income.
As for the childcare business, which was separated from the Medical Support Business in February, its business structure
has been strengthened beyond the provision of child-care centers within medical institutions to include the provision ofthese services within offices, as well.
As a result, the net sales of the Medical Support Business were 103,217 million yen (101,548 million yen in the previous
fiscal year), and operating income was 7,042 million yen (8,181 million yen in the previous fiscal year).
[Health Care Business]
For the Health Care Business, steady growth in the number of users of our home-visit, day care, and other home-careservices combined with solid growth in the number of users of our welfare services for the handicapped and othernon-insurance services contributed to maintain the upward trend in net sales and income.
In facility-care services, some facilities of the Nichii Home operated by Nichii Care Palace Co., Ltd. have been late in
improving income, but solid increases in the number of service users at Nichii no Hohoemi and Nichii no Kirameki helped
to improve income.
During the consolidated fiscal year under review, we opened 33 new home-visit facilities, 9 new day care facilities, and21 new home-care support facilities in our home-care services. In our facility-care services, we opened 14 new Nichii no
Hohoemi facilities and 2 new Nichii no Kirameki facilities, bringing the overall total to 300.
Nichii Carenet Co., Ltd., a wholesaler of welfare equipment, turned a profit for the first time in three fiscal years.
As a result, net sales of the Health Care Business were 124,204 million yen (117,995 million yen in the previous fiscal
year), and operating income was 6,500 million yen (3,586 million yen in the previous fiscal year).
[Education Business]
In the Education Business, enrollment for the Medical Office Work Course and Home Helper Level 2 Course declined year
on year, while enrollment rose for the government’s support program “Study and obtain a qualification as a care worker
while working at long-term care facilities” being promoted by local governments, and other job training programs including
subsidized job trainings, aimed at ensuring manpower and improving the employment conditions in the medical andlong-term care fields. The Education Business worked hard to hold trial course fairs throughout the country and pursue
other promotion activities to call attention to the benefits of working in the medical and long-term care fields.
To expand Web College enrollment, course offerings were enhanced, bringing the total to 46 as of the end of March.
As a result, net sales of the Education Business were 12,904 million yen (15,255 million yen in the previous fiscal year),and operating income was 1,596 million yen (2,992 million yen in the previous fiscal year).
[Other Businesses]
The Other Businesses segment moved ahead with development of businesses that would further strengthen its coreendeavors. Ahead of the start of its dog therapy services, Nichii Green Farm, Co., Ltd. began recruiting families toparticipate as foster families in its FCH (Family Care Home) System, a key part of its efforts to breed Australian
Labradoodles, a breed that has excellent qualities for providing emotional therapy. The FCH System is an upfront
investment in the provision of a new form of emotional healing by Nichii.
Net sales of Other Businesses were 501 million yen (553 million yen in the previous fiscal year), and operating loss was
68 million yen (394 million yen of operating income in the previous fiscal year).

2) Outlook for the year ending March 31, 2012
Japan’s social security services, amid a declining birthrate, accelerating aging, and persistently difficult employment
conditions, which add up to a greater need for enhanced services, are facing a lack of funding and the need for a total
overhaul of their relationship with the tax system.
In the lead up to the simultaneous revisions of the medical service fee, long-term care insurance system and compensation
for long-term care workers, scheduled for April 2012, there are urgent needs to prepare the infrastructure for establishingcomprehensive and continuous service delivery systems that allow everyone to live with peace of mind in their own
communities, and rebuild systems to make them sustainable.
Beginning in April 2011, the Nichii Group, under its new executive management system, will make the most of its

3

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2011

medical, long-term care, education, and daily life support management resources to reinforce its service infrastructure
through connections among its various businesses, and implement continuous increases in staff compensation in an effort toensure the delivery of high-quality services.
In addition, we will strengthen our business development, which is aimed at securing a stable revenue base, by furthering
our efforts to build a system for delivering high-value-added services by expanding our housekeeping and othernon-insurance services, and therapy, Web College, and other daily life support services.
In support of the recovery efforts against the Great East Japan Earthquake, aiming to provide daily life support for thevictims, we will push ahead with efforts to offer a diversified set of medical related and long-term care services, continue tocontribute relief goods, and accept disaster victims into our long-term care facilities to help affected areas recover as soon as
possible.
Segment outlooks are given below.
[Medical Support Business]
In the Medical Support Business, we will continue to pursue our contract revision strategy; strive to extend growth in net
sales and operating income; increase staff compensation, improve the career-up system, and enhance internal training
system to help ensure we have the best staff possible; and deliver high-quality services that result in greater customer
satisfaction.
We will leverage our 40-plus-year track record since our foundation and know-how to develop and offer cyber clerk
business, international medical staff exchange services in medical institutions, and other new services, and focus ondelivering high-value-added services by creating synergies among our childcare, long-term care, and other businesses. Our
ultimate aim will be to strengthen our comprehensive medical management support services for medical institutions.
[Health Care Business]
For the Health Care Business, the aging of Japan’s population which will peak in the foreseeable future makes it urgent to
supplement infrastructure, ensuring manpower, and discern future system-level developments for building regional service
networks.
In a growing market, the Nichii Group, leveraging its strengths in the form of a full service line of total long-term careservice covering everything from minimizing care needs through home-care services, facility-care services, andnon-insurance services to achieve continuous growth in the number of users of its services by moving ahead with theprovision of services adapted to local needs. We will achieve further growth by enhancing our home-visit care, therapy, andother non-insurance services to build a business platform resilient against systemic changes.
Nichii Carenet Co., Ltd. will proceed with preparations for creating a business platform and establishing a business modelfor developing a business for wholesaling welfare equipment in China.
[Education Business]
Amid the harsh environment in the social security area in Japan, which includes severe employment conditions andacceleration of aging of the population, the Education Business will continue efforts to increase enrollment in its mainstay
Medical Office Work Course and Home Helper Level 2 Course to promote high job-creation capacity and the humanresources development in the medical and long-term care fields, which are noticeably short of manpower. In addition,
through effective advertising campaigns and promotion activities to call attention to the benefits of working in the medical
and long-term care fields, we will also focus on enhancing our Web College course offerings to improve profitability,
reduce the impact of general economic conditions on our results, and attract a broader, deeper cross-section of students.
[Other Businesses]
In the Other Businesses segment, we will focus on expanding our business activities in an effort to promote organic ties toour core business segments and further strengthen our business platform as a company that provides comprehensive daily
life support.
We held the grand opening of Lakewoods Garden Himeharu no Sato operated by Nichii Green Farm, Co., Ltd. in Mobara
City, Chiba Prefecture on April 6, 2011. Moving forward, we will pursue promotion activities centered around theAustralian Labradoodles, a breed that has excellent qualities as a therapy dog, to raise awareness of this facility as a theme4

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2011

park that develops dog therapy, gardening therapy, and other new Nichii Group sources of healing in the field of long-term
and medical care.
In consideration of these environments and prospects, our outlook for the performance in the year ending March 31, 2012 is
250,000 million yen for net sales (240,827 million yen for the current fiscal year), 9,000 million yen for operating income(7,868 million yen for the current fiscal year), 9,300 million yen for ordinary income (9,660 million yen for the current
fiscal year), and 4,500 million yen in net income (3,478 million yen for the current fiscal year).

5

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2011

(2) Analysis of financial position
1) Overview of financial position
During the fiscal year, cash and cash equivalents (“cash”) decreased by 109 million yen year on year to 3,755 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 9,795 million yen.
This was primarily the result of an increase in income before income taxes and minority interests and loss on adjustment
for changes of accounting standard for asset retirement obligations.
[Cash flows from investing activities]
As a result of investing activities during the fiscal year, cash decreased by 5,402 million yen
This was primarily due to acquisition of software accompanying the development of Web College and 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 4,518 million yen.
The primary factors producing this result included an increase in payments for long-term loans.
Trends in cash flow indicators for the group can be seen below.
Year ended March 31, 2010

Year ended March 31, 2011

Equity ratio (%)

41.6

41.3

Equity ratio based on present value (%)

47.7

35.9

Debt redemption (years)

2.7

3.2

Interest coverage ratio (times)

21.2

16.4

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

6

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2011

(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, 2011, we are planning to pay a year-end dividend of 7 yen per share.
(Yen)
Cash Dividends per Share
Year-end

AnnualYear ended March 31, 2011

(Record date)

7.00 (Actual)

2Q-end7.00 (Forecast)

14.00 (Forecast)Year ending March 31, 2012

8.00 (Forecast)

8.00 (Forecast)

16.00 (Forecast)(4) Business and other risks
Presented below are the potential risks to the operations of each business of Nichii Group. We work on to mitigate suchrisks by acknowledging and dispersing them. However, in the event of an unforeseeable incident, such risks may cause
serious effect on our business performance and financial conditions of the group. The following matters were determined to
be potential risks by the group upon preparing this data as of the last day of the fiscal year, and may not cover all the risks
when making an investment decision on our stocks.
1) Business risks[Medical Support Business]
Nichii Group’s Medical Support Business provides, among other services, medical practice services other than medical
practice itself, medical-related duties, and medical service management consultation services.
Medical institutions will see major fluctuations in their medical revenues due to the biennial revision of the medical
service fee system and the medical insurance system reform (Article 2, Paragraph 2 of the Health Insurance Law Revision
Law). The group provides services to medical institutions, so the contents of revision rate for medical service fees, medical
insurance system reform and the progress of IT may affect our contract fees and the contents.
[Health Care Business]
The Nichii Group’s Health Care Business provides mainly services regulated under the Long-Term Care Insurance Law(Law No. 123 of December 7, 1997) and other relevant laws. Income from these services could be impacted by revision of
the long-term care insurance system, which occur every five years, and revision of compensation for long-term care workers,
which occur every three years. The company strives to diversify risks by providing non-insurance services and by
expanding its service offerings. Nevertheless, these efforts may not offset reduction in income arising from regulatory
tightening and a lowering of payments from the insurance system and other factors which could result in significant
negative impacts on income.
If future social security and tax system overhauls lead to changes in the way long-term care is provided, there could be
impacts on the Health Care Business's operations depending on how the changes were made.
[Education Business]
We will actively pursue the course development and offer the changes necessitated by any future changes in systems related
to qualification requirements for care workers including qualifications such as training hours, curriculum enhancement, etc.
for care workers who enroll in our mainstay Home Helper Level 2 Course or other course offerings. Despite our efforts,
however, there could still be impacts on the sales and income of these mainstay courses.
2) Risks due to the internal management system
The Nichii Group is working to strengthen the self-directed operational management framework as well as internal check
functions, to prevent human errors and dishonesty of employees. However, future operational management problems could
cause a loss of trust by stakeholders, and could affect our business performance.
[Risks due to personal information]
Each business segment of the group handles personal information specified in the Act on Protection of Personal Information.
We recognize the protection of personal information as an extremely important business issue. Therefore, we have7

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2011

established the Information Protection Committee to ensure appropriate acquisition and handling of information, and areworking to prevent leakage of personal information and reoccurrence of such problems through setting up privacy policies
and providing in-house training.
However, a personal information leak could cause loss of confidence in society, claims for damage, etc. to affect ourbusiness performance.
3) Official license and legal regulation in personnel business
For the personnel business carried out for Medical Support Business and Health Care Business, we already acquired thepermission of general workers dispatching business based on the “Act for Securing the Proper Operation of Worker
Dispatching Undertakings and Improved Working Conditions for Dispatched Workers (Labor Dispatch Law).” As for“Labor Dispatch Law,” if a personnel service company is found to be disqualified or conducted illegal behaviors, it may be
deprived of the permission of personnel business or ordered to suspend the business.
Nichii Group continues to thoroughly implement the compliance. However, violating the law, if it should occur in ourgroup, may affect our group performance.
4) Risks due to natural disasters and accidents
The Nichii Group’s various businesses provide services in medical institutions under contract, long-term care facilities,
service centers and training facilities and other locations throughout Japan. It is conceivable that earthquakes, tsunamis, orother large-scale natural disasters, and the spread of novel forms of influenza or other infectious diseases could make it
impossible for staff and our facilities to operate in the affected areas. The Nichii Group will make efforts to maintain system
to provide its services by quickly restoring facility functions and dispatching support staff. However, if, despite these efforts,
service provision becomes impossible, there could be impacts on the Nichii Group’s business results and financial
condition.
In the wake of the Great East Japan Earthquake occurred on March 11, 2011, we will undertake a general review ofbusiness continuity risk management measures for emergencies in all of our branches and facilities, and strengthen our crisis
management systems to ensure user safety above all else.
5) Risks related to the application of impairment accounting
The Health Care Business’s day care services are provided using buildings owned by the Company. In addition, goodwill
was recorded when facility-care services were taken over. In both cases, significant declines in profitability in such facilities
could necessitate the recording of impairment loss and, by extension, could also have an impact on income of the HealthCare Business.
With regard to goodwill, in particular, if IFRS are adopted in the future, goodwill will become non-amortizable. A
simulation of the impact of impairment conducted at least once a year indicates that negative impacts on recoverable value
and book value, if they were to emerge, could result in the recording of impairment loss all at once.

8

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2011

2. Overview of Nichii Group
Nichii Group consists of Nichii Gakkan Company, its 14 subsidiaries, and two affiliates. Nichii Group is engaged in fourbusinesses (Medical Support Business, Health Care Business, Education Business, and Other Businesses). In the Medical
Support Business, the group primarily provides medical practice services to medical institutions and pharmacies; sales,
disinfection, and sterilization services for medical equipment (inside hospitals); and medical affairs consulting. 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, etc.), facility care services (care service for specified facility residents, careservice for group home residents with dementia, and management of rental housing specialized for the elderly), sale and rentalof welfare equipment, catering, and welfare services for the handicapped. The Education Business is developing courses fortraining mainly medical office workers and home helpers, and a broad range of Web College and other Nichii e-learning
offerings for those interested in pursuing self-development or hobbies. In Other Businesses, Nichii Gakkan Company’s
subsidiaries take the lead in providing data processing, storage and delivery service, book publication and sale, production andsale of flowers, ornamental plants, seeds and saplings, leasing, personnel services and the operation of Lakewoods Garden
Himeharu no Sato in Mobara City, Chiba Prefecture.
Nichii Group’s businesses and positioning of each business are shown below. The business categories correspond to thosein 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, and welfare
services for the handicapped, etc.

Education Business

Courses for medical office work, Home Helper Level 2 Course,
babysitter training, and clerk course of medical doctors, 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 and operation andmanagement of tourist facilities, etc.

9Principal 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.

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2011

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.
Affiliates not subject to the equity method
Life Care Partners Co., Ltd. and 1 othercompany

Nichii Gakkan Company

Sales ofmerchandise
Provision ofservices

Local governments
Medical institutions
Customers
Member stores

Sales of merchandise
Provision of services

Other Businesses

Medical Support Business- Data processing, and storage anddelivery service- Publication and sale of books- Production and sale of flowers,
ornamental plants, seeds and saplings- Leasing- Personnel service- Operation and management tourist facilities

Nichii Gakkan Company
Nihon Support Service Co., Ltd.

Customers
Local governments, etc.

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 6 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, 2011

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 structure and 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 inthe business 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
The Nichii’s “Target Five Stars” medium-term management strategy calls for the Nichii Group to lead the industry in Net
sales, Earnings, Product strength, Employee compensation, and Corporate ethics. To realize sustainable
development for its self and contribute to a higher quality of life for everyone, the Nichii Group will address the issues
given below based on this strategy.
1) Entering new markets
Expansion of the daily life support businessWe will expand our business activities by pouring greater effort into developing daily life support services. Examples ofthese services include housekeeping and food services, lifelong learning courses administered through the Web College(e-learning), and childcare business for which the legal framework is currently being developed.
Global business development
The Nichii Group considers overseas business development to be a key element of its business strategy and, as part of its
April 1, 2011 organizational restructuring, has newly established the International Business Department.
In addition, we have begun developing a welfare equipment wholesaling and other businesses in China, which is expected
to experience both economic growth and a rapid aging in the future. Over the medium-to-long term we also aim to develop
our Medical Support, Health Care, and Education Businesses in China, as well as other parts of Asia-Pacific region.
2) Profitability enhancement
The Nichii Group will provide higher-level services to improve amount per contract in the Medical Support Business, andstrengthen development and promotion efforts for medical management support services in the Medical Support Business,
non-insurance services in the Health Care Business, Web College (e-learning course) offerings in the Education Business,and other high-value-added services. At the same time, we will completely revamp our head office and other administrative
functions to create a more balanced, effective transformation of business structure capable of producing stable income overthe long-term.
3) Ensuring manpower and human resource development
The Nichii Group will move ahead with strategic human resource development in branches and facilities throughout thecountry. We will also actively implement medical and long-term care staff compensation improvements, enhanced training

11

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2011

and career-up systems, expand our offerings of training courses tailored to actual needs, and take other steps to stably ensure
manpower over the long-term.
4) Provision of safe, secure, high-quality services
To take its ability to deliver safe, secure services to an even higher level, the Nichii Group will redouble its efforts to ensure
legal compliance, strengthen system to provide its services, and enhance training system. We will also work to appropriatelyreflect customer needs in our products and services through steps like strengthening our call center function, as weconcentrate on providing high-quality services.

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

12

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2011

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

FY2010(As of March 31, 2010)

FY2011(As of March 31, 2011)

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

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

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

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

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

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

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

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

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2011

(Thousands of yen)

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

14

FY2010(As of March 31, 2010)

FY2011(As of March 31, 2011)

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

979,919
1,318,002
4,781,871
936,059
3,538,277
743,978
14,457,396
4,223,744
35,1008,542,023
39,556,372

24,002,119
2,493,828
3,636,254
4,133,049
149,221–444,443
34,858,917
69,352,763

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

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

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

92,75992,759223,893
49,728,322
119,081,085(46,849)(46,849)
255,608
52,200,395
125,781,172

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2011

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

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

15

FY2010FY2011(from April 1, 2009
to March 31, 2010)(from April 1, 2010
to March 31, 2011)

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

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

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

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

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

113,596
115,971
200,810–
1,628,650
478,082
2,537,111

545,559
3,307
54,42061,836665,124
6,877,093

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

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2011

(Thousands of yen)

Extraordinary income
Gain on sale of fixed assets
Gain on prior periods bad debts recovered
Reversal of allowance for employees’ bonuses
OthersTotal extraordinary income
Extraordinary losses
Loss on retirement of fixed assets
Loss on sales of investment securities
Adjustment for amortization of goodwill
Impairment loss
Provision of allowance for doubtful accounts
Loss on disaster
Provision of allowance for loss on disaster
Loss on adjustment for changes of accounting standard for asset
retirement obligations
OthersTotal extraordinary losses
Net income before income taxes and minority interests
Income taxes-current
Income taxes for prior periods
Income taxes–deferred
Total income and other taxes
Income before minority interests
Minority interests in income
Net income (loss)

16

FY2010FY2011(from April 1, 2009
to March 31, 2010)(from April 1, 2010
to March 31, 2011)

43,52898,015–
16,333
157,878

210–
111,148
5,119
116,478

47,986
120,945
4,121,190
89,751–––

43,157––
23,742
316,000
260,264
382,800–

504,813151,1074,530,981
2,503,989
2,332,930–(3,020,388)(687,457)–
36,832
3,154,614

157,413
1,688,190
8,088,781
4,200,699
114,000
259,450
4,574,150
3,514,631
36,214
3,478,416

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2011

(Consolidated statements of comprehensive income)(Thousands of yen)
FY2010(from April 1, 2009
to March 31, 2010)
Income before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests

17–

FY2011(from April 1, 2010
to March 31, 2011)
3,514,631–––(139,608)(139,608)
3,375,022––

3,338,807
36,214

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2011

(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

18

FY2010FY2011(from April 1, 2009
to March 31, 2010)(from April 1, 2010
to March 31, 2011)

11,933,790

11,933,790–
11,933,790–
11,933,790

17,354,214

17,354,214–
17,354,214–
17,354,214

24,820,390

26,912,370(796,653)(265,515)
3,154,614(466)
2,091,979
26,912,370(897,810)–
3,478,416(54)
2,580,551
29,492,922(6,436,143)(6,788,705)(353,461)
899(352,562)(6,788,705)

(680)
96
(584)
(6,789,290)

47,672,252

49,411,670(796,653)(265,515)
3,154,614(353,461)
432
1,739,417
49,411,670(897,810)–
3,478,416(680)
412,579,967
51,991,637

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2011

(Thousands of yen)

Accumulated other comprehensive income
Valuation difference on available-for-sale 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 accumulated other comprehensive income
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

19

FY2010FY2011(from April 1, 2009
to March 31, 2010)(from April 1, 2010
to March 31, 2011)

10,02892,75982,730(139,608)

82,73092,759(139,608)(46,849)

10,02892,75982,730(139,608)

82,73092,759(139,608)(46,849)

191,560

223,893

32,33232,332
223,893

31,71431,714
255,608

47,873,842

49,728,322(796,653)(265,515)
3,154,614(353,461)
432
115,0631,854,480
49,728,322(897,810)–
3,478,416(680)
41(107,894)
2,472,073
52,200,395

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2011

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

Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in allowance for employee bonuses
Increase (decrease) in allowance for directors’ bonuses
Increase (decrease) in allowance for employee retirement benefits
Increase (decrease) in allowance for directors’ retirement benefits
Increase (decrease) in allowance for loss on disaster
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 on disaster
Loss on adjustment for changes of accounting standard for asset
retirement obligations
Decrease (increase) in accounts receivable
Decrease (increase) in inventories
Decrease (increase) in other current assets
Decrease (increase) in claims provable in bankruptcies
Decrease (increase) in other fixed assets
Increase (decrease) in accounts payable
Increase (decrease) in consumption tax payable
Increase (decrease) in other current liabilities
Increase (decrease) in other long-term liabilities
OthersSubtotalInterest and dividends received
Interest paid
Income taxes paid
Compensation for damage received
Cash flows from operating activities

20

FY2010FY2011(from April 1, 2009
to March 31, 2010)(from April 1, 2010
to March 31, 2011)

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–

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

504,813(2,184,188)(77,046)(222,665)(25,345)
560,782
120,290
526,589
514,549(114,590)
4,959
13,129,093
25,764(553,526)(1,016,236)
141,101
11,726,195(1,337,096)(139,788)(1,164,567)(24,654)499,699
39,127(201,228)
590,398(596,522)(15,726)
13,398,071
23,104(598,890)(3,026,906)–
9,795,378

Nichii Gakkan Company (9792) Financial Results for the Year Ended March 31, 2011

(Thousands of yen)

Cash flows from investing activities
Payments into time deposits
Withdrawal of time deposits
Purchase of short-term investment securities
Proceeds from sales of short-term investment securities
Acquisition of tangible fixed assets
Proceeds from sale of tangible fixed assets
Acquisition of intangible fixed assets
Expenditure for business transfer
Acquisition of investment securities
Proceeds from sale of investment securities
Acquisition of shares of subsidiaries and affiliates
Payments of loans receivableCollection of loans receivable
Payments for guarantee deposit
Collection of guarantee deposit
Subsidy income
Others (net)Cash flows from investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans
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
OthersCash flows from financing activities
Effect of exchange rate change on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
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

21

FY2010FY2011(from April 1, 2009
to March 31, 2010)(from April 1, 2010
to March 31, 2011)(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)(414,000)
420,000(100,000)
100,000(2,198,956)
21,328(1,903,155)––
12,120–(1,305,605)
148,988(479,398)
421,887
229,251(355,245)(5,402,785)(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)

300,000–
7,000,000(10,100,000)
41(680)(894,448)(4,500)(767,599)(51,092)(4,518,279)
15,977(109,708)

47,872–

4,436,404
3,864,764

3,864,764
3,755,056