Value Creation

03
CHAPTER

Empowering people topursue lifelong growth in
the age of the 100-year life
How We Create Value
Reviewing and enhancing each of the activities, and taking on
new challenges proactively, the Benesse Group continues tocreate new value in order to support each person in pursuing theirgoals at each stage of life.

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Benesse Report 2023

50

CHAPTER

03 How We Create ValueAt a Glance
We are strongly committed to tackling the social challenges currently facing many people and helping our customers live well (toachieve “Benesse”). To this end, the Benesse Group provides services in the areas of education (in Japan and overseas), nursing care andchildcare, and lifestyle in order to meet people’s needs at different stages of life and help solve social challenges.

We conduct activities in our Out-of-School Learning Business, School and Teacher Support
Business, and University and Working Adult Business.

Fiscal year
ended
March 2023

School and Teacher
Support Business

50.8%

Out-of-School
Learning Business

Education in Japan

Percentage of consolidated
net sales▶ Provide Shinkenzemi correspondence courses targeted atelementary to high school students; and run prep schools andclassrooms through Tokyo Individualized Educational Institute,Tetsuryokukai, BE studio (English classroom), and others▶ Offer Shinken Simulated Exams (mock university entrance exams for highschool students), Study Support and Course Map (materials for learningand choosing a postgraduation pathway), GTEC (Global Test for English
Communication), Mirai Seed (ICT education support service forelementary and junior high schools), school study drills and tests, etc.
▶ Provide services to support cloud-based learning and school
administration operations

Major products and services

Net sales breakdown
Shinkenzemi

Major business companies:
Benesse Corporation
Tokyo Individualized Educational Institute, Inc.
UP Inc.
Tokyo Educational Institute Co., Ltd.
(Tetsuryokukai)
Benesse BE studio Inc.

45.0%

Prep Schools/
Classrooms

21.0%

School/Teacher Support

23.2%

Major business companies:
Benesse Corporation
Classi Corp.
EDUCOM Corporation

University/
Working Adult

University andWorking
Adult Business▶ Operate online education platform Udemy for working adult learners; andprovide study abroad support▶ Offer university administration support services▶ Offer career development support services

9.6%

Major business companies:
Benesse Corporation
Shinken-AD Co., Ltd.
Benesse i-Career Co., Ltd.

Other*: 1.2%

Percentage of consolidated
net sales

Kids & Family

16.5%
Fiscal year
ended
March 2023

We engage principally in offering Kodomo Challenge, correspondence courses aimed atpreschoolers, mainly in Japan, China, and Taiwan.
Japan▶ Offer Kodomo Challenge correspondence courses for preschoolers and Kodomo Challenge
English, and operate related businesses▶ Publish magazines: Tamago Club and Hiyoko Club (pregnancy, childbirth, parenting); THANK YOU!
(lifestyle information); Inu no Kimochi and Neko no Kimochi (direct selling)▶ Operate online-order services, such as Tamahiyo Shop and Tamahiyo no Uchiiwai

Major products and services

Net sales breakdown
Kodomo Challenge (Japan)

29.0%

Other

30.9%

Major business companies:
Benesse Corporation
Benesse Corporation China

China▶ Operate correspondence courses and classrooms, mainly for preschoolers

Kodomo Challenge (overseas)

40.1%

Taiwan▶ Operate correspondence courses mainly for preschoolers

Percentage of consolidated
net sales

Nursing Careand Childcare

51

Benesse Report 2023

32.2%
Fiscal year
ended
March 2023

We engage in the care business centering on nursing home care and related services such ashome help, meal delivery, and nursing care consultation as well as nurse and caregiver referraland staffing. We also operate daycare and after-school childcare centers.
▶ Nursing home care service:
Operate nursing homes for the elderly under six
brands: Aria, Clara, Granny & Granda, Madoka,
Bon Sejour, and Cocochi and elderly housing
under Li-Re▶ Home help services▶ Adult daycare services, nursing caretraining courses▶ Daycare and afterschool childcare▶ Referral to and staffing of nurses andcaregivers▶ Meal delivery and nursing care meals▶ Nursing care consultation services

Major products and services
Major business companies:
Benesse Style Care Co., Ltd.
Benesse MCM Corp.
Benesse Palette Co., Ltd.
Benesse Senior Support Co., Ltd.
Heart Medical Care Co., Ltd.

Net sales breakdown
Other

15.0%

Nursing home care

85.0%

Benesse Report 2023

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CHAPTER

03 How We Create Value

Education Business in Japan
Review of fiscal 2022

(billions of yen)

240.0

In the Education Business in Japan, net sales decreased by 1.4% year on year to 209 billion yen. Thisis chiefly attributable to a decrease in revenues from Shinkenzemi due to reduced cumulativeenrollments, which was not offset by the increase in orders received by the University and Working
Adult Business. Operating income grew by 0.4% year on year to 19.1 billion yen, owing to efficiency
improvements in selling expenses for Shinkenzemi and the effect of expenses having been posted
in the previous year to respond to the revision of school textbooks, which more than offset thedecrease in profit accompanying the fall in revenue. The total enrollment for the Shinkenzemi
correspondence course in Japan was 1.6 million as of April 2023, a 140,000 decrease from the samemonth in the previous year.

160.0(billions of yen)

212.1

209.0

19.0

19.1

25.0

15.0

80.0

5.0

0

FY2021
Net sales

FY20220Operating income

Out-of-School Learning BusinessBusiness overview and future prospects

Enhancing products and services inorder to raise motivation for learningand respond to diverse learning needs
Yumi Narushima
Managing Executive Officer
Head of the Out-of-School Learning Business Company ofBenesse Corporation

Market
The annual number of births in Japan peaked at two million in 1975 and has
been declining ever since, dipping below 0.8 million in 2022. Going forward, thenumber of babies born in Japan is projected to decline by around 1.0% per year
on average.
Despite this ongoing demographic decline, the scale of Japan’s
out-of-school learning market has remained unchanged in recent years. In fiscal
2020, however, market performance of prep schools and other services
weakened due to the impact of the spread of COVID-19. In fiscal 2021,
performance improved as a result of business activities being continued with amanaged response to the COVID-19 situation and the provision of systems forproviding online and offline services in combination. As a result, the market in
fiscal 2021 grew year on year to 1,469.7 billion yen*.
In addition, with the coming of the so-called “era when anyone can get
into college” due to the decline in births, the needs of children and parents withregard to learning are growing more diverse, as formats for entrance
examinations are becoming more varied. Furthermore, the COVID-19
pandemic has also triggered the emergence of new digital products andservices which have not been fully captured in the traditional out-of-school
learning market survey, shown to the right, and competition among
companies is growing fiercer. The same movement toward digitalization is also
taking place in school activities, and it is gaining momentum against the
backdrop of the GIGA School Program.

53

Benesse Report 2023

Trends in the out-of-school learning market in Japan*
Prep school
Correspondence courses (for preschool-aged children/elementary to high school students)
Others (preschool education/study guides/tutoring)

Share of correspondence courses

10.0%(billions of yen)

2,500.0

8.2%

8.5%

9.0%

(%)

10

9.8%

2,000.0
1,500.0

1,476.7

1,480.6

1,477.2

1,432.9

1,469.751,000.0
500.0

0

2017

969.0

972.0

972.0

924.0

970.0

121.4

125.6

132.3

143.2

144.0

386.3

383.0

372.9

365.7

2018

2019

2020

355.7
2021 (fiscal year) 0* The figures were calculated by Benesse based on data from Education Industry 2022, surveyed by Yano
Research Institute Ltd.

The Out-of-School Learning Business Company runs Shinkenzemi
correspondence courses as well as prep schools and classrooms to
support out-of-school learning activities in a comprehensive manner.
Shinkenzemi in particular uniquely possesses the key skills andinfrastructure to provide instruction and services, with a history ofaround 1.6 million enrollments, a wealth of systematic content, and a
network of around 8,000 Red-Pen Teachers and 1,500 coaches incharge of different high schools. By combining these long-cultivatedstrengths with the individualization efforts that we have been
focusing on in recent years with our push into digital, we provide
individualized teaching materials and programs according to learners’
interests and concerns, learning progress, and academic level. By
doing so, we are working to increase the retention rate of enrollments
and maintain and expand cumulative enrollments. Despite our efforts,
cumulative enrollments for fiscal 2022 did decrease due to a numberof factors, such as diversifying needs for learning, changes in school
education methods, and declining motivation for learning, in addition
to the accelerating trend towards decrease in the number of children.
Going forward, Shinkenzemi will further enhance its teachingmaterials and services to raise motivation to learn while developing andoffering products and services to respond to diverse learning needs.

As opposed to the correspondence education businessand school and teacher support
business, the prep school andclassroom business offers education services to students directly
in real physical spaces. At present,
we operate prep schools andEnglish classrooms through fivegroup companies.
In fiscal 2022, cumulative enrollments reduced year on year,
driven mainly by a fall among senior high school students. This waschiefly an outcome of the early scheduling of a growing number ofuniversity entrance exams (intra-year entrance exams). In theout-of-school learning market, demand related to junior high school
entrance exams is rising, mainly in urban areas. In response, inFebruary 2023, Benesse opened a Shingakukan Rootasu classroom
specializing in junior high school entrance exams in Shibuya. Also
joining the Group was Kyoto Rakusai Yobikou Co., Ltd., known for its
high examination pass rate for public senior high schools andintegrated junior and senior high schools in Kyoto, which will help us
address a broader range of entrance exam-related needs.
Furthermore, we are exploring the possibility of new methods andsettings for out-of-school learning, focusing on combining
Shinkenzemi’s correspondence education platform and theclassroom’s in-person setting to create an Online Merges with Offlinemodel that takes full advantage of the Benesse Group’s out-of-school
learning-related assets.

Benesse Report 2023

54

CHAPTER

03 How We Create Value

Education Business in Japan

Out-of-School Learning Business

School and Teacher Support Business

Related business data

Business overview and future prospects

Shinkenzemi and Kodomo Challenge enrollments in April
Senior highschool courses

Junior highschool courses(thousands of students)

2,620

3,000

2,710

Elementary
school courses

2,720

Shinkenzemi average monthly fee per person

Kodomo Challenge in Japan(preschool courses)

Senior highschool courses(yen)Junior highschool courses

Elementary
school courses

12,0002,490

Responding to the GIGA School
Program for elementary and junior highschools as well as enhancing products
catering to needs specific to senior highschools with the aim of maintaining andstrengthening our position as a partner
for public education

2,210

9,000

2,000

8,440
5,768

6,000
1,000

3,770

9,119

9,420

9,563

6,325

6,684

6,963

7,112

4,094

4,150

4,247

4,334

8,620

Takanori Tamura

3,000

0

2019

2020

2021

2022

2023

[ as of April each year ]Junior highschool courses

19,13820,000

2020

2021

2022

(fiscal year)

Senior highschool courses

Junior highschool courses

25

19,13920,70920,112

19.7

18,315

Elementary
school courses

10,000

10

5,000

5
2019

2020

2021

22.3

20.9

19.5

10.8

10.0
3.0

20
15

2018

21.3

2022 (fiscal year)

0

12.9

13.1

12.8

4.4

4.4

4.1

3.3

2019

2020

2021

2022

2023

(year)[ as of April each year ]Prep school and classroom enrollments in April

108

116

117

12,500

115

60
30
2019

2020

2021

2022

2023

(year)[ as of April each year ]

55

9,910

9,680

10,00090

0Benesse Report 2023

Number of schools using Mirai Seed(thousands of students)

150
120

Related business data

Students taking Shinken Simulated Exams and other exams(thousands of students)

114

Executive Officer
Head of the School and Teacher Support Business Company ofBenesse Corporation

The School and Teacher Support Business offers Shinken Simulated
Exams (mock university entrance exams for high school students),
Study Support and Course Map (materials for learning and choosing a
postgraduation pathway), GTEC (Global Test for English Communication),
Mirai Seed (ICT learning support service for elementary and juniorhigh schools), and other products including school study drills andtests. Within this segment, Classi Corp. and EDUCOM Corporation
provide services to support cloud-based learning and school
administration operations. Through these offerings, we aim to
maintain and strengthen our position as a reliable partner for public(%)

15,00002019

Note: The average monthly fee is calculated by dividing the net sales of each course by the
cumulative enrollment.

Elementary
school courses(thousands of students)

25,0002018

Shinkenzemi share of the target population

Cumulative enrollments in Shinkenzemi over a full year
Senior highschool courses

0(year)

education. We are speeding up
digitalization initiatives andincreasing capabilities for broad
area coverage, diverse solutions,an d qu ic k su b m issio n o f
proposals, which constitute our
key growth strategies, in order to
respond to individual challenges
faced by schools andmunicipalities.
In fiscal 2022, in the area of elementary and junior high schools,
the number of schools adopting our Mirai Seed ICT learning support
software continued to grow on the back of the GIGA School Program
implemented to introduce PCs and tablets to these levels of schools.
Meanwhile, in the senior high school segment, where we countaround 90% of the schools in Japan as our customers, enrollments for
Shinken Simulated Exams and other assessment programs trended
downward, principally as a result of demographic decline and theincreasing number of university entrance exams that were scheduled
for earlier than the standard time (intra-year entrance exams). Against
this backdrop, we will enhance products for schools facing issues with
providing advice on diverse postgraduation pathways as part of ourefforts to offer services more attuned to the needs of individual
schools. By promoting these activities while maintaining ourlong-established strong assessment services, we aim to maintain andbolster our competitiveness.

8,900

9,280

9,110

8,000

7,500

6,000

5,000

4,000

2,500

2,000

0

2018

2019

2020

2021

2022 (fiscal year)

9,010

10,000

0

7,942
5,945

Apr. 2021

Apr. 2022

Apr. 2023

Benesse Report 2023

56

CHAPTER

Education Business in Japan

Special feature: University and Working Adult Business

Based on Udemy, we are starting to take on new challenges

University and Working Adult Business

Enriching lifestyles and society

Business overview and future prospects

Aiming to build a business model thatcan provide reskilling support forbusinesses and consumers along withHR services in an integrated fashion

increasing their investment inpersonnel
recruitment
anddevelopment for sustainablegrowth and the government isenforcing investment policies topromote reskilling.
Given these factors, theUniversity and Working Adult
Business anticipates that Japan’s
reskilling market will expand
significantly toward 2030, and plans to increase net sales from 20
billion yen in fiscal 2022 to 100 billion yen in fiscal 2030. The key tool
for promoting this plan is the online learning platform Udemy, forwhich Benesse Corporation is Japan’s sales agent. Our Udemy
business in Japan is steadily growing, with a total number of users
exceeding 1.4 million and 1,300 companies registered, which will
provide a solid customer base for expanding the reskilling business.
Centering on this tool, we are working to build a business model thatcan offer reskilling support and matching services for businesses andconsumers in an integrated manner while also seeking partnershipand M&A opportunities.

Masaki Yamasaki
Managing Executive Officer
Head of the University and Working Adult BusinessCompany of Benesse Corporation

The Benesse Group is focusing efforts on expanding into new fields
as a driver of long-term profit growth. Among a number of target
fields, the highest priority is given to the University and Working
Adult Business.
In many countries, DX and GX initiatives are driving major socialtransformations, giving rise to needs for different work methods and job
skills. Japan, while facing a dwindling birthrate and aging population andshrinking working-age population, is entering the era of the 100-year life.
Against this backdrop, people are calling for an environment conducive
to lifelong learning and career development, while many enterprises are

Related business data

Udemy customer base

Net sales plan for the University and Working Adult Business(unit: billions of yen)Enterprise

50% or above

Nikkei 225-listed90%

Selected% as a model
operator forpracticing humancapital management*

50% or above

DX-certified by the
Ministry of Economy,
Trade and Industry

Annualgrowth+22 %We promote the Udemy business as one of our key initiatives toachieve a “society where people take pride in their latest learning
pursuits.” In 2015, Benesse entered into a business alliance agreementwith Udemy, Inc, a US-based company that operates the world’s
largest online education platform, and launched services to provide
working adults in Japan with opportunities to acquire skills at theworld’s most advanced levels. Udemy represents an online
consumer-to-consumer (C-to-C) marketplace that connects teachers
and learners from around the world. Users access the program via
their computer or smartphone to pursue their chosen learning
activities in an efficient way, particularly by utilizing their unscheduled
space of time. In addition to services for individual users, we offer
corporate users a broad spectrum of business skills learning programs
to choose from through Udemy Business.

Individual upskilling
opportunities
for career development

Organizational
culturethat recognizes and encourages
reskilling activities

Learning culture: everyone has the opportunity to
pursue autonomous and continuous learning

Society where people take pride in their latest
learning-related pursuits

One of the world's largest online education platform
For individual users

For organizational users

More than 1,300 companies and 1.4 million users registered in Japan

65.0

40.0

Used by more than 1.4 million people(Jun. 2023)

2022

2023

*19 entities named in ITO Report for Human Capital Management, issued by the Ministry of Economy, Trade and Industry

Benesse Report 2023

Business alliance with US-based Udemy, Inc.

What working adults in Japan need most right now(Jun. 2023)

20.0

57

In Japan, which is entering the era of the 100-year life, relatively few
adults engage in learning activities aimed at personal fulfillment ascompared with people in the US and Europe. We believe it isimportant to establish a culture of learning where adults can haveroutine opportunities to continue learning, not only at university but
also after graduation, in order to pursue their individual career or life
goals. In April 2022, backed by this belief and a commitment tosquarely tackle the challenges of social structure related to university
and working adult segment, Benesse established the University andWorking Adult Business Company and set forth its purpose to support
people to “continue learning throughout life, thus enriching individual
lives and society at large.”

100.0

Adopted by more than

1,300 entities

03 How We Create Value

2024

2025

2026

2027

2028

2029

2030 (fiscal year)

The major strengths of the Udemy services operated in Japan are thespeedy content delivery via the C-to-C platform, curricula for practicalbusiness skills, and the extensive lineup of programs. Our offerings
cover courses on technology, coaching and 1:1meetings, and mental
health, and they are all cutting edge in every field, from business
communication to health. For example, courses on generative AI werealready available from Udemy when the technology began to draw
public attention overseas. Learning programs are constantly updatedwith the newest information, enabling users to stay one step ahead.
This feature is made possible by the use of the C-to-C model, which iswell suited to autonomous content creation planning andimplementation.
As of June 2023, Udemy Business has a customer base consistingof more than 1,300 enterprises of all sizes in Japan, and the combined
total number of people using Udemy Business and/or Udemy for
individual users exceeds 1.4 million. Our analysis indicates that the
major reasons for adopting the tool are its ability to offer a solution to
the issue of developing DX personnel, which is common to many
companies across different industries, and its flexibility, which suits theneeds of many companies that have begun to prefer online training in
the wake of COVID-19. The growing user count moreover testifies tothe appeal of the product, which provides easy access to high-quality
curricula from anywhere in Japan. Going forward, we will create moreuser-friendly functions to meet the needs of corporate users
regardless of industry and organization size.

Benesse Report 2023

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CHAPTER

03 How We Create Value

Special feature: University and Working Adult Business

Forming the National Municipal Reskilling Network, an off-shoot from the Udemy business
In May 2023, the Company formed the National Municipal Reskilling
Network to support municipal governments with their reskilling
efforts. This action was planned in response to our recognition of thespecific challenges faced by many municipalities in promoting
reskilling activities, which we identified by examining the use of
Udemy Business services by certain municipal officers, and we foundthem of a different nature from those of business companies. The new
project is designed to provide solutions to these challenges by sharing
know-how and insights with participating municipalities.

Specifically, major activities are: actively publishing a booklet on
reskilling activities to share best practices and challenging projects
among participating municipalities; hosting webinars featuring
public figures and guest experts; and organizing networking
sessions to help participating municipalities form closer ties with
one another. It is expected that needs for similar networking
activities will grow in the future, and we hope to act as a catalyst in
forming appropriate structures.

Building a business model capable of providing comprehensive reskilling support services
Our goal as the University and Working Adult Business is to match theneeds of companies and individuals by providing support forreskilling through Udemy. In this business field, demand is growing
from various sectors such as government (To G) and schools (To S) in
addition to business (To B) and consumers (To C), and we will respondto this demand by expertly drawing on the wealth of know-how that
we have accumulated over the years. At present, we are expanding
the business centering on Udemy-based learning support while

investing in SkyHive Technologies Inc. and acquiring Waris Co., Ltd.
SkyHive, which possesses the world’s largest labor market database,will engage in skills visualization while Waris will play a key role inexpanding into the matching market for female workers (recruiting,transferring, job hunting, changing jobs) through reskilling services.
With these functions in place, we aim to build a business model
capable of providing comprehensive support for a full range ofreskilling processes related to human capital management.

Committed to achieving a “society where
people take pride in their latest
learning pursuits”
Tomonori Iida
Executive General Manager in chargeof Working Adult Education Businessand Udemy business in Japan
Benesse Corporation

Launching the Udemy business, a demonstration of Benesse’s innovative power
The Udemy business represents a new global partnershipproject, a business development format that generally poses
formidable challenges for Japanese companies. We also had a
hard time launching the Udemy business, spending muchtime and energy on a process of trial and error that lasted
nearly one year. At that time, we were simultaneously
engaged in a total of 13 new project developments andviewed Udemy as one of the most promising among them.
As it turned out, my confidence was well-placed, as the

project has subsequently developed into a successful
platform business, winning numerous corporate andindividual customers. This achievement exemplified
Benesse’s ability to achieve innovation through a newpartnership and develop it into a new business.

We are a company engaging in social value creation
Clarificationof goals

Expanding business toinclude visualization ofcurrent status/skills

Visualizationof current
status/skills

Expanding business fromlearning to visualizationof current status/skills

Matching

Expanding business beyond
learning to matching(recruiting, transferring,job hunting, changing jobs)
through reskilling

Learning
Business
expansion

Expanding businessto include matching

Business
expansion

Since announcing the Transformation Business Plan we havereceived inquiries about it from many companies. The Plan
describes our future business visions and approaches toward
them. In the future, when cooperation with several
companies is realized, we would like to think further about
what role Benesse will play. In the Udemy business, forexample, we promote a co-branding strategy to represent
Udemy and Benesse in combination. I think it appropriate for
Benesse to play alternating roles in public exposure, either inthe spotlight or behind the curtain.
With regard to this, we are primarily pursuing our goal of
creating a “society where people take pride in their latest
learning pursuits, ” while not necessarily seeking to attach ourname to the achievement. This means that Benesse must be
willing to perform its role from behind the scenes, particularly
with respect to realizing various social ideals or achieving thewell-being of society in general. I think this could be a worthy
way of Benesse. Of course, as a business entity, it is ideal tocreate social value while at the same time adding economic
value.

Aiming to provide one-stop solutions to human capital management issues

Pursuing possibilities beyond the ideal learning culture
In October 2022, the Japanese government announced its plan toinvest a total of one trillion yen in reskilling promotion over five years.
This will serve as a tailwind for our business based on Udemy. On theback of this situation, we are promoting the Udemy business toachieve an environment where practical hands-on learning
opportunities are easily accessible and available to willing adult59

Benesse Report 2023

learners, with a view to building an ideal learning culture. At the sametime, we are looking beyond this goal to the possibility of developing
new business models using datasets obtained from the Udemy
business, such as about individual learners’ characteristics, interestsand concerns, and actions and behaviors, which constitutes a sourceof business growth with immeasurable potential.

Toward the goal of realizing a “society where people takepride in their latest learning pursuit,” we are striving to build
appropriate learning infrastructure. To this end, the University
and Working Adult Business is solidifying its foundation basedon the Udemy business in order to expand into new fields.
Our plans include helping companies to address issues
related to human capital management by providing
one-stop solutions. We are committed to successful
performance in this field.

Benesse Report 2023

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03 How We Create Value

Kids & Family Business
Review of fiscal 2022

(billions of yen)

90.0

In the Kids & Family Business, net sales decreased by 4.7% year on year to 67.8 billion yen. This isprincipally attributable to a decline in revenue, reflecting reduced cumulative enrollments for
Kodomo Challenge both in Japan and China. In China in particular, the reduced revenue resulted
from the temporary suspension of business activities due to the country’s zero-COVID policy, andcould not be offset by the positive effect of currency exchange accompanying the weaker yen.
Operating income declined by 95.9% year on year to 70 million yen due to decreased revenue andprofit despite a boost in profit resulting from the reallocation of the burden of selling expenses
between the Kid’s & Family Business and the Education Business in Japan.

(billions of yen)

71.2

67.8

60.0

15.0

10.0

30.0

1.7

0

FY2021
Net sales

5.0

0.07
FY20220Operating income

Business overview and future prospects

Responding to diversifying needs
to improve customer's lifetime value
Toshihiko Nishimura
Executive Officer
Head of the Kids & Family Business Company of Benesse Corporation

The pillar of the Kid’s & Family Business is Kodomo Challenge, thecorrespondence course designed to help children acquiredevelopmentally appropriate lifestyle habits and knowledge. We are
expanding the market for this product in Japan, China, and Taiwan.
In fiscal 2022 in Japan, cumulative enrollments decreased due tothe accelerating trend toward lower birthrates, changes in theeconomic environment, and diversifying needs. Despite this, however,operating income grew, thanks to cost-cutting measures and theincrease in unit price per student following a price revision. Goingforward, while focusing on improving our product retention rate byMarketRelated business data

Japan

China

Due to both demographic decline and the impact of COVID-19, the needsof parents in regard to their children’s education are significantly changing.
In the domestic preschool education market, mainstream teachingmaterials have been shifting from print to digital tools such as tablets,
reflecting a shift from the values of older generations as well as social
conditions. In addition, learning needs of preschoolers are becoming morediverse and individualized against the backdrop of a rising employment
rate for women and a growing percentage of female university graduateswith four-year degrees. Demand for English learning and STEAM as well asother education activities is also increasing.

In China too, the decline in the birthrate is picking up speed. The annual
number of births continued to fall for the sixth year to below the 10 million
level, specifically, 9.56 million, or a 50% reduction from the 17.86 million
recorded in 2016, the most recent peak. The annual figure is expected tocontinue to decrease in 2023.
One factor contributing to the declining birthrate is the excessive costof education. In July 2021, to address this issue, the government
announced the “Double Reduction” policy to reduce the burden on
students in terms of homework and out-of-school education during theyears of compulsory education.
The policy includes restrictions on prep schools and other education
providers at the compulsory education level. In response to this situation
as well as to stay-at-home orders related to COVID-19, a number ofbusinesses are scaling back or withdrawing from the market.
On the other hand, consumer enthusiasm for education remains high,and it is expected that the preschool education market for character
cultivation will continue to trend at a certain level.
Due to these factors, needs for preschool education in China arechanging significantly while also becoming more diverse and individualized.

Cumulative enrollments in Kodomo Challenge over a full year

Kodomo Challenge enrollments in April
Japan

China

(thousands of students)
2,500
2,080

Japan

Taiwan

1,990

2,020

2,000

24,390

1,800

1,490

1,500
1,000

24,25924,20423,232

2019

2020

2021

19,82920,00010,000

500
0

2019

2020

2021

2022

2023 (year)

0

2018

2022 (fiscal year)[ as of April each year ]Kodomo Challenge average monthly fee per person (Japan)
(yen)
2,500
2,000

1,882

1,961

2,006

2,204

2,376

Kodomo Challenge share of the target population (Japan)
(%)
20
15

13.9

14.1

14.2

13.9

2019

2020

2021

2022

1,500
1,000

10

500

5

0

Benesse Report 2023

Overseas(thousands of students)
30,000

2018

2019

2020

2021

2022 (fiscal year)

Note: The average monthly fee is calculated by dividing the net sales of each course by the cumulative enrollment.

61

increasing customer loyalty, we
will create multilayered value andprice structures for our products
and promote combination options
to respond to diversifying needs inan effort to achieve growth despite
the demographic challenges.
In China, our cumulative enrollments in fiscal 2022 decreased,primarily due to a plunging birthrate and the effect of the
COVID-related lockdown policy on sales and delivery operations, evenwith the fierce market competition having begun to ease due to the
Double Reduction policy. In response to these changes in theenvironment, we will strive to evolve our products to cater topreschool education needs that are becoming more diverse andindividualized while aiming to recover Kodomo Challenge
enrollments for character cultivation and improve customer lifetime
value.

0

11.7

2023 (year)[ as of April each year ]Benesse Report 2023

62

CHAPTER

03 How We Create Value

Nursing Care and Childcare Business
Review of fiscal 2022

(billions of yen)

150.0

In the Nursing Care and Childcare Business, net sales increased by 4.2% year on year to 132.6
billion yen. This is largely attributable to an increase in the number of customers resulting from theaddition of nine new nursing home and elderly housing facility locations and six new daycare andafterschool childcare centers. Operating income decreased by 17.0% year on year to 6.6 billion yen
due to increased utility costs connected to rising energy prices as well as increased sales
promotion costs for the enhancement of related activities.

(billions of yen)

132.6

127.3

100.0

10.0

8.0

6.6

50.0

0

FY2021
Net sales

15.0

5.0

FY20220Operating income

Business overview and future prospects

Aiming for further growth by achieving
recovery from the impact of COVID-19
and expanding peripheral businesses
Shinya Takiyama
Director and Senior Managing Executive Officer
Head of the Nursing Care and Childcare Business Company ofBenesse Style Care Co., Ltd.

The Nursing Care and Childcare Business engages primarily inproviding facility-based nursing care and related services such ashome help, meal delivery, and nursing care consultation as well as
nursing and medical professional referral and staffing. We also
operate daycare and afterschool childcare centers. Utilizing advanced
digital technology and unique methods based on the verbalized
know-how of our staff, we are committed to offering high-quality
service to each of our elderly and young customers. We have thus
established a solid position in the nursing care and childcare markets.
In fiscal 2022, the occupancy rates of our nursing homes

MarketWith the ongoing aging of the population in Japan, the number of people
who require nursing care has also continued to increase. To resolve the issueof nursing care for elderly, the nursing care insurance system under thesocial insurance system was enacted in 2000. Since then, the domestic
nursing care market*1 has expanded rapidly, with the long-term care benefit
expenditure in fiscal 2020 at 10.2 trillion yen, a 2.6% increase over theprevious year. As of April 2022, the number of people receiving nursing
care insurance services was 5.93 million, a 2.0% increase from a year earlier.
The number of elderly aged 65 and over increased to 29.1% of the total
population*2 as of September 15, 2022, a 0.3pt increase over the previous
year. It is expected that in 2040, the percentage of elderly people will havehit 35.3%.
As the birthrate declines, the population ages, and we enter the era of
the 100-year life, in order to improve the quality of life of the elderly andsolve the social issue of a shortage of human resources for nursing careservices, the nursing care industry needs to leverage digital technology to
improve the quality and efficiency of services.
*1 Source: Ministry of Health, Labour and Welfare, ”Status Report on the Long-term Care
Insurance Projects”*2 Source: Statistics Bureau, Ministry of Internal Affairs and Communications, “The Elderly inJapan from a Statistical Standpoint (as of September 15, 2022)”

People receiving nursing care insurance services
In-home services(millions)
5.43
6Community-based services

Facility services

5.93 (+2.0%)*

5.81

5.64

5.59

Related business data

4

3.66

3.78

3.84

3.99

4.08 (+2.2%)*

2

0.84
0.93

0.87
0.95

0.84
0.95

0.87
0.95

0.89 (+2.9%)*
0.96 (+0.6%)*

0

2018

2019

2020

2021

2022

Source: Ministry of Health, Labour and Welfare, ”Status Report on the Long-term Care Insurance Projects”* Figures in parentheses are a comparison with the previous year (service recipients in April each year).

Long-term care benefit expenditure by category
Facility services

6.2%

30.9%

Community-based services

16.1%
12.9%
Specified nursing homes licensed toprovide nursing care (private-pay
elderly homes with nursing care)

In-home services
FY202046.7%

10.2 trillion yen
in totalHome-visit services

13.5%
Commuting services

5.3%

Occupancy rate of our existing facilities

Distribution of our nursing homes

(%)
100

(As of March 2023)

96

95

93

90

90

80

OthersOther in-home services

continued to decline due to theimpact of the COVID-19 outbreak,mainly affecting our high-end
facilities. Striving to improve theoccupancyrate,
ourhighest-priority issue at present,
we are carrying out a number ofmeasures, such as expanding trial
short-stayprograms
andboosting sales capabilities, in the context of the pandemic’s waning
effects on economic and social activities. We are looking to restore
the occupancy rate to the pre-COVID level by the end of fiscal 2024.
At the same time, we are steadily moving forward with new
initiatives, namely new area development strategies for expanding
the number of facilities as well as human capital investment and DX
promotion plans for improving the quality of nursing care services.
Going forward, we are planning to focus more efforts on expanding
peripheral businesses in markets with strong growth potential where
we can leverage the Company’s advantages to best effect, such as
nursing care HR and nursing care meal services.

15.1%

Aichi

22

Kyoto

4

Hokkaido2

Miyagi5

Saitama24

60
Osaka 1940

Hyogo 24

14

Tokyo

164

Kanagawa 65

20
Nara

0

Chiba

2018

2019

2020

2021

2022

(end offiscal year)

2

Okayama 4
Fukuoka

3

Source: Ministry of Health, Labour and Welfare, “Status Report on the Long-term Care Insurance Projects”

63 Benesse Report 2023

Benesse Report 2023

64

CHAPTER

03 How We Create Value

Nursing Care and Childcare Business

Related business data

Facility-based nursing care business: improving the quality of nursing care

Nursing homes & elderly homes by brandNumber of daycare and afterschool childcare centers■ Aria ■ Clara ■ Granny & Granda■ Madoka ■ Bon Sejour ■ Cocochi■ Daycare

400

330

322

■ Li-Re339

343■ Afterschool

120

352

80
200

Developing the Majikami nursing careexpert and Majikami AI to increase thequality of nursing care

99

93

88

84

80

300

Benesse’s unique nursing care DX for increasing the QOL of residents

53

57

60

62

27

27

28

31

65

40
100

0

19

18

20

21

22

(end offiscal year)

0

18

19

20

34

21

22 (end of
fiscal year)

New challenges for growth: expanding Nursing Care Peripheral Business

Focusing on nursing care HR and nursing
care meal services
The Benesse Group is pursuing the extensive development of its
nursing care business centering on facility-based care and a diverse
range of related services.
In Japan, demand for nursing care professionals is increasing
with the growth of the elderly population and personnel shortages
will likely become more severe.
In this situation, we are seeing good opportunities to develop
business related to nursing care HR (matching care providers withjob seekers) and nursing care meal services (providing prepared
meals to make up for a shortage of cooks). We will focus on
expanding into these two fields, which have strong market growthpotential and are likely to provide us with opportunities to takeadvantage of our strengths.

Market growth potential and our strategies for nursing care HR/
meal services businesses
Market growthPresent operations
potential(FY2022–FY2028)
Nursing care HR

Annual growth+5%*1

Nursing care meal services

Annual growth

+10 %
*2

Benesse MCM
engaged in staffing;
Heart Medical Care inpersonnel placement
and media relations

Benesse Palette
engaged in mealdelivery services forthe elderly at homes
and provides nursing
care meals for
Benesse Style Care
homes

Future development
Benesse’s strengths
direction▶ Deep understandingof customers
cultivated throughfacility-based service
operations▶ Knowledge gained
from existing
nursing carepersonnel businessWill create new
personnel services
businesses to meet adiverse array of
employment-related
needs, while
expanding existing
businesses▶ Adept cooking
techniques (taste
and safety) honed
through operations
to provide nursing
care meals at ourown facilities

Will create a B-to-B
business to provide
pre-prepared nursing
care meals to facilities
operated by othercompanies*1 The value of the nursing care HR market has been calculated based on the number of people eligible toreceive nursing care services.
*2 The value of the pre-prepared nursing care meal market is an estimate that factors in the shifting of
cooking operations from in-house kitchens to off-site commercial kitchens in addition to existing demand.

65 Benesse Report 2023

Benesse Group’s nursing care business
Market growth rate: 5% or more*

Facility care/Home care

Nursingcare meal
services

Nursingcare DX

Under
consideration(Unit: billions of yen)AI

Knowledge of nursing Acquiring nursing
care experts certifiedcare knowledge
by Benesse (Majikami) (Majikami AI Solution)

Improving the nursing skills of
non-Majikami
staff using Majikami AI Solution

Expertise in nursing care from 28 years of operations and personnel training
capabilities stemming from Benesse’s education business operations

Granda Yotsuya, opened in March 2022 as the first Benesse’s “sensing home”

Nursing Care Antenna for making nursing
care knowledge publicly available

30.0

Nursingcare HR

Annualgrowth

+35%

Nursingcare
meal
services

5.0

2024

An overwhelming improvement to service infrastructure
by combining people and technology

Support and increase nursing care personnel

Net sales plan

2023

Analysis for“unusual”
signs

Sleep
qualityIn March 2022, we opened the first Bennese’s “sensing home,” Granda
Yotsuya. We are also rolling out the relevant technology to existing
facilities to expand the use of this model in a bid to make our products
more appealing. Our plan is to expand the coverage to 56 locations in
total by the end of fiscal 2023. In the sensing home, each resident’s
room is equipped with sensors that collect information on theresident’s status in relation to sleep and toileting, and the collected
data is processed for visualization. Using this data and Majikami's
know-how, we will further accelerate the development of AI solutions
that realize quality of service with the highest priority on QOL.

* Both figures are forecasts for 2022 to 2028.

2022

Dementia
care

Expanding the Bennese’s “sensing home”

Nursingcare HR

Assistive
products

Service quality that places the highest emphasis on QOL

Market growth rate: 5% or less*

Seniorhousing

CustomerreferralWith the aim of improving the quality of life (QOL) of elderly residents
of nursing homes, Benesse Style Care is promoting the developmentof the Majikami nursing care expert and the Majikami AI digital tool.
Majikami is an internal nursing care qualification system to certify
employees with a high level of expertise and practical skills, and a totalof more than 220 Majikami experts have been certified to date.
Majikami AI is being developed by quantifying the factors that
contribute to improving the QOL of residents and then employing theinsights and behavior of Majikami experts as instructional data to train
the system. By effectively combining human and technologicalcapabilities, this system aims to enable even less-experienced staff toprovide nursing care of a quality close to that provided by Majikami.

Overview of Benesse-style nursing care DX

2025

2026

2027

2028 (fiscal year)

While committed to improving the quality of nursing care provided at
its own facilities, Benesse Style Care is also sharing its accumulated
knowledge in an effort to contribute to the industry as a whole.
As part of such effort, we run Nursing Care Antenna, a portal site thatprovides comprehensive information needed by caregivers in Japan.
The website makes available for free expertise on nursing caretechniques that was previously limited to internal use as well as theBenesse Methods knowledge base that Benesse Style Care has built
up over its 28 years of nursing home operations. Posts also include
information on seminars, recreational and other activity materials foruse in nursing care settings, and information on common geriatricdisorders and related medicine.
Site membership has expanded to reach 120,000 as of July 2023.

Offering free access to practical knowledge assets built
through 28 years of operations

Nursing care techniques

Outing destinations

Benesse’s nursing caretechniques

Wheelchair-accessible

Nursing caretechnical guidelines(with video)

popular destinations

Accessibility
information

Nursing care recreational
activity materials
Recreational activity
materials for nursing care:
More than 5,000 items

Benesse Methods

Emergency preparedness
measures

Visual materials

Free access to Benesse’s
nursing care expertiseand methods

Protection against
infectious disease
Disaster preparedness/
response

Free-of-charge, copyright-free

Toileting care
Dementia care

Visual materials for use innursing care settings:
More than 1,000 items

etc.

Benesse Report 2023

66