Benesse Holdings, Inc.
FY2020 Financial Results Briefing
May 11, 2021

Event Summary[Company Name]

Benesse Holdings, Inc.

[Company ID]

9783-QCODE[Event Language]

JPN[Event Type]Earnings Announcement[Event Name]FY2020 Financial Results Briefing[Fiscal Period]

FY2020 Annual[Date]

May 11, 2021

[Number of Pages]

44[Time]

16:00 - 17:15(Total: 75 minutes, Presentation: 54 minutes, Q&A: 21 minutes)[Venue]Webcast[Venue Size][Participants][Number of Speakers]

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Tamotsu Adachi
Hitoshi Kobayashi
Shinsuke Tsuboi

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Representative Director and Chairman, CEO
Representative Director and President, COO
Executive Officer, CFO

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Presentation
Adachi: Thank you very much for taking time out of your busy schedule to participate in Benesse’s financial
results briefing today.
As you all know, Benesse Holdings, Inc. has made changes to its management structure as of April 1, 2021. I
am the Representative Director and Chairman, CEO, and Mr. Kobayashi is the Representative Director andPresident, COO. Kobayashi will do today’s presentation.
First, the financial results for the fiscal year ended March 31, 2021, and then the forecast for the fiscal year
ending March 31, 2022. I would also like to explain in detail about the current business performance andbusiness conditions, especially since the impact of the COVID-19 was very significant last year.
So, Mr. Kobayashi, please start.
Kobayashi: Yes. I am Mr. Kobayashi. Thank you very much for joining us today. As Mr. Adachi mentioned
earlier, today I would like to elaborate a little bit on what the situation was like not only in terms of thefinancial results but also in terms of the various businesses of Benesse Holdings, Inc. during the COVID-19
pandemic over the last year. Then, I would like to explain what we are going to do this year in response.
Please note that the explanation may take a little longer than usual. We will try to extend the time for a Q&A
session, or you can send your questions later to our IR department.

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First, I would like to provide a summary of the figures for the fiscal year ended March 31, 2021, as well as an
explanation of the business situation.
First, let’s look at the figures YoY.
Our company was also affected by the COVID-19, and sales decreased by about 4.7%. Operating profit was
down 38.4%, ordinary profit was down 44.7%, and net profit was down 50.3%.

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3This is shown as a waterfall for each business.
The operating profit was JPY21.2 billion in FY2019. The Shinkenzemi added JPY4.8 billion, but unfortunately,other businesses were inevitably affected by the COVID-19.
The figures in the previous section show that each business area was affected, resulting in an operating profitof JPY13 billion.

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4The question is, how did this compare to our original budget and forecast?
Sales increased by 0.4% and operating profit increased by 40.7% to JPY13 billion from the originally announced
JPY9.3 billion. As a result, ordinary profit increased from JPY4.5 billion to JPY9.2 billion, or 105.8% of increase,and net profit was JPY3.1 billion, although the forecast for the net profit was zero.

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Looking at the results by project, the results compare to the budget was positive except for the Shinkenzemi.
We have also invested in sales for Shinkenzemi in the last minute, so other than that, school and teacher
support, cram schools and English language school businesses increased by JPY2.6 billion, Global Kodomo
Challenge increased by JPY200 million, and nursing care and childcare business increased by JPY1.3 billion,
resulting in an operating profit of JPY13 billion.

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I would like to explain this a little bit by business unit, in light of the impact of the COVID-19, and what thetrends were in each business.
Shinkenzemi; out of domestic education segment. This was in April 2020, when the school was closed andthere was a great increase in problems in the world. We were able to finish the first half of the year with avery good number of new or continuing customers in April, and we spent the second half of the year
maintaining a strong retention rate amidst an increase in utilization. Accordingly, the figures for each quarterare shown on the right, and in each quarter, Shinkenzemi was able to achieve a YoY increase for the year.
On the other hand, the school and teacher support and cram school businesses had the biggest impact on ourbusinesses. Since schools were closed in April and May in Japan, the negative impact of the closure had asignificant impact on the first half of the fiscal year. However, in the second half of the fiscal year, these 2
businesses also showed signs of recovery. Therefore, as shown in the waterfall earlier, we were able to achievea recovery in profits that exceeded our expectations for schools and cram schools business segments relative
to our budget.
This is Global Kodomo Challenge. In Japan, enrollment in Kodomo Challenge remained positive, as didenrollment in Shinkenzemi. China’s business was slightly negative compared to last year. Also, concerts. This
is in Japan, but we have a very profitable business, concerts. Unfortunately, it was difficult to hold concerts
here due to the impact of the COVID-19, so this had a negative impact on our earnings.
Nursing care business. In the first half of the nursing care business, we had to refrain from business operations
due to the declaration of an emergency situation. On the other hand, there has been a gradual recovery, but
unfortunately, since then, the state of emergency has been declared twice again, so in total, the occupancy
rate has declined compared to the year before last.
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7Berlitz. Berlitz is a global COVID-19-influenced business. In Europe and the US, as well as in Japan, there wasinevitably a negative impact from the closure of language centers. However, a gradual recovery was seen
toward the second half of the fiscal year. That is what the year was all about.

I would like to talk about each business unit in more detail.
This is Shinkenzemi. As I mentioned earlier, Shinkenzemi got off to a brisk start enrollments in April last year.
By increasing the utilization rate of teaching materials, the annual retention rate, which is a KPI that measures
how many enrollments who were in the program in April 2020 remained through March 2021, also increased
significantly. It means that the profit of Shinkenzemi improved greatly for FY2020.
In 2019, at the same time as the announcement of our financial results, we said that we would change ourstrategy from focusing on enrollment in April to a direction that would generate solid profits. What we had inmind was to rebuild our business with a focus on customers’ retention of subscription. I believe that last year
was a year in which we were able to firmly realize this.
The year started off with 19.4% new customers in April, an increase of about 100,000 people. In addition, thepercentage of April enrollments remaining in the following March was 4% overall, and 5% for digital courses
alone. This will have an impact of approximately JPY2.8 billion on our revenue. That is how our FY2020 ended.
The table below shows how the operating profit of Shinkenzemi has changed when compared to FY2017. Theline graph shows April enrollment, and the bar graph shows profit. If 2017 is set to zero, then in 2018, profit
was up JPY 0.4 billion, in 2019, profit was up JPY 4.7 billion, and last year, profit was up JPY 9.5 billion. I think
you can see from this that the profitability of the Shinkenzemi division has steadily increased over the past 3
years.

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8This is the School and Teacher Support business.
The School and Teacher Support business is a business that generates figures mainly through assessments
such as the Shinken Simulated Exams for high school students, but as I mentioned earlier, there were school
closures in the first quarter. As a result, we were unable to conduct mock exams at high schools during thisperiod, and sales dropped by half.
On the other hand, after lifting the closure of the school, from the second quarter onward, as you can see inthe table below, the blue line is for the mock exams for high school students including Shinken Simulated
Exams, Study Support, and Course Map. When you see the last year’s figures carefully, the assessment
business has been recovering since the second quarter.
On the other hand, the GTEC is still in the process of recovering a bit. Of course, the GTEC was influenced by
the COVID-19, but there was also an unexpected change in the university entrance examination reform in
2019. Since there has been a change in the university entrance examinations to assess the ability of 4 English
skills, the motivation of high schools to use GTEC has slightly decreased because they are not used in thenationwide entrance examination. Therefore, unfortunately, the GTEC, as shown by the orange line in thetable below, has been negative for a year compared to a year ago.

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We will continue with the classroom and cram school business.
The impact of the COVID-19 is concentrated in the first quarter of the school year, during the closure of schools
in Japan. At that time, schools were closed, and cram schools had to be closed according to the guidelines ofeach municipality, so unfortunately, cram school business was not available for student members to attend.
We made a refund support for customers. In other words, there are students, but we were not able to conductclasses, so we were offering a refund for about 2 months.
Also, because of the effects of the COVID-19 from March, the enrollment in April as start of the year, when
we are recruiting the most students, was low. The impact of each of these is negative JPY1.9 billion andnegative JPY2 billion. It is no exaggeration to say that this is almost the influence of the COVID-19 in theclassroom business. However, during this period, we have been preparing for the online classroom businessto be able to continue, and after the school closure, the cram school will be open, but we have been preparing
for the students to be able to continue their studies at the cram school while taking proper measures against
infection.
As you can see in the table below, the sales were down significantly in the first quarter for the reasons I
mentioned earlier, but in the second, third and fourth quarters, sales were slightly higher than the previous
year. We have seen a significant recovery in this area.

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10Next is the Global Kodomo Challenge.
In Japan, it was able to maintain the same level of enrollment as Shinkenzemi. However, as I mentioned alittle earlier, the concert business, which is extremely profitable, due to the effects of the COVID-19, we could
hardly hold concerts in summer, and in winter we had to hold concerts while reducing the number of seats.
The impact on the profit and loss here was minus JPY600 million for 1 year, a very significant figure.
In China, there was an impact of the COVID-19 a few months earlier than in Japan, but the sales channels in
China are inevitably store sales in real stores or sales by telephone, so the decline in enrollment during the
COVID-19 period had an impact on the sales channels as well. Another thing that has had a big impact on thepast year is the entry of competitors.
As you can see in the table below, Japan was able to maintain positive growth in the first and fourth quarters
compared to the previous year, but unfortunately, China was not able to recover and remained negative fora year. This is what happened.

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The next item is the nursing care and childcare business.
On this side, we refrained from business especially in the first quarter. In addition, the number of people whoare holding back or considering moving in is inevitably increasing in this environment. Therefore, I believe thatthe resulting decline in occupancy rate had a very large impact on our profit and loss. Even after the reopeningof the facility, the number of people considering not moving in inevitably increased over the next year as thenumber of infected people increased nationwide. The occupancy rate went down by 2.7 points to 92.6% in
March this year, 1 year later from 95.3% at the end of March last year.
However, in terms of earnings, we were able to improve the retention rate and firmly control labor andrecruiting costs, and as a result, we were able to generate operating profit figures that were higher thaninitially planned for nursing care and childcare business.

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The next one is Berlitz.
As I mentioned earlier, Berlitz is not only a problem in Japan, but the whole world has been greatly affectedby the COVID-19. Therefore, sales for FY2020 will be significantly lower. On the other hand, in response tothis environment, we are carrying out a rather bold and drastic major restructuring at the same time. This iswhere the fixed costs were greatly reduced. I think that is what this year is all about.
Although sales of both BTS and ELS have decreased significantly, the introduction of Berlitz 2.0 and online
courses has been a little slower than planned, but we are now in the process of making a firm plan for
implementation worldwide, starting with North and South America.
On the other hand, as I mentioned earlier, we have restructured fixed costs significantly, so even if the breakeven point of sales is about JPY20 billion lower than FY2018, we will still be profitable. This is the structure wehave developed.
As I mentioned above, I think I have not had enough opportunity to talk and explain, but I would like toreiterate the state of Benesse’s businesses in the COVID-19 disaster.

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Next, I would like to talk about our business outlook and future strategies for the fiscal year ending March 31,
2022.
First of all, as for the highlights and forecast for the full year of this fiscal year, sales increased by 3.2% or
JPY441 billion. Operating profit increased by 33.7% from JPY13 billion to JPY17.5 billion. Ordinary profit
increased from JPY9.2 billion to JPY12 billion, or 29.6% of increase. We started the year with a plan to increase
net profit from JPY3.1 billion to JPY5 billion, an increase of 60.1%.

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Looking at the waterfall by segment, the education business in Japan such as Shinkenzemi, school and teacher
support, cram schools and English language schools, will recover by JPY1.2 billion and JPY4.4 billion,
respectively. And, it is K&F, as I will tell you later. This is the integration of Kodomo Challenge and the K&F
business including Tamahiyo business. The recovery will be slightly slower in nursing care and childcare. Thisis minus JPY3.3 million. We have started to aim for Berlitz achieving an operating profit of JPY17.5 billion withplus JPY3.5 million and other factors.
As for nursing care, due to the infection of the COVID-19, as I mentioned earlier, the initial occupancy rate has
dropped by about 3 points, or 2.7 points as a start. The positive revenue recognition standard has a negative
impact, so we are planning to start with a plan of minus JPY3.3 million.

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As a summary of our strategy, we will recover to the FY2019 level by FY2022. In other words, we have been
saying that we will make a V-shaped recovery over the next 2 years, and this sheet shows how this will lookwhen we look at each business.
Rather than a V-shaped recovery, Shinkenzemi was on a growth path last fiscal year, and we will continue toaim for a large increase in profit compared to FY2019. Digital courses have evolved quite a bit. As a result, we
will be able to improve the retention rate, and the challenge is to further promote marketing reform. In thiscontext, we are planning to increase profits significantly.
Classroom business. In the area of cram schools and English classes, we expect to achieve a V-shaped recovery
in 1 year, not 2. Early recovery from the effects of the COVID-19. And even if a major infection spreads again,
we have something online. As cram school business, we want to make sure that we are prepared to continue
providing an environment that never stops learning, while also making and protecting solid profits.
School and Teacher support. As for the school business, I think the assessment will return. Almost all returns.
For GTEC, there are still some areas where have not been able to return. In the midst of all this, the GIGA
School project for elementary and junior high school students began in earnest this April, and I want to makesure that this is an opportunity for growth. We think that we will recover properly taking for 2 years not 1 year
for school business.
This is K&F. This is a business that integrates K&F businesses such as Kodomo Challenge and Tamahiyo, andwe will use the integration of Tamahiyo and Kodomo Challenge as an opportunity to strengthen our businessin Japan and to strengthen our customer base. China business is still a little weak. In China we have seen agreat deal of increased competition over the past year. And that digital content is becoming very popularamong young children. Under such circumstances, we believe that we need to review our strategy for China
with a firm eye on the environment.

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It is about nursing care and childcare. As for nursing care and childcare, we will do our best to deal with the
COVID-19. Since this is a place where we take care of many elderly people, we naturally believe that thisproject needs to be handled carefully without causing any major clusters there. However, we would like toexpand our strategic properties in parallel with the COVID-19, and we believe that this business can recover
sufficiently by recovering the occupancy rate while watching the COVID-19 situation.
It is Berlitz business. As for Berlitz, we see this year as one in which we will carefully assess the path toprofitability in FY2022. We would like to proceed within the plan of recovering to FY2019 level in FY2021 andturning profitable in FY2022 for Berlitz.

This is the number of members of Shinkenzemi and Kodomo Challenge in Japan in April.
The total number of enrollments increased by 0.3% compared to the previous year. The number of elementary
school students increased by about 2.9% compared to the previous year, but unfortunately, the number ofhigh school students, junior high school students, and Kodomo Challenge students did not catch up with theprevious year’s figures.

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I would like to break down the April enrollments little bit so that I can give you a better understanding of thefactors. The number of enrollments for April was originally defined as the number of new members who will
join in April and the number of existing members since previous March who will continue to stay as members
in April. The enrollment in April is made up of these 2 factors.
The left side of this chart shows the retention rate in April, and the retention rate in April for all courses ishigher than the previous year. The number of junior high school students was almost the same as last year,
but we were able to surpass it. The number of people who were able to use the materials and services
increased, and the April retention was successful.
On the other hand, if you look at the right side of the page, you will see that the number of new students has
increased in digital courses compared to a year ago. Unfortunately, the number of original paper courses did
not reach the same level as last April, so in total, the number of new students decreased by 30,000, and thenumber of continuing students increased by 40,000, for a total increase of 10,000.
Also, as you can see below, the ratio of digital course members as of April. This is another increase in thenumbers. In the COVID-19 disaster, we can see the situation of our customers on a one-to-one basis throughdigital courses, and we are trying to increase the retention rate by promoting the use of digital courses. This
April, the percentage of digital courses has risen to about 70% for elementary and middle school courses. Thisis an increase of 20% from the year before last, and a very large number of people are choosing to study
digitally.

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18You may have the impression that the new numbers were not as good as you think. I would like to explain alittle about that. In fact, we have been conducting sales activities for the month of April for a long time, since
February, and the sales for April were very strong at first. We were supposed to have a very good start in April.
However, to be honest, we were not able to attract new members as we had expected in March and April.
What is happening is that the first customers to move, and the ones who move at the earliest possible time,
are the ones who are passionate about education. This has been the case every year. Those who are
passionate about education firmly moved to choose the outside school learning. Therefore, we had a goodstart in February. However, this is the volume zone for customers who plan to choose outside school learningin March and April. We believe that there is a situation that it is hard for these group of people to move.
In this COVID-19, we have been conducting our business by checking the trends of our customers with a very
short span of time. In such a situation, one of their concerns which we heard in March to April was economic
anxiety. The family’s income is inevitably decreasing. Under such circumstances, we have found that about
30% of customers are hesitant to choose off-campus learning due to financial concerns.
In terms of our business, we have analyzed that the most affected area is the lower grades of elementary
school. And it also says that the child’s motivation is down. What was happening in school for the last year?
The school was closed for the first half of the first semester last year, but school must continue to follow thecurriculum in the rest of the year. Because of this, all the classes had to be completed by March regardless ofthe extent of students’ understanding. And because of that, more homework was given to them.
On the one hand, there are events that strengthen students’ mental awareness each year as a group. Such as
sports day, cultural festival, and a school excursion trip for the final year. It has been a year in which students
have lost the opportunity to experience such a variety of things. It is the new junior high and high school
students that we are particularly concerned about because of students’ motivation downward.
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The students in their sixth grade of elementary school and their third grade of junior high school, who are themost motivated to go on to the next level of education could not spend the year while cultivating a firm
awareness to prepare for the next grade. This has had a huge negative impact on their motivation downward
and mental health. The survey showed that 30% to 40% of the students were less motivated than in previous
years to prepare for the next school year. As a result, about 30% of the parents have decided to hold off or
postpone their choice of off campus learning.
In response to this situation, a very clear evidence is that among the new enrollments, there are a certain
number of people who choose to pay the monthly fee by trying it out for a month first, and if they like it, theydecide to continue. This year, however, the number of such people has decreased by about 10% compared toprevious years. We have also analyzed the market situation in this way.
As for Kodomo Challenge, there are a certain number of people who visit their friends’ homes to see the actual
Kodomo Challenge materials and then consider joining the program. This is actually a unique feature of
Kodomo Challenge, but there are some customers like that. In COVID-19, the number of people coming andgoing from one household to another is decreasing, so in that sense, the number of customers who decided
to subscribe it after seeing it at their friends’ house by about 10% compared to previous years. We believethat the combination of these factors made it difficult for acquiring new customers.
In fact, in May and June, we did not take any major sales action because these are not sales months, but
among the natural members, the number of members increased more than usual in May and June. I wonder
if this is the behavior of customers that seems to coincide with the fact that the time of choosing off-campus
learning has shifted a bit. That is how I see it.

On the other hand, there was a strong residual rate for the last year, but what caused that?
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20This is already an overwhelming enhancement of digital services. And we focus on its utilization. The numberof members who can use the service has been steadily increasing.
For example, a digital red pen. Red Pen Teacher has gone digital. This has helped improve the submission rate.
In addition, it takes 2 to 3 days to send back a digital copy, whereas it used to take 2 weeks to send back apaper copy. A red pen teacher would be able to comment not only on the red pen’s answers, but also on
digital learning. Because of this, the red pen submission rate is very high.
And of course, the rate of submission of these red pens contributes greatly and positively to the retention
rate. That is what we have been doing.
Also, in terms of teaching materials, during COVID-19, there was an inevitable variation in the level of progressfrom school to school. However, we changed the program so that the teaching materials can be usedaccording to the progress of the school. Therefore, the number of members who continue to use the contentsof the materials has increased by about 6% compared to a year ago. As I mentioned earlier, the rate of red
pen submissions has tripled. This is a factor that has contributed to a significant 4% improvement in theresidual rate of digital course members of the Elementary School Course compared to the previous year. We
will continue to strengthen these efforts in the current fiscal year.

I would also like to share with you some of Shinkenzemi’s future growth strategies.
Of course, for organic, digital courses are increasing in Shinkenzemi today, so in this context, we will further
refine blended learning, focusing on digital plus human instructional enhancement.
And, although I still think it is a challenge, we will further strengthen our marketing reform. At present, wespend about 60% of our sales expenses on direct mail, which is our closing channel. This is where you canSupportJapan
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experience a little more and recognize the contents of the seminar materials. While reinforcing this activity,
we will be closing the deal at the end. I think we need to change the balance of the cost structure to that.
In that sense, we have released an app called manabi no techo, notebook for learning, since last year, and weare planning to provide learning information that parents need at the time and place they need it, regardlessof whether they are members or non-members. We are planning to have the customers experience a variety
of teaching materials there.
On the other hand, we provide 500,000 tablets per year. As a result, we would like to consider using the tablet
as a platform to provide a variety of educational contents other than seminars as an inorganic part of thecourses. In fact, as a first step, we have started a programming course this past April. We are already off to agood start, with 20,000 members at the start. We want to increase the variety of contents for these things. I
would really like to do such things in the seminar.

As for the future evolution of Shinkenzemi’s DX, we will increase the number of online live sessions from 600
in 2020 to 4,200 this year. The online live is the part of digital and people’s online.
And for digital learning, they will introduce AI to make sure that the proposals are tailored to each customer’s
learning situation, according to their proficiency level. The digital red pen which are originally for grade 3 tograde 6 of elementary school will be expanded to the all the year groups of elementary and junior high schools.
That is what we are going to do.

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Education Business in Japan, Cram schools.
For cram schools, the number of students in April was 109,000 2 years ago, and last year it was 99,000 during
COVID-19. In addition, we offered a refund for 2 months. We will start this April with 110,000. At this stage,
we are beginning to see a V-shaped recovery to some extent.

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School & Teacher Support.
As for the school and teacher support segment, the GIGA school initiative is largely taking place at elementary
schools and junior high schools from this April. There are about 30,000 elementary and junior high schools inJapan. The percentage of 1 PC per person is now 97% of the total number of PCs in schools. However, only
about 60% of them use paid educational services. While 40% of the students have not yet been able to use
the system to that extent, the Mirai Seed product has already been used by 6,000 schools and 2.4 million
students.
As an added bonus, we also support the ICT Supporter system, which is easy to use in that classroom setting.
By the end of this fiscal year, we will expand the number of school users to 7,000. That is why we are working
on GIGA initiative.

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The next 2 are Classi and EDUCOM.
This is a project to promote the digitization of schools by providing platform mainly to high schools orelementary and junior high schools. Both Classi and EDUCOM have been steadily increasing the number ofschools adopting them every year. In this context, we are trying to further enrich Classi’s content, and we are
now promoting a plan to realize personalized learning in Classi, which is learning linked to Benesse’s
assessment.
EDUCOM is mainly for school administration support, but it can also make a significant contribution to the
GIGA School project in compulsory education, while providing it in combination with the Mirai Seed system I
mentioned earlier. This is what we are thinking about.

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As for K&F, we integrated Tamahiyo, now K&F Division, and Kodomo Challenge, Global Kodomo Challenge
Company, from this April. This is a business that was integrated based on the idea of building solid
relationships with customers by firmly connecting relationships with customers from pregnancy to preschoolage, and developing new businesses through these contacts, in addition to expanding the current business.
There is an app called the Tamahiyo app, which is downloaded 450,000 times a year. There are more than
800,000 babies born in Japan today, and about 60% of them have downloaded the Tamahiyo app. Beginningfrom the Tamahiyo apps, we would like to move to the Shimajirō Club application, then we would like to build
up a relationship from easy one to a solid individual relationship, picking up new needs, and building up thebusiness. We would also like to improve the sales efficiency of Kodomo Challenge.

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It is China situation. China is experiencing some major environmental changes. The target market is heating
up due to the influx of competition. Or the revitalization of the digital early childhood education market. In
addition, we are facing the challenge of reviewing the sales itself, and I believe that this is the time to redesign
our business strategy based on the current situation.
As for digital products, Benesse will be introducing digital products from this September, mainly for the upper
grades. We are also currently working on sales, mainly through EC and digital channels. We are starting to seesome results for the current status of the Kodomo Challenge China project.

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Nursing care and childcare.
I have already told you that nursing care and childcare have been affected by the COVID-19, but I believe thatthe framework of the growth strategy presented in the medium-term plan itself will not change significantly.
We will continue to develop strategic properties with a focus on high-end homes and expand our dominant
areas. We will also strengthen our human resources, which are the core of our services, and expand ournursing care peripheral business with a firm focus.
In fact, as we announced yesterday, in the area of human resource matching business, we are immediately
working on the grouping of Proto Medical Care.

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Berlitz business.
For Berlitz, making profitable in FY2022. We would assess early on the possibility of whether this could reallybe achieved. I believe this is the most important thing we will do in this year. Berlitz 2.0 has finally entered
the implementation phase. In such a situation, whether or not the top line really rises is an extremely
important KPI, so we are in a phase where we need to carefully assess this and make various decisions as
management.

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In this context, I have been talking about the 2-year V-shaped recovery. We have already talked about whatkind of recovery we can expect for each business unit. We have set an operating income of JPY17.5 billion inthis budget, and in 2 years we will increase the operating income to JPY26 billion, mostly from organic.
I would like to do my best to achieve this goal.

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Next is our medium- to long-term growth strategy.
When we announced our medium-term management plan last year, we presented this chart showing how wewould think about the next 5 years in each phase. There will be no major changes here. The first step is tomake a V-shaped recovery over the next 2 years, and after that, there will be challenges and growth. Although
this appears to be mainly inorganic and new areas, it is naturally accompanied by organic growth. That is what
I want you to understand. And our financial goals are also as mentioned before.

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In such a situation, it is very important to understand how to deal with social issues in the medium and longterm, and we are naturally examining what kind of social structural problems will occur in the fields ofeducation and nursing care in the next 5 to 10 years, as part of this medium-term plan, or in response to thatmedium-term plan.
As for learning and child rearing, the problem is not only the declining birth rate, but also the fact that thecompetition for entrance exams is declining and the concept of goals and competition for children’s learning
is disappearing. Alternatively, we will need more diverse learning to survive in the future. The use of digitaland AI will be further accelerated in this learning and parenting process. Income disparity/regional disparity,
which may spread as educational disparity.
I believe that we should be fully aware of these factors as we consider our growth strategy. In the university
and working world, some universities will be eliminated, or the evaluation of universities will move from theentrance examination to the career path after graduation. I also believe that working people will need tocontinue to learn more than ever before.
As for nursing care, in Japan, the number of elderly people is expected to increase for the time being,
especially in urban areas. On the other hand, there is an overwhelming shortage of human resources toprovide nursing care services and nursing care workers. I think a very important point is how to deal withthese problems.

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In such a situation, organic growth of existing businesses, and inorganic growth around existing businesses. In
addition, sowing the seeds of new areas announced in the medium-term plan. There is no change in our
understanding that we need to make sure that these things are done properly. For Shinkenzemi, we arefurther developing its diverse learning experience with the use of tablets and other platforms. For K&F, wewill continue to build a strong business around the new business, not only for children but also for parents.
For schools, we will take on the challenge of not only assessing, but also changing the content fromassessment to learning, which is necessary for today’s school education. In the area of nursing care, we havejust introduced one new initiative, but we will also focus firmly on expanding peripheral businesses.
And the challenge to new areas that we announced in the medium-term plan is to develop a new revenue
model for university workers, centered on Udemy. In addition, we would like to carefully consider overseas
expansion, focusing on our core businesses.

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In order to support this, it will be very important for Benesse to firmly promote DX. In the middle of last year,
we created an organization within the Company called Digital Innovation Partners. We would integrate thedigital and IT departments centering this organization. We will work together to address the digital challengesof each business in this organization. We will put the drive on. Then, we are going to train and hire digitaltalent. This is an organization that is doing that, and I think it is very fair to say that this organization is now
on track and has begun to promote data in collaboration with various departments.
This past May 1, we were also able to obtain DX certification, which is promoted by the Ministry of Economy,
Trade and Industry. With this as a tailwind, I would like to firmly advance Benesse’s digital business.

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Strengthen employee skill development. I think this is related to the "S" part of ESG, but we are not only hiringDX, but also promoting the development of DX skills among our current employees. Our current employees
are knowledgeable about education. I believe that by combining this knowledge with digital skills, they will beable to create a force that is essential to the growth strategy of each business. We are starting with job
definitions, skill maps, assessment management, and training with a solid plan in place.
At Benesse Corporation, 93% of all employees have already taken Udemy’s DX courses. I would like to do mybest to further promote this kind of thing.

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It has been a little long, but in closing, I would like to talk about our capital policy for this fiscal year. From theperspective of stable dividends, the Company will continue to maintain a dividend of JPY50 per share in
FY2021. With this in mind, we would like to promote the project firmly this year.
That is all from me. Thank you very much.

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