Financial Results for FY2020
Hitoshi Kobayashi
Representative Director and President, COO
Benesse Holdings, Inc.
May 11, 2021
This presentation contains forward looking statements concerning the future plans, strategies, beliefs andperformance of Benesse Holdings, Inc. and its subsidiaries. These forward-looking statements are not historical facts.
They are expectations, estimates, forecasts and projections based on information currently available to the Company
and are subject to a number of risks, uncertainties and assumptions. As such, actual results may differ materiallyfrom those projected.

FY2020 Overview and Results
Summary【Results】 Highlights for FY2020（YoY）
Sales and income down YoY in the full year
on the impact of COVID-19
470.0

Net sales

460.0

448.5

Operating income

25.0

450.0
440.0

427.5

430.0
420.0

-4.7％

390.0

13.0

-38.4％

5.0

実績

380.0

0.0

FY19

20.0

20.0

10.0

400.0

25.0

21.2

15.0

410.0

(Billions of Yen)

30.0

FY20

FY19
10.0

Ordinary income

9.0
8.0

16.7

7.0

15.0

FY20

Net income*
6.2

6.0

9.2

10.0

3.1

4.0
3.0

-44.7％

5.0

5.0-50.3％

2.0
1.0

0.0

0.0

FY19

FY20

FY19

FY20

*Net income attributable to owners of parent

2

【Results】 Change in Operating Income by Segment（YoY）
School & Teacher Support Business, Classroom Business,
Nursing Care Business and Berlitz negatively affected by COVID-19
30.0(Billions of Yen)
25.0

+4.8

(6.8)

20.0

(1.0)

15.0
10.0

(3.5)

(0.5)

21.2
13.0

5.0
0.0

(0.9)

*

3

【Results】 Highlights（vs. initial forecast）
Earnings ended higher than initial forecasts
430.0

Net sales

Operating income

429.0

427.5

428.0

427.0

42.6.0

+0.4％

424.0

4.0

422.0

Forecast

実績

FY20

12.0

Result0.05

Ordinary income
9.2

5

Forecast

ResultFY20

FY20Net income*

4

3.1

4

8.0

3
3

4.5

2

4.0

2

2.0

0.0

2.0

FY20

10.0

6.0

(Billions of Yen)

+40.8％

6.0

423.0

13.0

9.3

8.0

425.0

420.0

12.0
10.0

426.0

421.0

14.0

Forecast

FY20+105.8％

1

0

実績

1

Forecast

Result

0

FY20

FY20

＋Y3.1bn

ResultFY20*Net income attributable to owners of parent

4

【Results】 Change in Operating Income by Segment（vs. initial forecast）
Recovery better than initially expected in School & Teacher Support Business,
Classroom Business, Nursing Care business
investments made in Shinkenzemi
14.0

Result(Billions of Yen)
12.0
10.0

Forecast

(0.7)

+2.6

+0.2

+1.3

+0.0

+0.1

8.0

13.0

6.0
4.0

9.3

2.0
0.0

5

FY20 overview: Trends in each segment given the impact from COVID-19
Billions of Yen

State of business

Operating income YoY

Education Businessin Japan

1H

2H

Shinkenzemi

Brisk April
enrollments andretentions

Retention rate
remains strong

School &Teacher
Support

Negative fromschool closures

Recovery at Shinken
Simulated Exams
Negative at GTEC

1H

2H

+1.0

+1.2

+1.5

+0.9

(4.8)

(0.1)

+0.4

(2.3)
Increased
investment

Negative fromschool closures

RecoveryGlobal Kodomo
Challenge

Enrollments up in
Japan, down in China
Negative from concert
cancellations

Moderate recovery in
Chinese enrollments
Negative from concert
cancellations

(0.3)

+0.4

(0.1)

Nursing Care

Negative frommarketingrestraint

Gradual recovery,
but occupancy
rate down

(0.6)

(0.8)

(0.2)

Berlitz

Negative fromschool closures

Moderate
recovery

(0.1)

(1.5)

(1.7)

Cram
Schools(0.9)

Increased
investment+0.8

Reduction oflabor cost

+0.0
6

Education Businessin Japan(Shinkenzemi)

FY20 overview

Brisk start to enrollments in April 2020,
retention rate also up on rise in materials usage rate,
major improvement in profitability●Shift to profit growth strategy at Shinkenzemi from FY19,
profitability improving●April 2020 enrollments up 19.4% YoY (+100,000) on growing
needs for home learning because of school closures●Retention rate in following March from April enrollments +4% YoY
overall, +5% YoY for tablet based courses
・Rise in retention rate from April enrollments boosted FY20 income by Y2.8bn
Operating income change in the past three years (vs. FY17)
Operating income change (Ybn, vs. FY17)
Shinkenzemi April enrollments (mn)
1.78

1.89

1.81

+9.5

+0.4

+4.7

0

160

FY18

FY19

FY20

7

Education Businessin Japan(School & Teacher
Support)

FY20 overview

Assessments for Shinken Simulated Exams and otherservices recovered to year-earlier levels from 2Q
GTEC recovery needs more time
⚫ Simulated exam sales to high schools down by half in 1Q on
impact of school closures⚫ Rebound from 2Q on school re-openings apart from for GTEC
⚫ GTEC sales remain down heavily YoY affected by the change ofuniversity entrance exams reform
FY20 YoY change in High School Business sales by quarter

Shinken Simulated Exams,
Study Support, Course Map

GTEC-related

School & Teacher Support
Business total

8

Education Businessin Japan(Cram Schools)

FY20 overview

Large earnings decline in 1Q on impact of school closures
Return to year-earlier level from 2Q,
investments made with an eye on FY21
⚫ Major impact from school closures in 1Q
Profit negatives: Y1.9bn from refunds, etc.
Y2.0bn from decline in enrollments at start of theyear due to marketing restraint⚫ Enhanced COVID-19 response including video/online lessons⚫ Stepped up sales to aid April enrollment recovery
FY20 YoY change in Cram Schools/English Education Business sales by quarter

1Q

2.1%

2.4%

2Q

3Q

3.6%

4Q

-31.7%

9Global Kodomo
Challenge

FY20 overview

In Japan, course business brisk, but profit down on concert
cancellations due to COVID-19
In China, threat from new market entrants adds to COVID-19 impact

Japan⚫ Course enrollments brisk throughout year
⚫ Fall in profit from concert business, a key revenue
stream, due to COVID-19 impact
Profit decline in concert business: -Y0.6bn

China⚫ Course enrollments down YoY on shrinking in sales
channels due to COVID-19⚫ Threat of increased competition from new entrants

YoY change in cumulative enrollments by quarter

Japan
China

Jan-Dec fiscal year in China business10

FY20 overview

Nursing Care &Childcare

Occupancy rate down on 1Q marketing restraint,rise in people postponing pre-occupancy tours⚫

Decline in occupancy rate on marketing restraint in 1Q⚫

Occupancy rate fails to recover, down 2.7pt from 95.3% in Mar 2020, even aftermarketing restart as more people put off occupancy due to increase in COVID-19
infections nationwide⚫

Pre-occupancy tours have also fallen to around 70% of pre-COVID levels recently
after January state of emergency⚫

Profit exceeds initial forecast on reduction in labor costs and hiring costs from higher
staff retention rate

Change in occupancy rate by month
95.3%

92.6%

Apr 2020
state of emergency

20/3

20/4

20/5

Jan 2021
state of emergency

20/6

20/7

20/8

20/9

20/10

20/11

20/12

21/1

21/2

Apr 2021
state of emergency

21/3

11

Berlitz

FY20 overview
Sales down sharply in FY20 on COVID-19 impact
Restructuring significantly lowers fixed costs⚫ Sales remain down heavily on FY19 levels in BTS and ELS⚫ Introduction of Berlitz 2.0 delayed due to COVID-19 impact
Launched in North/South America, global roll out scheduled to becompleted during FY21
⚫ Fixed costs reduced through restructuring
FY21 breakeven point to be well below that of FY18 (around Y20bn lower)
Like-for-like monthly sales in BTS business(vs. FY19)

Like-for-like monthly sales in ELS business(vs. FY19)

Mar. Apr. May Jun July Aug. Sep. Oct. Nov. Dec. Jan. Feb.

Mar. Apr. May Jun July Aug. Sep. Oct. Nov. Dec. Jan. Feb.

*Like-for-like monthly sales exclude sales from schools turned into franchises and sales from countries
where Berlitz has completely withdrawn

12

FY2021 Financial Forecasts andFuture Strategies (FY21-22)

【Forecast】 FY21 Highlights

Aim to steadily recover from the impact of COVID-19
450.0
445.0

Net sales

441.0

440.0
435.0
430.0

427.5

425.0

(Billions of Yen)
17.5

200
150

+3.2％

420.0

Operating income
13.0+33.7％

100

415.0
50

410.0
405.0
400.0

0

FY20

FY21

Ordinary income

12.0

FY20

FY21

Net income*

5.0

9.2
3.1

+60.1％+29.6%

FY20

FY21

FY20

FY21

*Net income attributable to owners of parent

14

【Forecasts】 FY21 Change in Operating Income by Segment （YoY）
Amid recent continued expansion in COVID-19 infection rates, there has been asteady recovery in the School & Teacher Support Business and the Classroom
Business, but a negative impact on the Nursing Care Business from COVID-19
infections and change in revenue recognition standards
25.0(Billions of Yen)
20.0

+0.3
+4.4

15.0

+3.5

(1.7)

+1.2

10.0
5.0

(3.3)

17.5
13.0

0.0

15

Strategy Summary (FY21）
Recover to FY19 levels by FY22
Gradually recover and grow via organic and inorganic growthBusiness

Strategy summary

Shinkenzemi

・Grow profit by strengthening tablet based courses and raising retentionrate
・Efficiently increase engagement points via reform of marketing

Cram School &EnglishEducation

・Swiftly recover from COVID-19 impact
・Strengthen hybrid strategy via online lessons

School &Teacher
Support・Measures for the GIGA School concept
・Further promote platform business for schools

K＆F(Global Kodomo
Challenge +K&F）

Nursing Care &Childcare

Berlitz

FY21 momentum（Operating income vs.
FY19）

Large profit increase

Recover to FY19 level

・Japan: Bolster ties by merging structures of Tamahiyo business andKodomo Challenge business・China: Strengthen digital content to respond to increasing competition
・Respond to COVID-19, expand strategic properties

Recovery to takeanother year

Revise strategy for
China

Depends on COVID-19
impact・Clarify roadmap and possibilities for return to profit in FY22
Recover to FY19 level

16

Education Businessin Japan(Shinkenzemi)

April Enrollments in the Shinkenzemi and Kodomo Challenge (Japan)

Total enrollments up 0.3% YoYExpansion in elementary school course, but April newenrollments down slightly in other courses onchange in market conditions(thousand)

2019

2020

2021

YoY

Change (%)

Change inshare (%)

High School
Course

150

150

140

(10)

(9.4)

(0.3)

Junior HighSchool Course

420

420

410

(10)

(1.8)

(0.3)

Elementary
School Course

1,240

1,330

1,360

(30)

+2.9

+1.0

KodomoChallenge

810

810

810

(0)

(1.1)

+0.0

Domestic
Total

2,620

2,710

2,720

+10

+0.3

+0.2
17

Education Businessin Japan(Shinkenzemi)

Factors for Change in April Enrollments(April Retention Rate/April New Enrollments)

Brisk April retention as existing students increase service usage
Growth in new April enrollments for digital courses but large fall for
paper-and-pen courses
April retention rates by course (YoY)

New April enrollments by course type (vs.FY19)*Combined total for Elementary School and Junior High School Courses+0.82%+40,000+0.54%-70,000+0.12%+0.00%
KodomoChallenge

Elementary

Junior HighSchool Course School Course

digital courses
High School

Paper-and-pen
courses

CourseRise in usage of study material services
Brisk April retention rates in all courses

Expansion in digital courses on improved
services, greater client acceptance
Decline in paper-and-pen courses

Around 70% of April elementary school and junior high school course
enrollees choose digital courses(a sharp 20ppt increase compared to that of FY19)

18

Education Businessin Japan(Shinkenzemi)

Factors for Change in April Enrollments(Market Conditions for New Enrollments)

April new enrollment momentum brisk through February,
declined from March⚫ Engaged with highly-motivated students, unable to stimulate
volume zone containing the less motivated⚫ Rise in deferment/wait-and-see approach to out-of-school learning due
to economic uncertainty, fall in children’s motivation

・Economic uncertainty = felt by around 30% *based on Benesse market surveys
・Fall in children’s motivation = rise of 30-40% compared to other years*based on Benesse surveys of teachers
・Deferment/wait-and-see on out-of-school learning = around 30%*based on Benesse market surveys

・Ratio of new enrollments paying monthly (pay-as-you-go) down around 10%⚫ Fall in contact with Kodomo Challenge materials at home of friendor acquaintance・Down around 10% vs. pre-COVID-19 (Compared to FY19)
19

Education Businessin Japan(Shinkenzemi)

Reasons for Brisk Retention Rate/FY20 elementary school courses

Rise in usage thanks to strengthening of digital services for
FY20 courses
Steady improvement in courses offering deeper learning andfurther growth■Digitalization and monthly
implementation of Red Pen Teacher

・Easier submissions
・Instruction based on daily progress
Digital Red Pen
Teacher■Rapid provision of digital lessons tooffset major disruption to academic
progress from school closures■6% rise in enrollees continuing to
use materials and contents(5th yr. elem. s tudents)■ 3 times increase in digital course
enrollees submitting to Red Pen
Teacher (5 yr. elem. students)thReview lessons
for all topics⇒4% YoY rise in following-Marchretention rate for April elementary
school digital course enrollees
20

Education Businessin Japan(Shinkenzemi)

Growth Strategy for Shinkenzemi

Aim to grow Shinkenzemi using the following three strategies
Inorganic

Organic
Raise retention rate
for enrollees digitalcourses■Advance digital + human
instruction■Production of study materials
based on data
DX and online shift

Marketing reform

Respond to diverse
learning needs■Increase guardian■Leverage annual

engagement points⇒Learning notebook■New marketing using trials,
evidence, personalized
proposals

distribution of 500,000
dedicated tablets

・Programming lessons
launched in April 2021

21

Education Businessin Japan(Shinkenzemi)

DX advances for Shinkenzemi

Advances in digital + human instruction to enable
personalized learning and support motivation towardlearning
FY20

FY21

■Promotes
understanding■Pace oflearning
supports
motivation

Around 600
lessons

Around4,200
lessons

Combined
total forElementary
to High
Schoolcourses

Digitallearning■Personalized
learning

Rule-based(learningmap)AI
personalized
lessons basedon proficiency

In thecase ofthe JuniorHigh
SchoolcourseDigitalRed PenTeacher■Convenience■Instruction
based onlearning record

ElementaryYrs. 3-6

All years in
Elementary
and JuniorHigh

Online live
lessons

Education Businessin Japan(Cram Schools)

Rapid V-shaped Recovery (Total April Enrollments)

Steady recovery in enrollments bystrengthening COVID-19 countermeasures,
bolstering new admissions, and increasing service
satisfaction levels for current enrollees
11.5
11
10.5
10
9.5

110,000

109,000

9

99,000

8.5

Having completed
conversion toonline lessons we
expect to be able
to curtail the
future impact of
COVID-19

8

FY19

FY20

FY21
*Total number of Group cram school enrollees as of April

23

Education Businessin Japan(School & Teacher
Support)State of GIGA School Project and New Measures

Amid rapid progress on the one PC per student
movement by the government, an increasing
number of schools are using Miraiseed
Around 40%
Futureroll out to be
expanded,mostly inregional
citiesAround 60%

Around29,000schools

97%
complete

All elementary

One PC per

Launch of paid

and junior highstudent

educational

schools

Mostly Tokyo
metropolitan
area,
government
ordinance
cities,regional
hub cities

Miraiseed■Paid software for elementaryand junior high schools■Used by around 6,000
schools (2.4mn students)*As of April 2021

■Uptake increasing owing tousability in classrooms, service
design, and sense of security
from around 900 ICT
supporters⇒Target growth to 7,000
schools by end-FY21

software24

Education Businessin Japan(School & Teacher
Support)Platform Business for Schools
Creating value through synergies gleaned
from customer engagement points
No. of schools using

2,100

2,400

2,800

3,100

Strategy⚫ Realize personalized learning
linked to Benesse assessment⚫ Strengthen support for personal
usage aimed at problem solving
and shift to ICT⚫ Product development with schools

FY17

6,045

FY18

7,400

FY19

8,300

FY20

9,300

Empirical research focused on school issues
conducted in cooperation with schools⚫ Expand support for existing admin
and provide reliable user support
through CS activities⚫ Realize school net concept

Link related services with a focus on school
admin support, and support teachers’
everyday instruction using ICT

FY17

FY18

FY19

FY20

*Figures for elementary and junior high schools only

⚫ Expand support for high school
administration
25

K＆F

（Kids & Family）

Tamahiyo and Kodomo Challenge (Japan)

Merge the structures of Tamahiyo (K&F division) and Kodomo Challenge (Global
Kodomo Challenge Company) (planned change in segment name)

Cooperate, mainly through apps, with the aim of expanding customer
engagement points and providing wide-ranging support⚫

Targets⚫
⚫

Increase new customers in joint effort by Tamahiyo World andKodomo Challenge World
New business development (including support for guardians)
Raise sales efficiency via mutual use of customer data

Pregnancy

Baby

Ages 1-6

Tamahiyo app
450,000 downloads a year

Shimajiro Club app
Apps for members and non-members launched in FY21

26

K＆F

（Kids & Family）

Kodomo Challenge (China)

Amid significant change in the business environment, pursue
product digitalization and transformation of the sales structure

Key issues

Measures

Overheating and increasing
competition in target markets
due to entry of new players

Redesign business strategy（start from course focus）＜Measures for FY21＞⚫

（product adjustments from Sep 21）

Digital + activation of preschool
education market

Decline in sales efficiency

Raise product value via digital + people

Develop AI video lessons⚫

Reform sales structure（expand EC, increase digital
engagement points, use data）

27

Nursing Care &Childcare

Growth Strategy

Steadily implement the strategies of the medium-term
management plan while responding to COVID-19

Expand No.
of homes⚫ Develop strategic properties

・Strengthen unique high-end homes
・Deepen and expand dominance strategy
・Area growth linked to hiring strategy

Aria Ichiban(opened Feb 2021)

Strengthen
HR training⚫ HR training centered on development of specialties

Grow peripheralbusinesses(medium- andlong-term）⚫ Grow peripheral businesses
・Increase scale of HR recruitment business, non-contiguous growth・Formulate method for “Benesse sensing homes” using technology

・Boost training of in-house specialist qualification holders (dementia,
care techniques, safety management and recurrence prevention)28

Berlitz

Future Development

Swiftly determine prospects for return toprofit in FY22
・Additional structural reforms of FY20 to lower costs YoY in FY21
Recentmomentum・Major fall in breakeven point on cumulative impact ofrestructuring measures

・Berlitz 2.0 to launch fully in FY21, targeting topline recovery

Targeting return to profit in FY22, recent progress as expected
While monitoring sales growth and initial student enrollments from new
products aim to swiftly gauge prospects for FY22 return to profit during FY21
29

Expect V-shaped Recovery in FY22

Target FY22 operating income of Y26bn
Operating income(Billions of Yen)

Previous MTMP
Transform and Grow
Benesse 2022

New MTMP
Evolve and Challenge: Phase 1

30.0
25.0
20.0
15.0

26.0
21.2

10.0
5.0

12.6

16.2

13.0

17.5

0.0
FY17

FY18

FY19

FY20

FY21

FY22

30

Medium- and Long-term Growth Strategies

Addendum: Targets of the New Medium-term Management Plan

Aiming for a V-shaped recovery in Phase 1, growthfrom new challenges in Phase 2

Positionof eachphase

Financial
targets&
KPI

Phase 1: FY21-22

Phase 2: FY23-25

V-shaped recovery
To achieve a V-shaped recovery
from the impact of COVID-19
organically in existing fields

Challenge & growth
Aim for further sustainablegrowth through inorganic means(new challenges in existing businesses)

Challenge new fields(Moving into new fields and overseas territories by leveraging
Benesse’s strengths)

FY23-FY25
Organic growth 3%+ (sales)
FY22
To rebuild sales/OP to above
FY19 levels “in 2 years”※After adjustment forrevenue recognition standards

Benchmarked to FY22 level after V-shaped
recovery from COVID-19

FY25
OIM 8%+
ROE 10％+32

Medium- and Long-term Societal Issues
Deepening structural problems in Japanese society in the
educational and nursing care spheres over the next 5-10 years

Learning &childcare⚫ Decline in school entry competition due to fallingbirthrate → Loss of concepts of goals/competition⚫ Diverse learning will be important to navigate the future⚫ Need to develop human resources who can operating in a
global environment⚫ Acceleration in digital/AI usage⚫ Strong possibility of widen in educational inequality owing toincome disparities/regional disparities

University
students &working
adults⚫ Universities without a unique selling point to wither away
⚫ University ratings to shift from “entry level” to “post-graduation
pathways”⚫ Lifelong learning to become important for working adults too

Nursingcare⚫ Elderly population to rise by 2040, especially in city centers⚫ Supply shortage of nursing care services, acute shortage ofnursing care human resources⚫ Longer healthy expectancy to become a major issue
33

Medium- and Long-term Business Growth Strategies
Grow inorganically in existing businesses, plant moreseeds for new business fields
Inorganic growth■Shinkenzemi：Develop platform business attuned todiverse learning■K&F：Online lessons (for caregivers and children)■School & Teacher
Support：Bolster instruction and training for Shinken
Simulated Exams through links with Classi（LMS）■Nursing Care

：Expand peripheral businesses (HR recruitment business)

Online lessons（dance class）

Challenge new fields■University students& working adults：Develop new revenue model centered on Udemy■Overseas
expansion：Consider overseas development around the periphery ofcore businesses
34Strengthen Business Base to Support Medium- and Long-term Business
Growth (Systems to Promote DX)

Create systems to promote robust Group DX in support ofefforts to “evolve core businesses” and “challenge new fields”

Assembly/dispatch of
in-house & external
specialists

Obtained DX Certificationfrom METI on May 1st.

■Data/AI usage■Architecture redesign■DevOps■Digital marketing■Productivity/RPA■R&D■Hiring/training DX staff
35

ESG: 「S」 Boost Skills Development Among Staff
Not only recruiting DX staff, but promoting DX skills development
among all employeesHRdevelopment
policies■ Gauge organization capabilities, promote desire for self-improvement
and challenge among employees■ Prepare “Job + skill level” specific training, improve while monitoring impactJobdefinitions

Define positions needed for Benesse DX

Skill maps

Create skill map for each position
Provide visibility on required skill levels

Assessment

Stress objectivity and market value appraisal

Management

Manage via talent management system

Training
programs

Original programs based on in-house cases + use of Udemy

Also use external assessment*No. of Udemy trainees at Benesse Corporation: 2,065 (93% of total headcount)36

Capital Strategies

Aim to keep dividend per shareat Y50 in FY21

from the perspective of
maintaining stable dividends

37