Financial
Statements
2023
Benesse Holdings, Inc.
and Subsidiaries
Consolidated Financial Statements
for the Year Ended March 31, 2023,
and Independent Auditor’s ReportConsolidated Balance Sheet
Benesse Holdings, Inc. and Subsidiaries
March 31, 2023

Millions of Yen
2023
2022

ASSETS
CURRENT ASSETS:
Cash and deposits (Notes 5 and 6)
Marketable securities (Notes 5, 6 and 7)
Receivables:
Trade notes and accounts (Notes 6 and 16)
Other (Note 6)
Due from associated companies (Note 16)
Inventories (Note 8)
Other current assets
Allowance for doubtful receivables

Thousands of
U.S. Dollars(Note 1)2023

¥ 115,675
20,498¥ 125,787
18,996$ 863,246
152,970

26,98656,52527
34,542
11,645(271)

25,621
57,99418
34,69911,881(337)

201,388421,828201
257,776
86,904(2,022)

Total current assets

265,627

274,659

1,982,291

PROPERTY AND EQUIPMENT:Land
Buildings and leasehold improvements (Note 9)
Equipment, fixtures and other (Note 9)
Lease assets (Note 9)
Total
Accumulated depreciation

34,88090,07531,910125,141
282,006(118,907)

34,99088,51330,473
114,184
268,160(111,352)

260,299672,201
238,134
933,888
2,104,522(887,365)

Net property and equipment

163,099

156,808

1,217,157

INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 6 and 7)
Investments in associated companies (Note 6)
Goodwill and other intangible assets (Notes 4 and 11)
Software (Note 9)
Asset for retirement benefits (Note 13)
Deferred tax assets (Notes 4 and 19)
Other assets

22,3402,286
13,81423,7396,937
12,486
31,232

19,257
2,262
14,93024,653
6,627
10,251
31,152

166,716
17,060103,090
177,157
51,76993,179233,074

112,834

109,132

842,045¥ 541,560¥ 540,599$ 4,041,493(Continued)

Total investments and other assets
TOTAL

-1-

Millions of Yen
2023
2022

LIABILITIES AND EQUITYCURRENT LIABILITIES:Current portion of long-term debt (Notes 6 and 12)
Payables:Trade notes and accounts
Other
Due to associated companies
Advances received (Note 16)
Income taxes payable
Other current liabilities¥

Total current liabilities

LONG-TERM LIABILITIES:Long-term debt, less current portion (Notes 6 and 12)
Lease obligations (Notes 6 and 10)
Advances received from nursing home residents (Note 16)
Liability for retirement benefits (Note 13)
Deferred tax liabilities (Note 19)
Other long-term liabilities
Total long-term liabilities

5,068

¥

5,075

Thousands of
U.S. Dollars(Note 1)2023$

37,821

15,96922,680834
102,532
1,989
19,605

16,12925,594896
109,269
2,282
20,933

119,172
169,2546,224
765,164
14,843
146,306

168,677

180,178

1,258,784

28,108107,239
60,598
6,303
671
8,710

33,17598,24357,727
5,957
596
8,560

209,761
800,291452,224
47,037
5,007
65,001

211,629204,258

1,579,321

13,81828,432
27
131,471

13,781
28,391
105
125,422103,119
212,179201
981,127(21,365)(21,364)(159,440)

(918)
764
2,103
154,332
6,922

408
200
2,428
149,371
6,792(6,851)
5,702
15,694
1,151,731
51,657161,254

156,163

1,203,388¥ 541,560¥ 540,599$ 4,041,493

COMMITMENTS AND CONTINGENT LIABILITIES(Note 10)
EQUITY (Notes 14 and 20):
Common stock—authorized, 405,282,040 shares in 2023
and 2022; issued, 102,604,773 shares in 2023 and102,571,215 shares in 2022
Capital surplus
Stock acquisition rights
Retained earnings
Treasury stock—at cost, 6,163,618 shares in 2023 and
6,160,099 shares in 2022
Accumulated other comprehensive income (loss):
Unrealized (loss) gain on available-for-sale securities
Foreign currency translation adjustments
Defined retirement benefit plans (Note 13)
Total
Noncontrolling interests
Total equity
TOTAL(Concluded)

See notes to consolidated financial statements.

-2-

Consolidated Statement of Income
Benesse Holdings, Inc. and Subsidiaries
Year Ended March 31, 2023

Millions of Yen
2023
2022
NET SALES (Notes 15 and 16)

Thousands of
U.S. Dollars(Note 1)2023

¥ 411,877¥ 431,944$ 3,073,709

COST OF SALES (Notes 13 and 18)

232,513239,185

1,735,172

Gross profit

179,364

192,759

1,338,537

158,744

172,592

1,184,656

20,62020,167

153,881

197
356(5,842)

178
343(5,818)
349
383
112
526
(200)

1,470
2,657
(43,597)

(95)
(320)
(461)

(9,570)
(749)

(709)
(2,388)(3,440)

INCOME BEFORE INCOME TAXES

14,7105,721

109,776

INCOME TAXES (Note 19):
Current
Deferred

4,741(2,014)

3,895
(226)

35,381(15,030)

2,727

3,669

20,351

11,983

2,052

89,425

630

988

4,701

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES(Notes 13, 17 and 18)
Operating income
OTHER INCOME (EXPENSES):
Dividend income
Rent income
Interest expense—net (Note 12)
Foreign exchange gain
Gain on investments—net
Equity in net earnings of associated companies
Subsidy income
Loss on impairment of long-lived assets (Note 9)
Loss on sale of investments in an associated company(a consolidated subsidiary in 2022)
Loss on temporary closure
Other—net (Note 20)

Total income taxes
NET INCOME
NET INCOME ATTRIBUTABLE TO NONCONTROLLINGINTERESTS
NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT

459
337
141
(682)

¥ 11,353

¥

1,064

Yen
PER SHARE OF COMMON STOCK (Notes 2.t and 22):
Basic net income
Cash dividends applicable to the year
See notes to consolidated financial statements.

-3-

2023

2022

¥ 117.73
60.00¥ 11.04
50.00

3,425
2,515
1,052
(5,090)$84,724

U.S. Dollars
2023
$

0.88
0.45

Consolidated Statement of Comprehensive Income
Benesse Holdings, Inc. and Subsidiaries
Year Ended March 31, 2023

Millions of Yen
2023
2022
NET INCOME

Thousands of
U.S. Dollars(Note 1)2023

¥ 11,983¥ 2,052$ 89,425(1,324)
570
(317)
(4)

(761)
6,054
1,404
24

(9,880)4,254(2,366)(30)(1,075)

6,721(8,022)COMPREHENSIVE INCOME¥ 10,908¥ 8,773$ 81,403

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent
Noncontrolling interests
See notes to consolidated financial statements.

¥ 10,266
642¥ 7,769
1,004$ 76,612
4,791

OTHER COMPREHENSIVE INCOME (LOSS) (Note 21):
Unrealized loss on available-for-sale securities
Foreign currency translation adjustments
Defined retirement benefit plans
Share of other comprehensive (loss) income in associates
Total other comprehensive (loss) income-4-Consolidated Statement of Changes in Equity
Benesse Holdings, Inc. and Subsidiaries
Year Ended March 31, 2023
Thousands

Millions of Yen
Accumulated Other
Comprehensive Income (Loss)

Number of
Shares ofCommonStock
Outstanding
BALANCE, APRIL 1, 2021

96,383

Unrealized
Gain(Loss) on
ForeignDefined
Stock
Available- Currency Retirement
Common Capital Acquisition Retained Treasury for-Sale Translation Benefit
Stock
Surplus
Rights Earnings Stock Securities Adjustments
Plans¥ 13,740 ¥ 29,632¥ 105 ¥ 151,435 ¥ (21,362) ¥ 1,166

Cumulative effects of changes inaccounting policies¥ (5,852) ¥ 1,016 ¥ 169,880(22,257)

Restated balance
Issuance of new shares (Note 14)

13,74029,632

41

41

30

105

129,178

Noncontrolling
Interests

Total¥ 5,157 ¥ 175,037(22,257 )(21,362)

1,166(5,852)

1,016

147,623

Total
Equity(22,257)
5,157

82

152,780
82

Net income attributable to owners of theparent

1,064

1,064

1,064

Cash dividends, ¥50.0 per share(4,820)(4,820 )(4,820)(2 )(2)(1,305 )(1,305)Purchase of treasury stock

(2)

(2)

Capital increase of a consolidated
subsidiary(1,305)

Change in the parent’s ownershipinterest due to transactions with
noncontrolling interests

23

23

Net change in the year
BALANCE, MARCH 31, 2022

96,411

13,781

28,3913437

37Issuance of new shares (Note 14)
Net income attributable to owners of theparentCash dividends, ¥55.0 per share
Purchase of treasury stock105(21,364)

6,052

1,412

6,706

1,635

8,341

408

200

2,428

149,371

6,792

156,163

74

74

11,353

11,353

11,353(5,304)(5,304 )(5,304)

(1 )

(1)

(4)

(1)

Capital increase of a consolidated
subsidiary44

Net change in the year
BALANCE, MARCH 31, 2023

125,422

96,44123(758 )¥ 13,818 ¥ 28,432(78 )(1,326 )564¥ 27 ¥ 131,471 ¥ (21,365)¥ (918 )¥ 764(325 )(1,165 )¥ 2,103 ¥ 154,332

4130(1,035)¥ 6,922 ¥ 161,254

Thousands of U.S. Dollars (Note 1)
Accumulated Other
Comprehensive Income (Loss)

CapitalSurplus

Stock
Acquisition
Rights$ 102,843 $ 211,873$ 784

CommonStock

BALANCE, MARCH 31, 2022
Issuance of new shares (Note 14)276

Unrealized
Gain(Loss) on
Foreign
AvailableCurrency
Treasury for-Sale
Translation
Stock
Securities Adjustments

Retained
Earnings$935,985 $ (159,433)$ 3,045$ 1,493

DefinedRetirement
Benefit
Plans

Total

Noncontrolling
Interests

Total
Equity$ 18,119 $ 1,114,709 $ 50,687 $ 1,165,396

276

552

552

Net income attributable to owners of theparent84,72484,72484,724

Cash dividends, $0.41 per share(39,582 )(39,582 )(39,582 )

(7)

(7)

(7)

Purchase of treasury stock
Capital increase of a consolidated
subsidiary30

Net change in the year

BALANCE, MARCH 31, 2023

$ 103,119 $ 212,179

30
(583)

(9,896 )

4,209

$ 201

$ 981,127 $ (159,440) $ (6,851 )$ 5,702

See notes to consolidated financial statements.

-5-(2,425)(8,695 )30
970(7,725 )$ 15,694 $ 1,151,731 $ 51,657 $ 1,203,388

Consolidated Statement of Cash Flows
Benesse Holdings, Inc. and Subsidiaries
Year Ended March 31, 2023

OPERATING ACTIVITIES:
Income before income taxes
Adjustments for:
Depreciation and amortization
Loss on impairment of long-lived assets
Loss on sale of investments in an associated company(a consolidated subsidiary in 2022)
Other noncash income and expenses—net
Changes in assets and liabilities, net of effects:
Decrease in allowance for doubtful receivables
and other reserves
Increase in trade receivables
Decrease (increase) in inventories(Decrease) increase in trade payables(Decrease) increase in advances received
Increase in asset for retirement benefits
Other—net
Subtotal¥

Millions of Yen
2023
2022

Thousands of
U.S. Dollars(Note 1)2023

14,710

$

¥

5,721

109,776

19,432682

18,945200

145,015
5,090

95
5,401

9,570
6,453

709
40,306(96)(1,302)257(234)(7,500)(310)
1,864
32,999(60)(651)(3,039)2,724
2,230(1,594)(4,557)35,942(716)(9,716)
1,918(1,746)(55,970)(2,313)
13,908
246,261

1,120(6,742)(7,915)
2,682

713(6,345)(6,512)
667

8,358(50,313)(59,067)
20,01522,144

24,465

165,254(236)(47,998)
46,499(4,203)(8,265)(6,282)
2,257(1,761)(358,194)347,007(31,366)(61,679)(46,881)
16,843

(744)

(164)
(16,999)
2,931(4,716)(9,612)(8,886)
1,483(2,819)(7,818)(760)(18,972)(47,360)(141,583)(5,075)(5,302)(3,732)
(508)

(249)
(4,820)(3,410)(648)(37,873)(39,567)(27,851)(3,791)(14,617)(9,127)(109,082)

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS

758

2,222

5,657

NET DECREASE IN CASH AND CASH EQUIVALENTS(10,687)(29,800)(79,754)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

114,235

144,035

852,500

Interest and dividends received
Interest paid
Income taxes—paid
Income taxes—refund
Net cash provided by operating activities
INVESTING ACTIVITIES:
Increase in time deposits—net
Purchases of marketable securities
Proceeds from sales of marketable securities
Purchases of property and equipment
Purchases of software
Purchases of investment securities
Proceeds from sales of investment securities
Purchase of controlling interests in companies
Payment for sale of interests in a subsidiary previously consolidated
Other—net
Net cash used in investing activities
FINANCING ACTIVITIES:
Repayments of long-term debt
Dividends paid
Repayments of lease obligations
Other—net
Net cash used in financing activities

CASH AND CASH EQUIVALENTS, END OF YEAR (Note 5)¥

103,548¥

114,235(5,552)$772,746(Continued)-6-

Consolidated Statement of Cash Flows
Benesse Holdings, Inc. and Subsidiaries
Year Ended March 31, 2023

Millions of Yen
2023
2022
ADDITIONAL CASH FLOW INFORMATION:
Purchase of controlling interests in companies:
Current assets
Long-term assets
Consolidation goodwill
Current liabilities
Long-term liabilities
Acquisition cost
Cash and cash equivalents of newly consolidated subsidiaries
Purchase of controlling interests in companies
Sale of interests in a subsidiary previously consolidated:
Current assets
Long-term assets
Current liabilities
Long-term liabilities
Unrealized loss on available-for-sale securities
Foreign currency translation adjustments
Defined retirement benefit plans
Transfer expenses
Loss on sale of investments in a consolidated subsidiary
Selling price
Other receivables
Other payables
Transfer expenses
Cash and cash equivalents of a subsidiary previously consolidated
Payment for sale of interests in a subsidiary previously consolidated
NONCASH INVESTING AND FINANCING ACTIVITIES:Assets and obligations from finance lease transactions
recognized in the consolidated balance sheet:
Lease assets
Lease obligations¥

11,58012,704

¥

1,945
288
2,458
(410)
(31)
4,250
(1,431)

¥

2,819

¥

13,782
6,950(12,507)(5,016)
(11)
5,929
726
266
(9,570)
549
(318)
55
(266)
(7,838)¥(7,818 )

¥

5,847
6,227

Thousands of
U.S. Dollars(Note 1)
2023$

86,41894,806(Concluded)
See notes to consolidated financial statements.

-7-

Notes to Consolidated Financial Statements
Benesse Holdings, Inc. and Subsidiaries
Year Ended March 31, 2023
Note 1.

BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS

The accompanying consolidated financial statements of Benesse Holdings, Inc. (the “Company”) have been
prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Act andits related accounting regulations, and in accordance with accounting principles generally accepted in Japan, which
are different in certain respects as to the application and disclosure requirements of International Financial
Reporting Standards (“IFRS”). The foreign subsidiaries prepare their financial statements in accordance with IFRS.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been
made to the consolidated financial statements issued domestically in order to present them in a form which is morefamiliar to readers outside Japan. In addition, certain reclassifications have been made in the 2022 consolidated
financial statements to conform to the classifications used in 2023.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which theCompany is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts areincluded solely for the convenience of readers outside Japan and have been made at the rate of ¥134 to $1, theapproximate rate of exchange at March 31, 2023. Such translations should not be construed as representations that
the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.

Note 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa.
Consolidation—The consolidated financial statements include the accounts of the Company and its 37 (38in 2022) subsidiaries (collectively, the “Group”).
Under the control and influence concepts, those companies in which the Company, directly or indirectly, is able toexercise control over operations are fully consolidated, and those companies over which the Group has the ability to
exercise significant influence are accounted for by the equity method.
Investments in eight associated companies (nine in 2022) are accounted for by applying the equity method.
All significant intercompany balances and transactions have been eliminated in consolidation. All material
unrealized profits included in assets resulting from transactions within the Group are also eliminated.
b.
Business Combinations—Business combinations are accounted for using the purchase method.
Acquisition-related costs, such as advisory fees or professional fees, are accounted for as expenses in the periods
in which the costs are incurred. If the initial accounting for a business combination is incomplete by the end of thereporting period in which the business combination occurs, an acquirer shall report in its financial statements
provisional amounts for the items for which the accounting is incomplete. During the measurement period, whichshall not exceed one year from the acquisition, the acquirer shall retrospectively adjust the provisional amounts
recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed asof the acquisition date and that would have affected the measurement of the amounts recognized as of that date.
Such adjustments shall be recognized as if the accounting for the business combination had been completed at theacquisition date. The acquirer recognizes any bargain purchase gain in profit or loss immediately on the acquisition
date after reassessing and confirming that all of the assets acquired and all of the liabilities assumed have been
identified after a review of the procedures used in the purchase price allocation. A parent’s ownership interest in a
subsidiary might change if the parent purchases or sells ownership interests in its subsidiary. The carrying amountof noncontrolling interest is adjusted to reflect the change in the parent’s ownership interest in its subsidiary while
the parent retains its controlling interest in its subsidiary. Any difference between the fair value of the consideration
received or paid and the amount by which the noncontrolling interest is adjusted is accounted for as capital surplus
as long as the parent retains control over its subsidiary.
c.
Cash Equivalents—Cash equivalents in the consolidated statement of cash flows are defined as low-risk,
highly liquid, short-term (maturity within three months of acquisition date) investments that are readily convertible tocash.
d.
Inventories—Inventories are primarily stated at the lower of cost, determined by the average cost method, or
net selling value. Inventories of foreign subsidiaries are primarily stated at the lower of cost, which is determined by
the average cost method, or market, or net selling value.
e.
Marketable and Investment Securities—Marketable and investment securities are classified and accounted
for, depending on management’s intent, as follows: (1) trading securities, which are held for the purpose of earning
capital gains in the near term, are reported at fair value, and the related unrealized gains and losses are included inearnings (costs of securities sold are calculated by the moving-average method); (2) held-to-maturity debt
securities, for which there is a positive intent and ability to hold to maturity are reported at amortized cost using thestraight-line method of amortization; and (3) available-for-sale securities, which are not classified as either of theaforementioned securities, are reported at fair value, with unrealized gains and losses, net of applicable taxes,-8-

reported in a separate component of equity (costs of securities sold are calculated by the moving-average method).
Nonmarketable available-for-sale equity securities are stated at cost determined by the moving-average method.
For other-than-temporary declines in fair value, investment securities are reduced to net realizable value by acharge to income. As for investments in investment limited partnerships and other similar partnerships, which are
deemed to be securities in accordance with Article 2, paragraph (2) of the Japanese Financial Instruments andExchange Act, the Group’s share of each partnership’s equity and net income or loss are recognized on a net basis
based on the partnership’s most recent financial statements that are available depending on the reporting dateprescribed in the relevant partnership agreement.
f.
Property and Equipment—Property and equipment are stated at cost. Depreciation of property andequipment of the Company and its domestic subsidiaries is computed by the declining-balance method over theestimated useful lives of the assets, while the straight-line method is applied to buildings acquired on or after April 1,
1998, building improvements and leasehold improvements acquired on or after April 1, 2016, lease assets of theCompany and its domestic subsidiaries, and all property and equipment of foreign subsidiaries. The range of useful
lives in the Company and its domestic subsidiaries is principally from 2 to 50 years for buildings and leasehold
improvements. The useful lives for lease assets of the Company and its domestic subsidiaries are the terms of therespective leases, and those of foreign subsidiaries are the terms of the respective leases or estimated useful livesof the lease assets.
Under certain conditions, such as exchanges of fixed assets of similar kinds and sales and purchases resulting
from expropriation, Japanese tax laws permit companies to defer the profit arising from such transactions by
reducing the cost of the assets acquired. As of March 31, 2023 and 2022, such deferred profit amounted to¥3,591 million ($26,799 thousand) and ¥3,375 million, respectively.
g.
Long-Lived Assets—The Group reviews its long-lived assets for impairment whenever events or changes incircumstance indicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss isrecognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash flows
expected to result from the continued use and eventual disposition of the asset or asset group. The impairment loss
would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount,which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the
net selling price at disposition.
h.
Goodwill and Other Intangible Assets—The differences between the cost and net equity at acquisition(“consolidation goodwill”) and customer-related assets in domestic subsidiaries are amortized on a straight-line
basis over 3 to 20 years for goodwill and mainly over 20 years for customer-related assets. Immaterial consolidation
goodwill incurred during the period is charged to income.
i.
Software—Software used internally is amortized by the straight-line method over its estimated useful life
(primarily five years both for the Company and its domestic subsidiaries and for foreign subsidiaries).
j.
Leases—Finance lease transactions are capitalized to recognize lease assets and lease obligations in thebalance sheet by the Company and its domestic subsidiaries, and all other leases are accounted for as operatingleases.
On January 13, 2016, the International Accounting Standards Board (IASB) issued IFRS 16, “Leases,” requiring
the recognition of substantially all lease assets and lease liabilities on the balance sheet. The Company’s foreignsubsidiaries applied this accounting standard effective April 1, 2019.
k.
Retirement and Pension Plans—The Company and certain domestic subsidiaries have severance
lump-sum payment plans and a contributory funded defined benefit pension plan for employees, and certain
domestic subsidiaries have lump-sum payment plans for directors, Audit & Supervisory Board members andcompany officers. The pension plans, which were established under the Japanese Employees’ Pension Insurance
Act, cover a substitutional portion of the governmental pension program by the Company on behalf of thegovernment and a corporate portion established at the discretion of the Company. The pension fund is administeredby a board of trustees composed of management and employee representatives as required by government
regulations.
Effective April 1, 2004, the Company and its certain domestic subsidiaries introduced a cash-balance plan as partof the former pension plan to reduce their future risk due to unexpected low returns from the pension fund.
In addition, certain subsidiaries have defined contribution plans.
The Group accounts for the liability for retirement benefits based on the projected benefit obligations and plan
assets at the consolidated balance sheet date. The projected benefit obligations of the Company and its domestic
subsidiaries are attributed to periods on a benefit formula basis. Actuarial gains and losses of the Company and its
domestic subsidiaries that are yet to be recognized in profit or loss are recognized within equity (accumulated othercomprehensive income) after adjusting for tax effects, and are recognized in profit or loss primarily over eight years
no longer than the expected average remaining service period of the employees, starting from the year following theyear in which they occur. Past service costs of the Company and its domestic subsidiaries are amortized on astraight-line basis primarily over eight years no longer than the expected average remaining service period of theemployees.
Retirement benefits to directors, Audit & Supervisory Board members and company officers of certain domestic-9-subsidiaries are recorded as a liability at the amount that would be required if all directors, Audit & Supervisory
Board members and company officers retired at each consolidated balance sheet date.
l.
Stock Options—Compensation expense for employee stock options is recognized based on the fair value atthe date of grant and over the vesting period as consideration for receiving goods or services in accordance withAccounting Standards Board of Japan (“ASBJ”) Statement No. 8, “Accounting Standard for Share-based Payment.”
Stock options granted to nonemployees are accounted for based on the fair value of either the stock option or the
goods or services received. In the consolidated balance sheet, stock options are presented as stock acquisitionrights as a separate component of equity until exercised.
m.

Research and Development Costs—Research and development costs are charged to income as incurred.

n.
Foreign Currency Transactions—All short-term and long-term monetary receivables and payables
denominated in foreign currencies are translated into Japanese yen at the exchange rates at the consolidatedbalance sheet date. The foreign exchange gains and losses from translation are recognized in the consolidated
statement of income to the extent that they are not hedged by foreign exchange forward contracts.
o.
Foreign Currency Financial Statements—The balance sheet accounts of the foreign subsidiaries aretranslated into Japanese yen at the current exchange rate as of the balance sheet date except for equity, which istranslated at the historical rate. Differences arising from such translation are shown as “Foreign currency translation
adjustments” in a separate component of equity. Revenue and expense accounts of foreign subsidiaries aretranslated into yen at the average exchange rate.
p.
Derivative Financial Instruments and Hedge Activities—The Company uses derivative financial
instruments to manage its exposures to fluctuations in foreign currency exchange rates. Foreign exchange forward
contracts are utilized by the Company to reduce foreign exchange risk.
The Company measures foreign exchange forward contracts at fair value, and the unrealized gains/losses arerecognized in the consolidated statement of income.
q.
Bonuses to Directors and Company Officers—Bonuses to directors and company officers are accrued at
the end of the year to which such bonuses are attributable.
r.
Basis for Recognizing Revenue and Expenses—The Group identifies a distinct good or service in acontract with a customer, and considering it as a transaction unit, identifies performance obligation(s). The
transaction price is determined as the amount of consideration to which the Group expects to be entitled in
exchange for transferring the promised good or service to the customer. Certain contracts include more than one
performance obligation, and the transaction price is allocated to each performance obligation. When control of apromised good or service is transferred to a customer and a performance obligation of the Group is satisfied at apoint in time under a contract with the customer, revenue is recognized at the point in time. When control of apromised good or service is transferred to a customer and a performance obligation of the Group is satisfied overtime under a contract with the customer, revenue is recognized over time by measuring the progress towards
complete satisfaction of the performance obligation. For certain good and product sales in Japan, the Company andits domestic subsidiaries recognize revenue upon shipment when the period between the time of shipment of anordered good or product and the time when the customer obtains control is normal, applying an alternative
treatment in paragraph 98 of the ASBJ Guidance No. 30, “Implementation Guidance on Accounting Standard for
Revenue Recognition,” issued on March 26, 2021. The Group does not have significant financial components incontracts with customers.
The Group’s major businesses are the Education Business in Japan, the Kids & Family Business, and the Nursing
Care and Childcare Business.
(1) Education Business in Japan
In the Education Business in Japan, the Group engages in the correspondence course business targeting
primary school students to high school students, Shinkenzemi, the school and teacher support business, theprep school and classroom education business, the university and working adult business, and otherbusinesses.
In the correspondence course business, Shinkenzemi, the Group provides more than one good and/or service
including the provision of course materials and services for correcting answers submitted by customers andtutoring. A contract associated with the business includes more than one performance obligation, and the standalone selling price is not directly observable. Accordingly, the Group allocates the transaction price to eachperformance obligation by estimating its costs of satisfying a performance obligation and then adding anappropriate margin for that good or service. The Group determines that a customer obtains control of a promised
good or service and a performance obligation of the Group is satisfied at the point in time when the customer
confirms that course materials conform to agreed specifications to recognize revenue from the provision ofcourse materials, and when the Group provides answers to the customer after correction to recognize revenue
on answer correction and tutoring.
In the school and teacher support business, the Group mainly offers simulated exams and support services for
ICT education, learning, and school affairs. In connection with simulated exams, the Group mainly provides- 10 -

question booklets and answer booklets, grades the exams, and provides exam results to customers. The Groupconsiders these activities as one performance obligation since they are highly interrelated and determines that acustomer obtains control of a good or service and a performance obligation of the Group is satisfied mainly at
the point in time when the Group provides exam results to the customer to recognize revenue. For support
services for ICT education, learning, and school affairs, a customer obtains control of a service by receiving asoftware license and upgrading the version, or receiving ICT use support. Accordingly, the Group determinesthat its performance obligation is satisfied by measuring the progress in providing the service and recognizes
revenue over the contract term.
In the prep school and classroom education business, the Group primarily provides classes. A customer
obtains control of a service by taking classes. Accordingly, the Group determines that its performance obligation
is satisfied by measuring the progress in giving lessons and recognizes revenue over the contract term.
In the university and working adult business, the Group mainly offers a university support service and an online
education platform service for working adults. The university support service primarily consists of a study abroad
support service. A customer obtains control of a service by receiving a study abroad support service.
Accordingly, the Group determines that its performance obligation is satisfied by measuring the progress inproviding the service and recognizes revenue over the contract term. The Group operates the Udemy business,an online education platform service for working adults. A customer obtains control of a service such as bytaking a course and by receiving support for taking the course. Accordingly, the Group determines that its
performance obligation is satisfied by measuring the progress in providing the service and recognizes revenue
over the contract term. In a transaction where the Group is an agent in connection with the provision of a service
to a customer, revenue is recognized in the net amount of consideration that the Group retains after paying acontent supplier the consideration received from the customer.
(2) Kids & Family BusinessIn the Kids & Family Business, the Group provides the course materials of Kodomo Challenge in thecorrespondence course business in Japan, China, and Taiwan, targeting mainly infants. The Group also
engages in the mail-order business in Japan.
To recognize revenue for Kodomo Challenge in the correspondence course business, the Group determinesthat a customer obtains control of course materials and a performance obligation of the Group is satisfied at the
point in time when the Group provides the course materials to the customer.
To recognize revenue for the mail-order business, the Group determines that a customer obtains control ofgoods and a performance obligation of the Group is satisfied at the point in time when the Group provides the
goods to the customer. In a transaction where the Group is an agent in connection with the provision of goods toa customer, revenue is recognized in the net amount of consideration that the Group retains after paying a
supplier the consideration received from the customer in exchange for goods provided by the supplier.
(3) Nursing Care and Childcare BusinessIn the Nursing Care and Childcare Business, the Group engages primarily in the residential care services
business, and revenue of the business is comprised of facility usage/nursing care charges and payments fromnursing home residents.
For facility usage/nursing care charges, a customer obtains control of a service by receiving a nursing careservice. Accordingly, the Group determines that its performance obligation is satisfied by measuring the
progress in providing the service and recognizes revenue over the period of service.
For payments from nursing home residents, a customer obtains control of a service by using nursing homefacilities. Accordingly, the Group determines that its performance obligation is satisfied over the period of use
and recognizes revenue over such period after estimating the average occupancy term.
s.
Income Taxes—The provision for income taxes is computed based on the pretax income included in the
consolidated statement of income. The asset and liability approach is used to recognize deferred tax assets andliabilities for the expected future tax consequences of temporary differences between the carrying amounts and thetax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted income tax rates tothe temporary differences.
t.
Per Share Information—Basic net income per share is computed by dividing net income attributable tocommon shareholders by the weighted-average number of common shares outstanding for the period.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends
applicable to the respective fiscal years, including dividends to be paid after the end of the year.
u.
New Accounting Pronouncements
Accounting Standard for Current Income Taxes, Accounting Standard for Presentation of Comprehensive
Income, and Implementation Guidance on Accounting Standard for Tax Effect Accounting—The standards
and guidance were revised to include where to record income tax expense in the case of taxation on othercomprehensive income and the tax effect on the sale of subsidiary shares under the Group Taxation Regime.
The Company and its domestic subsidiaries expect to apply the revised standards and guidance for annual
periods beginning on or after April 1, 2024, and are in the process of measuring the effects of applying the revised
standards and guidance in future applicable periods.

- 11 -

Note 3.

ACCOUNTING CHANGE

Implementation Guidance on Accounting Standard for Fair Value Measurement
The Company and its domestic subsidiaries started to apply the ASBJ Guidance No. 31, “Implementation Guidanceon Accounting Standard for Fair Value Measurement,” issued on June 17, 2021 (the “Guidance” in this section) at
the beginning of the year ended March 31, 2023, and prospectively apply the new accounting policies prescribed by
the Guidance in accordance with the transitional provision in paragraph 27-2 of the Guidance. As a result of theapplication, the fair value of some investment trusts whose assets consist of investment trusts that are financial
instruments is estimated based on the net asset value since such investment trusts have no market price and there
are no significant restrictions on cancellation or repurchase to such an extent that market participants would requirecompensation for the risk.
There were no effects on the consolidated financial statements for the year ended March 31, 2023.
In Note 6. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES, (6) Financial Instruments Categorized by
Fair Value Hierarchy, information about investment trusts for the year ended March 31, 2022, is not disclosed inaccordance with paragraph 27-3 of the Guidance.

Note 4.
a.

SIGNIFICANT ACCOUNTING ESTIMATES
Evaluation of Goodwill(1) Amount recorded in the consolidated financial statements
Millions of Yen
2023
2022
¥ 11,192¥ 12,122

GoodwillThousands of
U.S. Dollars
2023$ 83,523(2) Information on the significant accounting estimates of identified item
The Group aims at proactively conducting M&A transactions after carefully selecting target companies mainly ingrowth areas and recognizes goodwill measured as the excess of the acquisition cost over the net of the amounts of
the identifiable assets and the liabilities of the acquired company measured at fair value at the date of businesscombination as the acquired company’s excess earnings power in the future that is expected from its businessactivities.
Goodwill is attributed to any Group company from which operating results are separately reported for managerial
purposes. At the end of each reporting period, each company assesses whether there is any indication that goodwill
may be impaired after taking into consideration a rapid change in the business environment where its subsidiaryacquired through a merger or acquisition operates. If there is an indication that goodwill may be impaired, an
impairment loss is recognized when the aggregate amount of estimated undiscounted future cash flows of the asset
group including the goodwill is less than its carrying amount.
The undiscounted future cash flows are estimated based on the business plan approved by the management ofeach company, and such plan is developed on the basis of certain assumptions including the assumption ofrevenue forecast that is based on the market environment where the company operates.
Goodwill recorded in the consolidated balance sheet as of March 31, 2023, includes goodwill relating to theacquisition of Heart Medical Care Co., Ltd., the Company’s consolidated subsidiary, which amounts to ¥2,151
million ($16,052 thousand). To evaluate such goodwill, the Company treated a large unit including the goodwill,
Heart Medical Care Group, as an asset group. As of March 31, 2023, the Company identified a potential impairment
indicator for goodwill, mainly in light of the fact that the business performance for the year ended March 31, 2023, ofHeart Medical Care did not meet the business plan developed at the time of the acquisition. The Company
estimated the undiscounted future cash flows based on a future plan approved by the management of Heart Medical
Care, considering future uncertainties and other factors. The future plan was developed mainly based onassumptions including the number of nursing care equipment users, the number of client companies in the directoryfor nursing care service providers and on the job recruitment websites of Heart Medical Care, the number ofcustomers and the conversion rates of recruitment services, and the market growth rates that were premised onincreasing needs for nursing care services and for caregivers and nurses due to the aging population.
As a result of comparing the aggregate amount of estimated undiscounted future cash flows of the asset groupbased on the future plan and its carrying amount, the Company has determined not to recognize any impairment
loss since such undiscounted future cash flows exceed the carrying amount.
If any assumption used in the estimate is required to be revised due to the deteriorating business environment
caused by changes in customer and competitive trends and other factors, the Group may recognize an impairment
loss in the year ending March 31, 2024.

- 12 -

b.

Recoverability of Deferred Tax Assets(1) Amount recorded in the consolidated financial statements
Millions of Yen
2023
2022
¥ 12,486¥ 10,251

Deferred tax assets

Thousands of
U.S. Dollars
2023$ 93,179(2) Information on the significant accounting estimates of identified item
The Group recognized deferred tax assets which were expected to be recoverable by using future taxable incomethat excludes tax deductions resulting from the reversal of deductible temporary differences based on future
profitability and tax planning in accordance with the schedule for reversal of taxable/deductible temporary
differences. Each Group company estimated future taxable income in periods during which deferred tax assets were
determined to be recoverable based on the business plan approved by the management of the company taking into
consideration the impact of business environment on the Group’s operating results. As a result, deferred tax assets
which were determined not to be recoverable in future were reversed as valuation allowance.
Future taxable income was estimated mainly based on assumptions including the cumulative total number ofenrollments for Shinkenzemi and Kodomo Challenge, major businesses of Benesse Corporation. For the residential
care services business of Benesse Style Care Co., Ltd., future taxable income was estimated mainly based onassumptions including the number of nursing homes and elderly homes, occupancy rates and other factors thatwere premised on increasing needs for nursing care services due to the aging population.
If future taxable income is required to be revised in connection with the assumptions used in these estimates dueto the deteriorating business environment caused by changes in customer and competitor trends and other factors,
in the year ending March 31, 2024, the Company may further reverse deferred tax assets that are not expected tobe recoverable.

Note 5.

CASH AND CASH EQUIVALENTS
Cash and cash equivalents at March 31, 2023 and 2022, consisted of the following:
Millions of Yen
2023
2022
¥ 115,675¥ 125,787
20,49818,996

Cash and deposits
Marketable securities
Time deposits and short-term investments
which mature or become due after morethan three months of acquisition date
Investment trusts and otherCash and cash equivalents

Note 6.

(32,615)(10)(30,539)(9)¥ 103,548¥ 114,235

Thousands of
U.S. Dollars
2023$
863,246
152,970(243,395)(75)$

772,746

FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1)Group Policy for Financial Instruments
The Group manages its surplus funds focusing on liquidity and safety according to how and when they are to
be used during the year. Particularly, derivative transactions are utilized mainly to hedge various risks andefficiently manage funds. The Group considers derivative transactions with high leverage to be high-risk
transactions and does not enter into such transactions. In addition, the Group has set overdraft limits in order
to finance operating capital flexibly and stably in case of an unpredictable event.

(2)

Nature and Extent of Risks Arising from Financial Instruments
Trade notes and accounts receivable and other receivables are exposed to counterparty credit risk. Monetary
receivables in foreign currencies are exposed to the market risk of fluctuation in foreign currency exchange
rates. The Group uses foreign exchange forward contracts in order to manage exposure to market risk fromchanges in foreign currency exchange rates of dividend income from foreign subsidiaries, which are exposed
to foreign exchange risk and counterparty credit risk. Marketable and investment securities mainly comprisecommercial paper, equity securities, debt securities, investment partnerships and stock investment trusts. The
Group holds equity securities, investment partnerships and stock investment trusts within certain limits. Theseare exposed to issuer credit risk, foreign exchange risk, interest rate risk and market price risk.
Trade notes and accounts payable, other payables and income taxes payable are due within one year.
Long-term debt is primarily used for future business investments of the Company. Long-term debt with variableinterest is exposed to interest rate risk. Lease obligations under finance leases are mainly used for capital
investments.

- 13 -

(3)Risk Management for Financial Instruments
Credit risk management
The Group manages its credit risk from trade notes and accounts receivable and other receivables inaccordance with the “Credit Management Regulations,” which include monitoring of counterparties, due dates,
amounts and balances by type by the general manager of each department of the Group to identify andmitigate the default risk of counterparties at an early stage and monitoring of the credit standing ofcounterparties by the Company’s Finance Department on a regular basis.
The Finance Department manages issuer credit risk by regularly monitoring the rating information and thecredit standing of issuers in accordance with the “Fund Management Regulations.” As for counterparty credit
risk in derivatives, the Group regards that counterparty default risk is extremely low because the counterpartiesare limited to creditworthy financial institutions.
Market risk management
For fluctuation risks of foreign currency exchange rates, interest rates and market prices relating to marketable
and investment securities, the Company’s Finance Department obtains and monitors the price information ofmarketable and investment securities from financial institutions on a steady basis for securities with market
prices, and on a periodic basis for those without market prices. With respect to securities transactions, theFinance Department executes transactions in accordance with the “Fund Management Regulations,” whichprescribe the authority and the limits, and monitors the status on a steady basis. The Finance Department
reports the status to the Representative Director and President, CEO, on a weekly basis, and in the event of asignificant change in the status, the Finance Department reports it to the Board of Directors.
Foreign exchange risk relating to monetary receivables in foreign currencies is hedged by foreign exchange
forward contracts. In addition, long-term debt, except some, is at fixed interest rates to control the interest raterisk of long-term debt.
The derivatives the Company uses are foreign exchange forward contracts, and as to foreign exchange risk,
the authority and the limits for each transaction are prescribed in the “Derivative Transaction Regulations,” andthe Company’s Finance Department monitors unrealized gain/loss on foreign exchange forward contracts on asteady basis. The Finance Department reports it to the Representative Director and President, CEO, on a
weekly basis, and to the Board of Directors on a quarterly basis and in the event of a significant change in thestatus.
Liquidity risk management
Liquidity risk includes the risk that the Group cannot meet its contractual obligations in full on their maturity
dates. In order to manage liquidity risk, the Company’s Finance Department develops an annual financial plan
based on reports from departments, monitors bank account activity on a daily basis, and prepares and updates
a financial plan on a monthly basis. The Company’s subsidiaries manage their liquidity risk in the same way as
the Company does.

- 14 -

(4)Fair Values of Financial Instruments
Since various assumptions and factors are reflected in estimating fair value, different assumptions and factors
could result in different fair value.
(a) Fair value of financial instruments
Millions of Yen
Carrying
AmountFair Value

March 31, 2023
Marketable and investment securities:
Available-for-sale securities¥

38,484¥38,484

Total¥

38,484¥38,484Long-term debt
Lease obligations¥

33,176
110,779¥

32,926
107,598¥ (250)(3,181)

Total¥ 143,955¥ 140,524¥ (3,431 )March 31, 2022
Marketable and investment securities:
Available-for-sale securities¥

34,845¥34,845

Total¥

34,845¥34,845Long-term debt
Lease obligations¥

38,250101,713¥

38,008101,151¥ (242)
(562)

Total

¥ 139,963¥ 139,159¥ (804)

Carrying
AmountThousands of U.S. Dollars
Unrealized
Fair Value
Gain (Loss)

March 31, 2023
Marketable and investment securities:
Available-for-sale securities$

287,194$

287,194

Total$

287,194$

287,194

Long-term debt
Lease obligations$

247,582
826,709$245,717
802,970

Total
Notes:

Unrealized
Gain (Loss)$ (1,865)(23,739)$ 1,074,291$ 1,048,687$ (25,604 )1. Since “cash and deposits,” “trade notes and accounts receivable,” “other receivables,” “trade notes
and accounts payable,” “other payables,” and “income taxes payable” are cash or settled in a shortperiod of time, their carrying amount approximates fair value. Accordingly, information about these
items is not disclosed.
2. The carrying amount and the fair value of long-term debt and lease obligations include the current
portion of long-term debt and lease obligations.

(b) Carrying amount of investments in equity instruments that do not have a quoted market price in an active
marketThousands ofMillions of Yen
U.S. Dollars
2023
2022
2023
Investments in equity instruments that do not have aquoted market price in an active market¥ 1,824¥ 1,156$ 13,612
Investments in associated companies
2,286
2,262
17,060Total¥ 4,110¥ 3,418$ 30,672
The above table does not include investments in partnerships or other similar entities, for which an amountequivalent to the Group’s share is recognized on a net basis in the consolidated balance sheet. Suchinvestments were carried at ¥2,530 million ($18,880 thousand) and ¥2,252 million as of March 31, 2023 and2022.

- 15 -

(5)Maturity Analysis for Financial Assets and Securities with Contractual Maturities
Millions of Yen
Due after
Due after
Due in1 Year
5 Years
1 Yearthroughthroughor Less
5 Years
10 Years
March 31, 2023
Deposits¥ 115,390
Trade notes and accounts receivable
26,986
Other receivables
56,525Marketable and investment securities—
Available-for-sale securities with fundinvestments and other:Government and corporate bonds¥ 20,500¥ 6,700¥ 2,600
Trust fund investments and other
1,022
Total marketable and investment securities¥

March 31, 2022
Deposits
Trade notes and accounts receivable
Other receivables
Marketable and investment securities—
Available-for-sale securities with fundinvestments and other:Government and corporate bonds
Trust fund investments and other

20,500¥ 7,722¥ 2,600

Due after
10 Years¥ 125,408
25,621
57,994

Total marketable and investment securities¥

19,047¥ 2,811
1,064¥3,400¥19,047¥ 3,875¥3,400Due in1 Yearor Less
March 31, 2023
Deposits
Trade notes and accounts receivable
Other receivables
Marketable and investment securities—
Available-for-sale securities with fundinvestments and other:Government and corporate bonds
Trust fund investments and otherTotal marketable and investment securities

Thousands of U.S. Dollars
Due after
Due after
1 Year
5 Years
throughthrough
5 Years
10 Years$

861,119
201,388421,828$

152,985$ 50,000
7,627$ 19,403$

152,985$ 57,627$ 19,403

Due after
10 Years

Please see Note 12. LONG-TERM DEBT for annual maturities of long-term debt and Note 10. LEASES for
obligations under finance leases.
(6)

Financial Instruments Categorized by Fair Value Hierarchy
The fair value of financial instruments is categorized into the following three levels, depending on theobservability and significance of the inputs used in making fair value measurements:
Level 1: Fair values measured by using quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2: Fair values measured by using inputs other than quoted prices included within Level 1 that are
observable for the assets or liabilities, either directly or indirectly.
Level 3: Fair values measured by using unobservable inputs for the assets or liabilities.
When using more than one input that is significant to fair value measurement, the Group categorizes the fairvalue on the basis of the lowest priority level input.

- 16 -

(a) Financial instruments measured at fair value in the consolidated balance sheet
Millions of Yen
Level 1
Level 2
Level 3
March 31, 2023
Marketable and investment securities—
Available-for-sale securities:
Equity securities¥
7,650
Government and corporate bonds¥ 29,655
Investment trusts
102
1,077
Total

¥

7,752

¥

¥

¥

7,650
29,655
1,179¥

38,484

Millions of Yen
Level 2
Level 3

Level 1March 31, 2022
Marketable and investment securities—
Available-for-sale securities:
Equity securities
Government and corporate bonds

30,732

Total

8,483

Total

¥
¥

25,147

8,483
25,147

Total
¥
8,483
¥ 25,147¥ 33,630
The above table does not include the fair value of investment trusts which were carried at ¥1,215 million atMarch 31, 2022.

Level 1March 31, 2023
Marketable and investment securities—
Available-for-sale securities:
Equity securities
Government and corporate bonds
Investment trusts

$

Total

$

Thousands of U.S. Dollars
Level 2
Level 357,090

Total

761$ 221,306
8,037$

57,090221,306
8,798

57,851$ 229,343$ 287,194(b) Financial instruments not measured at fair value in the consolidated balance sheet
Millions of Yen
Level 1
Level 2
Level 3
March 31, 2023
Long-term debt
¥ 32,926
Lease obligations
107,598

Total¥

32,926
107,598

Total¥ 140,524¥ 140,524

March 31, 2022
Long-term debt
Lease obligations

¥

¥

Total

¥ 139,159

Level 1

38,008101,151

Thousands of U.S. Dollars
Level 2
Level 338,008101,151¥ 139,159

Total

March 31, 2023
Long-term debt
Lease obligations$ 245,717
802,970$ 245,717
802,970

Total$1,048,687$ 1,048,687

Note: Valuation techniques used to measure fair value and inputs used in fair value measurement
Marketable and investment securities
The fair values of listed equity securities, government bonds, corporate bonds and listed investment trusts aremeasured at the quoted market prices. Since listed equity securities and listed investment trusts are traded in
active markets, the fair values of listed equity securities and listed investment trusts are categorized as Level 1.
As the quoted market prices of government bonds and corporate bonds are not considered to be in active- 17 -

markets due to low market transactions, the fair values of government bonds and corporate bonds are
categorized as Level 2.
The fair values of bonds without quoted prices are measured at the prices obtained from financial institutions
and are categorized as Level 2.
The fair values of unlisted investment trusts are measured at the publicly available net asset value. As thequoted market prices of unlisted investment trusts are not considered to be in active markets due to low market
transactions the fair values of unlisted investment trusts are categorized as Level 2.
Long-term debt and Lease obligations
The fair values of these items are measured by the Discounted Cash Flow Method using the total of principal
and interest, the remaining term of the obligation, and an interest rate for similar new transactions, and are
categorized as Level 2.

Note 7.

MARKETABLE AND INVESTMENT SECURITIESMarketable and investment securities as of March 31, 2023 and 2022, consisted of the following:
Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Current:
Government and corporate bonds¥ 20,498¥ 18,996$ 152,970

Total¥ 20,498¥ 18,996$ 152,970¥¥$

Non-current:
Marketable equity securities
Investments in equity instruments that do nothave a quoted market price in an active market
Investments in partnerships
Government and corporate bonds
Trust fund investments and other
Total

7,650

8,483

57,090

1,824
2,530
9,157
1,179

1,156
2,252
6,151
1,215

13,612
18,88068,336
8,798¥ 22,340¥ 19,257$ 166,716

The costs and aggregate fair values of marketable and investment securities at March 31, 2023 and 2022, were as
follows:
Millions of Yen
Unrealized
Unrealized
Fair
Cost
Gains
LossesValue
March 31, 2023
Securities classified as:
Available-for-sale:
Equity securities¥ 8,387¥ 703¥(1,440)¥ 7,650Government and corporate bonds
29,805
3(153)
29,655
Trust fund investments and other
1,154
25
1,179
March 31, 2022
Securities classified as:
Available-for-sale:
Equity securities
Government and corporate bonds
Trust fund investments and other

¥

8,081
25,157
1,154

Cost
March 31, 2023
Securities classified as:
Available-for-sale:
Equity securities
Government and corporate bonds
Trust fund investments and other$

62,590222,425
8,612- 18 -

¥

567
95
62

¥ (165)(105)(1)

Thousands of U.S. Dollars
Unrealized
Unrealized
Gains
Losses

$

5,246
22
186

$(10,746 )(1,141)¥

8,483
25,147
1,215

Fair
Value

$ 57,090
221,306
8,798

The proceeds and realized gains and losses of available-for-sale securities that were sold during the years ended
March 31, 2023 and 2022, were as follows:

Proceeds

Millions of Yen
Realized
Gains

Realized
LossesMarch 31, 2023
Available-for-sale:
Equity securities
Government and corporate bonds
Trust fund investments and other

¥

793
824
85

¥

204
124
23

¥

(30)

Total

¥ 1,702

¥

351

¥

(30)

March 31, 2022
Available-for-sale:
Equity securities

¥

861

¥

230

¥

(6)

Total

¥

861

¥

230

¥

(6)

Thousands of U.S. Dollars
Realized
Realized
Proceeds
Gains
LossesMarch 31, 2023
Available-for-sale:
Equity securities
Government and corporate bonds
Trust fund investments and other$ 5,9186,149
634$ 1,522925
172$ (224)

Total$ 12,701$ 2,619$ (224)The impairment losses on available-for-sale securities for the years ended March 31, 2023 and 2022, were ¥10
million ($75 thousand) and ¥47 million, respectively.
Note 8.

INVENTORIESInventories at March 31, 2023 and 2022, consisted of the following:

Finished products
Work in process
Raw materials and supplies

Millions of Yen
2023
2022
¥ 29,618¥ 29,260
2,949
3,445
1,975
1,994

Thousands of
U.S. Dollars
2023$ 221,030
22,007
14,739Total¥ 34,542$ 257,776- 19 -¥ 34,699

Note 9.

LONG-LIVED ASSETSThe Group reviewed their long-lived assets for impairment as of March 31, 2023 and 2022. As a result, the Group
recognized impairment losses as follows:
Thousands
Millionsof U.S.
Use
Typeof YenDollars
Recoverable AmountYear ended March 31, 2023
Online teaching service inSoftwarecorrespondence course
business
Educational platform
Software, lease assets,businessand others
Prep and classroom
Buildings and leaseholdeducation business
improvements, leaseassets, and others
Residential care services
Buildings and leaseholdbusiness
improvements, leaseassets, and others
Prep school business
Buildings and leasehold
improvements, andothersEnglish language classes for Buildings and leasehold
children business
improvements
Total
Year ended March 31, 2022
Online English lesson
Softwarebusiness (for schools andprep schools)
Residential care services
Buildings and leaseholdbusiness
improvements, leaseassets, and others
Prep and classroom
Buildings and leaseholdeducation business
improvements,
software, and others
Total

¥371

$2,769

Zero

129

963

Zero

84

627

Zero

64

477

Zero

23

172

Zero

11

82

Zero

¥682

$5,090

¥125

Zero

40

Zero

35

Zero

¥200

- 20 -

Note 10.

LEASES

LesseeThe Company and a domestic subsidiary have lease contracts for certain land, buildings and other assets under
noncancelable operating leases. The Group leases land, buildings and other assets and software under financeleases.
Obligations under finance leases and future minimum payments under noncancelable operating leases were as
follows:
Millions of Yen
Thousands of U.S. Dollars
2023
2023
Finance
Operating
Finance
Operating
LeasesLeasesLeasesLeasesDue within one year
¥
3,540
¥
9,901
$ 26,418$ 73,888
Due after one year
107,239
48,700800,291
363,433
Total

Note 11.

¥ 110,779¥

58,601$ 826,709$ 437,321

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets at March 31, 2023 and 2022, consisted of the following:
Millions of Yen
2023
2022
¥ 10,115¥ 11,059

Consolidation goodwill
Goodwill associated with domestic consolidated
subsidiaries
Others
Total

Note 12.

Thousands of
U.S. Dollars
2023$ 75,485

1,077
2,622

1,063
2,808

8,038
19,567¥ 13,814¥ 14,930$ 103,090

Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

LONG-TERM DEBT

Long-term debt at March 31, 2023 and 2022, consisted of the following:

Bonds payable with interest rates
ranging from 0.16% to 0.42% in 2023 and 2022
Unsecured
Loans from banks with interest rates
ranging from 0.13% to 2.16% in 2023 and 2022:
Unsecured
Total
Less current portionLong-term debt, less current portion¥ 10,019¥ 10,025$

74,76923,15733,176(5,068)28,22538,250(5,075)

172,813247,582(37,821)¥ 28,108¥ 33,175$ 209,761

Annual maturities of long-term debt, excluding finances leases (see Note 10), at March 31, 2023, were as follows:Year Ending
Thousands ofMarch 31
Millions of Yen
U.S. Dollars
2024¥ 5,068$ 37,821
2025
53
395
2026
5,042
37,6272027
10,01374,7242028
2029 and thereafter
13,00097,015
Total¥ 33,176- 21 -$ 247,582

Note 13.

RETIREMENT AND PENSION PLANS

Under most circumstances, employees terminating their employment are entitled to retirement benefits determinedbased on the rate of pay at the time of termination, years of service and certain other factors. Such retirement
benefits are made in the form of a lump-sum severance payment from certain domestic subsidiaries and annuity
payments from a welfare annuity fund. Employees are entitled to larger payments if the termination is involuntary or
by retirement at the mandatory retirement age.
Liability for retirement benefits below as of March 31, 2023 and 2022, excludes retirement benefits to directors,
Audit & Supervisory Board members and company officers at certain domestic subsidiaries of ¥108 million ($806
thousand) and ¥98 million, respectively. Such retirement benefits are paid subject to the approval of theshareholders.
Defined Benefit Plans(1)

The changes in defined benefit obligation for the years ended March 31, 2023 and 2022, were as follows:
Thousands ofMillions of Yen
U.S. Dollars
2023
2022
2023
Balance at beginning of year
¥ 20,581¥ 22,968$ 153,590
Current service cost
1,349
1,328
10,067
Interest cost
108
158
806
Actuarial gains
(131)
(354)
(978)
Benefits paid
(927)
(871)
(6,918)Foreign currency translation difference
for a foreign subsidiary
118
Decrease resulting from exclusion ofsubsidiaries from consolidation(2,777)
OthersBalance at end of year

(2)

(3)

(21)

11

(157)

¥ 20,959¥ 20,581$ 156,410

The changes in plan assets for the years ended March 31, 2023 and 2022, were as follows:

Balance at beginning of year
Expected return on plan assets
Actuarial (losses) gains
Contributions from the employer
Benefits paid
OthersMillions of Yen
2023
2022
¥ 21,349¥ 19,758
426
404
(171)
878
750
726
(632)
(430)
(21)
13

Balance at end of year

¥ 21,701¥ 21,349

Thousands of
U.S. Dollars
2023$ 159,321
3,179(1,276)
5,597(4,716)(157)$ 161,948

Reconciliation between the asset recorded in the consolidated balance sheet and the balances of defined
benefit obligation and plan assets was as follows:
Thousands ofMillions of Yen
U.S. Dollars
2023
2022
2023
Funded defined benefit obligation¥ 14,764¥ 14,722$ 110,179
Plan assets(21,701)(21,349)(161,948)
Total(6,937)(6,627)(51,769)
Unfunded defined benefit obligation
6,195
5,859
46,231
Net asset arising from defined benefit obligation¥(742 )¥(768)

Liability for retirement benefits
Asset for retirement benefits

Millions of Yen
2023
2022
¥ 6,195¥ 5,859(6,937)(6,627)

Net asset arising from defined benefit obligation¥ (742 )- 22 -¥ (768)$(5,538 )Thousands of
U.S. Dollars
2023$ 46,231(51,769)$ (5,538 )(4)The components of net periodic benefit costs for the years ended March 31, 2023 and 2022, were as follows:
Thousands ofMillions of Yen
U.S. Dollars
2023
2022
2023
Service cost
¥ 2,045¥ 2,007$ 15,261
Interest cost
108
158
806
Expected return on plan assets
(426)
(404)
(3,179)
Recognized actuarial gains
(479)
(278)
(3,575)
Amortization of prior service cost
38
38
284
Net periodic benefit costs¥ 1,286¥ 1,521$ 9,597
Service cost includes ¥696 million ($5,194 thousand) and ¥679 million of estimated prepaid retirement
payments for employees in accordance with the prepaid retirement allowance plan of Benesse Corporation forthe years ended March 31, 2023 and 2022, respectively.
The Group also recognized additional retirement benefits to employees during the year ended March 31,
2022. These payments are not included in net periodic benefit costs above but are included in loss on
restructuring of business included in other—net (¥12 million) for the year ended March 31, 2022.

(5)

(6)

(7)
a.

Amounts recognized in other comprehensive income (before income tax effect) in respect of defined retirement
benefit plans for the years ended March 31, 2023 and 2022, were as follows:
Thousands ofMillions of Yen
U.S. Dollars
2023
2022
2023
Prior service cost
Actuarial (gains) losses

¥

38
(518)

Total

¥ (480 )

¥

38
1,999

¥ 2,037$284(3,866)$ (3,582 )Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect ofdefined retirement benefit plans as of March 31, 2023 and 2022, were as follows:
Thousands ofMillions of Yen
U.S. Dollars
2023
2022
2023
Unrecognized prior service cost
Unrecognized actuarial losses

¥

(72 )
3,084

¥

(110 )
3,602

Total

¥3,012¥ 3,492$(537 )
23,015$ 22,478

Plan assets
Components of plan assets
Plan assets as of March 31, 2023 and 2022, consisted of the following:
Debt investments
Equity investments
General accountCash and deposits
Others

2023
29%
8
16
11
36

2022
28%
11
16
9
36

Total

100 %

100 %

b.

Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering the long-term rates of return which are
expected currently and in the future from the various components of the plan assets.

(8)

Assumptions used for the years ended March 31, 2023 and 2022, were set forth as follows:
2023
2022
Discount rate
The Company and domestic
Primarily 0.9%
Primarily 0.6%
consolidated subsidiaries
Expected rate of return
The Company and domestic
Primarily 2.0%
Primarily 2.0%
on plan assets
consolidated subsidiaries
Expected rate of salary
The Company and domestic
Primarily 5.6%
Primarily 5.6%
increases
consolidated subsidiaries- 23 -

Defined Contribution Plans
Certain subsidiaries had ¥175 million ($1,306 thousand) and ¥309 million in defined contribution retirement benefit
costs for the years ended March 31, 2023 and 2022, respectively.

Note 14.

EQUITYJapanese companies are subject to the Companies Act of Japan (the “Companies Act”). The significant provisions
in the Companies Act that affect financial and accounting matters are summarized below:a.
Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to theyear-end dividend upon resolution at the shareholders’ meeting. Additionally, for companies that meet certain
criteria including (1) having a Board of Directors, (2) having independent auditors, (3) having an Audit & Supervisory
Board, and (4) the term of service of the directors being prescribed as one year rather than the normal two-year
term by its articles of incorporation, the Board of Directors may declare dividends (except for dividends in kind) at
any time during the fiscal year if the company has prescribed so in its articles of incorporation. The Company meets
all the above criteria, and accordingly, the Board of Directors may declare dividends (except for dividends-in-kind) at
any time during the fiscal year.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if thearticles of incorporation of the company so stipulate. The Companies Act provides certain limitations on the amounts
available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for
distribution to the shareholders, but the amount of net assets after dividends must be maintained at no less than
¥3 million.
b.
Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (acomponent of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on theequity account charged upon the payment of such dividends until the aggregate amount of legal reserve andadditional paid-in capital equals 25% of the common stock. Under the Companies Act, the total amount of additional
paid-in capital and legal reserve may be reversed without limitation. The Companies Act also provides that common
stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can be transferred among
the accounts within equity under certain conditions upon resolution of the shareholders.
In connection with the issuance of shares under the restricted stock compensation plan, common stock and capitalsurplus each increased by ¥37 million ($276 thousand) and ¥41 million during the year ended March 31, 2023 and2022, respectively.
c.
Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock byresolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available
for distribution to the shareholders which is determined by a specific formula. Under the Companies Act, stockacquisition rights are presented as a separate component of equity. The Companies Act also provides thatcompanies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisitionrights are presented as a separate component of equity or deducted directly from stock acquisition rights.
Appropriations of Retained Earnings
The following appropriation of retained earnings at March 31, 2023, was approved at the Board of Directors held on
May 12, 2023:
Thousands ofMillions of Yen
U.S. Dollars
Year-end cash dividends, ¥30 ($0.22) per share- 24 -¥ 2,893$ 21,590

Note 15.

SEGMENT INFORMATION

Under ASBJ Statement No. 17, “Accounting Standard for Disclosures about Segments of an Enterprise and RelatedInformation,” and ASBJ Guidance No. 20, “Guidance on Accounting Standard for Disclosures about Segments of anEnterprise and Related Information,” an entity is required to report financial and descriptive information about its
reportable segments. Reportable segments are operating segments or aggregations of operating segments thatmeet specified criteria. Operating segments are components of an entity about which separate financial information
is available and for which such information is evaluated regularly by the chief operating decision maker in deciding
how to allocate resources and in assessing performance. Generally, segment information is required to be reported
on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate
resources to operating segments.
(1)
Description of Reportable Segments
The Group’s reportable segments are those for which separate financial information is available and regular
evaluation by the Company’s Board of Directors is being performed in order to decide how resources are allocatedamong the Group and to assess operating results.
The Group makes resource investments mostly in the three businesses of the Education in Japan, the Kids &Family, and the Nursing Care and Childcare to achieve sustainable growth of the Group as a whole.
Accordingly, the Group is made up of segments grouped by product and/or service based on the three businesses
and designates the Education Business in Japan, the Kids & Family Business, and the Nursing Care and Childcare
Business as its reportable segments.
In the Education Business in Japan, the Group engages in the correspondence course business targeting primaryschool students to high school students, the school and teacher support business, the prep school and classroom
education business, the university and working adult business, and other businesses.
In the Kids & Family Business, the Group engages in the correspondence course business in Japan, China, andTaiwan, targeting mainly infants, the mail-order business, book publication, and other businesses.
In the Nursing Care and Childcare Business, the Group engages in the residential care services business(operation of nursing homes and elderly homes) and the home care attendant services business, offers training
courses for nursing care personnel, and engages in recruitment and temporary staffing of nurses and caregivers,
the preschool and afterschool childcare operations business, and other businesses.
(Matters regarding Changes in Reportable Segments)
The Berlitz Business has been excluded from the Group’s reportable segments since the Company transferred all of
its shares in Berlitz Corporation that had constituted the Berlitz Business on February 14, 2022, and Berlitz was
excluded from the consolidation scope.
(2)
Methods of Measurement for the Amounts of Sales, Profit (Loss), Assets and Other Items for Each
Reportable Segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES. Segment profit corresponds to operating income. Intersegment sales andtransfers are recorded based on the prices used in transactions with third parties.

- 25 -

(3)Information about Sales, Profit (Loss), Assets and Other Items
Millions of Yen
2023

Sales:
Sales to external customers
Intersegment sales ortransfers
Total

Education
Business
in Japan

Reportable Segment
Nursing Care
Kids & Family and Childcare
Business
Business

Reportable
Segment
Total

¥

¥

¥

209,056

67,859 ¥17

132,687409,602

42

Others
¥

59

Total

2,275

¥ 411,877

16,74016,799¥ 428,676¥

209,073¥

67,901 ¥

132,687¥409,661¥

19,015

Segment profit (loss)¥
Segment assets
Other items:
Increase in property andequipment and intangible
assetsDepreciation
Amortization of goodwill
Loss on impairment oflong-lived assets
Goodwill at March 31, 2023
Investments inequity method entities

19,164
195,417¥70 ¥
62,121

6,651
212,640¥

25,885
470,178¥(160) ¥ 25,725
9,993
480,171

8,076
8,888
467

2,013
2,569
76

13,5306,404
513

23,61917,861
1,056

618
5,869

16
831

64
4,492

698
11,192

146

286

136
326

432

Reconciliations

Consolidated¥ 411,877¥ (16,799)¥ (16,799) ¥ 411,877¥(5,105) ¥ 20,620
61,389541,560

23,75518,187
1,056

651
3

24,40618,1901,056

698
11,192698
11,192

1,965

2,397

2,397

Others

Total

Millions of Yen
2022

Education
Business
in Japan

Reportable Segment
Nursing
Kids &
Care andFamilyChildcare
Berlitz
Business
Business
Business

Sales:
Sales to external customers ¥ 212,129 ¥Intersegment sales ortransfers
33
Total

71,238 ¥ 127,397 ¥
3920,074

Reportable
Segment
Total¥ 430,838 ¥

509

581

¥ 212,162 ¥

71,277 ¥ 127,397 ¥

20,583

Segment profit (loss)¥ 19,086 ¥Segment assets
202,947
Other items:
Increase in property andequipment and intangible
assets8,672
Depreciation
8,664
Amortization of goodwill
823
Loss on impairment oflong-lived assets
160
Goodwill at March 31, 2022
6,331
Investments inequity method entities
136

1,719 ¥
8,013 ¥
66,618
199,858(2,799 ) ¥

4,583
2,157
10

9,212
5,797
469

6
785

40
5,006

535
640

1,106 ¥ 431,944
16,902588- 26 -¥ 431,944¥ (17,483) ¥ 431,944

26,019 ¥(8) ¥ 26,011 ¥
469,423
10,109479,532

23,002
17,258
1,302

522
318

1,774

Consolidated

17,483 ¥ (17,483)¥ 431,419 ¥ 18,008 ¥ 449,427

206
12,122452

Reconciliations

23,524
17,576
1,302(5,844) ¥ 20,167
61,067
540,59939(28 )23,563
17,5481,302

206
12,122

206
12,122

2,362

2,362

Thousands of U.S. Dollars
2023

Sales:
Sales to external customers
Intersegment sales ortransfers
Total

Education
Business
in Japan

Reportable Segment
Nursing Care
Kids & Family and Childcare
Business
Business

Reportable
Segment
Total$ 1,560,119$$ 3,056,731

127

506,411 $990,201

314

$

441

$ 1,560,246$

506,725 $Segment profit (loss)$ 143,015
Segment assets
1,458,336
Other items:
Increase in property andequipment and intangible
assets60,269$523 $
49,634
463,589
1,586,866

Depreciation
Amortization of goodwill
Loss on impairment oflong-lived assets
Goodwill at March 31, 2023
Investments inequity method entities

Others990,201

Total

Reconciliations

16,978 $ 3,073,709
124,925

125,366

Consolidated$ 3,073,709$ (125,366)$ 3,057,172$

141,903 $ 3,199,075$ (125,366) $ 3,073,709$$(1,194) $ 191,978
74,575 3,583,366$ (38,097) $ 153,881
458,127
4,041,493

193,1723,508,791

15,022

100,970

176,261

1,015

177,276

4,858

182,134

66,328
3,485

19,172567

47,791
3,829

133,291
7,881

2,433

135,7247,881

22135,746
7,881

4,612
43,799

119
6,202

478
33,522

5,209
83,523

1,090

2,134

3,224

14,664

5,209
83,523

5,209
83,523

17,88817,888Notes: 1. Loss on impairment of long-lived assets of the Kids & Family Business is included as loss on liquidation ofbusiness in other—net.
2. The details of reconciliations were as follows:
Thousands ofMillions of Yen
U.S. Dollars
Sales
2023
2022
2023
Intersegment eliminations¥ (16,799 )¥ (17,483 )$ (125,366 )
Total¥ (16,799 )¥ (17,483 )$ (125,366 )Profit (Loss)
Intersegment eliminations
Corporate expenses

Millions of Yen
2023
2022
¥
68
¥
(35)
(5,173)(5,809)Thousands of
U.S. Dollars
2023
$
507
(38,604)

Total¥ (5,105 )¥ (5,844)$ (38,097)
Note: Corporate expenses are mainly expenses of the Company that are not attributable to the reportablesegments.

Millions of Yen
2023
2022
¥ (19,240)¥ (22,537)
80,62983,604

AssetsIntersegment eliminations
Corporate assets

Thousands of
U.S. Dollars2023$ (143,582)
601,709

Total¥ 61,389¥ 61,067$ 458,127
Note: Corporate assets consist mainly of marketable securities of the Company that are not attributable to
the reportable segments.

Increase in Property and Equipment andIntangible Assets
Intersegment eliminations
Capital investments by the Company
not attributable to reportable segments

Millions of Yen
2023
2022
¥ (98)¥ (298)

Total

¥

749

- 27 -

651¥

Thousands of
U.S. Dollars
2023$ (731 )

337

5,589

39

$ 4,858

Millions of Yen
2023
2022
¥ (312)¥ (332)

Depreciation
Intersegment eliminations
Depreciation by the Company
not attributable to reportable segments

315

Total
(4)

¥

Thousands of
U.S. Dollars2023$ (2,328 )

304

3

¥

2,350

(28)

$

22

Information about Geographical Areas
Sales

Japan
¥ 380,732

Millions of Yen
2023
Others¥ 31,145

Total¥ 411,877

Japan¥ 384,506

Millions of Yen
2022
Others¥ 47,438

Total¥ 431,944

Japan$ 2,841,284

Thousands of U.S. Dollars
2023
Others$ 232,425

Total$ 3,073,709

Note: Sales are classified by country or region based on the location of customers.
Note 16.
(1)

REVENUE RECOGNITION
Disaggregated revenue from contracts with customers
Millions of Yen
2023

Correspondence course
business
School and teacher
support business
Prep school and classroom
education business
University and working adultbusiness
Mail-order businessResidential care services
business
Others
Revenue from contracts
with customers

Education
Business
in Japan

Reportable Segment
Nursing Care andKids & FamilyChildcareBusiness
Business

Reportable
Segment
Total

¥

¥

¥ 144,111¥ 144,111

48,40848,40848,40843,96443,96443,96420,0184,168

20,018
4,168

94,157

49,95420,018
4,168

2,509

¥ 209,056¥

OthersTotal

13,737¥ 112,797
19,890112,797
36,136¥

2,275

112,797
38,411

67,859¥ 132,687¥ 409,602

¥

2,275

¥ 411,877- 28 -

Education
Business
in JapanCorrespondence course
business
School and teacher support
business
Prep school and classroom
education business
University and working adultbusiness
Mail-order businessResidential care services
business
Language education
business
ELS business
Others
Revenue from contracts
with customers¥ 102,477

Revenue from contracts
with customers

Notes:¥

52,151¥

154,628

Total¥

154,628

48,77848,77844,32744,32744,327

14,2894,176

14,2894,176

109,455

109,455

18,757
1,317
35,111¥

1,106

18,757
1,317
36,217

430,838¥

1,106

14,2894,176¥ 109,455¥
2,258¥ 212,129$

Others

48,778

Education
Business
in JapanCorrespondence course
business
School and teacher support
business
Prep school and classroom
education business
University and working adultbusiness
Mail-order businessResidential care services
business
OthersMillions of Yen
2022
Reportable Segment
Nursing Care
Reportable
Kids & Family and Childcare
Berlitz
Segment
Business
Business
Business
Total

702,664¥

14,911

17,942

71,238¥ 127,397¥

18,757
1,317

20,074¥

Thousands of U.S. Dollar
2023
Reportable Segment
Nursing Care andReportable
Kids & FamilyChildcare
Segment
Business
Business
Total$ 372,791

Others¥431,944

Total$ 1,075,455$ 1,075,455

361,254361,254361,254

328,090

328,090

328,090

149,388
31,104

149,388
31,104

149,388
31,104

18,723

102,516$ 841,769
148,432

841,769
269,671$

16,978

841,769
286,649$ 1,560,119$ 506,411$ 990,201$ 3,056,731$

16,978$ 3,073,709

1. The Berlitz Business has been excluded from the Group’s reportable segments since the Company
transferred all of its shares in Berlitz Corporation that had constituted the Berlitz Business on February
14, 2022, and Berlitz was excluded from the consolidation scope.
2. The Group identifies university and working adult domains as a significant future growth area in its
medium-term management plan and changed its organizational structure to implement the plan in theyear ended March 31, 2023. Accordingly, in the Education Business in Japan, revenue of the university
support business, the education business for working adults, and other businesses previously includedin the “school and teacher support business,” the “prep school and classroom education business,” and“others” has been separately stated as revenue of the “university and working adult business.” As aresult of this change, disaggregated revenue for the year ended March 31, 2022, has been reclassified
in the same manner.

(2)
Basic information to understand revenues from contracts with customers
Information to enable users to understand revenue from contracts with customers is as stated in Note 2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES, r. Basis for recognizing revenue and expenses.

- 29 -

(3)Relationship between the satisfaction of performance obligations in contracts with customers andcash flows arising from the contracts as well as the amount and timing of revenue expected to berecognized in future periods from existing contracts with customers at March 31, 2023 and 2022(a)
Contract balances
The following table presents the balances of receivables from contracts with customers and contract liabilities.
Millions of Yen
2023
Receivables fromContracts with Contract Liabilities
Customers
Balance at beginning ofyear
Balance at end of year¥

25,634¥27,006

Thousands of U.S. Dollars
2023
Receivables fromContracts with Contract Liabilities
Customers

166,995$ 191,299$ 1,246,231

163,130

201,537

1,217,388

Millions of Yen
2022
Receivables fromContracts with Contract Liabilities
Customers
Balance at beginning ofyear
Balance at end of year¥

29,356¥25,634

172,095
166,995

Receivables from contracts with customers and contract liabilities are included in trade notes and accounts
receivable and receivables due from associated companies, and advances received and advances received fromnursing home residents, respectively, in the consolidated balance sheet. Contract liabilities are mainly associatedwith contracts for which the Group receives consideration from customers in advance and recognizes revenue overtime.
Revenue recognized for the year ended March 31, 2023, that was included in the balance of contract liabilities atthe beginning of the year ended March 31, 2023, was ¥101,004 million ($753,761 thousand). Revenue recognized
for the year ended March 31, 2023, from performance obligations satisfied (or partially satisfied) in previous periods
was ¥2,860 million ($21,343 thousand).
Revenue recognized for the year ended March 31, 2022, that was included in the balance of contract liabilities atthe beginning of the year ended March 31, 2022, was ¥108,098 million. Revenue recognized for the year ended
March 31, 2022, from performance obligations satisfied (or partially satisfied) in previous periods was ¥2,756 million.
(b)Transaction prices allocated to remaining performance obligations
The aggregate amount of the transaction price allocated to the remaining performance obligations as of March 31,
2023 and 2022, was ¥163,130 million ($1,217,388 thousand) and ¥166,995 million, respectively. Such remaining
performance obligations were mainly associated with Shinkenzemi and Kodomo Challenge in the correspondence
course business and residential care services in the nursing care and childcare business.
The aggregate amount of the transaction price allocated to the remaining performance obligations associated with
Shinkenzemi and Kodomo Challenge as of March 31, 2023 and 2022, was ¥81,468 million ($607,970 thousand) and¥86,073 million, respectively. Approximately 90% of the remaining performance obligations are expected to besatisfied within one year, and the rest within a maximum of three years. The aggregate amount of the transaction
price allocated to the remaining performance obligations associated with the residential care services as of March
31, 2023 and 2022, was ¥60,598 million ($452,224 thousand) and ¥57,727 million, respectively. Approximately 70%of the remaining performance obligations are expected to be satisfied within three years, and the rest within amaximum of six years.

Note 17.

ADVERTISING COSTS

Advertising costs charged to income were ¥27,520 million ($205,373 thousand) and ¥33,445 million for the years
ended March 31, 2023 and 2022, respectively.

Note 18.

RESEARCH AND DEVELOPMENT COSTS

Research and development costs charged to income were ¥1,648 million ($12,299 thousand) and ¥1,280 million forthe years ended March 31, 2023 and 2022, respectively.

- 30 -

Note 19.

INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in theaggregate, resulted in a normal effective statutory tax rate of approximately 30.6% for the years ended March 31,
2023 and 2022.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax
assets and liabilities at March 31, 2023 and 2022, are as follows:
Thousands ofMillions of Yen
U.S. Dollars
2023
2022
2023
Deferred tax assets:
Tax loss carryforwards¥ 20,223¥ 22,462$ 150,918
Depreciation
6,959
6,368
51,933
Advances received from nursing home residents
4,564
4,127
34,060
Provision for employees’ bonuses
2,449
2,451
18,276
Liability for retirement benefits
2,102
1,967
15,687
Trade accounts receivable
766
1,059
5,716
Long-term other payables
730
776
5,448
Loss on impairment of long-lived assets
708
609
5,284
Leasehold and guarantee deposits
678
636
5,060
Deferred consumption taxes
595
522
4,440
Inventories
569
288
4,246
Unrealized loss on available-for-sale securities
489
73
3,649
Other payables
456
557
3,403
Social insurance premium
377
369
2,813
Enterprise tax
320
319
2,388
Tax goodwill
235
251
1,754
Unrealized profit on fixed assets
187
253
1,396
Foreign tax credit carryforwards
165
1,231
Prepaid expenses
131
81
978
Loss on valuation of investment securities
102
142
761
Advances received
65
142
485
Others
701
619
5,231
Total of tax loss carryforwards and temporary differences
43,57144,071
325,157
Less valuation allowance for tax loss carryforwards(18,456)(20,854)(137,731)
Less valuation allowance for temporary differences(9,071)(9,049)(67,694)
Total valuation allowance(27,527)(29,903)(205,425)
Total
16,044
14,168
119,732
Offset with deferred tax liabilities
3,558
3,917
26,553Net deferred tax assets
Deferred tax liabilities:
Asset for retirement benefits
Intangible assets
Undistributed earnings of foreign subsidiaries
and associated companies
Unrealized gain on available-for-sale securities
Inventories
Others
Total
Offset with deferred tax assets¥ 12,486¥ 10,251$

93,179¥¥$15,970
5,687

2,140
762
563
289
76
399
4,229
3,558

2,051
810
787
275
144
446
4,513
3,917

4,201
2,157
567
2,978
31,56026,553Net deferred tax liabilities
¥
671
¥
596
$
5,007
Valuation allowance decreased by ¥2,376 million ($17,731 thousand) primarily due to a decrease in valuation
allowance for tax loss carryforwards of the Company.

- 31 -

The expiration of tax loss carryforwards, the related valuation allowances and the resulting net deferred tax assets
as of March 31, 2023 and 2022, were as follows:
Millions of Yen
After
After
After
After
1 Year
2 Years
3 Years
4 Years
1 Yearthroughthroughthroughthrough
Afteror Less
2 Years
3 Years
4 Years
5 Years
5 Years
Total
March 31, 2023
Deferred tax assets
relating to tax loss
carryforwards
¥ 57
¥ 95
¥ 155
¥ 202
¥
32
¥ 19,682¥ 20,223
Less valuation
allowances for tax
loss carryforwards
47
81
74
99
32
18,12318,456
Net deferred tax assets
relating to tax loss
carryforwards
10
14
81
103
1,559
1,767
March 31, 2022
Deferred tax assets
relating to tax loss
carryforwards
Less valuation
allowances for tax
loss carryforwards
Net deferred tax assets
relating to tax loss
carryforwards

March 31, 2023
Deferred tax assets
relating to tax loss
carryforwards
Less valuation
allowances for tax
loss carryforwards
Net deferred tax assets
relating to tax loss
carryforwards

¥ 50

¥ 911

¥137

¥ 668

45

900

117

5

11

20

217

¥20,479¥ 22,462

130

208

19,45420,854

538

9

1,025

1,608

1 Yearor LessAfter
1 Yearthrough
2 Years

Thousands of U.S. Dollars
After
After
After
2 Years
3 Years
4 Years
throughthroughthrough
3 Years
4 Years
5 Years

After
5 Years

Total

$

$

709

$ 1,157$ 1,507239$146,881$ 150,918

351

604

552

739

239

135,246

137,731

74

105

605

768

11,635

13,187425¥$

For the tax loss carryforwards of ¥20,223 million ($150,918 thousand) and ¥22,462 million (amount multiplied byeffective statutory tax rate), deferred tax assets of ¥1,767 million ($13,187 thousand) and ¥1,608 million wererecognized as of March 31, 2023 and 2022, respectively. Net deferred tax assets relating to tax loss carryforwards
were determined to be recoverable as future taxable income was anticipated, and therefore, valuation allowance
was not recognized.

- 32 -

A reconciliation between the normal effective statutory tax rate for the years ended March 31, 2023 and 2022, andthe actual effective tax rate reflected in the accompanying consolidated statement of income was as follows:
2023
2022
Normal effective statutory tax rate
30.6%
30.6 %Per capita inhabitants tax
3.3
8.3
Expenses not deductible for income tax purposes
3.3
14.6
Amortization of goodwill
2.0
6.7
Foreign withholdings tax
1.7
3.3
Difference from burden of income taxes of foreign consolidated
subsidiaries
1.1
3.2
Equity in net earnings of associated companies
(0.7)
(0.6)
Foreign tax credit(0.7)
Undistributed earnings of associated companies
(1.5)
2.1
Income not taxable for income tax purposes
(2.1)
(3.5)
Change in valuation allowance(17.0)
155.7
Adjustment of loss on sale of investments in a consolidated subsidiary(62.6)
Adjustment of bad debt expenses(95.9)
Others
(1.5)
2.2
Actual effective tax rate

18.5%

64.1 %The Company and certain domestic consolidated subsidiaries started to apply the group tax sharing system at the
beginning of the year ended March 31, 2023, and account for and disclose the corporation tax and the local
corporation tax as well as their effect in accordance with the Practical Issues Task Force No. 42, “Practical Solution
on the Accounting and Disclosure Under the Group Tax Sharing System,” issued on August 12, 2021.
Note 20.

STOCK OPTION PLAN

In the year ended March 31, 2023, the Company recognized gain on reversal of stock acquisition rights of ¥78
million ($583 thousands) in other—net because 2,079 vested stock options were canceled.
The stock options outstanding as of March 31, 2023, are as follows:
NumberStock
Personsof Options
OptionGrantedGrantedDate of Grant
2015 Stock
3 directors
1,477
August 3, 2015
Option17 selected
1,873
employees
2016 Stock
3 directors
975
September 12,
Option2016- 33 -

ExercisePrice¥ 3,513¥ 2,639

Exercise Period
From August 4, 2017
to August 3, 2022
From September 13, 2018
to September 12, 2023

The stock option activity is as follows:
2015 Stock2016 Stock
OptionOption(Number of Stock Options)Year Ended March 31, 2023
Non-vested
March 31, 2022—Outstanding
GrantedCanceled
VestedMarch 31, 2023—Outstanding
VestedMarch 31, 2022—Outstanding
VestedExercised
Canceled
March 31, 2023—Outstanding

2,079

975

Exercise price¥3,513($26 )¥2,639($20 )

¥377
($3 )

¥277
($2 )

2,079
975

Average stock price at exercise
Fair value price at grant date

- 34 -

Note 21.

OTHER COMPREHENSIVE INCOME (LOSS)

The components of other comprehensive income (loss) for the years ended March 31, 2023 and 2022, were as
follows:
Thousands ofMillions of Yen
U.S. Dollars
2023
2022
2023
Unrealized loss on available-for-sale securities:
Losses arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal
Foreign currency translation adjustments:
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect

¥

(566)
(443)
(1,009)248$(7,478)(2,201)(9,679)(201)¥ (1,324)

¥

(761)

$

(9,880)

¥

¥

182
5,859
6,041
13

$

4,254

570
570

Total
Defined retirement benefit plans:
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Share of other comprehensive (loss) income in associates:
Gains arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal
Total other comprehensive (loss) income

Note 22.

¥ (1,002)(295)(1,297)
(27)

4,254

¥

570

¥ 6,054

$

4,254

¥

(40)
(440)
(480)
163

¥ 1,317
720
2,037
(633)

$

(298)
(3,284)(3,582)
1,216

¥

(317)

¥ 1,404$(2,366)

¥

6
(14)
(8)
4

¥

37
(8)
29
(5)

$

44
(104)
(60)
30

¥

(4)

¥

24

$

(30)

¥ 6,721$(8,022)¥ (1,075)

NET INCOME PER SHARE

The following table presents the bases for calculating basic net income per share (“EPS”) for the years ended March
31, 2023 and 2022. Diluted EPS for the years ended March 31, 2023 and 2022, is not disclosed because there wereno potentially dilutive shares outstanding.
Millionsof YenNet Income
Attributableto Owners of
the Parent

Thousandsof Shares

Year Ended March 31, 2023
Basic EPS—Net income available tocommon shareholders¥ 11,353

96,430¥ 117.73

Year Ended March 31, 2022
Basic EPS—Net income available tocommon shareholders¥

96,401¥ 11.04

1,064- 35 -

Yen

WeightedAverage
SharesU.S. Dollars

EPS$ 0.88

Independent Auditor’s Report
To the Board of Directors of Benesse Holdings, Inc.: