Benesse
Integrated Report2019Benesse Group Corporate Philosophy

bene (Well) + esse (being)

Benesse (Well-being)
What is “Benesse”? The heart of Benesse is enjoying the process of moving forward
step by step, with resolve, toward the realization of your dreams and aspirations.
Benesse empowers people to solve issues for themselves and to enjoy life to the fullat every stage by offering them the tools and support they need to create well-being.
We aim to be a globally respected corporate group that is both supported by andindispensable to its customers, communities, and society in general.

Benesse Group Principles
The Benesse Group is a global corporation with a people-oriented culture.
We believe that before we become good business people, we must live as
responsible members of society and that all of our actions should lead to Benesse(well-being), and we act in accordance with these principles.

Editorial Policy
We are publishing this report to let investors and otherstakeholders understand the Benesse Group’s medium- tolong-term strategies and initiatives for creating value, based on
our medium-term management plan, Transform and Grow
Benesse 2022, which we released in November 2017. In editing
the report, we have kept in mind the reporting frameworks of
the International Integrated Reporting Council (IIRC) and the“Guidance for Collaborative Value Creation” issued by the
Ministry of Economy, Trade and Industry (METI), limiting thecontent to items of particular importance
while striving to structure the report in a waythat is concise and easy to understand.
More detailed investor-relations
information and information related toenvironmental, social, and governance (ESG)
matters is published on our website.
• Period covered
The report covers primarily activities carried out in FY2018 (i.e., from April
2018 through March 2019), though it also includes some information on
initiatives from prior to that period and activities taking place after April
2019. The organization names and the job titles used are current as ofJune 22, 2019.
• Activities covered
The report covers the activities of Benesse Holdings, Inc., and its
consolidated subsidiaries. If the discussion at any point regards any
particular scope of coverage, this will be indicated on the pages concerned.
• Note regarding forward-looking statements
This report includes statements regarding current plans, forecasts,
strategies, etc. Any of these statements that are not historical facts are
forecasts of future performance; these statements are based on the
judgment that the Company has formed using the information currently
available, so they involve risks and uncertainties. Please be aware that, fora variety of reasons, actual performance may differ from current forecasts.

1

Benesse Integrated Report 2019

How this integrated report fits into our information reporting
Financial information

Non-financial information

Hard Copy

WebsiteVideos* Information about online and video media
can be found on the back cover

Benesse Integrated Report 2019
Multiple media formats are utilized according to
the content to facilitate understanding of
the Group’s strategies and initiatives
for creating value.

Data Book(hard copy)

Investor relations(website)

Corporate governance(website)

Corporate &Group information/
Sustainability
information (website)

CONTENTS
Benesse Group Corporate Philosophy & Principles

1

Global Kodomo Challenge

Steps in the History of Value Creation at Benesse

3

Nursing Care and Childcare

31

The Benesse Value Creation Model

5

Focus 3 Implementing the Service Navigation System

33

29

Part 1Our Vision and Business Strategies
Message from Management

8

Domestic Education
Focus 1 Shinkenzemi: Developing learning material
for English four skills

Focus 2 Classi implementation at
Noshiro Senior High School of Akita Prefecture

35

Other/New Business Domains

37

Part 3
Enhancing Operational Resources

Part 2
How We Create Value
Special Feature—Creating value inour education business

Berlitz

Dialogue Between Outside Directors

39

Corporate Governance42

Human Capital

51

Intellectual Capital

55

18

21
25

Social Capital

57

Communication with Shareholders and Investors

59

Environmental Conservation Efforts

60

Financial and Non-Financial Highlights

61

Group Information

63

27

Benesse Integrated Report 20192

Steps in the History of Value Creation at Benesse
As the challenges facing society have changed with the times, Benesse has continuously
strived to develop products and services that solve these problems in education and in life,
based on our core principle of well-being.

Benessebusinesshistory

Offering correspondence courses tailored toage, boosting children’s motivation to learn

Entering new businessdomains related to
globalization and aging
societies, seeking to
improve well-being
for everyone

1955

1989

1980

Company founded in
Okayama Prefecture
as Fukutake
Publishing Co., Ltd.

Begins publishing books andschool ID/rule booklets forjunior high school students.

For elementary
school students(now Shinkenzemi
Elementary School Courses)

Begins courses forpreschoolers in Taiwan

1990

Announces new
Benesse corporate
identity

Fukutake Publishing’s
main products at thetime of its founding

1962

1993

Begins simulated
exams for seniorhigh school students

First issue of Shinkenzemi
Elementary School Course(now Shinken Simulated Exams)

1988

1969

Begins correspondenceFirst issue ofcourses for senior
Seniorhigh school students Shinkenzemi
High School Course

For preschoolers(now Kodomo Challenge)

Enters thelanguage-education
business

Acquires Berlitz International(now Berlitz Corporation)

Begins pregnancy, childbirth,and childcare magazines
Tamago Club
Hiyoko Club(now Shinkenzemi SeniorHigh School Courses)

1972

Newspaper
advertisement
announcing Benesse
corporate identity

Set of learning materials forfirst issue of Kodomo Challenge

For junior highschool students(now Shinkenzemi JuniorHigh School Courses)

Children overseas
First issue of
Shinkenzemi JuniorHigh School Course

Targetinga wider rangeof customers

Infants
Elementary, junior high, and high school students
1955

3

Families

1975

1980

1985

1990

1995

Socialcontext

High economic growth

Advancement of globalization

Changes in
educationand living• Spread of higher education• Start of the Joint First-Stage Achievement Test (1979)• Increase in nuclear family households• Start of the National Center Test foruniversity admissions (1990)• Increase in double-income households• Aging society

Benesse Integrated Report 2019

Catering to diversified needs with our establishedmethods for more in-depth business(billionsof yen)Net sales¥600 billion 600
Growth target
projection for FY2022

1995

2006

2017

Listed on the Second
Section of the Osaka
Securities ExchangeEnters the
Preschool courses in China
prep-school business2018

Enters the nursing-carebusiness

2008

Changes name to
Benesse Corporation

500

New medium-term management plan,
Transform and Grow Benesse 2022

Begins courses forpreschoolers in China

Acquires Ochanomizu Seminar Co., Ltd.

Begins courses for preschoolers
in Indonesia

400

Next generation of
Shinkenzemi

In 1997, opens Benesse Home
Clara Okayama

Begins Shinkenzemi JuniorHigh School Courses + i

2009Shinkenzemi Junior HighSchool Courses + i

300

Adopts a holding-company structure
Changes name to Benesse Holdings, Inc.

Benesse Home Clara Okayama
Kadotayashiki, Okayama City

2014

2000

Listed on
the First Section of
the Tokyo Stock Exchange

Suffers a personal data breach

2015

200

Establishes Benesse Senior/Nursing
Care Research InstituteSeniors
100

0

2000

2005

2010

2015

2018

2020

2022

(Target)(Target)(fiscal year)

Toward a diverse, sustainable society• Education and entrance examination reform• Rise of the digital native generation• Increase in workloads

Benesse Integrated Report 20194

The Benesse Value Creation Model
We seek sustainable growth for both the Benesse Group and society by bringing people well-being throughour business and social activities, and continuously creating new value that helps solve social problems.

INPUTS
Business capital

Philosophy

Financial
capital
Total assets¥504.6 billion= well-being
Five business domains that
support the well-being of everyone

Shareholders’ equity¥174.0 billion

Domestic
Education (Japan)

Employees (consolidated)

20,000Intellectual
capitalSurvey reports

400

Social capital
Shinkenzemi enrollments
in Japan(including Kodomo Challenge)

2.62 million

Kodomo Challenge
enrollments outside Japan

1.27 million

Nursing home residents

16,000- English language becominga mandatory, graded subject
in elementary school- Beginning of education in
the basics of programming

Global Kodomo
Challenge- Lesson andlearning support

p.29• Diversificationof learning- Promoting active learning

Nursing Careand Childcare
p.31• Advancements indigital mediums

Berlitz• China’s growthand educational
challenges

p.35• More people whoneed nursing care
Other/New BusinessDomains• The nursery school
waiting list problem

p.37

Community initiatives
p.58
Benesse Foundation
for Children

Fukutake Foundation• Providing learning
opportunities to children• Creating environments forlearning with peace of mind

• Supporting art• Regional development

Strengthening corporate governancep.42

5

Benesse Integrated Report 2019

• Reforms to theeducation system- Reforms to the college
admission system

p.21

Human
capitalChanges in society• Greater language
learning needs due
to globalization• Larger economic
gaps between regions• Climate change

OUTPUTS
Value createdcourses• Correspondence
Shinkenzemi

university• Mockentrance exams

Shinken Simulated Exams

tests for• Proficiency
the four skills

Global Test of English
Communication (GTEC)of cram schools• Operationand prep schools

course• Correspondence
for preschoolers
Kodomo Challenge·Japan version·China version
residences for• Managing
the elderly

OUTCOMES
VisionFinancial targets
FY2022 (envisaged target)
Net sales¥600.0 billion
Operating income¥60.0 billion
Operating margin

10.0%
ROE

≥10.0%
p.10

Non-financial targets
Sustainability Visionof daycare• Operation
centers and afterschool
childcare centers• Berlitz language services• Learning throughout life
• Preparation for the needs ofa super-aged society• Sharing of knowledge with society

magazines• Informational
for pregnancy, childbirth,and parenting

and websites• Magazines
about pets

• Value co-creation
with communities• Creation of a healthy society
p.16

Benesse Integrated Report 2019

6

1

Part

Our Vision andBusiness Strategies
The Benesse Group engages in business activities andcommunity-based initiatives aimed at improving people’s
well-being, based on a vision and business strategies focused on
how society will continue to change in the years to come. Doingso, we will continue striving to create new value that delivers
solutions for customers and their communities.

7

Benesse Integrated Report 2019

Part 1 Our Vision and Business Strategies

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

Message from Management

Tamotsu Adachi
Representative Director, President and CEO

Pushing forward with business transformations forcontinued growth 10, and even 20 years into the future
FY2018 Earnings and achievements

Adapting to changes in the business climate togrow steadily in each segment
Our consolidated sales grew for the second consecutive year (+1.1% year-on-year) to 439.4
billion yen in FY2018, the first year of our five-year medium-term management plan called
Transform and Grow Benesse 2022. This may look like a small increase numbers-wise, but
I wish to point out that this total no longer includes sales figures (12.6 billion yen from theprevious year) from TMJ, Inc. which we sold off last year. This means that our otherbusinesses have compensated for that amount and more to produce this increase.
In terms of income, we posted increases in both operating income and ordinary
income, with 16.2 billion yen (+28.7%) and 12.1 billion yen (+31.3%) respectively. Net profit
may have decreased to 4.9 billion yen (-60.5%) but the main reason for the large decrease
was fallback after the extraordinary gain posted from the sale of TMJ, Inc. last year.
Looking back on FY2018, I consider it to have been a year in which both ourachievements and challenges came into clearer focus. I will go into more detail later
about the challenges that warrant immediate action, but I believe it is safe to say that theearnings of the group as a whole have grown because we have worked on initiatives ineach segment that are adapted to changes in the market and business climate.

Year-on-year changes in each segment
Net sales(YoY)

Operating income(YoY)

Domestic Education

5.5%

10.6%

Global Kodomo Challenge

8.1%

40.0%

Nursing Care and Childcare

Berlitz

4.6%

28.8%

4.0%

-¥700
millionBenesse Integrated Report 20198

Message from Management

Numerous changes are sweeping through the domestic education market in which
we do the bulk of our business in the Benesse Group. In addition to reforms of education
and university admission systems starting in 2020, these also include emphasis on thefour skills of English language proficiency (listening, reading, speaking, and writing),
accelerating the start of mandatory, graded English education in elementary schools, andgreater interest in making computer programming education compulsory. At the sametime, the rapid spread of digital learning through smartphones and tablets is causing
competition in the market to intensify.
With these changes taking place around us, we have actively extended our productand service offerings with the customer’s point of view in mind in domestic education,
including expanded adoption of the GTEC test for the four skills of English language
proficiency, while also successfully growing our core Shinkenzemi business and ourbusiness in school and teacher support. Tokyo Individualized Educational Institute andTetsuryokukai have also solidified their positions in the cram school industry. With use of
ICT on the rise in school settings, we added EDUCOM Corporation to the group in
January 2019 in order to leverage their strength in support systems for school affairs to
expand the client base of the Classi learning platform for schools.
Benesse Style Care operates in nursing care and childcare, another of our businesspillars, where steady increases in the number of our nursing and elderly homes plus
improvements to their occupancy rates have led to stronger business performance
amidst ever-increasing needs due to Japan’s super-aged society. However, the shortageof available labor in nursing care is now a major problem, and Benesse Style Care is no
exception. We began making advancements with better working conditions starting in2017 that have stabilized staff retention, but unfortunately there was an increase inturnover for some staff in the second half of last fiscal year. We are planning new
educational programs in FY2019, as we put systems in place that help us continue tooffer our occupants a high level of service.

Shinkenzemi enrollments
April 2017

April 2019

YoY difference

Change(Tens of thousandsof enrollees)(Tens of thousandsof enrollees)

Senior high school

15

16

15

(1)

(3.8)

(0.1)

Junior high school

40

42

42

(0)

(1.1)

0.1

Elementary school

116

120

124

4

3.3

0.8

Kodomo Challenge(Preschool)

74

79

81

2

2.7

0.5

245

257

262

5

1.9

0.4

Benesse Integrated Report 2019(%)

Change inmarket share(Tens of thousandsof enrollees)

Total

9

April 2018

(Tens of thousandsof enrollees)(%)

Part 1 Our Vision and Business Strategies

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

SloganTransform and Grow Benesse 2022

(FY2018–FY2022)

How we want the Company to be in FY2022• A reputation as Japan’s leading company for supporting rich lifestyles• Recover status as a top Japanese company that is universally trusted• Proud and motivated employees

Remain true toour commitments

Focus on strategy and execution

Focus on growth

Propose and execute specific strategies to deal withchanges in business environment

Grow existing businesses further and venture into new domains

Phase 1

Phase 2FY2018–FY2020

Net sales(billions of yen)

Operating income

439.4

434.4

459.0

1.1%

12.6

28.7%

16.2
2018

Grow by capitalizing on reforms ofeducation and college admission systems
FY2018the Service Navigation System in•allIntroduce
nursing homes

Pursue structural changes
FY2018Other/New
Business Domains

Completely overhaul Kodomo Challenge•teachingmaterials in China•Launch Kodomo Challenge in Indonesia

Entrench our leading position in the market bycontinuing to offer high-quality services
FY2018

Berlitz

2019(target)2020(target)(fiscal year)2022(envisaged target)••

FY2019 onward Strategic shift of emphasis from“increasing enrollment” to “increasing profitability”
Expand Class Benesse through franchising andpartnerships with cram schools

Expand the Kodomo Challenge brand of courses
FY2018

Nursing Careand Childcare

60.0

20.0

Developing teaching materials for the four skills of•Englishlanguage proficiency (Shinkenzemi business)
Converted school affairs support system•provider
EDUCOM Corporation(school and teacher support business)

Global
Kodomo Challenge

600.0

35.0

2017

Domestic
Education

500.0

FY2021–FY2022

Enter into a master franchising•agreementwith CIIC Co., Ltd. in China•

FY2019 onward Revamp products in phases to cater tochanges in the Chinese market•

FY2019 onward Establish high-end nursing homes outside ofcentral Tokyo
Work toward becoming profitable andre-establishing growth•

FY2019 onward Bring Berlitz 2.0 to all regions

Utilize M&A to expand in new business domains

Benesse Integrated Report 201910

Message from Management

Measures to address challenges and achieve further growth

Exercising leadership to take on three challenges
In addition to the aforementioned achievements, we are also aware of our challenges.
The three major challenges which must be addressed promptly are as follows, and wewill exercise leadership in pushing forward with reforms.
Overhaul the Shinkenzemi businessOne of these challenges is to overhaul the Shinkenzemi business. The significant fall inenrollment suffered in this business following the leak of personal information in 2014
has bottomed out and has now turned toward recovery. In an effort to bolster our
product offerings, we rolled out Level-Specific English Four Skills Training materials in
FY2019. Our customers had a very positive response to how it enables individuals to learn
according to their skill level, from the basics all the way up to university entrance
examination material, regardless of their grade in school. Still, enrollment is not recovering
at the pace we had initially anticipated. As of April 2019, enrollment remained at 2.62
million, an increase of 50,000 year-on-year which fell short of our target of 2.74 million.
We found the biggest problem to be that when comparing the new enrollment tothe sales cost invested in attracting them, our sales efficiency is actually lower than
expected. In our medium-term management plan, we set out the goal of increasing
enrollment to 3 million by 2020, but if we were to lay out the sales costs to try to achieve
this number it would significantly damage our profitability.
Having reached this conclusion, we decided to shift our strategy from “increasing
enrollment” to “increasing profitability.” From now on, we will be seeking not only toboost new enrollment, but also to achieve steady growth in enrollment by emphasizing
retention and not engaging too heavily in inefficient sales.
We see overhauling the Shinkenzemi business model itself to be a pressing
concern. While Shinkenzemi is an iconic Benesse business, the market climate and thevalue that customers demand have been rapidly changing in recent years, and ourcompetitors have expanded their presence. As Japan’s birthrate has continued to decline
and we reach an age in which everyone can enter a university, student types havediverged faster than we expected into the extremes of children who aim high and work
hard at their studies, and children who do not. We now need an approach tailored toeach and every child, utilizing the respective characteristics of paper and digital
mediums. As a result of these changes we have a strong awareness that we cannot

From increasing enrollment to increasing profitability
Accommodating the rapidly changing
needs of our customers,
with a commitment to boosting member satisfaction

11

Benesse Integrated Report 2019

Part 1 Our Vision and Business Strategies

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

simply keep doing things the way we have before. Therefore, we will begin working on
drastic reforms now with medium- to long-term growth in mind.
When I assumed the role of president two and a half years ago, it was my belief that
we should get back to fundamentals and do business in a way that utilizes our strengths.
However, I strongly believe now that we will need to create new strengths in order toovercome the immense turbulence immediately ahead. I intend to pursue drastic reformsof our products and sales methods, and work toward reforming our business model itself.
New growth for Kodomo Challenge in China
Generating new growth for our Kodomo Challenge business in China is also a verysignificant challenge. Enrollment in China continued to increase in FY2018, but the paceof this growth has slowed down compared to the roughly 20% year-on-year growth we
experienced several years ago. One reason is that we stopped expanding the regions
where the service is available, but that was not the only reason. Our analysis shows
another major reason was that we lagged at updating our products.
As backlash to overbearing emphasis on studying for entrance exams(examination-oriented education) starting in early childhood in China, the country is now
turning to the importance of developing a variety of qualities and human character traits
in children (quality education). Benesse is focusing on quality education utilizing Shimajiro(marketed in China as Qiaohu) just as we are doing in Japan, and response has been positive,
but on the other hand we believe that we also have to satisfy the needs of education-conscious
customers. Utilizing the expertise and digital technologies we have accumulated inJapan, we will develop educational materials catered to both examination-oriented andquality education, giving ourselves new strengths in Kodomo Challenge.
We already initiated reforms geared toward generating new growth last year,
completing a full overhaul of our products for prekindergarten courses (for ages between
7 and 35 months old) while bolstering efforts in E-commerce channels. As a result,prekindergarten course enrollment in April 2019 was 6.6% higher than the previous year,
and our retention rate had also increased by 6.1%. Going forward we are planning twophases of reforms to drastically restructure our business model in China withmedium-term growth in mind.

Future strategy for Kodomo Challenge in China
FY2021 onward•Drastically revise products and services targeting kindergarten children- Redesign products as more learning-oriented- Examine digital, classroom, and online applications- Proactively leverage partnerships with other companies

FY2019 to FY2020

FY2018•Speed up product revisions to reflect market changes•Develop products and services that meet the needs of education-conscious customers•Broaden customer contact channels by promoting the brand•Further expand E-commerce sales to 15% of total sales by FY2020•Revised prekindergarten courses (for ages between 7 and 35 months old)
•Bolstered E-commerce sales channels
Benesse Integrated Report 201912

Message from Management

For the first phase we plan to completely revise our products according to changes
in the market over the next two years. We will develop products and services foreducation-conscious customers, broaden customer contact channels by promoting thebrand, and expand our E-commerce channels even more. Then, for the second phasestarting in FY2021 we will drastically reconceptualize our courses for kindergarten
children according to the nature of the rapidly changing market in China.
Education-conscious customers in China have even more intense needs than in Japan.
We will re-accelerate growth by thoroughly understanding and catering to their needs. In
a way, we see this is a topic of even greater urgency than overhauling Shinkenzemi.
Reform our Berlitz business
Another challenge is to reform our Berlitz business. Net sales for Berlitz in FY2018 were
down 4% from the previous year, producing deeper losses with an operating loss of 4.7
billion yen. The main reasons were declines in the number of lessons in language services(BTS) and the number of students in our support for study overseas (ELS). In addition to
declining revenues, restructuring costs were also one of the reasons for lower
profitability. Of course, we naturally expect to see improvement effects from therestructuring, but those effects have not yet become apparent.
We believe that reforming the cost structure and transforming the products andbusiness operations are issues that require urgent action within Berlitz. Since the market
is steadily growing in Japan but there are various challenges standing in the way in othermarkets, we are pushing forward with major structural reforms to morph Berlitz into an
entirely new company.
In terms of products and services, we are working to develop a new program aspart of a company-wide reform project called Berlitz 2.0. This is an entirely new style oflanguage learning program in which online lessons and e-learning are made available inaddition to the traditional face-to-face classroom lessons, organically combined with thelatest in digital learning material based on Berlitz courses of study. Connecting teacherswith students through smartphones and computers makes it possible to utilize thehigh-quality language learning programs of Berlitz anytime, anywhere in the world.
Since no other industry players are providing high-quality services like theseworldwide yet, we expect that the top line of Berlitz could grow again substantially ifthese efforts are successful. With soft launches currently under way on a regional basis,
we plan to fully roll out these services to all regions around the end of the year.
Reforming the business of Berlitz means not only changing up the products but
reforming the awareness of its employees as well. In May of this year we held a meetingwith on-site staff at the head office of Berlitz in the US and found that the people
currently in charge there are very highly motivated, with infectious ambition. The people
they hired to lead their digital marketing are also extremely talented, with experience
working in digital marketing for cutting-edge companies at the forefront of digitaltechnology. They have already begun producing tangible results.
We must successfully achieve genuine transformation in response to the threechallenges above in order to keep Benesse growing into the future. Internally we arealso taking every possible opportunity to spread the awareness of 2019 being a“year of transformation.”

Berlitz employees

13

Benesse Integrated Report 2019

Part 1 Our Vision and Business Strategies

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

Leveraging our advantage in collective capability
to aim beyond our existing business fields andcreate value post-educational reforms
Medium- to long-term growth

Leveraging our collective capability togenerate new forms of education
Expanding our main business in domestic education is essential for the Benesse Group toachieve medium- to long-term growth. With major changes sweeping through Japan’s
educational system, we will need to provide new services in each segment that cater to
new demand. We know that this is not something we can accomplish simply byextension of our existing business operations. We need to make full use of the advantage
Benesse has in collective capability to create new forms of education with medium- tolong-term growth in mind, and we need to start doing so right now.
One path forward is developing the four skills of English language proficiency. We
have already rolled out Level-Specific English Four Skills Training materials in Shinkenzemi
and in school and teacher support. We are expanding our curriculum for the four English
skills in cram schools as well. In this sense the four skills of English have an impact acrossall our business segments.
We also see tremendous potential in new business utilizing digital data. These
initiatives leverage the vast data owned by Benesse, with our broad customer base.
Another path forward is supporting education for companies and working adults.
As Japan’s population ages and birthrate falls, we will bolster our approach to theeducational and learning needs of working adults. While we already provide some
services in this field, we are working toward creating and providing highly-marketablecorporate curriculum based on an online education program for individuals which we aredeveloping jointly with Udemy in the United States.
We are also working on organization-wide projects geared toward creating new
business. As an example of this, in our “Future Learning Project” (“Kore-mana”) we arereviewing the possibility of establishing new next-generation learning services that takeplace outside of school, and we have begun research on the topic of developing
products for STEAM education.
Wide-ranging initiatives such as these can only truly be achieved by a company
with the collective capabilities of Benesse, which can operate in fields ranging fromcorrespondence courses to elementary, junior, and senior high schools, cram schools,
universities, and even education for working adults.

Bolster our non-financial assets

Integrating our accumulated knowledge andexpertise into digital mediums
Our greatest strength at Benesse is the capability of our human resources, which is whatfuels our growth. I have been continuously conducting round-table discussions, visiting
different departments on a regular basis to share thoughts with our employees in their

Benesse Integrated Report 201914

Message from Management

workplaces. In these discussions, our team members in school and teacher support haveshared very serious opinions on the topics of how education should be conducted inJapan going forward, and how to give tangible form to educational goals in the classroom.
The same is true in our nursing care and childcare settings. It truly struck me that every
day these people are continuously asking themselves what they can do for children, what
they can do for seniors, and what they can do for the future of Japan. This high level ofmotivation is the source of Benesse’s strength. It is also what enables us to provide thehigh-quality services we are known for in educational and nursing care settings.
However, when thinking about sustainable growth going forward, we cannot
assume that the knowledge and expertise we have accumulated in educational andnursing care settings will be enough. This is where possibilities such as so-called “digitaltransformation” come into play, integrating our products and services with digitaltechnologies. I believe that this is something we need to be aware of in our overall
strategy for the Benesse Group and all aspects of our business. With this in mind, I havebeen vigorously spreading the message throughout the company that “if we can’t workwith digital, our company will not survive.”
Taking that into consideration, what our Group needs more than anything rightnow is human resources who not only possess knowledge and expertise in education,
nursing case, and our other business areas, but who are also highly motivated and haveskills in digital technology. Under the leadership of the Group Digital Division establishedin January of last year, we launched an initiative to educate employees that embody the
Benesse philosophy so they can also be strong in digital. Doing things this way may takea little time. However, rather than simply relying on outside players, I believe this path will
surely give us more of the human resources that Benesse truly needs.
I also think that we need to build mechanisms that help our staff stay highly
motivated and successful in nursing care, where it has become particularly difficult toacquire human resources. Specifically, we will establish internal certifications for the
Benesse Method which could be considered the fruit of our expertise in nursing care,while also creating specialized career paths, and establishing mechanisms to pay
remuneration that is commensurate with skill improvements. This will ultimately boost
our service level while at the same time improving our retention rate.
Another important human resources topic is developing the leadership for the
future of the Benesse Group. In the next generation leadership development project that
we launched last year, we provide leadership training to around 20 selected executive
management candidates from each department every year. Additionally, the Benesse
University development program for young employees which we also launched last year
is still going strong.
Furthermore, the Benesse Group also carried out a major non-financial initiativewith the establishment of our Sustainability Vision in January 2019. The purpose of thisvision was to clearly demonstrate to everyone both internal and external that our group

What can we do for the future of Japan?
The source of our strength is
the motivation each of our employees has
to keep asking themselves this question each day
15

Benesse Integrated Report 2019

Part 1 Our Vision and Business Strategies

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

Sustainability Vision of the Benesse GroupWe are committed to contributing to society now and in the future through all of our business activities and interactions with individuals, communities, andsociety by taking a fresh people-centered approach to all kinds of social issues and putting into practice the “Benesse = well-being” corporate philosophy in orderto create a sustainable, affluent world in a society where change is the norm.

Learning throughout life

Embracing the concept of joyful learning,
we will deliver high-quality learning for all generations in Japan, Asia, and the rest of the world.

Preparation for the needs ofa super-aged society

We see meeting the needs of a super-aged society as an “eighteenth goal” to go with the 17 SDGs,
and we will lead the world in providing supportive nursing care services for all.

Sharing of knowledge with society

We will share our experience and knowledge with society and work with
our partners to generate “well-being” in order to address the challenges that people face.

Value co-creation with communities

We will work with local residents to generate new value inlearning, culture, art, and other realms in order to build a more fulfilling society.

Creation of a healthy society

We will also actively develop business in new fields beyond education and nursing care thatwill be needed to generate “well-being” in the future.

is an enterprise that addresses social issues such as the SDGs head-on. Education andnursing care are both directly linked to social issues. Thus, expanding our businesses inthese areas will in and of itself contribute to solutions for these issues. In this sense, Benesse
can be considered a pioneer in sustainability. With this in mind, we have also established a
Sustainability Committee to be the organization that spearheads activities based on thesustainability vision. Going forward, the Sustainability Committee will be instilling this vision
throughout the company, while also clarifying specific key action items. We hope thecommittee can promote suggestions originating from the worksites, while also backcastingfrom our goal of what we aim to be in 2030 in order to clarify the key issues (materiality) that
we need to address.

Message to stakeholders

Challenging ourselves to transform,
with a sense of excitement and urgency
There were a number of circumstances arising in FY2018 that we did not anticipate at theoutset of the medium-term management plan, and as a result we lowered our target
operating income in FY2019 by 5 billion yen to 20 billion yen. First, I want us to achieve thisgoal with certainty, and then look to take on the next challenge.
For this next challenge we must not fail to take measures to address the issues thathave been identified and work as hard as we can toward transformation. We need to build
the foundation for new businesses that will be in place within two or three years and create
the future for Benesse that will continue for the next 10, and even 20 years.
As I mentioned before, FY2019 is a year of transformation for Benesse. With a sense of
excitement and urgency, we will push forward with these transformations.

Benesse Integrated Report 2019

16

Part

2

How We Create Value
The philosophy of the Benesse Group is to assist everyone whether
they are children, young people, parents, or senior citizens, to live amore fulfilling life. The Group has begun strategically creating newvalue in each of its business domains that provide services to people
over their whole lives, spanning from childcare to nursing care.

17

Benesse Integrated Report 2019

Part 1 Our Vision and Business Strategies

SpecialFeaturePart 2 How We Create Value

Part 3 Enhancing Operational Resources

Creating value in our education business

Capitalizing on Japan’s
educational reforms
and laying a roadmap
for the future
Hitoshi Kobayashi
Representative Director and Executive Vice President,
Benesse Holdings, Inc.
Representative Director and President, Benesse Corporation

Redefining Benesse’s mission while executing
growth strategies over three phases

From the first phase, we plan to strengthen the Group’s
established businesses to lay a foundation for the subsequent
phases. That will involve improving weak points and emphasizing
competitive advantages in each of those businesses. For example,
we must still regain public trust in the wake of a leak of customer
information in 2014. At the same time, we will work to expand ourClass Benesse courses in the Area and Classroom Education
Business and promote our mock university entrance exams forhigh schools. In the second phase, we will aim to capitalize on
opportunities for growth triggered by the major changes in theindustry, particularly educational and college admission system
reforms set to go into effect from 2020, and gain a foothold in
new markets by developing highly competitive products,
services, and businesses that make use of the Group’s collective
capabilities. In the third phase, from 2024 and beyond, we will

For the Benesse Group to realize sustainable growth in the future,
it will be essential to restructure the education business, which isone of its core businesses. Education in Japan is currently
undergoing rapid changes. Amid declining numbers of children
and school enrollment, there is a widening gap between students
who strive to enter scholastically competitive high schools anduniversities and students who do not. Meanwhile, digitaltechnologies like AI and IoT have suddenly arisen as
game-changers in education.
As a provider of educational services, Benesse Corporation
has been at the forefront of Japan’s education industry for many
years. Amid major changes surrounding the industry, however,
we recognize that it will be increasingly
more difficult to maintain high levels of
Medium- to long-term strategies for education and lifestyle-related businesses
customer satisfaction just by offering theSales andprofitsame products and services that we do now
and did in the past.
3. Continue expanding into new
At the heart of Benesse is a deep
markets while tailoring establishedcommitment to the well-being ofbusinesses to the times
customers. I believe that by revisiting thiscommitment, asking again what we should
2. Expand into lifestyle-related
and can do for customers, and redefining
markets by capitalizing on educationand college admission system reforms
our mission, we will be able to create
genuinely beneficial products and services
1. Revitalize and acceleratethat satisfy our customers going forward.
growth of established core businesses
From that standpoint, we intend to execute
growth strategies for the education businessspanning over three distinct phases.
2017
2020
2022
2024

Fiscalyear

Benesse Integrated Report 201918

Special Feature—Creating value in our education businessexplore new challenges to pursue, formulate a new vision forachieving growth, examine new growth markets and refine theBenesse Group’s businesses.

Phase1
Building on results of mainstay businesses in thefirst year of the medium-term management
plan and setting goals going forward
The first phase of our strategies commenced in FY2018, and wehave already produced some promising results. Among them, thenumber of students taking our Global Test of English
Communication (GTEC) has increased substantially. Developed byour education business, the test evaluates all four skills of English
language proficiency (listening, reading, speaking, and writing).
The fact that it was approved for newly reformed college
entrance exams indicates its usefulness as an educational tool.
Furthermore, we have seen a large increase in the number ofcram schools that adopted our Class Benesse course, whichbegan as an initiative for improving Shinkenzemi lineup. This
success provides a basis for developing this business in the future.
On the other hand, our mainstay Shinkenzemi business did
not grow as much as expected. In light of those results, we willchange our basic strategies from FY2019. For example, instead of
running up excessive marketing costs for attracting newenrollees, we will work to boost profits by raising the customer
satisfaction of current enrollees.
As a matter of course, we will continue applying digitaltechnology to enhance our correspondence courses. Benesse has
been developing courses that use both paper and digitalteaching materials, but in recent years, the ratio of digital to paper
has been rising with each progressive school year.
The advantage of digital learning tools is that they can bepersonalized for each student. The time when a student turns on
the tablet computer, which problems he or she solves and thetime taken to solve them can all be recorded. Furthermore,
mistaken answers and other detailed study history data can beanalyzed, whether on an individual level or aggregate level
involving millions of users. That allows us to create appropriate
study questions and optimize learning methods.
One after another, competitors have recently been entering
the market for digital teaching materials. Nevertheless, Benesse
has an overwhelming edge in terms of assets, expertise, andknow-how. For instance, we have compiled massive databases oftest questions and study patterns derived from users over many
years. Applying AI to this big data is just one way through which
we can develop highly personalized services.
Digital tools alone, however, cannot provide children with awell-rounded education. People are essential for encouraging
children to study and monitoring their progress. In this regard, aswell, our education business has a long history of developing
people-oriented services. For example, we have tutors provide
written instructions and corrections on answer sheets submitted

19

Benesse Integrated Report 2019by correspondence course students, and also have graduates of
the courses provide mentoring to current enrollees. By
integrating the extensive know-how of these educators with
newly developed digital tools, I am confident that we can create
original services far beyond the capabilities of our competitors.

Phase2
Leveraging collective capabilities ingroup-wide projects aimed at capitalizing on
education and college admission
system reforms
In the second phase, our biggest challenge will be to develop
new products and services designed for all four skills of English
language proficiency. We will aim to make these products andservices more competitive in each of our language
teaching-related businesses, including our firmly entrenchedschool and teacher support business, as well as Shinkenzemi andcram school businesses. Indeed, in each of these areas, curriculum
covering all four skills will be central for achieving growth. Toward
this end, our correspondence course business released
curriculum designed to teach each of the four skills above thelevels taught in school in April 2019. Moreover, our Area andClassroom Education Business adopted an online speaking
program for school students that meets guidelines set by thegovernment, and developed an English speaking course for cramand prep schools. This course is also being offered to cramschools operated by other companies.
To promote this shift to curriculum covering the four basic
language skills throughout the company’s domestic education
business, we established an English curriculum development
division in FY2018. This, however, is just one example of ourrecent initiatives. Aiming to create new value, we are carrying out

Framework for teaching English language skills

Shinkenzemi
Business

Collaboration

Collaboration

School andTeacher Support
Business

EnglishCurriculum
Development
Division

Collaboration

Area andClassroom
Education
Business

Part 1 Our Vision and Business Strategies

numerous projects that bring together the expertise andknow-how of every relevant division. We are also accelerating
initiatives in other spheres of education, including thedevelopment of tests for evaluating children based on a broader
range of variables.
Along with these initiatives, we are also implementing
internal branding activities to promote Benesse’s mission toemployees group-wide. To create new value, it is essential forevery employee to fully understand and endorse the same ideals
and vision of the Benesse Group. By expressing the Group’s
mission and creating a simple story, we hope to motivate
employees to take action and consider how to contribute tocreating new value. New products and services foster customer
loyalty and increase the power of our brand, and when thatsuccess is celebrated within the Group, we can craft our next
story and move forward. I hope all employees of the Group will
share these ideals and vision with the goal of continuously
creating new value going forward.

Phase3
Envisioning a new way forward from 2024
and beyond with a commitment
to children’s well-being
In preparation for the third phase of our growth strategies, we will
invite key personnel and managers overseeing each business toparticipate in workshops aimed at envisioning the future of theBenesse Corporation.
The goal of our education business is to motivate children
to study and equip them with the abilities to learn and think
independently. I believe these abilities will be vital for leading an
independent life upon reaching adulthood, when many jobs will
be automated via digital technologies and AI, and also invaluablefor helping make society more sustainable. What Benesse can doto achieve this goal and what new businesses can be createdfrom 2024 onward will be discussed in the workshops.
As technological advancements reshape society, the STEAM
educational approach of incorporating science, technology,
engineering, arts, and mathematics into curriculum has been
attracting attention. We are studying this kind of curriculum whileconsidering which learning methods will be most effective forPart 2 How We Create Value

Part 3 Enhancing Operational Resources

children in five to ten years. We are also studying methods foroffering education optimized for adults interested in recurrent
education and for people with disabilities. In addition, driven by ourcommitment to creating brighter futures for children from othercountries, particularly those in Asia, we plan to launch educational
services designed to raise the scholastic abilities of children who
aspire to work internationally, incorporating curriculum
developed for Japanese primary and secondary education.
Over many years, Benesse Corporation has been providing
services from the stages of pregnancy, childbirth and childrearing. In other words, we are there for our customers over their
entire childhood. By utilizing data derived from educational
services spanning across every stage of a child’s life frompreschool education to the time of entering college, it should bepossible to help that child thrive in the world as a young adult.
Benesse Corporation will strive to work alongside our customers
and support the well-being of each individual while aiming for
growth in the future.

Areas of focus for developing new businesses

1. STEAM-based education
2. Recurrent education
3. Education for people with disabilities
4. Global education for students in Asian countries

Benesse Integrated Report 201920

Overview of Business Segments

Domestic Education (Japan)
Domestic Education is the Group’s main business,accounting for more than 40% of consolidated sales.
We aim to use the educational and entrance-examreforms as an opportunity for further growth.

FY2018Net sales

43.7%

192.0 billion¥

Strengths• Customer trust built up over many years in the education field, with an overwhelmingly large customer base
• The largest business scale in the industry, and collective capability that covers schools from elementary throughjunior and senior high, plus extracurricular education for elementary, junior high, and senior high school students• Extensive educational knowledge from helping “bolster children’s motivation and ability to learn on their own” throughthe development of learning materials, entrance exam preparation, learning and career counseling, and more
• Diverse personnel and corporate culture that embody our customer-centric philosophy
Social Changes

Opportunities• Reforms to university entrance examinations andenaction of new educational guidelines• Progress in English four skills andthe accelerated start of English education• Change in parent attitudes due to larger numbers offour-year university graduates anddouble-income households• Larger disparities between schools, and between
the education level in different regions

Risks• Market stagnation and contraction due tothe decreasing birthrate• Intensifying competition from digital technology
companies entering the market, and increased
activity by competitors• Commodification of educational content andprice collapse due to the advancement ofdigital mediums

FY2020 Targets

Net sales CAGR 7%• Leverage the educational and entrance-exam reforms to push ahead withgrowth strategies in each business segment• Use our collective capabilities to promote the GTEC proficiency tests in the four English skills

21

Benesse Integrated Report 2019

Part 1 Our Vision and Business Strategies

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

FY2018 Results• Shinkenzemi total enrollment increased

steady business growth in school support,
and cram schools• Absorbed investments for bolstering Shinkenzemi

product offerings and for education reform-related
initiatives such as GTEC, and increased bothrevenues and profit

Net Sales & Operating Income
Net Sales

CAGR(billions of yen)

7%

250.0

182.0

200.0

Operating Income(billions of yen)

25.0

204.3

192.0

20.0

14.3

150.0

9.0

15.0

10.0

100.0

10.0

50.0

5.0

0

2017

2018

2019
(forecast)2020 (fiscal year)(target)0

Shinkenzemi Business
Enrollment increased despite price revisions
We will continue to grow profitability while
focusing on retention rate
Michiaki Yamamoto Corporate Executive Vice President, President of Zemi Business Company

FY2018 Results

FY2019 Initiatives• Average annual retention rate remained steady while• Shift strategy to focus more on profit growth rather than

new enrollment increased year-on-year while fallingshort of plan
• Released Level-Specific English Four Skills Training Page 25

increasing enrollment. Pursue customer satisfaction• Shift to digital products and services for moreindividualization

Highlights

Highlights

The release of Level-SpecificEnglish Four Skills Training

Improving the functions of Challenge Touch

In April 2019, we began offering Level-Specific English Four Skills
Training to Shinkenzemi enrollees in elementary, junior high, andsenior high schools. They appreciate how it allows them to learn thefour skills of English—listening, reading, speaking, and writing—athome, in a balanced manner according to their own capabilities.

An increasing number of users are utilizing Challenge Touchdedicated learning tablets to take Shinkenzemi Elementary School
Courses. This method is boosting lesson completion rates and overall
scores by taking advantage of the digital medium to get them to try
again at solving previously attempted problems, which is essential
to retaining what is learned. In 2019, we also added the Double
Try Again function, which allows students to try solving important
problems again at certain intervals. Enhancing the learning effects
of enrollees will lead to further improvement in retention rate.
Correct answers
increased by

12%** Based on average high scores ofmonthly tests in four subjects
Compatible with your own computer or smartphone in addition to dedicatedShinkenzemi tablets, making it possible to study on your own anywhere, at any time
Challenge Touch helps improve retention rate

Benesse Integrated Report 201922

Overview of Business Segments | Domestic Education (Japan)

Highlights

Prep & Review App makes effective use of students’ free time
We are focusing on developing smartphone-based learning for our
Shinkenzemi high school courses. In April 2019, we released thePrep & Review App, an effective tool that students use during their
free time. Not only does the app support efficient investigative
learning for preparation, review, and homework involving the
textbooks and other materials that students use at their schools,
but it also offers video lectures that offer deeper understanding of
the problem solving process. We put ingenuity into designing thisapp to adapt to the lifestyles and learning needs of high school
students who are constantly busy with club activities and friends.

Attentive support is also available throughin-app questions to Shinkenzemi advisors
when information in the app is not enoughto help students understand. Simultaneously,
we now actively promote use of the app,including an introductory video being
streamed on YouTube as of June, produced
through collaboration with a video creator
who is a high school student and is popularwith junior and senior high school students.

Hold a smartphone up to
the page number in a
textbook or reference
book, and the optimal
content will be displayed

School & Teacher Support Business
Offering new forms of learning in educational settings bymoving quickly to prepare for the educational andentrance-exam reforms
Director and Corporate Executive Vice President,

Masaki Yamasaki President of School and Teacher Support Business Company
FY2018 Results

FY2019 Initiatives• GTEC test takers and schools using Classi steadily increased• Converted school affairs support system provider EDUCOM• Move quickly to prepare for the educational andCorporation into a subsidiary, concluded a strategic
partnership with Classi Corp.

Highlights

the businessHighlights

Further elevating our predominance inhigh school English education
The GTEC has been adopted as one of the private-sector proficiency
tests—for the four skills in English—that will be used on the uniform
test for university admissions to be implemented beginning in
FY2020. The test is gaining prevalence, now in use at approximately
1,850 senior high and other schools throughout Japan and withmore than 1.26 million total test takers per year. We will continue
fulfilling our responsibility as part of the entrance examination
process while helping children learn English they can actually use.
Number of students taking the GTEC
(i.e., the tests for junior andsenior high school students)*

entrance-exam reforms• Bolster our support for schools and expand

1.26 million

Launching computer programming education
support at 1,600 elementary schools
throughout JapanThe new educational guidelines that go into effect in FY2020
make computer programming a mandatory subject atelementary schools. While exploration into specific initiatives for
programming in the school setting will now begin, putting these
initiatives into practice involves a variety of challenges. One major
challenge is the importance of having people available to support
instruction. To help solve this,Benesse is combining in-housedeveloped original learningmaterial for programming with ICT
services deployed on-site tosupport high-quality programming
education at no cost for around
1,600 schools.
“Mirai Seed” dedicatedprogramming content

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 2018 (fiscal year)* In the case of a proficiency test with stand-alone score (including students who
were tested on only three skills)

23

Benesse Integrated Report 2019

Part 1 Our Vision and Business Strategies

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

Highlights

Helping to improve the quality of school education with school affairs support + learning assistanceClassi is a cloud-based learning assistance platform service that
supports the shift to ICT in school education in four areas—
adaptive learning, active learning, portfolio, and communication.
Classi currently has around 2,500 member schools andapproximately 1.16 million individual paid members. Efforts arebeing dedicated to offering functions in Classi that deliver what
the times require, such as the portfolio function, for themultifaceted and comprehensive evaluations that will go into
place along with the educational and entrance-exam reforms.
Classi Corp. has also entered into a strategic partnership with
EDUCOM Corporation, which provides integrated support
systems for school affairs in elementary and junior high schools.
This will allow us to deliver high-quality, highly-detailed school
guidance support by using the educational and learningassistance data of Classi in tandem with the various types ofschool affairs data of EDUCOM. Reducing the workload involvedin learning assistance and school affairs, we will help create
school environments where teachers spend more timeinteracting with the students while leveraging the strengths ofdigital mediums to create new forms of learning.
Classi and EDUCOM enter into a strategic partnership

Strength insenior high schools

Strength in elementaryand junior high schools

The largest-scale learningassistance platform in JapanThe largest-scale comprehensive
school affairs support system
in Japan

Area and Classroom Education Business
Solid growth in cram schools and better
English learning services
Corporate Executive Vice President,

Kenji Yamakawa President of Area and Classroom Education Business Company

FY2018 Results

FY2019 Initiatives• Numbers of students increased at Tokyo Individualized• Utilize our unique strengths to further expand

Educational Institute and Tetsuryokukai• New service Class Benesse combining Shinkenzemi with
face-to-face learning guidance expanded to 48 classrooms• Expanded the number of locations of BE Studio English
services for kids

cram schools• Increase the number of Class Benesse classrooms
through franchising• Collaborate more with other cram schools on
proficiency tests in the English four skills

Highlights

Increase the number of Class Benesse individual
instruction classrooms through franchising

Number of classrooms
by year80

80

The combined number of directly-managed and franchised Class
Benesse classrooms reached a total of 50 in June 2019. Combining
Shinkenzemi learning material with individualized face-to-facelearning guidance, Class Benesse provides individualized guidancewith the philosophy of educating children to learn independently.
Based on this philosophy we will work to expand franchises whileaiming to have 80 classrooms in operation throughout Japan byspring of 2020, with a focus on small class sizes that combine
Shinkenzemi and original learning material.

60

48

Actively
expand

40
20
0

2018

2019
(forecast)(fiscal year)

Benesse Integrated Report 201924

Overview of Business Segments | Domestic Education (Japan)

Yuto Ono

Arata Yamamoto

Manager, Information System
Department,
Benesse Corporation

General Manager, Philippines
Overseas Office,Benesse Corporation

Focus

1

Sachiko Mitsuhashi

Nobue Tominaga

Director, Product & Service
Development Department,
Benesse Corporation

General Manager, Learning
Materials Development
Department,
Benesse Corporation

Setting sights on the future of English language education reform

Shinkenzemi: Developing learning material for English four skills

Material to teach each child Englishthat is actually usefulSee articles featuring interviews with members of this project team, check here
https://www.benesse-hd.co.jp/en/ir/library/ar/2019/focus/index.html

Leveraging knowledge and expertise fromcorrespondence course support to adapt our materials
to changes in English language education
Education develops the skills that children will need to be successful
members of society in the future. Children living in this age of rapid
globalization and technological innovation have a greater need thanever for the skills to think on their own and collaborate with others
while carving out the future. Japan is reforming its education systemand entrance examinations in order to help students acquire these skills.
With more emphasis on this future vision, English language
education in Japan is now undergoing drastic change. The new
university entrance examination to be implemented in the 2021
academic year will comprehensively evaluate examinees on all four
English language skills, including listening and speaking in addition toreading and writing which the examination has tested up to now.
This is because Japan needs human resources who are just as capableof confident communication in English, with people from othercountries, as they are at communicating in Japanese.
In April 2019, Benesse released Level-Specific English Four Skills
Training, a digital learning material made continuously available to25

Benesse Integrated Report 2019

Shinkenzemi enrollees at no additional charge. Through Shinkenzemi,
Benesse has long been supporting correspondence courses which
are the cornerstone of self-study and self-learning. Some parents havevoiced anxiety and confusion about the changes in English language
education. Benesse developed English Four Skills Training in responseto their concerns.

Providing close support to each enrollee to
steadily raise their proficiency
Enrollees have different skill levels, and English Four Skills Training isdesigned to allow each of them to advance level-by-level startingfrom the level they can currently handle. The defining characteristic of
this training is that it provides a service broken down into 12 stages
according to the proficiency level of the enrollee, rather than learningmaterials according to grade level as the practice has been in thepast. The level assessment test determines the English level of eachenrollee and offers lessons that match their individual levels. Startingin 2020 elementary schools in Japan will begin teaching Foreign
Language Activities in third and fourth grades to familiarize students
with English and will begin teaching English as a subject in fifth andPart 1 Our Vision and Business Strategies

Twelve proficiency level training progression
Recommended
grade level

CEFR*1Elementary school

Junior high school

Senior high school

CEFR B1-B2

Proficiency level

Tremendous response immediately after release
Steady use by enrollees remains strong

Level. 12*2
Level. 11
Level. 9
Level. 8
Level. 7
Level. 6

CEFR A1

Level. 5
Level. 4
Level. 3[CEFR-J PreA1]

Level. 2
Level. 1

Twelve stepsof proficiency*1 European standards for measuring English language proficiency*2 Level 12 is in development, to be ready in 2020

sixth grades. Students will be graded in English as a subject. Due tovaried learning opportunities each student has had until now, rightnow English skill levels vary significantly even between students inthe same grade. For that reason, there is good reason to be optimistic
about lesson material tailored to different proficiency levels which
can effectively boost English skills starting with what students cancurrently handle.
Another feature of the learning material is its emphasis on
output. Lessons encourage students to organize their thoughts andideas then communicate them in their own words by enabling themto communicate back and forth with their instructors.
The learning cycle is also designed to enable enrollees tosteadily acquire greater English skills. They can set their own
achievement goals based on the results of the level assessment test,
and the cycle is supported by highly detailed suggestions about
when and how to use the learning materials. Designed to keep eachenrollee on track while learning on their own, follow-ups andre-assessments determine the optimal level to proceed according to
the progress and proficiency of the learner.
Other companies also offer English four skills learning materials,
but Benesse has its greatest strength in continuously being able tofacilitate the progress of each and every enrollee from elementary
school students through senior high school students with astreamlined service. Combining the knowledge and expertise we

Proficiency level assessment by checklist

Part 3 Enhancing Operational Resources

have built over the years in materials development and academic skill
assessment, we attentively guide enrollees along their learning paths.

Level. 10
CEFR A2

Part 2 How We Create Value

Response to English Four Skills Training immediately after its release
was tremendous. And while data on usage trends is still accumulating,actual usage has shown to be even greater than we initially expected.
One example is that over 50% of enrolled elementary school first
graders have started using it. Having analyzed the situation, we believe
this is a result of large numbers of parents coming on board in theleadup to English becoming a required subject.
At the same time, we have also come to understand whatchallenges we will need to overcome to further expand enrollment.
Since junior and senior high school enrollees have expressed desire
to use this training to prepare for English four skills proficiency tests
and for entrance examinations, we will be providing one-on-one
online lessons with foreign instructors who know how to address the
specific test format, timed according to the testing schedule. We will
also work on improving the assessment test by analyzing past data to
be able to produce highly accurate assessments even with a small
number of questions.

Seeking progress and evolution in the form ofEnglish learning material that is genuinely usefulBenesse has accumulated enrollee response data from having provided
Shinkenzemi and upwards of 900,000 online English conversation
lessons per year, in addition to a vast collection of learning history
including data of conversations with foreign instructors. Utilizing thisdata along with our customer base, we will aim to achieve further
progress and evolution. We will execute phased implementations oflearning through conversation with AI. Some children want to boost
their spoken English skills but find it difficult to engage in conversation
with foreign instructors. In cases such as these, we could reduce theirresistance to English conversation by having English-speaking AI
characters that can present the right topics for the enrollee.
We will enhance our learning materials for improving scores on
tests and entrance examinations, but that is only one side of things.
“Fostering the skills in children that will be useful for their future.” Basedon this strong conviction, Benesse will utilize the learning data it has
accumulated to create learning material to acquire useful English,
which takes four skills learning to the next level for all enrollees while
also being receptive to their opinions and those of their parents.

Setting goals for each test to enable structured learning

Online English conversation with foreign instructors fora fee is available, allowing for personalized instruction

Benesse Integrated Report 201926

Overview of Business Segments | Domestic Education (Japan)

Focus

2

Shoichi Ishikawa

Hideaki Yoshida

Classi Marketing Section,
School ICT Business Division,
Benesse Corporation/
Area Manager, Marketing
Department, Classi Corp.

Teacher and Career
Guidance Counselor, Noshiro
Senior High School of
Akita Prefecture

Setting sights on future education reform in JapanClassi implementation at Noshiro Senior High School of Akita Prefecture

Pioneering a new education format thattrains the ability to learn independently

The future of schools that aspire to be“regional prep schools”
As part of educational reforms, more universities will be requiring
students to take the written Japanese language section of theentrance examination in addition to an English four skills (listening,reading, speaking, writing) test starting with the entrance
examinations in the 2020 academic year. There will be more emphasisthan ever on students retaining what they have learned and being
able to produce output. Amidst this growing demand for new-age
education, more and more schools are implementing Classi, an
educational platform that leverages ICT (Information andCommunication Technologies). One such school is Noshiro SeniorHigh School, a prefectural preparatory school belonging to Akita
Prefecture in Northern Japan.
Noshiro Senior High School teacher Hideaki Yoshida, who is incharge of career guidance, shared why his school chose Classi,
explaining that, “For some time, we had been teaching students tothink on their own and incorporate what they learn from ‘inquiry’
within conversations. Classi was appealing because it includes
features to help accomplish that.”27

Benesse Integrated Report 2019

Using Classi to connect, reflect, andmutually improve“Inquiry” involves discovering problems on your own and training theability to learn while experiencing the process of solving those
problems. Starting in the 2022 academic year, a new subject under
the name “Tankyu” (inquiry) will be established among courses
taught in senior high schools in Japan. Noshiro Senior High School

Classi in use at Noshiro Senior High School
Using “portfolio” to improveself-management and offer
more diverse forms of guidanceOverall evaluation

Using “in-school groups”
for learning in groups andcollaborating with other schools

Using “questionnaire”
for students to evaluateeach other, share information

External collaboration

Facilitate interactionPart 1 Our Vision and Business Strategies

was designated by Akita Prefecture as a “model school for thepractice of inquiry-related activities” in 2017. The school used thisdesignation as an opportunity to get a step ahead and proceed withactivities such as inquiries for solving problems in the community.
“Since implementing Classi, we have been able to ‘connect,’ ‘reflect,’and ‘mutually improve,’ which are valuable aspects of conducting
inquiries.” (Mr. Yoshida)
The communication functions of Classi are useful for“connecting.” In addition to learning in groups within the school,these functions also enable us to collaborate with other schools togive students a deeper learning experience. For “reflecting,” we use
the portfolio function. Students can easily input and store their inquiry
findings and their own revelations through their smartphones, which
also makes it easy to reflect on what exactly they learned. Based on
this data, teachers can also give the proper advice, guidance, andevaluations. As for “mutual improvement,” in addition to the functions

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

I’ve already mentioned we also utilize the questionnaire and ballot
box functions. Questionnaires facilitate interaction, allowing students
to evaluate each other, share information, and even write theirimpressions of presentations made by other students.
Utilizing these functions, they have also started using Classi tokeep learning records for lessons other than the inquiries at theschool, and as a communication bulletin board.

Expand the horizons of student learning
Classi is an ICT tool that has evolved while helping to solve problems
in educational settings that are undergoing reform, serving as a closecompanion for teachers. Classi enables more comprehensive
collection of individual student data through linkage withassessments such as Shinken Simulated Exams and Study Support
which Benesse has long provided, making it a tool that supports
guidance for both education and career planning.
We are also reviewing new features that can be equipped tomake it easier for schools to communicate with each other to facilitateeven more collaborative education in the future. If we can achieve this,it will help rectify regional disparities in education and information.
We will continue to develop and evolve this educational
platform in order to unlock students’ potential and provide newforums for learning.
See more about this project in easy-to-understandformat with these videos and HTML articles
https://www.benesse-hd.co.jp/en/ir/
library/ar/2019/focus/classi.html

Keeping learning records andreflections via smartphone

Keeping records of realizations and lessons learnedin group work

TESTIMONIALS
Opinions and impressions of others can quickly beshared, allowing for more in-depth learning throughmutual interaction.

Ms. A, Teacher

Interacting with universities and other schools is easy,
making it possible to learn of different perspectives
and approaches to a variety of things and expanding
our horizons.

Teachers can access data recorded
by students at any time

B, Second Year Senior High School Student
Improve the quality of lectures withon-the-spot questionnaire totals

I want to use ICT to assist
schools and change
education in Japan.

Hisashi Inoue
Director, Classi Corp.
Director of Digital Business
Development Department,
Benesse Corporation

Our mission at Classi Corp. is to unlock the infinite potential ofchildren and transform learning. We are actively striving toprovide new forms to support in school education to makeschools the training grounds for students to thoroughly acquire

the abilities that future society will require.
One illustration of this is the wide-open learning environmentthat transcends individual schools which Classi’s group function
enables as we have seen at Noshiro Senior High School, includinginteraction with people in the community and professionals outside
the school, and collaborative learning with schools in other prefectures.
Receive feedback from peers. Go even more in-depth with new
realizations and studies that transcend school boundaries. We intend
to provide even more learning opportunities made possible through
ICT, and learning opportunities that Classi in particular can create to
unlock the potential in children.

Benesse Integrated Report 201928

Overview of Business Segments

Global Kodomo Challenge
Keeping our focus on Kodomo Challenge,a correspondence course for preschoolers that draws on
the expertise of Benesse, we are pushing ahead withexpanding this competitive brand globally.

FY2018Net sales

12.8%
56.4 billion¥

Strengths• Over 2 million members in Japan and around the world, plus the expertise of 30 years in businesseducating preschoolers• The brand power of Shimajiro, which is well-known and well-liked in Japan and internationally• Learning solutions for each stage of development• Solid customer base in business related to pregnancy, childbirth, and parenting
Social Changes

Opportunities• Changes in attitudes toward education and raisingchildren due to more mothers having graduatedfrom four-year universities and more
double-income households• Increasing perception that English should be taught
from early ages
• Trends toward making preschool education freeRisks
• Accelerated decline in Japan’s birthrate andstagnation in educational investment• Intensifying competition from the shift to digital• Accelerated intensity of educational consciousness
in China

FY2020 Targets

Net sales CAGR 10%• Focus on increasing the competitive edge and the number of enrollees in Kodomo Challenge,
both in Japan and abroad (primarily China)• Use global standard products and global alliances to expand

29

Benesse Integrated Report 2019

Part 1 Our Vision and Business Strategies

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

FY2018 Results and FY2019 Initiatives

Leveraged the strength of the Shimajiro brand to create
new value in preschool education domestically and abroad
Corporate Executive Vice President

Haruna Okada Director and President of Global Kodomo Challenge Company• Increased both revenues and profit, as total

enrollment grew both domestically and globally(+580,000 YoY), while changes in course prices in
China also had a positive effect

Net Sales & Operating Income
Net Sales

CAGR(billions of yen)

75.0

52.2

56.4

Operating Income(billions of yen)

8.0

58.7

6.0

50.0

2.3

10%

3.2

3.5

4.0

25.0

2.0

0

FY2018 Results

2017

2018

2019
(forecast)2020 (fiscal year)(target)0

FY2019 Initiatives

In Japan• Leveraged the Shimajiro brand to establish more contact

points with customers (films, a YouTube channel, Amazon
Prime Video, concerts, etc.)• Establish more contact points with customers
through cooperation with other companies

Abroad• Engineered a full product update for prekindergarten courses

for ages between 7 and 35 months old in China, enrollment
growth and retention rates were strong in April• Launched Kodomo Challenge in Indonesia• Began broadcasting animation and entered into a productcommercialization licensing agreement in Thailand

Highlights• Accelerate revisions to Kodomo Challenge
products in China• Use the production committee format to produce
and distribute Qiaohu (Shimajiro) videos in China• Expand E-commerce channels

Highlights

Leverage Shimajiro to establish more customer
contact points

Improving our products according to needs inJapan and abroad

The year 2018 marked the 30th anniversary of Kodomo Challenge.
The main character Shimajiro has been utilized in a wide range ofbusiness geared toward preschool-age children, frombroadcasted programs to concerts, movies, themed playgrounds,
and streaming apps. We strive to raise the recognition level ofKodomo Challenge overall while attracting quality customers byproviding diverse products and services that match the growthand development of children.

For Kodomo Challenge in China we pioneered the market in
online courses for preschoolers which had not previously existed
in the country and achieved significant growth while establishingpresence in more locations. However, that pace has slowed inrecent years as we have lagged at updating our products inaccordance with the new needs that parents have in China’s
rapidly changing market. In response, we fully updated ourmaterial for prekindergartens (ages between 7 and 35 monthsold) in April 2019. We are now seeing steady results, as enrollment
in April was 6.6% higher than the previous year, and retention rate
had also increased by 6.1%.
We are also updating our products in Japan, with sights set
on changes in the domestic market such as larger numbers ofworking mothers.

Collaboration with JAL for airplane wrap
advertisements and distribution of toysand merchandise by airline crews

Streaming English language andintellectual development appson Amazon FreeTime Unlimited

Benesse Integrated Report 201930

Overview of Business Segments

Nursing Care and Childcare
The Nursing Care and Childcare business constitutes thenumber-two pillar of the Benesse Group.
We are focusing on improving quality and reinforcing
our strategy of regional dominance.

FY2018Net sales

26.6%

116.9 billion¥

Strengths• Nursing home management from the resident’s perspective, seeking to “being closely tuned in to how people are”
• Benesse Methods: Systematized scientific approaches based on 20 years of practical knowledge
Examples: Dementia Care Method, pattern language, Service Navigation System• Improved, differentiated service quality through application of the method• Strategic hiring and human resources development• Daycare center and afterschool childcare club management from the children’s perspective,
with seeking to “help children grow as their own unique individuals”
Social Changes

Opportunities• Increasing elderly population in big cities• More recipients of nursing care services covered by

Risks• Serious shortage of nursing care and daycare staff• Escalating building and construction costs,• New additional compensation conditions for• Intensified competition from the market entry of

nursing care insurance

nursing care workers• Children waiting for openings at daycare centers andafterschool childcare centers around Tokyoand shortage of usable land

large capital from other industries• Increasingly tight finances in social security

FY2020 Targets

Net sales CAGR 3%• More nursing homes, higher occupancy rates• Differentiate service quality by establishing Benesse Methods and deploying them organization-wide

31

Benesse Integrated Report 2019

Part 1 Our Vision and Business Strategies

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

FY2018 Results and FY2019 Initiatives

Achieve steady growth through differentiation created byfurther developing the Benesse Method
Director and Corporate Executive Vice President,

Shinya Takiyama President of Nursing Care and Childcare Business Company• Increased numbers of residents as nursing

homes increase• Increased revenue, maintaining occupancy rateover 95%• Significantly higher profit due to decreased labor cost

Net Sales & Operating Income
Net Sales

CAGR(billions of yen)

150.0

111.8
100.0

3%

Operating Income(billions of yen)

116.9

121.8

11.3

10.4

20.0
15.0

8.8

10.0

50.0

0

5.0

2017

2018

2019
(forecast)2020 (fiscal year)(target)

FY2018 Results

FY2019 Initiatives• Six more homes and residences for the elderly were

• Continue to build about 10 nursing homes annually• Establish high-end nursing homes in cities outside of

added• Recognized with an Information Technology Award for
the Service Navigation System, which exemplifies
Benesse Methods and enhances the value of services in
the nursing care setting Page 33

0central Tokyo• Continue to differentiate services by entrenching

Benesse Methods throughout the organization andmaintain a high occupancy rate
• Focus on planning new human resources systems
and training personnel, which includes verbalizing
our high level of expertise, and creating new
in-house qualification standards linked to salaries andjob positions

Highlights

Benesse Method childcare pattern language “words that continuously expand a child’s universe”
Following up on the Benesse Method: Tips for Shaping
Environments for the Elderly, Closely in Tune with How the People
Are which established patterns from successful examples ofshaping such environments in homes for the elderly, Benesse
Style Care has now released the Benesse Method: Words that
Continually Expand Child’s Universes. Using pattern language*,
this method establishes records of common language
supporting our business philosophy of “helping children
grow as their own unique individuals” in the practicalchildcare setting.
This method compiles seven things that have been highly
valued over 20-plus years in Benesse Childcare and verbalizes
them in the form of 40 tips. Sharing this knowledge openly andputting it into continued practice, we will add even more depth
to this Benesse Method going forward.
* A theory related to construction and urban planning which was advocated by
Christopher Alexander. This theory was utilized as the framework for verbalizing
the 40 tips

Words that Continuously Expand a Child’s Universe is a booklet offering a compilationof common language to improve childcare for children whose potential is as
endless as the universe itself and make their childcare more in-depth

Benesse Integrated Report 201932

Overview of Business Segments | Nursing Care and Childcare

The 2018 IT Awards organized by
the Japan Institute of Information
Technology (JIIT) recognized theService Navigation System as asystem that could change thefuture of nursing care and gave it
the “IT Business Award.”

Focus

Ken Iwaida

Takemasa Harada

General Manager, Service
Promotion Division
Executive Officer, Benesse
Style Care Co., Ltd.

Service Navigation Systems
Training Director, Tokyo Area
1 Business Division,
Nursing Care Area 2 Company,
Benesse Style Care Co., Ltd.

3

Setting sights on greater numbers of people who need nursing care

Implementing the Service Navigation System

Changing the future of the nursing caresetting with the Benesse Method

At the core of system development is the convictionthat nursing care is a creative line of work
In 2017, Benesse Style Care developed the Service Navigation System,a recordkeeping platform for nursing and caregiving that would
revolutionize the style of services provided in nursing care settings.
Developing this platform in-house, the development project was
launched in 2012 and after five years of repeated testing and validations
it was ready to fully go live. Currently the platform has been rolled out
to all of the company’s roughly 320 nursing homes throughout
Japan, with the exception of two Li-Re locations, and it is being used
for the services provided to over 16,000 residents (as of August 2019).
At the core of the Service Navigation System is the conviction at
Benesse Style Care that nursing care is a creative line of work. You
need to have specialized knowledge and skills to be able to work in
nursing care, and nursing and caregiving staff, care managers,
rehabilitation therapists, and other specialists form teams to create
the services that allow each of the residents to live in ways that suit
their own personalities. Because of their conviction to deliver suchservices, the greatest emphasis in development was not simply toaccomplish the goal of improved productivity, but rather to produce

33

Benesse Integrated Report 2019a tool that would enhance the quality of nursing care services.
The defining feature of the platform is that it executes PDCA
cycles to establish services that have never been provided before,
based on various resident care data gathered on a daily basis. As such,
the Service Navigation System really is a tool that amplifies thecreativity of nursing care staff.

Leveraging the realizations and actions of staff toimprove quality of life for residents
Nursing care settings have traditionally maintained recordkeeping
sheets for each floor, on which staff would write down the names of
the residents and things like what they ate and their water intake.
Because of that, keeping and checking the records consumed asignificant amount of time. The Service Navigation System centrally
manages all of this information for each floor and makes theinformation available for viewing and sharing at any time oncomputers and smartphones. Details of the care being provided canbe entered simply by touching the corresponding location on thescreen, and the status of residents is displayed in the form ofeasy-to-understand icons.

Part 1 Our Vision and Business Strategies

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

However, the purpose of this system is not simply to take workthat was analog and convert it to digital format. Rather, it aims toencourage staff to “realize” things and be the impetus for turningthese realizations into “actions.” Just as its name implies, the system isimplemented with the intention of guiding (= navigating) staff
toward exercising more creativity in their work. Staff can provide
services based on what the Service Navigation System informs them
about things like changes
in the weight of residents
over certain periods oftime, and points to beaware of when providing
care to them, thereby
improving their quality ofCare that should be provided is listed as icons
life (QOL).

occurrence of other accidents. The timing to perform procedures torenew nursing care insurance plans has also been made clearer. Since
the life circumstances of residents and the points to be aware of in
caring for them can now be recorded accurately and in detail, all staff
members can immediately share this information and use it to takeeven more appropriate action.
Of course, the system is also generating productivity andefficiency effects. Time and effort spent checking record sheets andreports has been reduced, while information is now shared andcoordinated more smoothly. Each staff member can now take thetime that would have gone toward these tasks and use it instead torevise care methods or spend more time with residents. This is how
services are being improved for the nursing homes as a whole.

New “realizations” are achieved through communication
within nursing homes

Benesse Style Care will continue working to develop and evolve theService Navigation System as a tool for seeking out ways to provide
nursing care services that are even more in tune with residents and cancontinuously support them in the lifestyles they want to live. For example,
we would like to work on connecting it to other IT solutions to improve
the accuracy and efficiency of nursing care operations, such as analyzing
accumulated data to find ways to reduce accident occurrences.
With our vision of leading the path to an ideal future for the nursing
care industry, we will set ourselves at the forefront of the industry by
developing, evolving, and utilizing the Service Navigation System.

Leading the path to an ideal future forthe nursing care industry

on timetables

Implementation of the Service Navigation System has brought about
big changes in the nursing care settings at Benesse Style Care. Thiscan be observed in how staff now communicate with each othermore actively than ever before, and in how the new realizations that
this leads to are being put into practice by each and every staff
member. The system also comes with a function to record and verify
future recurrence prevention measures step-by-step wheneveraccidents occur, which is also helping to pre-emptively prevent the

See more about this project in easy-to-understandformat with these videos and HTML articles
https://www.benesse-hd.co.jp/en/
ir/library/ar/2019/focus/service.html

Five characteristics of the Service Navigation System(1) Improved productivity (4) “Realizations” about residents(2) Compliance(5) Accident recurrence prevention(3) Information sharing
and coordination

Information sharing and coordination between different job types in the Service Navigation System

Nursing care workers

Familymembers

Nursing home
directors

Service Navigation
SystemManaging the entry of all
information pertaining
to residents

Care managers

NursesDoctors

Know the status of
all nursing homes

SupportCompany
Division

Supervise
Government

ReportFront desk tasks
Rehabilitation therapists
Smooth information sharing and coordination
during shift changes
Check and enter information
via smartphone

Benesse Integrated Report 201934

Overview of Business Segments

Berlitz
One of the largest language-education companies
in the world.
Under a new CEO, we are moving ahead withradical reforms.

FY2018Net sales

11.2%

49.2 billion¥

Strengths• 461 language centers in over 70 countries and regions worldwide• The Berlitz Method of learning a target language through immersion in life situations using that language only
Verified as effective with a 140-year track record of success in the world• Able to offer language learning through intercultural understanding• Extensive track record in language training for companies, schools, and public offices,
implemented at more than 4,800 companies in Japan and over 20,000 around the world
Social Changes

Opportunities• Language learning needs are increasing aroundthe world due to the globalization of business• More students going to study abroad as economies
of developing countries grow• Increasing needs for language learning and theintercultural understanding that accompanies it

Risks• Diversification and intensifying (price) competition in

products and services due to the shift to digital mediums• Intensifying competition from new entrants comingfrom sectors other than the existing education field• Increasing needs of customers who want to takelessons through more flexible methods

FY2020 Targets

Net sales CAGR 2%• Restore business performance by reforming the cost structure and transforming products
and business processes

35

Benesse Integrated Report 2019

Part 1 Our Vision and Business Strategies

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

FY2018 Results and FY2019 Initiatives

Putting the finishing touches on restructuring,
while pursuing initiatives aimed at growth
Curtis Uehlein CEO, Berlitz Corporation• Revenues decreased mainly due to less language

lessons taking place in Europe, and less Chinese
students going to study abroad• Profit significantly decreased due to an additionalrise in restructuring costs, resulting in a second
consecutive year of operating loss

Net Sales & Operating Income
Net Sales
CAGR(billions of yen)

60.0

2%

Operating Income(billions of yen)

51.3

49.2

15.0

49.4

40.0

10.0

20.0

5.0

0

(3.9)

(4.7)

2017

2018

0

(3.3)
2020 (fiscal year)(target)2019(forecast)

FY2018 Results

FY2019 Initiatives• Pushed through cost reductions with thorough• Enhance the product and solutions portfolio,

restructuring mainly at US headquarters and ELS centers• Performance within Japan was strong, including morebusiness with corporate customers• Launched the Berlitz 2.0 project to develop and launch new
products, improve business processes, and boost
satisfaction with the customer experience• Entered into a master franchise agreement with CIIC Co.,
Ltd. in China-5

including the launch of Berlitz 2.0• Upgrading operational infrastructure andoptimizing systems and processes• Improve business efficiency by franchising in

low-earnings countries and concentrating
operational resources in strategically important
countries• Develop marketing and optimize business processes

Highlights

Planning to roll out Berlitz 2.0 to
all regions around December 2019
Seeking to radically update our products, the goal of Berlitz 2.0 is
to maintain the positive aspects of face-to-face language learning
while allowing students to choose learning styles and content
that match their own schedules. While offering curriculum thatutilizes AI and voice recognition technologies to cater to various
language learning needs, we are also developing interfaces thatmake it simple for students to choose and schedule the lessons
they want to take.
As the only language services company to conclude a
global alliance agreement with Google, Berlitz is also harnessing
the world’s highest level of digital marketing skills.

Berlitz 2.0 overview

Improve products
and solutions

New Customer Experience
Innovate in marketing

Implement
new platforms

Benesse Integrated Report 201936

Overview of Business Segments

Other/New Business Domains
We aim to conduct a variety of businesses that help
make lives richer, and to establish new areas ofbusiness by means of M&As.

FY2018Net sales

5.7%

24.6 billion¥

Business Related to Pregnancy,Childbirth, and Child-Rearing

Lifestyle-Related
Business

Utilizing feedback from women who are pregnant or raisingchildren, we provide information and products that are
helpful to such women in their day-to-day lives.

We support day-to-day living by
providing lifestyle informationand forums for communicatingwith customers.

Tamago Club

Hiyoko Club

tamahiyo photo studio

THANK YOU!

Pet-Related Business
Benesse offers magazines, websites,
and more to make life with pets
more enriching.

DOG’S HEARTCAT’S HEART

Policies and Strategies Going Forward

Using M&As to create a third business pillar

37

Benesse Integrated Report 2019

The sort of“third pillar”
we areaiming for

Consideration criteria

During the five years of the medium-term management plan, toensure recovery in performance and enable the Benesse Group to
grow sustainably into the future, we intend to create a ”third pillar”
of business—following on our education business and our nursing
care business—by means of mergers and acquisitions. We aregiving consideration to going into new lines of business in health,
lifestyle, and other areas, where there would be high affinity with
our existing businesses, and the main target of these new lines ofbusiness would be working adults and healthy seniors.
The companies that we are looking for as potential M&A
targets would have operating margins of 10% or more—as arough guide—before amortization of goodwill, and the amountthat we currently foresee investing would be ¥50–100 billion.

Aiming to create new lines of business thatwould constitute at least 10% of both theCompany’s net sales and its operating incomein the Company’s FY2022 business portfolio

Area criteriaHigh priority given to consideration ofcompanies in the areas of health and lifestyles

Investment
criterion

Operating margin, before amortization of
goodwill, of 10% or more (as a rough guide)

Investment
amount¥50–100+ billion foreseen(Options such as joint investment with othercompanies are also under consideration)

Part

3

EnhancingOperational Resources
The Benesse Group has renewed its resolve to produce a high levelof economic and social benefits, under the banner“Transform and Grow.” As part of this resolve, the Benesse Group is
working to further enhance its human, social, and intellectual
capital that will drive the creation of value in the future.

Benesse Integrated Report 201938

Dialogue Between Outside Directors

Shinjiro Iwata

Ryuji Yasuda

Outside Director and Chairman of the Board of Directors

Outside Director

After joining Hitachi, Ltd., in 1972, Mr. Iwata served as CEO of Hitachi
Data Systems Corporation, executive vice president of Hitachi Global
Storage Technologies, Inc., and representative executive officer andexecutive vice president of Hitachi, Ltd. He has served as an outside
director at Benesse Holdings since 2014 and is currently the chairman of
the Board of Directors.

Mr. Yasuda joined McKinsey & Company, Inc. Japan, in 1979, after which
he served as a general manager of A.T. Kearney, Inc. In 2004, he becamea professor at Hitotsubashi University’s Graduate School of International
Corporate Strategy (currently the Department of International
Corporate Strategy in the Graduate School of Business Administration).
Since 2015, he has been an adjunct professor at the school while serving
as an outside director of Benesse Holdings.

Improving the efficacy of the Board of Directors
with a view to realize sustainable growth
Increasing opportunities for dialogue
with outside directors leads to a more
effective Board of Directors
Iwata Compared with 2014, when I was appointed as an outside
director, the way the Board of Directors operates and thecontent of our deliberations have changed considerably. When I
first joined the Board, our meetings lasted about one to one anda half hours, and sometimes discussions were not very
substantive. More recently, however, members of the Board aremuch keener to listen to the ideas of the outside directors andapply them in management.
Yasuda I joined the Board one year later in 2015, and since thattime, preparatory meetings have been held in advance of board
meetings, giving us opportunities to discuss various issues. At the39

Benesse Integrated Report 2019same time, the company’s expectations for outside directors
changed. In Board meetings, the president has been opening up
the floor for discussion after making his usual opening remarks.
He has been listening to the viewpoints of outside directors alongwith the input of board members who are directly involved inoperations, which has initiated a dialogue of ideas from both
inside and outside the company. It seems like the president has
been trying to raise the efficacy of the Board of Directors byencouraging all of its members to contribute a wide range ofviews and debate openly while explaining their objectives.
Iwata I used to think a lot about how to encourage the outside
directors to participate more in discussions, but now they offer
many ideas, so I never worry about that anymore. I imagine that theoutside directors feel at ease about participating more because thechairman, myself in this case, is also from outside the company.

Part 1 Our Vision and Business Strategies

Yasuda As the chairman of the Board, you take on the role of acompany chairman who is not involved in business execution.
You also place importance on having outside directors engage indialogue with the president and executive officers. I believe thathaving many opportunities for such dialogue will lead to a more
effective Board of Directors.
Iwata I agree, but if we look at the results of our annual evaluationof the Board’s effectiveness, improvements were made up to FY2017,
and then the results leveled off in FY2018. I think the results reflect
the initial awareness among board members of the need to
improve. If I am right about that, in retrospect, perhaps we shouldhave set new goals for improvement and raised the bar even higher.
Yasuda Another reason is that the Board of Directors deliberated
on many big issues three or four years ago, like strengthening thecompliance system, restructuring core businesses to boost
earnings, and monitoring the company’s financial condition.
Because improvements were made and everything has beengetting back on track, input from outside directors has, in fact,
decreased a little since then. Nevertheless, I hope that we outside
directors offer even more ideas than before about the Benesse
Group’s future.

Information sharing and training
create a firm basis for deliberations
by the Board of Directors
Iwata Outside directors now receive more information than in
the past, especially in meetings held in advance of board
meetings. We also regularly participate in various events andgatherings in order to get an inside look at the Group’s businesses.
Yasuda I have visited workplaces of all of the Group’s businesses
a number of times, and, as you would expect, I can learn morefrom talking with people in those workplaces than I do fromlistening to a presentation in the board room.

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

Iwata What impressed me most recently was an initiative in thenursing care business. It has developed a method for caring forpeople with dementia and other illnesses based on best practices
compiled from around 300 nursing homes. The head of thisbusiness is now talking about making this method open to theindustry, saying that Benesse can raise standards in the entire
nursing care industry while also taking the lead. I was very
impressed by that level of confidence and determination.
Yasuda Employees in the nursing care business are very
motivated, indeed. They independently decide on projects topursue and set up workshops to exchange ideas and shareexpertise. That demonstrates the powerful sense of mission they
have to help people. I think the same is true for employees
involved in the correspondence and classroom courses of theeducation business. The strong dedication they have to theirwork is very evident in their workplaces. Over the years, I havealways said that Benesse’s greatest strength is its humanresources. Realizing the capabilities of human resources,
however, is not just about assembling people with skills; passionis what drives those capabilities, and Benesse has many
passionate employees.
Iwata Officer study sessions provide a means of providing
information to outside directors. They follow board meetings, andinclude a presentation by the officer in charge of a business or
ongoing initiative. Requests from directors concerning mattersthey want to know more about, the feasibility of particularmeasures and so on, are drawn up based on board meeting
minutes. Then responses to those requests are prepared for the
study sessions. This procedure is a unique feature of thecompany’s corporate governance.
Yasuda It is important that we do not simply adopt externallydeveloped systems based on Japan’s Corporate GovernanceCode. Moreover, we cannot really get a true sense of a company’s
workings just by reading documents in the boardroom. In otherwords, the meetings with executives are an excellent means ofgetting the information we need.

Evolving discussions concerning
the Board’s diversity andsuccession planning
Iwata The five outside directors currently serving on the Board
each come from different professional backgrounds, and I think
this creates a good balance. Going forward, however, it will benecessary to invite new outside directors to the Board, so weshould begin discussing what kind of background and experience
we would like them to have.
Yasuda For Benesse Holdings, the composition of the Board of
Directors should not only be based on the diversity of the outside

Benesse Integrated Report 201940

Dialogue Between Outside Directors

Japan’s low birthrate, however, it will be necessary to determine
how to procure and use capital for incorporating digitaltechnology and establishing a new business as the Group’s third
pillar after the education and nursing care businesses.
Yasuda Asset replacement is an obvious means of ensuring
sustainable growth. While enhancing businesses that are alreadystrong, replacing businesses that no longer generate synergies
and investing in new products and services for which demand ishigh are essential strategies for realizing growth. Mergers andacquisitions are being considered as ways for establishing a third
pillar, so we can expect them to be discussed by the Board in
the future.

directors’ specialties, but also on the company’s long-term
strategies. That will mean appointing people who haveinternational business experience and solid expertise in digitaltechnology. Women should also be appointed as directors, as thecompany did this year.
Iwata Someone with global business experience, such as aformer CEO of an American company, for instance, could bring acompletely different dynamic to the Board. In some respects,
Westerners have very different approaches to work and personal
life than Japanese, but if Benesse is going to successfully compete
globally in the future, I think it will be necessary to gradually
incorporate elements of such approaches.
Yasuda Succession planning will also be important for thecompany’s future, and the Nomination and Remuneration
Committee has been leading discussions on appointing thepresident’s successor and grooming the next generation of
inside directors.
Iwata As you know, a leadership grooming program is being
considered and candidates are being interviewed. From this year,
all outside directors will serve as members of the Nomination andRemuneration Committee, so I expect more discussions of theseissues than in the past.
Yasuda The Board of Directors is also comprised of insidedirectors, so it will be a little tricky to determine how much of thedeliberations by the Nomination and Remuneration Committee
can be reported to it. Nevertheless, the company is certainly
taking succession planning more seriously, and is also operating
programs for training new leaders, such as the Benesse
University program.
Iwata Along with that, I believe the Board of Directors should
engage in more discussions about how to use capital. Up to now,
procuring capital has not been a major issue because thecompany receives admission fees from new enrollees ofcorrespondence courses every April, and then uses that cash over
the year. When the number of enrollees goes down due to41

Benesse Integrated Report 2019

Tackling issues with a long-term
perspective amid major changes
in the operating environment
Iwata If we consider the Benesse Group’s operating
environment, the markets for correspondence courses and schoolsupport services are shrinking due to the country’s declining
population. Consequently, improving capital efficiency will
become increasingly important in the future, and launching new
businesses will be essential. As these trends play out, I believe theBoard must debate on the future direction of the Group over the
next five and ten years.
Yasuda I completely agree. The education market is contracting
and, despite full enrollment at Japanese universities, the quality ofeducation in Japan appears to be lagging behind other countries.
At a time when major educational reforms will be needed inJapan, I think Benesse should rise up to the challenge ofenvisioning how it can contribute with an even longer term
perspective. The company is well positioned to do that because it
has a very clear raison d’etre as an education and nursing careprovider. Therefore, even if society changes, it should be obvious
how to decide on what needs to be done and what mission to
pursue next. For example, now that Japan is dealing with a rapidly
aging population, Benesse should be able to offer more services
related to nursing care, so we need to consider how to shift thecompany’s human resources in that direction.
Iwata That’s right, because improving education and helping theelderly live comfortably and securely will continue to bechallenges for generations to come. Recurrent education could
provide a way to bridge those challenges and meet growing
demand in the future. By responding to such wide-ranging issues
and needs of people and their communities, Benesse should be
able to create new businesses. As an outside director, I hope tohelp the company take on such challenges in the future.

Part 1 Our Vision and Business Strategies

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

Corporate GovernanceCorporate governance
The Company continuously appoints both directors in charge ofbusiness execution and multiple, highly independent outside
directors. This ensures that meetings of the Board of Directors
cover lively, multifaceted discussions that go beyond internal
circumstances, assuring that the supervisory function of the Boardof Directors is maintained and improved, and that the Company
also conducts effective audits by standing Audit & Supervisory
Board members who are knowledgeable about the Company, as
well as outside Audit & Supervisory Board members who areattorneys or certified public accountants.

Board of Directors
In principle, the Board of Directors meets monthly led by the
Chairman of the Board to deliberate on important matters for the
management of the Company and the Benesse Group, make key
management decisions, and supervise the business execution of
the operating companies. Since 2003, the Company has
appointed multiple outside directors. Five of the Board’s ten
directors are outside directors (four are independent outside
directors), and an outside director is Chairman of the Board.
Appointing multiple directors and multiple highly
independent outside directors, the Company assures the Board’s
supervisory function and executes business appropriately.

Nomination and Compensation Committee
The Company established the Nomination and Compensation
Committee as an advisory committee to the Board of Directors.
The chairman is an outside director and the majority of theCommittee’s members are outside directors. In the appointment
and dismissal of directors and of the director and president/CEO,the Committee deliberates and submits its opinion to the Boardof Directors, which makes the final decision.

The Committee also deliberates on the compensation
system for directors and submits its opinions on this to the Boardof Directors, and is delegated by the Board of Directors to decide
the compensation of individual directors.

Management Council
The Management Council generally meets monthly, chaired by
the president and attended by the executive vice president,
directors in charge, heads of companies, vice heads of companies,
those responsible for administrative divisions, and individuals
designated by the president. Council members share importantBenesse Group issues and information and deliberate on
important matters for the Group.

Audit & Supervisory Board
In accordance with the Code of Audit and Supervisory Board
Member Auditing Standards, the policy of the Audit & Supervisory
Board is to assume responsibility for establishing a good corporate
governance structure worthy of the trust that society places in the
Company, with emphasis on preventive auditing. The Company
also conducts effective audits via standing members of the Board
who are knowledgeable about the Company, and via outside
Board members who are attorneys or certified public accountants.
The Board meets once a month, in principle, and individual
Board members share their awareness of key management issues
by attending important management meetings such as Board of
Directors, Nomination and Compensation Committee, andManagement Council meetings, and by exchanging opinionswith senior management. Two standing members of the Boardand one part-time member also serve as auditors for major
subsidiaries while actively receiving verbal business reports fromoperating companies investigating business, and other tasks.

Chart of corporate governance structure

Independent & outside

OutsideInternal

General Meeting of Shareholders
Appoints

Appoints

Audit &
Supervisory Board

Board of Directors

Appoints
Nomination andCompensation Committee

Independent Auditors

ChairmanCEOManagement Council
Internal Auditing
Department

Directors in Charge
Company

Directors in Charge

Directors in Charge

Company(Company President)(Company President)

Subsidiaries

Subsidiaries

Administrative Divisions
Subsidiaries

Subsidiaries

Benesse Integrated Report 201942

Corporate GovernanceIn addition to appointing dedicated audit staff to enhance
its audit system, the Company also has the Benesse Group Audit
Committee (adding standing members of audit & supervisoryboards at subsidiaries) to strengthen cooperation among theGroup’s audit systems.

Improving the effectiveness of the Board of Directors
In FY2015, the Company began carrying out an annual assessmentof the Board of Directors. In FY2018, the Board administered aquestionnaire to all 14 Board directors and members of the Audit& Supervisory Board. The Board then analyzed the responses,
carried out self-assessment with regard to the Board’s
effectiveness, and deliberated concerning the results.
As a result of the deliberations, some suggestions weremade including for more substantial discussions on matters suchas capital policy toward achieving the objectives of the medium-term
management plan, but the Board of Directors overall was found tohave further enhanced its effectiveness, including significant

improvement over the previous year in assessments pertaining totraining and the provision of information to directors.
Items assessed in Board of Directors
effectiveness assessments(1) Overall effectiveness of the Board(2) Composition of the Board(3) How the Board operates(4) Quality of discussions in the Board(5) Training and the provision of information

FY2018 initiatives and future actions

FY2018 Initiatives

The following items were priority actions• Joint considerations with the Nomination and Compensation Committee about thegrooming of successors, and diversifying the composition of the Board• More extensive discussions on matters such as capital policy and business evaluationindexes from a medium- to long-term perspective• Have outside directors and outside Audit & Supervisory Board members engage inongoing dialogue with employees in the workplaces and provide them withworkplace-based perspectives and experiences of our products and services (hold officer
study sessions and provide opportunities to participate in success story presentationsorganized by each division)

Overview of the FY2018
assessment

The Board of Directors overall was found to have maintained a high level of
effectiveness, and corporate governance has been strengthened• [Significant improvement] Free, open, and constructive discussions are taking place thanks
to supportive practices such as briefing sessions, advance distribution of documents andother materials, and holding officer study sessions• [High level maintained] The Board has attained an appropriate composition, with half of its
members being outside directors boasting a variety of experience and expertise, and withthe chairman himself being an outside director• [Issues] More substantial discussions are desired on matters such as capital policy towardachieving the objectives of the medium-term management plan

Actions in FY2019

The following items are priority actions• Monitor the medium-term management plan
• Continue discussions on matters such as capital policy from a medium- to long-term
perspective, and make these discussions more extensive

Note: The questionnaire was administered from the end of March to mid-April, 2019.

43

Benesse Integrated Report 2019

Part 1 Our Vision and Business Strategies

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

Composition of directors and how they are appointed
The Company employs the following method of appointing
directors in order to ensure proper supervision over managementfrom the standpoint of achieving sustained growth for the
Benesse Group.

• Outside directors/independence• Number of Board members• Requirements of directors

No more than 10 directors.

The following requirements have been established for directors to
be able to properly handle the role.
1. Deep understanding and empathy for the corporate
philosophy of the Benesse Group
2. Outstanding leadership befitting of a manager
3. Outstanding character and insight, as well as mental andphysical health
4. Meets legal requirements for eligibility as a director• Diversity
The Board seeks to maintain a good balance among its directors,
appointing directors with diverse types of expertise andexperience without being too heavily weighted in any specificfield. At the Ordinary General Shareholders’ Meeting on June 22,
2019, the Company newly appointed a female to the Board, thus
ensuring diversity in terms of gender. The Board is also improving
the effectiveness of its supervision by appointing multiple outside
directors who have experience in managing companies or who
have high levels of insight and expert knowledge in sectors suchas global business and IT/digital, in which the Company aims togrow in the future.

In order to ensure proper supervision over management, at least
half of the Board is composed of outside directors, and at least
one-third are independent outside directors.

• Appointment process
The Nomination and Compensation Committee, in which thechairman is an outside director and the majority of the Committee’s
members are outside directors, deliberates on the nomination of
directors and submits its opinion to the Board of Directors, whichthen makes a final decision. This format ensures transparency,
fairness, and objectivity in the appointment of directors.

Expertise of Board of Directors and Audit & Supervisory Board members
Directors of
the Board

Management

Education

Accounting

Law

Nursing care

Global experience

DigitalTamotsu Adachi
Hitoshi Kobayashi
Shinya Takiyama
Masaki Yamasaki
Haruna Okada
Shinjiro Iwata
Kiyoyuki Tsujimura
Hideaki Fukutake
Ryuji Yasuda
Katsumi Ihara
Audit & Supervisory
Board members

Yoshinori Matsumoto
Naoto Saito
Eiichi Izumo
Miyuki Ishiguro

Benesse Integrated Report 201944

Corporate Governance

Officer compensation
The Benesse Group aims to achieve sustained medium- tolong-term growth for the entire Group. Our basic policy for thecompensation of directors (excluding outside directors) is toprovide incentive for sustained improvement of corporate value.
At the same time, compensation for outside directors iscomprised only of basic compensation, so as not to obstruct theirsupervision of management.

Compensation for directors is set to competitive levels incommensurate with the roles, skills, responsibilities expected of
directors who manage the Group, based on median levels foundfor Japanese companies of similar size using externally-conductedcompensation surveys as a reference. At the same time,compensation for Audit & Supervisory Board members is decided
through consultation with those members, and is comprised onlyof basic compensation.

Compensation system for directors (excluding outside directors)
Performance-linked Compensation

Fixed Compensation

Restricted Stock
Compensation

Basic Compensation
50–55%Bonus
35%

Set based on expectations for the role

Paid taking the Company’s businessperformance into account

10–15%

Compensation
linked to stock price

These are performance-linked bonuses that are paid based on the Company’s business performance in the fiscal
year, fluctuating within a range of 0 to 200 percent. Bonuses are comprised of three portions, (a) a portion linked to theperformance of the Company, (b) a portion linked to the performance of the business domain of the director, and (c) aqualitative evaluation portion. The ratios of these three parts for each director depend on whether the director is
responsible for a business domain, as well as their actual responsibilities and other details. The contributions ofeach director are then evaluated in many ways to determine the amounts of their bonuses.

Bonuses[Details of the performance-linked portions](a) The portion linked to the performance of the entire Company: This part is linked to the rate to which the consolidated performance forecast(consolidated sales, consolidated operating income) is achieved. Evaluation is performed according to a table created by the Nomination andCompensation Committee at the beginning of the fiscal year. (b) Performance of the business domain which the director is responsible for: This part islinked to the rate to which the performance targets (sales, operating income, Shinkenzemi and Kodomo Challenge enrollment in Japan, etc.) are achievedin the field each director is responsible for. Evaluation is performed according to a table created by the Nomination and Compensation Committee atthe beginning of the fiscal year. (c) The qualitative evaluation portion: This part evaluates the level or achievement at the end of the fiscal year relative
to qualitative targets for organizational contributions or brand enhancements which were set for each director at the beginning of the fiscal year. These
qualitative targets include specific efforts such as grooming successors and cultivating organizational culture. Evaluations of the rate to which thesetargets are achieved (performance) are decided by the Nomination and Compensation Committee after hearing the self-evaluation of each director.

Restricted stockcompensation

A restricted stock compensation plan was introduced in FY2017 to better link compensation to medium- tolong-term performance and as an incentive for directors to continuously improve corporate value, as well as tofurther promote shared values between shareholders and directors. The transfer restriction period is set at three
years, restricting transfers and other dispositions during this time. If a director (excluding outside directors) is foundby the Board of Directors to have committed a major violation of the rules of the Company during their term in
office, that director (excluding outside directors) may be ordered to return their stock compensation within thispredetermined transfer restriction period even if no longer serving as a director.

Total compensation by officer category (FY2018)
Officer Category
Amount of Compensation (millions of yen)
Basic Compensation
Amount of Compensation
by Type (millions of yen)

Stock Options*
Bonuses
Restricted Stock Compensation

Number of Eligible Officers

Directors(excluding Outside
Directors)

235
106
5
75
47
5

OutsideDirectors(excluding outside Audit &Supervisory Board members)

Outside Audit &Supervisory
Board Members

62
62
–
–
–
2

20
20
–
–
–
2

61
61
–
–
–
5

* The Company has no plans for new allocation of stock options to directors and Audit & Supervisory Board members.

45

Benesse Integrated Report 2019

Audit & Supervisory
Board Members

Part 1 Our Vision and Business Strategies

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

Reasons outside directors and Audit & Supervisory Board members were appointed
Directors of the Board
Shinjiro Iwata

Mr. Iwata has acquired a great deal of company-management experience and knowledge at global corporations in the telecommunicationsindustry. In addition, in his role as an outside director, he is contributing to improving the transparency of both the Company’s managerial
supervision and the decision-making processes used in managing the Company. For example, as chairman of the Board of Directors heconducts meetings of the Board, and as chairman of the Nomination and Compensation Committee he states his views without hesitation.

Kiyoyuki Tsujimura

Mr. Tsujimura acquired a great deal of company-management experience and knowledge at global corporations in the telecommunicationsindustry, and in his role as outside director he carries out appropriate supervision of the Company’s management. At meetings of the Board,he draws on his experience and knowledge to offer opinions and recommendations in a forthright way regarding important questions
about the management of the Company.

Hideaki Fukutake

In his role as an outside director, Mr. Fukutake makes use of his experience as outside director of a major Group subsidiary and his
perspective as a shareholder to carry out appropriate supervision of the Company’s management. At meetings of the Board of Directors, hedraws on his experience and knowledge to offer opinions and recommendations in a forthright way regarding important questions about
the management of the Company. And as a member of the Nomination and Compensation Committee, he takes an active, vocal part inmeetings of the Committee, contributing to improving the transparency of the decision-making processes used in managing the Company.

Ryuji Yasuda

Mr. Yasuda has extensive experience, having served in roles such as management consultant at a global consulting firm, professor at auniversity, and outside director at another company, and has profound professional knowledge as well. In his role as an outside director, hecarries out appropriate supervision of the Company’s management. At meetings of the Board, he draws on his experience and knowledge
to offer opinions and recommendations in a forthright way regarding important questions about the management of the Company. And asa member of the Nomination and Compensation Committee, he plays an active, vocal part in meetings of the Committee, contributing to
improving the transparency of the decision-making processes used in managing the Company.

Katsumi Ihara

Utilizing extensive company management experience and knowledge gained at global corporations, Mr. Ihara has been judged as capableof exercising appropriate supervision of the Company’s management in his role as an outside director.

Audit & Supervisory Board members
Eiichi Izumo

Mr. Izumo, formerly a partner at Deloitte Touche Tohmatsu LLC, possesses the professional knowledge of a certified public accountant andexperience acquired working with many different companies in various roles as an auditor and consultant. Utilizing this knowledge andexperience, he actively provides opinions and recommendations on important matters for the management of the Company in the Board of
Directors and the Audit & Supervisory Board.

Miyuki Ishiguro

Ms. Ishiguro, a partner in the law firm of Nagashima Ohno & Tsunematsu, has a great deal of practical experience and excellent ability andinsight in the field of corporate legal affairs. She also draws on her experience as an outside director at other companies to participate in theauditing work of the Company from a neutral and objective perspective.

Criteria for Independence of Outside Directors and Outside Audit & Supervisory Board members
The Company shall determine that the Company’s Outside
Directors, Outside Audit & Supervisory Board Members and therespective candidates for those posts possess a high degree of
independence when all of the following criteria are satisfied:
1. The individual has not served as business personnel of the Company
or its Group companies (collectively “the Benesse Group”) in thecurrent fiscal year or the past nine fiscal years.
2. Individuals who have satisfied all of the following conditions (A)through (H) for the past three fiscal years:
A. The individual is not an entity for which the Benesse Group is a majorclient and does not serve as business personnel thereof.
B. The individual is not a major client of the Benesse Group and does notserve as business personnel thereof.
C. The individual is not a major shareholder (directly or indirectly holding avoting interest of 10% or more) of the Company and does not serve as
business personnel thereof.
D. The individual does not serve as business personnel of an entity that is amajor investee of the Benesse Group (in which the Benesse Group directly
or indirectly holds a voting interest of 10% or more).
E. The individual is not a consultant, accounting expert or legal expert who
has received compensation in the form of a large amount of money orother assets, other than officer’s compensation from the Benesse Group(or an individual belonging to an entity such as a corporation, association,or other group that has received such assets).
F. The individual has not received a large charitable donation or subsidy
from the Benesse Group and does not serve as business personnel ofsuch a recipient.
G. The individual is not an independent auditor of the Benesse Group anddoes not belong to a corporation, association or other group that serves
as an independent auditor of the Benesse Group.
H. In cases where the business personnel of the Benesse Group have been
appointed as outside officers of other companies, the individual does notserve as business personnel of the other company.

3. The individual is not a relative of a person who meets either of thefollowing conditions “a.” or “b.”a. An individual who does not satisfy any of the foregoing conditions (A)through (H) in (2) above for one of the past three fiscal years. However, thebusiness personnel stipulated in conditions (A) through (D) and (F) and (H)shall refer only to key business personnel. Condition (E) shall apply only topersons with specialized qualifications, such as certified public
accountants and lawyers. Condition (G) shall apply only to key businesspersonnel and persons with specialized qualifications, such as certified
public accountants and lawyers, in the individual’s organization.
b. Key business personnel of the Benesse Group in the current fiscal year or
any of the past three fiscal years.

Benesse Integrated Report 201946

Corporate GovernanceDirectors and Audit & Supervisory Board members (As of June 22, 2019)

OutsideIndependent

Newly Appointed

Directors
In 1977 joined Mitsubishi Corporation. Went on toserve as a Partner at McKinsey & Company, Inc. Japan,
President and CEO of Japan Lease Auto Co., President
and CEO of GE Fleet Services Co., Managing Director
and Japan Representative of Carlyle Japan LLC, and inother positions. Since 2003 he has been a Director of
the Company, a position which he has heldintermittently for a total of 11 years. Since 2016 he has
been the Company’s Representative Director andPresident, CEO.

Joined the Company in 1996. Has been Representative
Director and President of Benesse Style Care Co., Ltd.,
since 2013, and has been a Director of the Company
since 2016. Currently serves as a Director andCorporate Executive Vice President of the Company,
Head of the Company’s Nursing Care and Childcare
Business Company, and Representative Director andPresident of Benesse Style Care Co., Ltd.
• Other current key positions
Representative Director and President of Benesse
Style Care Co., Ltd.

• Current responsibilities
Berlitz Corporation

Tamotsu Adachi

Attendance at Board of Directors meetings: 14/14

Representative Director,
President and CEO

Shinya Takiyama
Director• Other current key positions
Outside Director at JVC KENWOOD Corporation
Outside Director at A.L.I. technologies Inc.

Shinjiro Iwata

Masaki Yamasaki
Director

Director and Chairman

Attendance at Board of Directors meetings: 14/14
Joined the Company in 1982. Since becoming an
executive officer in 2005 she has held a wide variety ofposts, from being a Member of the Labour Policy
Council at the Ministry of Health, Labour and Welfare
to serving as the Company’s Chief Human Officer(CHO), becoming Head of the Kids & Family Company.
She became a Senior Executive Officer of theCompany in 2018 and a Director of the Company inJune 2019. Currently she is a Corporate Executive Vice
President and the President of Global Kodomo
Challenge Company.

• Other current key positions
Representative Director and President of Benesse
Corporation

Representative Director andExecutive Vice President• Current responsibilities
Zemi Business Company, School and Teacher
Support Business Company, Area and Classroom
Education Business Company, Global Kodomo
Challenge Company, and Kids & Family Division
Attendance at Board of Directors meetings: 14/14• Other current key positions
Director and Executive Vice President of Benesse
Corporation, and Representative Director andPresident of Classi Corp.
• Current responsibilities
Zemi Business Company (deputy), School and Teacher
Support Business Company (deputy), and Area andClassroom Education Business Company (deputy)

Joined the Company in 1985. After having served as
Representative Director and President of Benesse Style
Care Co., Ltd., in 2012 became a Director of theCompany, a position that he continues to serve in.
Went on to lead the Company’s Corporate Planning
Division, Overseas Business Company, Zemi BusinessCompany, etc. Currently serves as Representative
Director and Executive Vice President of the Company,
and as Representative Director and President ofBenesse Corporation.

Hitoshi Kobayashi

Attendance at Board of Directors meetings: 14/14

Joined the Company in 1989. After having served ashead of the Group’s school and teacher support
business, Representative Director and President of
Ochanomizu Seminar Co., Ltd., Representative Director
and President of Classi Corp., Representative Director
and President of Benesse i-Career Co., Ltd., and in otherroles, in 2017 became a Director of the Company, aposition he continues to serve in. Currently serves as a
Director and Corporate Executive Vice President of theCompany, Head of the Company’s School and Teacher
Support Business Company, Director and Executive
Vice President of Benesse Corporation, andRepresentative Director and President of Classi Corp.

In 1972 joined Hitachi, Ltd. Went on to serve as CEO of
Hitachi Data Systems Corporation, EVP of Hitachi
Global Storage Technologies, Inc., and Representative
Executive Officer, Executive Vice President andExecutive Officer of Hitachi, Ltd., and held otherpositions as well. He has been a Director of theCompany since 2014, and has been Director andChairman of the Company since 2016.

Attendance at Board of Directors meetings: 14/14• Current responsibilities
Nursing Care and Childcare Business Company• Other current key positions
Director of Benesse Corporation

Haruna Okada
Director• Current responsibilities
Global Kodomo Challenge Company (deputy)
Attendance at Board of Directors meetings: -47

Benesse Integrated Report 2019

Part 1 Our Vision and Business Strategies

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

Audit & Supervisory Board members
In 1977 joined Daio Paper Corporation. In 1991 joined
the Company, and went on to serve as Manager of theGeneral Affairs Department, as Manager of the
Human Resources Department, and in other positions
before becoming a Corporate Executive Vice
President in 2003. Since 2008, has been a Standing
Member of the Audit & Supervisory Board.

In 1975 joined NTT Public Corporation. In 2001
became a Member of the Board of Directors of NTT
DOCOMO, Inc., in 2008 became Senior Executive Vice
President and Member of the Board of Directors of
NTT DOCOMO, Inc., and in 2012 became President andChief Executive Officer and Member of the Board of
Directors of DOCOMO Engineering Inc. Since 2014, hehas been a Director of the Company. In 2014 heserved as a Professor at Tokyo Institute of Technology,
and after leaving that position he in 2015 became
Representative Director and CEO of CarpeDiem, Inc., a
position he continues to serve in.

Kiyoyuki Tsujimura
Director• Other current key positions
Representative Director and CEO of CarpeDiem, Inc.
Attendance at Board of Directors meetings: 14/14

Attendance at Board of Directors meetings: 14/14
Attendance at Audit &Supervisory Board meetings: 16/16

Yoshinori MatsumotoStanding Audit &Supervisory Board Member

In 2000 joined KEYENCE CORPORATION. In 2006 joined
SMS CO., LTD., and subsequently became Division
President of Nursing Care and Medical Care, and Media
at that company. Since 2009, has been Director of efu
Investment Limited. Since 2012, has been Vice
Chairman of the Board of Fukutake Foundation, andsince 2013 has been a Director of Berlitz Corporation.
After having served as an Outside Director of Benesse
Corporation, since 2014 he has been a Director of theCompany. In 2018 he became Director of Kings Plant
Barn Ltd., a position he currently serves in.

Hideaki Fukutake
Director• Other current key positions
Vice Chairman of the Board of Fukutake Foundation
and Director of efu Investment Limited
Attendance at Board of Directors meetings: 14/14
In 1979 joined McKinsey & Company Inc, Japan and in1991 became a Director of that company. In 1996
became Managing Director and Chairman of A.T.
Kearney, Asia, and subsequently served as Chairmanof J-Will Partners Co., Ltd. In 2004 became Professor at
the Graduate School of International Corporate
Strategy at Hitotsubashi University, and since 2015 has
been Adjunct Professor at the same Graduate School(now known as the Graduate School of Business
Administration, Hitotsubashi University Department
of International Corporate Strategy). Since 2015, hasbeen a Director of the Company.

Ryuji Yasuda
Director

Joined the Company in 1986. After working in the
Finance & Accounting and Auditing & Business
Administration Departments in the Group, he later
became General Manager of the Finance &Accounting Division, General Manager of the Internal
Auditing Division, and then General Manager of theBusiness Administration Division. In 2015 he became
an Audit & Supervisory Board Member at Tokyo
Individualized Educational Institute, Inc., and in 2017
became a Senior Executive Officer of the Company
before also being appointed as a Standing Audit &Supervisory Board Member starting in June 2019.

• Other current key positions
Adjunct Professor, Graduate School of Business
Administration, Hitotsubashi University Department
of International Corporate Strategy; Outside Director
at Yakult Honsha Co., Ltd.; Outside Director at ORIX
Corporation; Outside Director at Kansai Mirai
Financial Group, Inc.
Attendance at Board of Directors meetings: 14/14

Naoto Saito• Other current key positions
Audit & Supervisory Board Member of Tokyo
Individualized Educational Institute, Inc.

Standing Audit &Supervisory Board Member Attendance at Board of Directors meetings: Attendance at Audit &Supervisory Board meetings: -In 1995 joined Tohmatsu & Co. (now Deloitte Touche
Tohmatsu LLC). Since 1998, has been registered as acertified public accountant. In 2010 became a Partner
at Deloitte Touche Tohmatsu LLC, and after leavingthat position, in 2015 became Representative of Izumo
CPA Office, a position he currently holds. Since 2015,
has been a Member of the Company’s Audit &Supervisory Board.
• Other current key positions
Representative of Izumo CPA Office, and Outside
Audit and Supervisory Board Member at TORIIPHARMACEUTICAL CO., LTD.

Eiichi Izumo
Audit & Supervisory
Board Member

Attendance at Board of Directors meetings: 14/14
Attendance at Audit &Supervisory Board meetings: 16/16

In 1991, registered as a lawyer and joined the firm
Tsunematsu Yanase & Sekine (now Nagashima Ohno &Tsunematsu). Since 1999, has been a partner at thatfirm. Since 2017, has been a Member of the Company’s
Audit & Supervisory Board.

In 1973 joined Mitsui Knowledge Industry Co., Ltd.
After joining Sony Corporation in 1981 he has served
as Group Chief Strategy Officer (CSO), Chief Financial
Officer (CFO), and Executive Deputy President then as
Representative Director and President of SonyFinancial Holdings Inc., and later also as Director andChairman of the same company. Starting in 2018 hehas been an outside director at Hitachi Ltd., and inJune 2019 he became a Director of the Company.

• Other current key positions
Partner at the law firm of Nagashima Ohno &Tsunematsu, Outside Director at Miraca Holdings
Inc., and Outside Member of Audit and Supervisory
Board at Lasertec Corporation• Other current key positions
Outside Director of Hitachi, Ltd.

Attendance at Board of Directors meetings: 14/14
Attendance at Audit &Supervisory Board meetings: 14/16

Attendance at Board of Directors meetings: -Katasumi Ihara

Miyuki Ishiguro

Director

Audit & Supervisory
Board Member
Benesse Integrated Report 201948

Corporate Governance

Enhancing internal control
At a meeting of the Board of Directors held in May 2006, theCompany passed a resolution establishing a system (internal control
system) to ensure compliance with the stipulations of the Companies
Act and the Ordinance for Enforcement of the Companies Act.
Said resolution received final revision in a resolution passed at a
meeting of the Board held on March 29, 2019.
In addition, a project team was set up at the Company forthe purpose of creating and operating internal controls relating tofinancial reporting under the Financial Instruments and ExchangeAct, and the team’s activities extend to the entire Group.

Ensuring compliance
The Company has established the Benesse Group Principles,
which are rooted in the Group’s corporate philosophy. The
principles indicate how all the Group’s executive officers andemployees should behave, for the purpose of ensuring that theoperations of the Group be performed in an appropriate andethical manner that goes beyond just legal compliance. In
accordance with these Principles, the individual companies
establish standards of conduct or internal rules of their own thathave more specific content suited to the conditions, nature, andsize of their businesses, ensuring that their operations are carriedout in an appropriate manner and thereby ensuring compliance.
Compliance administrators are appointed at each company
to identify the risks within their respective businesses andimplement measures to counteract them. For these activities,
they work closely with the administrative office in charge ofcompliance for the Company (Compliance Division) to devise ways
to fortify the systems on-site, such as sending staff on assignment
to take charge according to the circumstances. Various types oftraining are also provided for the purpose of raising employee
awareness, and the Internal Auditing Division monitors how
thoroughly compliance is implemented at our business sites.
In addition, the Group set up the Benesse Group Speak-Up
Line as an internal reporting mechanism to be used wheneverillegal conduct, improper conduct, or conduct that violates theGroup’s articles of incorporation or internal rules may bediscovered. The Audit & Supervisory Board Member Hotline has
also been set up for cases in which someone in the Company’s
management might be involved in the conduct being reported.
These mechanisms are set up externally and managed to beworry-free for those who use them, including the ability to remain
anonymous when reporting, thus ensuring the effectiveness of
the Group’s compliance monitoring.

Risk management
The Company has established the Benesse Group Risk
Management and Compliance Rules to further our efforts in risk
management and compliance.
The Risk and Compliance (RC) Committee handles
day-to-day risk management. Attended by full-time directors,
general managers, and company heads, the RC Committee
analyzes key risks within the Group and considers policies in
response based on the assessments by Company administrative
divisions in charge of each type of risk and by each respective
company and subsidiary. The RC Committee then reports to theBoard of Directors on the key risks they identified and policies todeal with them, and risk-related measures are then implemented
at Company administrative divisions, companies, and subsidiaries
while Compliance Division serves to monitor their progress.
When emergencies occur, we set up the Emergency
Reporting Hotline for reporting circumstances to management
right away, and in more severe situations we convene theEmergency Task Force and put systems in place for dealing withthe emergencies.
Day-to-day risk management
Monitoring report(RC Committee)
Assess risk

MonitorExecute measures
to counter risks

Company administrative
offices, companies, and subsidiaries
assess risks and implement
measures to counter them
Report to management

Propose measures
to counter risks

Report on policies
in response to key risks(Board of Directors)

Internal reporting mechanisms and responses when emergencies occur
Internal reporting mechanisms(set up externally: can stay anonymous)Benesse Group
Speak-Up Line

Audit & Supervisory
Board Member Hotline

Emergency response systems

Emergency Reporting Hotline(Benesse Group Hotline)
Superiors

Employees (who notice the emergency)

49

Benesse Integrated Report 2019

Analyze and identify
key risks, consider
policies in response(RC Committee)

Part 1 Our Vision and Business Strategies

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

Interview with an Outside Audit & Supervisory Board member

Striving to gather information at every occasion,and make objective decisions
self-correction by taking measures before any major
problems arise.

Eiichi Izumo
Audit & Supervisory
Board Member

Listening to diverse information isfundamental in auditing
The word “auditor” is said to derive from “audi” (“to listen”),
an origin shared with the words audience and audio. I
believe that listening is fundamental in auditing. In addition
to meetings of the Audit & Supervisory Board and Board of
Directors, I also attend other meetings such as Management
Council where members of the executive team cometogether. I listen to what many people have to say and do
my best to judge things from an objective standpoint.
At Benesse I think that enough information is provided
at the proper time to enable such objectivity. Explanations
are provided to members of the Board of Directors days prior
to their meetings, and our administrative office provides
explanations on the content of proposals. Officer study
sessions are then held after Board of Directors meetings, where
those in charge at executive departments explain the businessdetails, current status, and challenges. I also have opportunities
to hear directly from employees and obtain information on
auditing site visits, observation tours at the worksites, and at
various events. Therefore, meetings of the Audit & Supervisory
Board and Board of Directors are always lively, while covering
a diverse range of issues. Occasionally, critical opinions of
the president are even expressed with no reservations.
Cooperation is strong between the so-called threeaudit parties, the Internal Auditing Division, Audit &Supervisory Board members, and independent auditors. We
also have mechanisms in place for sharing the information
learned from audits, as reports on audit results are always
received from the Internal Auditing Division, andindependent auditors provide information not only aroundthe time of financial reports but pretty much at all times.
I also think that the internal reporting mechanisms
are functioning effectively. When reports are received, thecontact office for reporting and Audit & Supervisory Board
members investigate the matter on their own, then reportto the executive department in charge and work toward

The challenge now is to develop
human resources capable of working
beyond the boundaries of divisions
One of the main focal points in the audits performed in
FY2018 was the progress of the medium-term
management plan. To put it bluntly, our company set
numerical targets that were simply too ambitious. Sales andincome both increased in FY2018, but we conducted theaudit with the awareness that employees in the workplaces
might be overburdened having to overextend themselvesin efforts to achieve the targets for FY2020, and we looked
into whether these and other circumstances could beleading people to take improper actions.
Another area we focused on was the acquisition of
EDUCOM Corporation by Classi Corp. We received detailed
explanations on many occasions for this transaction, about
the business plan and financial information which were thebasis for decisions, and about the setting of the asking priceand the status of progress leading up to bids. I think thebusiness opportunities and risks were also thoroughly
discussed in the Board of Directors.
Looking at the Benesse Group going forward, I will bepaying particular attention to business creation through
M&A, the “third business pillar” as advocated in themedium-term management plan, and the degree to which
the resulting synergy effects can boost business value aswell as whether the risk of goodwill impairment can be
avoided. The key to this is having the systems and people
in place to run business properly in new fields, so in that
respect I think human resources will probably be the issue
for the Benesse Group going forward.
In both education and nursing care, the Group has somany people with strong awareness of being helpful toothers, and they are putting everything they have into theirwork. However, I fear that in doing so, they may sometimes
be unable to see their surroundings. Going forward, I think
the focus will have to be not only on human resources
development within each business division, but also on
employee growth through organic connections between
the various types of business within the Group. I believe
this ultimately connects to the Benesse corporate
philosophy of well-being.

Benesse Integrated Report 201950

Human Capital

Fulfilling our mission to transform and grow by strengthening
our employee base and organizational capabilities
Three policies to strengthen our human capital, our source of value creation
next-generation leaders, (2) hiring people capable of instituting
reform, and (3) human resources and organizational reforms for a
100-year lifespan era.

Eriko Satonaka
General Manager ofGroup Human Resources

Strengthening human capital is one of the most important
topics in the Benesse Group medium-term management plan.
People are our most important management resource, and we
see them as our source of value creation. We aim to giveourselves the people, structures, and culture needed to“Transform and Grow.”
Based on that idea, our Human Resources Headquarters is
working on three main initiatives. These are (1) developing

The Benesse Group’s personnel & organization strategy

Developing
next-generation leaders

Hiring personnel capableof instituting reform

Reforms for a 100-year lifespan era• Training 100 future leaders• Benesse University programs• Strengthening digital andglobal staffing• Promoting diversity, reforming ourcorporate culture• Extended retirement age,instituting retirement age for
executives, modifying
compensation system• Incentives in support of nursing
care and childcare• Health and productivity
management

Developing next-generation leaders
Grooming the next generation of senior
management candidates
To lay the foundation for the future of the Group, we are working togroom the next generation of Benesse Holdings senior managers.
In FY2018 we started an initiative to continuously,systematically groom around 100 next generation senior
management candidates that were identified by our Group
companies. Each selected candidate undergoes a program
according to his or her own development plan which includes
group leadership skills training, external training assignments,

51

Benesse Integrated Report 2019and coaching. At the same time, information is shared among
management, and regular opportunities are allotted for
management to review the program from multiple perspectives.
Their development will then proceed systematically by gaining
experience in various positions and tasks through assignments tovarious projects and locations.
These training efforts are continuously ongoing, as year-two
training to deepen the talent pool is also being conducted forselected candidates in FY2019, the second year of the program.

Part 1 Our Vision and Business Strategies

Opening Benesse University to train
young employees
Benesse University is a Group-wide program that was launchedin April 2018 as an initiative for developing young employees.
The program consists of two components—group training, andopen courses.
Around 20 employees from seven Group companies
participated in the group training in FY2018, the first year of the
program. Through four months of activities including lectures by
senior managers and external instructors, training camp on
Naoshima Island, and action-based learning that attempts tosolve actual problems, participants were trained to become
proactive action-takers. By also establishing deeper connections
through extensive interactions with each other, the participants
established cooperative working relationships that transcend theboundaries of individual companies. Twenty more employees
were newly chosen to undergo the second year of this program

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

in FY2019. We are working to provide growth opportunities thatinvolve all companies in the Group as means of ongoingprofessional development.
Meanwhile, for the open courses there are courses offeredeach year in which all Group employees can freely participate.
These include multiple courses each year that introduce the world’s
latest technologies and information such as digital technology,
AI, and EdTech, stimulating employees to ambitiously seek
professional growth while also building their intrinsic motivation.

An open course taught by an outside
expert, attended by 700 employees

Training camp on Naoshima Island

Hiring personnel capable of instituting reform
Working to strengthen digital staffing
and institute office reform
Digital transformation (DX) is advancing in all types of industrial
fields and the Benesse Group is also engaged in business
transformation, combining education and nursing care withdigital technologies. The Group Digital Division established in
January 2018 is a new organization that collaborates with Group
companies to accelerate the development of new products andservices that employ digital technologies.
This division is also active in hiring and training so-called“DX personnel”—employees who shift our services andoperations into digital mediums. In addition to our existing
mid-career hiring, the division is also putting more effort intohiring new graduates as candidates to become next-generation
DX leaders, and is developing special training programs utilizing
platforms such as Udemy. Furthermore, they are also working toboost the skills of existing employees and strategically develop
human resources capableof proactively planningand producing products
and services that harness
the attributes of digitaltechnology.
Aside from these
activities, the Group Digital
Division is also actively
improving the office
At the Digital Development Company officeenvironments that DX

personnel work in. One example of such efforts is how thedivision is promoting internal and external collaboration byenlarging open spaces at the Digital Development Departmentof the Zemi Business Company established at Tokyo Head Officein 2018.

Supporting the success of diverse personnel
The Benesse Group is determined to recognize diversity among
human resources regardless of nationality, race, gender, or age,and to leverage their differences in positive ways. As ourbusiness expands globally and we take on more and more
employees of diverse nationalities, we are doing our best to givethem workplaces where they can utilize their respective
capabilities and be active, while gaining a sense of fulfillment
from their work.
The ratio of female employees in the Benesse Group isrelatively high (around 50%). Many female employees play activeroles utilizing the perspectives of consumers in our education,
nursing care, and childcare business segments. In April 2016, theBenesse Corporation obtained grade three certification—thehighest grade awarded—from Eruboshi, the recognition system
based on the Act on the Promotion of
Women’s Participation andAdvancement in the Workplace. As of
April 2019, the percentage of manager
positions held by females in the Group
had risen to 36%.

The Eruboshi certification logo

Benesse Integrated Report 201952

Human Capital

Reforms for a 100-year lifespan era
Maximize organizational performanceby improving productivity
Every year the Benesse Group has conducted the Gamba
organizational assessment of employees, but the problem of low
productivity in the assessment results has surfaced as aGroup-wide problem in recent years. This is a major factor
impeding job satisfaction and performance, so we initiated acompany-wide activity under the theme of productivity
improvement. The aim of the activity is to reduce work hours(input) while improving performance (output).
In May 2019, we gathered Group companies and major
subsidiaries for a Kickoff Event in which we contemplated thechallenges that must be overcome to improve productivity at
every organization. The organizations pledged to take theinitiative in working on these efforts.
We will be conducting quarterly reviews of KPIs that show
specific plans (action plans) and achievement levels of thoseplans to confirm progress. In addition to the Gamba
organizational assessment there will also be reviews involving
management at the end of FY2019, the results of which will bereflected in plans for the subsequent year. Doing so, we will befacilitating PDCA cycles and improving the productivity of theGroup as a whole on an ongoing basis.

Productivity improvement cycle

Bolster work-life management initiatives
With Japan’s 100-year lifespan era on the horizon, the Benesse
Group is implementing a number of policies to boost employee
motivation and create good work environments and culture.
These include extending the retirement age and instituting aretirement age for executives, offering telecommuting andflextime, as well as offering incentives so employees can balance
their work with parenting or providing nursing care, andproviding healthcare support.
Recently the Group has been targeting workstyle reform inparticular, setting out (1) working healthy and (2) balancing
nursing care with work (success of diverse personnel) as the twobanners for workstyle reform activities. Without good health, you
cannot exercise your full capabilities, nor can you engage in yourwork with a positive frame of mind. Additionally, environmentswith diverse human resources are essential for fostering acompany culture where people push each other to be better andgrow together as professionals. With workstyle improvements,
we are pursuing additional growth for the Group as a whole byboosting the performance of each and every employee.

Benesse Corporation
Data related to work-life management (full-time employees)

Plan proposal

Overtime work hours(average/month in FY2017 ended March 2018)*

36 hours• Visualize organizational problems,
led by on-site staff• Share opinions with management

Rate of paid leave taken(average/month in FY2017 ended March 2018)60%

Number of employees who use telecommuting(FY2017 ended March 2018)

300

Number of male employees who took childcare leave(FY2017 ended March 2018)15

Number of employees who took nursing care leave(FY2017 ended March 2018)2

Reflection• Confirm the progress on
KPIs at each company• Verify the organizational
assessment results• Hold management reviews

Implementation• Execute measures

Average years ofcontinuous serviceMen

11.9 years

Women

12.5 years* Regular working hours: 7 hours/day

53

Benesse Integrated Report 2019

Part 1 Our Vision and Business Strategies

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

The Group-wide health management initiative
Hiroki Nishiwaki
Section Chief,
Human Resources Division

The Benesse Group is pursuing a variety of initiatives
aimed at promoting employee health, which include
establishing an occupational health system andconsultation desk and utilizing agencies that offer
employee assistance programs (EASs). In January 2018,
we issued the Benesse Group Health Declaration to
add more momentum to our health management andfollowing up on the declaration we began holding trial“health events” throughout the Group in September
2018. These activities involved tackling healthproblems by organizing employee volunteers from theGroup’s main companies into 20 teams and assigningeach team to work on a health-related goal such as
quitting smoking, improving eating habits, or getting
more exercise.
We are also working on “Collabo-health” incollaboration with our health insurance association. To
bolster our initiatives against metabolic syndrome
among the Group as a whole, we are holding healthseminars that promote lifestyle improvements in areas
such as eating and sleeping habits. We will continue
putting our ingenuity
into devising ways toimprove health that
employees
Benesse Holdings was recognized asa 2019 Certified Health and Productivity
intuitively enjoy.
Management Organization

Supporting employees in balancing their work with nursing care,so nobody has to leave their job to provide such care
Yuko Onizawa
Human Resources Division

Nursing care is an issue that will face everyone at some pointin their lives. Many Benesse Group employees likely havetheir own potential problems related to nursing care. People
tend to put off dealing with the issue of nursing care until
it directly relates to them, and they might not be very
conscious or interested in it for the time being. However,
we expect that more and more employees will be
troubled with nursing care issues as time goes on.
With these circumstances in mind, the Benesse
Group launched a Seminar for Balancing Work and Nursing
Care for employees in FY2015. The seminar provides
necessary and sufficient knowledge and information
about balancing work with nursing care, including support

systems for achieving this balance and nursing careinsurance systems. Online seminars are also available,
which employees can join from their own seats at workor from meeting rooms by accessing the specified URL.
Seminar content is derived from various resources
we at Benesse Style Care in the Benesse Group haveaccumulated through our nursing care operations. We
will continue doing our best as specialists in nursing careservices to support Group employees.
Ratio of employees who are age 50 and older(Benesse Corporation)

16% ofall employees

2018

31% ofall employees

2025 (forecast)Benesse Integrated Report 201954

Intellectual
CapitalCombining our accumulated knowledge and expertise withdigital to create new value
Diverse intellectual capital as a foundation for value creation
Leveraging intellectual capital for the growthof the Benesse Group

Leveraging digital technology to createeven more value

In the 1960s, the Benesse Group began offering simulated
exams and correspondence courses. Since then, the Group hasgone on to expand its business into many other fields including
languages and nursing care, thereby creating new markets. The
marketing knowledge and expertise in product and service
development that we have acquired along the way in thesedifferent fields constitute valuable intellectual capital for theGroup. We are currently engaged in a variety of R&D activities
including business research and questionnaire surveys, throughwhich we will create superior products and services while
growing our intellectual capital.
The Benesse Group has also accumulated big data fromchildren’s learning histories and residents’ life records, inaddition to a wealth of implicit expertise-type knowledge basedon long years of business operations. Using advanced digitaltechnology to analyze, verbalize, and systematize this big dataand implicit knowledge, we aim to create new value that drives
the growth of the Group.

We have been producing a variety of achievements by leveraging
digital technology to further enhance the value of the intellectual
capital we have accumulated. For example, in education we areproviding products and services that have strong competitive
advantage, such as Level-Specific English Four Skills Training
materials which allows students to learn the four skills of English ina balanced manner through computers and tablets, Challenge
Touch tablet-based learning materials, and Classi cloud service
that supports operations in educational settings. Going forward,
we are determined to continue making our products and services
even more sophisticated, actively incorporating the functionalities
and user interfaces that only digital can deliver, plus using AI toanalyze the learning status of individual course takers in order tooffer them the optimal advice.
Competition has intensified in the education business withdigital technologies in recent years as more and more companies
from other industries have entered the market. Benesse
Corporation is working toward filing patent applications in order
to differentiate ourselves from the competition and preemptively
avoid the risk of rights infringements.

Breakdown of Group R&D expenditures(Benesse Group, FY2018)
Company-wide

Others¥35 million¥9 million

Nursing Care andChildcare Business¥3 million
Global Kodomo
Challenge Business¥149 million

Total

1.31 billion¥

Domestic Education
Business¥1,113 million

Students can take courses on Challenge Touch tablets

55

Benesse Integrated Report 2019

Part 1 Our Vision and Business Strategies

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

Think tanks complement the Group’s intellectual capital
The Benesse Educational Research and Development Institute andthe Benesse Senior/Nursing Care Research Institute are our twolaboratories which serve as think tanks, carrying out original
surveys and research based on knowledge the group has
accumulated in the education and nursing care businesses. Theselaboratories not only utilize their research findings for thedevelopment of business in the Benesse Group, but they also
widely disseminate their findings in society through reports,
websites, and symposiums, thereby contributing to solutions forsocial problems involving education and the elderly.

Benesse Educational Research and Development Institute (BERD)

Giving back to society the results of multifaceted surveys and researchThis in-house think tank came into being in 2013 throughthe merging of the Benesse Group’s several research
departments. Taking a comprehensive view of parenting
and the educational environment, the BERD conducts
multifaceted surveys and research in the field of
education regarding a wide range of people, covering
everyone from infants to college students, working adults,
parents, and teachers.
The BERD is made up of four different research offices,each of which maintains collaboration with educational
institutions and researchers in Japan and abroad. The
research offices carry out research in their particular areas of
specialization, e.g., the talents and abilities that will beneeded in society in the future, ways for acquiring thosetalents and abilities, and assessment based on testing
theory. Since the founding of the predecessor to thisresearch institute in 1980, more than 400 studies have been
carried out, the results of which are presently being put toactual use in parenting and education. In recent years BERD
has also been dedicating efforts to supporting
cross-organizational projects in the education business.
Examples of survey reports

International Survey on
Ability to Design
Early Childhood Home
Children’s Learning
Fostered by Visualizing Education [2018]
the Learning Process(Joint research projectwith the Gifu City
Board of Education)2017 Parent and Child
Survey on Children’s
Lifestyles and Learning(Joint research projectwith the Institute ofSocial Science at the
University of Tokyo)

Panel surveys to visualize parent-child growth factors
from infant age to high school graduation
Satoshi Okabe
Child Sciences andParenting Research Office
Benesse Educational Research andDevelopment InstituteBreaking from traditional fixed-standpoint observation
surveys that are conducted every few years, our panel
surveys follow the same individuals year by year to
identify when and through what events children growand develop. For example, we have already known thaton average, motivation to learn declines from higher
grades of elementary school through junior high school.
However, when we look at changes in individual
students, we discover cases in which some of them havemaintained or even increased their motivation despite
entering junior high school. In what ways are children

like these learning, and what are their parents focusing
on in their upbringing? Issues that parents and children
are facing and hints toward solving them are lying
hidden within our vast data remaining from roughly
20,000 groups of parents and children all over Japan.
Conducting joint research with the University of Tokyo,
we are academically analyzing and visualizing thisinformation and sharing it with the world throughacademic conferences, projects, and the media.
We are currently conducting two panel surveys—
one for infants and another for students in elementary,junior high, and senior high schools, with our plan being
to connect the two surveys in 2023. Doing so, we will
have an unprecedented survey that can trace thedevelopment and learning process from infancy all theway up to high school graduation. We intend tocontribute even more toward improving the quality ofevidence-based education.

Benesse Integrated Report 201956

Social Capital

Creating new value on the strength of relationships cultivatedwith people and society
Domestic Education BusinessNursing Care and Childcare Business

Improving customer satisfaction andeducation in communities

Creating new value based on commentsfrom our worksites

We are working hard each day to maintain and improve customer
satisfaction in Shinkenzemi and Kodomo Challenge by providing
educational materials that support each and every enrollee.
We are also contributing to education in communities inour cram-school operations with Class Benesse, accelerating the
expansion of franchises while also collaborating more with othercram schools for English proficiency tests in the four skills.

The Benesse Senior/Nursing Care Research Institute presented its
own original Dementia Care Method at the inaugural Japan-UK
Dementia Conference, held to spread awareness of the importanceof international collaboration in combating dementia. As theinternal think tank of Benesse Style Care, the institute created thismethodology by analyzing and systematizing a series of case studies.
The institute also oversees product development together
with residents of elderly homes
through the use of living labs.
Comments from residents areused in joint development with
manufacturers to makeslip-resistant socks that areeasy to put on, offering theelderly more opportunities to
At the inaugural Japan-UK
Dementia Conference
be a part of society.

• Dedicated smartphone app “Teiki Tesuto: Yoku Deru Kiso” (regular tests:
basics that are frequently useful) offering courses for high school
students: 90% or higher satisfaction rate*1• “Iid Awards” customer satisfaction survey forcorrespondence courses: Kodomo Challengeawarded the top prize*2*1 From 2,264 responses received from questionnaires forstudents enrolled in Shinkenzemi*2 From an internet survey for parents of 4,947 children taking
correspondence courses. Published on the educational
information website of IID Inc.

Creating sustainable communities with Benesse well-being as a starting point
Benesse Art Site Naoshima is the collective name for our
art-related activities taking place on the islands of Naoshima,
Teshima, and Inujima on the Seto Inland Sea in conjunction with
the Fukutake Foundation. These activities have been developing
communities in the area for at least three decades.
Our objective is to make this a special place unlike anyother by spending time creating art amongst the nature andunique culture of each island. Visitors can be inspired to reflect
on the meaning of well-being as they mingle with the art
products on each island, experience the classic Japaneselandscapes of the Seto Inland Sea, and interact with people inthe communities. Recent years have also seen high numbers of57

Benesse Integrated Report 2019

visitors from Japan and overseas with at least 500,000 visitors
annually to each island, invigorating the local economies andcommunities while at the same time demonstrating greatersocial value creation by the Benesse Group.
Annual tourist visitors to Naoshima Town
727,057

800,000
600,000

486,820497,381

2014

2015

508,044 544,317

400,000
200,000
0

2016

2017

2018

(year)

Part 1 Our Vision and Business Strategies

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

An important expression of our Sustainability Vision

Tamotsu Adachi
Representative Director,
President and CEO

Since our Benesse Art Site Naoshima activities are deeply connected to Benesse’s corporate
philosophy, we consider them important enough to refer to as part of our identity.
In March 2019 the Group announced our Benesse Group Sustainability Vision. One of thethemes of this vision is “value co-creation with communities,” which we define as “working
with local residents to generate new value in learning, culture, art, and other realms in orderto build a more fulfilling society.” This theme was made part of our vision with the aim of finding
solutions to learning problems in each community, while maintaining mutual relationships
and growing together with them through our Benesse Art Site Naoshima activities.
Together with our group employees, the Fukutake Foundation, local residents, visitors
to Benesse Art Site Naoshima, and other stakeholders, we will reflect on what “well-being”
means for people and engage in activities that turn this well-being into a reality.

Foundation activities—Initiatives geared toward
the creation of well-being—
Our commitment to the Benesse corporate philosophy ofwell-being is not limited only to our business activities, butalso reflects in the activities of our foundations that engage
in community initiatives. Our two foundations to create social
value by aiding regional development and assisting children.

Corporate Philosophy

Benesse (Well-being)

Business Activities

Education
LivingBenesse
Educational
Research andDevelopment
Institute (BERD)

NursingcareChildcare
BenesseSenior/Nursing
Care ResearchInstituteCommunity Initiatives
ESG
SDGs

Benesse Art Site Naoshima
Learning assistance for people
with disabilities
Initiatives for alleviating childpoverty
Benesse Foundation for Children
Fukutake Education andCulture Foundation
Fukutake Foundation

Social Value Creation

Fukutake Foundation

Benesse Foundation for Children

The Fukutake Foundation (formerly the Naoshima Fukutake
Art Museum Foundation) was established along with the
opening of the Chichu Art Museum in 2004 and assumed its
current name after a merger of two aid foundations in
October 2012. The foundation carries out three different
types of activities, one of which is museum operations
mainly in Naoshima, Teshima, and Inujima, the second being
to assist culture- and art-driven regional development activities
throughout Japan, and the third being to independently
and jointly organize events such as Setouchi Triennale. We
will continue working to build even better communities,
where elderly people everywhere are happy, and everyone
can think deeply about the Benesse principle of well-being.

The Benesse Foundation for Children was established in2014 and changed into a public interest incorporated
foundation by approval of the Cabinet Office on April 1,
2015. Since then, the Benesse Foundation for Children has
been working to create environments where children canlearn with peace of mind, to assist children dealing witheconomic issues, sickness, disabilities, or other obstructions
to their learning, and to aid the learning and upbringing ofchildren who have been affected by disasters (emergency
assistance). The foundation is also ambitiously attempting
to go beyond assistance for overcoming problems to also
nurture and educate children who will play prominent roles
in building an even better society.

Benesse Integrated Report 201958

Communication with Shareholders and Investors
Benesse proactively discloses information to shareholders and investors,
with superior IR disclosure tools and emphasis on mutual communication, while conducting IR.

Active IR activities conducted openly
and transparently
The president and executive vice presidents provide
explanations of company performance and business strategy
in their own words at financial results analyst meetings held
twice a year. Proceedings from these sessions are also
published and streamed online in the form of videos,transcripts of presentations, and question and answer session
summaries. In FY2018, we held around 200 individual
meetings and small meetings for institutional investors andsecurities analysts both in Japan and overseas, engaging in
open, candid discussions about our performance and the
direction of our business.
We also actively communicate with overseas institutional
investors. The president and executive officers in charge of IR
paid five visits to investors in Europe, North America, and Asia in
FY2018. Participating in conferences organized by brokerages
as well, our communication
efforts reach a broad range ofinvestor categories.
To enable even more
people to attend our General
Meetings of Shareholders, weFinancial results analyst meeting for
hold the meetings on
FY2018 ended in March 2019
Saturdays. For stakeholders(Held on May 10, 2019)

who are unable to attend, we publish and stream videos,transcripts of presentations, question and answer session
summaries, and other material from the meetings on our
website just as we do for financial results analyst meetings.

Disclosures on our IR website
With the principle of fair disclosures in mind, we strive toprovide an extensive range of information on our website. In
addition to the proceedings from financial results analyst
meetings and General Meetings of Shareholders which we
make available on the website, we also disclose various IR
materials, financial data, and press releases in a timely manner.
We have also established a website geared toward
individual investors, designed to help those unfamiliar with
Benesse to gain a greater understanding of our company. It
points out the strengths of Benesse and our strategies, as wellas information about our business performance, presented ina way that is easy to understand.

Online Investor Relations

Introducing the Benesse Group

External assessments of our IR tools (FY2018)
Our IR website, Integrated Report, and other IR tools have earned high praise from society.
IR Website
Gomez IR Site Ranking
Best Company,
Silver Award

59

Benesse Integrated Report 2019

Integrated Report
Nikko Investor
Relations Co., Ltd.
All Japanese Listed
Companies’ Website
Ranking AAA Grade

Daiwa Investor
Relations Co., Ltd.
Internet IR
Excellence Award(Silver Award)

LACP (League of American
Communications
Professionals)
Gold Award(23rd place globally)
2017/2018 Vision Awards
Annual Report
Competition

GPIF(Government Pension
Investment Fund)
Selected as an Excellent
Integrated Report byasset managers
entrusted with domestic
equity investment

Part 1 Our Vision and Business Strategies

Part 2 How We Create Value

Part 3 Enhancing Operational Resources

Environmental Conservation Efforts
Seeking further growth, Benesse formulates medium- to long-term environmental targets andactively strives to reduce our environmental footprint while improving external assessments of our activities.

Environmental action froma
long-term perspective

Reducing CO2 emissions

Benesse actively engages in environmental conservation
efforts in order to maintain our business and achievesustainable growth. We formulate medium- to long-term
environmental targets setting FY2050 as the final fiscal year,
and work toward reducing the environmental impact of ourbusiness activities while aiming to improve external
assessments of our environmental activities.
In FY2018 we performed a SWOT analysis with theachievement of these environmental targets in mind. Our
analysis was based on environmental changes and stakeholder
expectations and requirements such as the growth of ESG
investment, TCFD* recommendations, and the adoption of theSDGs (Sustainable Development Goals). From the results of theanalysis, we identified reducing CO2 emissions stemming fromthe use of paper and promoting environmental education as
two particularly high-materiality items. With our Sustainability
Committee established in September 2018 leading the way,
we will be working to enhance the environmental
management of the Benesse Group as a whole, and to achieve
our medium- to long-term environmental targets.
* Task Force on Climate-related Financial Disclosures. Established by the FSB(Financial Stability Board) in 2016, the TCFD issues recommendations thatencourage companies to disclose information about climate-related risks
and opportunities

Approximately 99% of our CO2 emissions stem from the paper used
for direct mail and educational materials, approximately 97% of whichis comprised of emissions categorized as Scope 3 (transport andlogistics, usage, disposal, etc.) by Japan’s Ministry of Environment. In
response, we are working to reduce the unnecessary use of paper inour offices, while also reducing the volume of paper we use by shifting
products and services to digital and other mediums.

Environmental education activities
Utilizing the knowledge and expertise we have established in the
education business over the years, we are devoting our efforts toenvironmental education for children who represent our future.

• Kurukuru Recycling Program Shimajiro Club

We collect and recycle used Kodomo Challenge
course materials and toys at Shimajiro Concerts.
Cumulative totalcollected through FY2018

14,774 kg• Ministry of the Environment(Sponsored) Essay Contest forHigh School StudentsChildren put theireducational materials incollection box forrecycling

We conduct essay contests for students to write about environmental
problems around them and propose potential solutions.
Entries in FY2018

1,955

Medium- to long-term environmental targets

2018

2019

2030

2050

Reduce CO2 emissions(compared to FY2013)

10.1% reduction

12.0 % reduction

31.0 % reduction

55.0% reduction

External assessment(CDP Analysis)

Joined the A List

Stayed on the A List

Stay on the A List–

Recognized by the CDP as a Climate Change 2018 A List company, and the first education or
nursing care company from Japan to declare support for the TCFD recommendations.
The Benesse Group is working to reduce the environmental
impact of our business activities, and to promote
environmental education. Through these efforts, we havebeen recognized by the CDP* as a Climate Change 2018
A List company, the highest possible rating, for displaying
excellence in efforts to reduce greenhouse gas emissions
and mitigate climate change.

To also designate environmental issues
as key management issues and bolster ourenvironmental efforts, we became the firsteducation or nursing care company fromJapan to declare support for the TCFD recommendations.
* Established in 2000, the CDP is an international non-profit organization
which promotes greenhouse gas emissions reduction, protection of
aquatic resources, and forest conservation by corporations andgovernment agencies

Benesse Integrated Report 201960

Financial and Non-Financial Highlights
Financial Information
Net sales

Operating income/Operating income ratio(billions of yen)
500

463.2

444.1

430.0

434.4

439.4

400

(billions of yen)(%)(billions of yen)

50

15

45

40

12

30

9

15

(yen)
240

128

29.2

300

30

200

20

100
0

Net income (loss) attributable toowners of the parent/
Net income (loss) per share

6.3

10

14

15

16

17

18
(fiscal year)

12.6

10.8

7.6

2.4

0

14

1.8

15

16

Operating income (left)

2.9
17

36
(10.7)

16.2

6

0

3.7

3

(15)

0
18
(fiscal year)

(30)

14

50

80

4.9

0

(8.2)
3.5

(111)

160

12.3

(80)

(85)
15

16

17

(160)

18

(fiscal year)

Operating income ratio (right)

Net income (loss) attributable to owners of the parent (left)
Net income (loss) per share (right)

ROE/ROA

CAPEX

(%)

(billions of yen)(billions of yen)

16

50

25

40

7.3

(1.7)
0

2.9
2.5

0.7

(8)

ROE

(4.5)

14

15

16

17

18
(fiscal year)

21.6

14

15

20.3

19.9

19.8

16

17

18
(fiscal year)

20

30

24.9

15

23.6
19.4

20

10

10

5

0

14

15

16

17

18
(fiscal year)

0

ROA

Equity ratio

Interest-bearing debt/
Debt-to-equity ratio(%)(billions of yen)

60

120

105.8
94.0

45

21.0

1.0

(2.2)
(5.3)

37.9
31.5

8

2.1

Depreciation & amortization

39.2

36.4

34.9

34.5

90

33.6

30

60

15

30

75.5

58.6

Cash dividends/Dividend payout ratio
111.0
63.9

120.6

(%)

68.1

80

(yen)
120

60

90

40

60

20

30

46.4

33.9

(%)
400

95

95

95

95

256.9

300

50

200

98.2
100

73.8
0

14

15

16

17

18
(end of fiscal year)

0

14

15

16

Interest-bearing debt (left)

17

0
18
(end of fiscal year)

Debt-to-equity ratio (right)

Note: Interest-bearing debt includes lease obligations.

61

Benesse Integrated Report 2019

0

14

15

Cash dividends (left)

16

17

0
18
(fiscal year)

Dividend payout ratio (right)

Non-Financial Information
Business-related
Shinkenzemi enrollments (domestic)

Kodomo Challenge enrollments(overseas)(thousands of students)(thousands of students)

5,000

1,500

1,220
4,000
3,000

2,430

2,450

2,570

2,620

1,270

1,100

1,200

2,710

1,270

Nursing homes & elderly homes
by brand
400

900

292

276

300

308

316

322

16

17

18
(end of fiscal year)

900
200

2,000

600

1,000

300

0

15

16

17

18

0

19
(year)[ as of April ]Senior high school courses

Junior high school courses

Elementary school courses

Kodomo Challenge(preschool courses)

100

15

China

16

17

18

0

19
(year)[ as of April ]Taiwan

14

15

Aria

Clara

MadokaBon Sejour

Granny & Granda
Cocochi

Li-Re

Human Resources
Employees on consolidated basis

Ratio of female employees/Managers

25,00060

Employees who took childcare leave/
Returned from leave
(%)

(%)

20,14520,60721,022

20,38751

20,42620,000

52

53

53

52

400

100

304
45

30

15,000

30

31

36

35

300

30

200

15

100

252

271

260

250
84.4

83.3

90

86.8
80

80.0

10,000
5,000
0

14

15

16

17

18
(end of fiscal year)

015
Employees

16

17

18

70

0

(year)
19[ as of April ]

14

15

16

17

0

18

(fiscal year)

Managers (including officers)

Employees who took childcare leave (left)
Percentage of employees who returned from childcare leave

Note: Percentages are for Benesse Corporation.

Note: Figures are for Benesse Corporation and Benesse Style
Care combined.

Human Resources

Environment

Employees taking shorter hours forchild-rearing

CO2 emissions

Paper consumption

(t)

(t)

400

354
289

300

265

6,000

5,471
4,717

5,000

270

5,082

4,787
4,154

80,00062,99260,06060,00054,16655,94816

1761,194

4,000

218

3,000

200

40,0002,000
20,000

100
1,000
0

15

16

17

18

(year)
19[ as of April ]Note: Figures are for Benesse Corporation and Benesse Style
Care combined.

0

14

15

16

17

18
(fiscal year)

Note: CO2 emissions are for electricity consumption only.

0

14

15

18
(fiscal year)

Note: Paper consumption excludes printing paper for use in offices.

Benesse Integrated Report 201962

Group Information
Corporate Information As of March 31, 2019
Name

Representative

Benesse Holdings, Inc.

Date established January 28, 1955
Headquarters

Representative Director, President and CEO
Tamotsu Adachi (As of June 22, 2019)

3-7-17 Minamigata, Kita-ku, Okayama-shi,

Employees (Consolidated) 20,426

Okayama 700-0807, Japan

Capital13,661 million yen

Fiscal year-end

March 31

Consolidated subsidiaries
Name of company

As of March 31, 2019

Common stock(Millions of yen)

Ratio ofshareholding (%)

Description of business

Benesse Corporation

3,000

100.0

Education, publishing, mail-order sales, etc.

Classi Corp.

840

50.0

Development and operation of educational platform

Tokyo Individualized Educational Institute, Inc.

642

61.9

Operation of prep schools

Benesse i-Career, Co., Ltd.

261

51.0

Career education and career building support services for university students and working adults

UP Inc.

100

100.0

Operation of prep schools

Shinken-AD Co., Ltd.

65

100.0

Advertising business specializing in higher education institutions

Plandit Co., Ltd.

40

100.0

Planning and editing of study materials

EDUCOM Corporation

33

65.2*1Development and sales of school business support system

Benesse BE studio Inc.

10

100.0

Operation of English language schools for children

Learn-S Co., Ltd.

10

100.0

Planning, editing, production and sales of study materials

Ochanomizu Seminar Co., Ltd.

10100.0*2

Operation of prep schools

Tokyo Educational Institute Co., Ltd.

10

100.0

Operation of prep schools

125,000 Thousands of RMB

100.0

Sales of correspondence course materials for preschoolers

136,700 Million INR

100.0*3

Operation of prep schools in Indonesia

Benesse Style Care Co., Ltd.

100

100.0

Nursing care services for the elderly business, childcare business

Benesse Senior Support Co., Ltd.

100

100.0*4

Nursing care consultation service business

Benesse Palette Co., Ltd.

100

80.0*5

Food delivery services and nursing care food for seniors business

Benesse MCM Corp.

80

100.0*4

Introduction and temp staffing of nurses and human resources trained in nursing care

Berlitz Corporation

Benesse Corporation China
PT. Benesse Indonesia

1,005 Thousands of U.S. dollars

100.0Language instruction, global leadership training and support for study overseas

Benesse InfoShell Co., Ltd.

150

90.0

Information system maintenance and operation business, information processing service business

Benesse Business-mate, Inc.

50

100.0*6

Office operational management, outsourcing and support services

Simul International, Inc.

40

100.0

Interpretation, translation and language instruction business

20

100.0

Hotel and campsite operation and management

20

100.0

Creation, sales and distribution of study materials

3,600 Thousands of H.K. dollars

100.0

General trading and quality assurance related to educational equipment, toys and other items

Naoshima Cultural Village Co., Ltd.
Benesse Base-Com, Inc.
Benesse Hong Kong Co., Ltd.
Plus 15 other subsidiaries.

*1 Indirect stock holding of 65.2% through a subsidiary *2 Including an indirect stock holding of 50.0% through a subsidiary *3 Including an indirect stock holding of 0.3% through a subsidiary*4 Indirect stock holding through a subsidiary *5 Indirect stock holdings of 80.0% through subsidiaries *6 Including indirect stock holdings of 2.0% through subsidiaries

Benesse Holdings corporate website
www.benesse-hd.co.jp/en/
Our corporate website provides comprehensive information on the Group as a whole.

Corporate and Group information

63

Benesse Integrated Report 2019

Investor Relations

Sustainability

Investor Information As of March 31, 2019
Shares issued

102,483,603 shares

Unit of trading

Listed date

October 26, 1995

Independent auditor Deloitte Touche Tohmatsu LLC

Securities listing(Common stock) Tokyo Stock Exchange, First Section
Ticker code

9783

Isin code

JP3835620000

100 shares

Transfer agent

Mitsubishi UFJ Trust and Banking Corporation

Shareholders

40,573

Top 10 shareholders

Shareholdings by type of shareholder
Shares (Thousand)

Percentage (%)

The Master Trust Bank of Japan, Ltd.

12,743

13.22

Japan Trustee Services Bank, Ltd.

12,11012.57

Treasury Stock

efu Investment Limited

7,858

8.15

6.00%

Fukutake Foundation

6,408

6.65

The Chugoku Bank, Ltd.

2,787

2.89

JP Morgan Chase Bank 385635

2,475

2.57

SSBTC Client Omnibus Account

1,941

2.01

Minamigata Holdings, Inc.

1,836

1.90

Individuals and
Other

Nobuko Fukutake

1,769

1.83

18.02%

State Street Bank West Client - Treaty 505234

1,670

1.73

Notes: 1. The shares held by The Master Trust Bank of Japan, Ltd. include 6,809 thousand Company
shares (a 7.06% investment ratio) contributed by efu Investment Limited as trust assets. efu
Investment is an asset management and investment corporation of which Hideaki Fukutake
serves as representative. The decision-maker with respect to the execution of voting rights’
related to the consigned trust assets is efu Investment Limited.
2. The Company owns 6,156 thousand shares of treasury stock which are not included above
because they do not carry voting rights. These shares of treasury stock are also excluded
from the calculation of percentages.

Financial Instruments Firms

0.82%

Other Corporations

11.01%

Financial
Institutions

31.20%

Foreign Companies—Other

32.91%

Coverage in SRI indexes
MSCI ESG Index*1

FTSE*2*1 The inclusion of Benesse Holdings, Inc. in any msci index, and theuse of msci logos, trademarks, service marks or index names herein,
do not constitute a sponsorship, endorsement or promotion ofBenesse Holdings, Inc. by msci or any of its affiliates. the msci indexes
are the exclusive property of msci. msci and the msci index names
and logos are trademarks or service marks of msci or its affiliates*2 FTSE Russell (the trading name of FTSE International Limited andFrank Russell Company) confirms that Benesse Holdings, Inc. has
been independently assessed according to the FTSE4Good and
FTSE Blossom Japan Index criteria, and has satisfied therequirements to become a constituent of the FTSE4Good IndexSeries and FTSE Blossom Japan Index. Created by the global index
provider FTSE Russell, the FTSE4Good Index Series and FTSE
Blossom Japan Index are designed to measure the performance ofcompanies demonstrating strong Environmental, Social andGovernance (ESG) practices. These indices are used by a wide
variety of market participants to create and assess responsible
investment funds and other products

Benesse Integrated Report 201964

About the cover photo
Benesse Art Site Naoshima is thecollective name for our art-related
activities taking place mostly on theisland of Naoshima on the Seto Inland
Sea. We aim for it to be a special place
unlike any other, which inspires
people to reflect on the meaning of“Well-being” by spending time creating
art amongst the Seto Inland Sea
scenery. Contributing to the society of
the local community in all facets of theenvironment, culture, and economy,
we are fostering a relationship ofmutual growth between modern art
and the region it encompasses.

Benesse Holdings, Inc.
Investor Relations Department
1-34, Ochiai, Tama-shi, Tokyo
206-0033, Japan
Phone: +81-42-357-3656
Email: tokyoir@mail.benesse.co.jp
URL: https://www.benesse-hd.co.jp/en/ir/index.html

Looking out over the Seto
Inland Sea from Naoshima

Benesse Art Site Naoshima website:

http://benesse-artsite.jp/en/

To find out more about the Benesse GroupOn our website you will find content and videos that are linked to the content of this report.
Feel free to look at them to complement this report.

Special Content
From the project featured in Focus within this report, we share ideas unique toBenesse and comments from people on-site about bringing about well-being.
Domestic Education

Domestic Education

Nursing Care and Childcare

Developing learning material
for English four skills

Implementing Classi

Implementing the Service
Navigation System

Material to teach each child
English that is actually
useful• Interview article

https://www.benesse-hd.co.jp/
en/ir/library/ar/2019/focus/
index.html

Pioneering a new education
format that trains the ability
to learn independently• Digest article

https://www.benesse-hd.co.jp/
en/ir/library/ar/2019/focus/
classi.html• Video

Changing the future of thenursing care setting with
the Benesse Method• Digest article

https://www.benesse-hd.co.jp/
en/ir/library/ar/2019/focus/
service.html• Video

Online Version ofBenesse Report 2019
HTML articles, PDF files, andvideos of the report areavailable on the website.
https://www.benesse-hd.co.jp/
en/ir/library/ar/2019/index.html