Riso Kyoiku Co., Ltd.
Q3 Financial Results Briefing for the Fiscal Year Ending February 2023
January 12, 2023

Event Summary[Company Name]

Riso Kyoiku Co., Ltd.

[Company ID]

4714-QCODE[Event Language]

JPN[Event Type]Earnings Announcement[Event Name]

Q3 Financial Results Briefing for the Fiscal Year Ending February 2023

[Fiscal Period]

FY2023 Q3[Date]

January 12, 2023

[Number of Pages]

23[Time]

15:30 – 15:56(Total: 26 minutes, Presentation: 14 minutes, Q&A: 12 minutes)[Venue]Webcast[Venue Size][Participants][Number of Speakers]

SupportJapan
Tollfree050.5212.7790
0120.966.744

2Masahiko Tenbo
Masaaki Kume

North America
Email Support

President and CEO
Vice President and CFO

1.800.674.8375
support@scriptsasia.com
1

Presentation
Tenbo: Hello, everyone. My name is Tenbo from Riso Kyoiku Co., Ltd. It’s a pleasure to meet you all.
Kume: My name is Kume from Riso Kyoiku. It’s a pleasure to meet you all.
Tenbo: It’s now time for us to start the Q3 financial results briefing for the fiscal year ending February 2023.
As part of our measures to prevent the spread of COVID-19, we have again decided to hold our financial results
briefing online. We apologize for any inconvenience this may cause and appreciate your understanding.
Kume: Today, just like the usual process, I will explain the Q3 results for the fiscal year ending February 2023,
the results and future outlook, the background, shareholder return policy, and future prospects, followed bya question-and-answer session for questions sent to us through the Q&A function. Please feel free to submit
questions through Q&A, even during the presentation.
President Tenbo will now explain the Q3 results for the current fiscal year ending February 2023.
President Tenbo, please begin.
Tenbo: I will now explain the Q3 results for the fiscal year ending February 2023.

SupportJapan
Tollfree050.5212.7790
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
2

Net sales increased by JPY1.181 billion compared to the previous period at JPY23.245 billion. Operating
income decreased by JPY450 million at JPY1.624 billion, ordinary income decreased by JPY419 million at
JPY1.66 billion, and current net income decreased by JPY292 million at JPY1.022 billion.

SupportJapan
Tollfree050.5212.7790
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
3

I will now explain the background of our results.
At the end of November 2022, the total number of students enrolled in the entire group was 27,134, anincrease of 0.1% compared to the previous year, which is an increase of 6% compared to two years ago.
Net sales for Q3 of the current fiscal year increased 5.4% YoY as the tutoring school business, the in-school
individual tutoring business, and the character-emotional camp education business increased from theprevious year.
Income decreased YoY due to an increase in personnel expenses resulting from base salary increases for
employees, workers, and teachers to acquire talented human resources and due to an increase in advertisingexpenses for hiring in H1. Also, a sharp rise in various prices, including utility costs due to soaring resource
and crude oil prices arising from the global rise in energy demand, along with the weak yen could have resulted
in the decrease.

SupportJapan
Tollfree050.5212.7790
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
4Regarding the status for each segment, we had the TOMAS Futamatagawa, Hamadayama, and Oyamadai
schools opening in March 2022 and the Kawaguchi school renovation for our tutoring school business. We
renovated the TOMAS Mitaka school and opened the new Inter TOMAS Mitaka school in May. We renovated
the TOMAS Musashi-Kosugi school in August, the TOMAS Tachikawa school in September, the TOMAS
Kinshicho school in October, and the TOMAS Kamiooka school in November.
As of the end of November 2022, there were 96 tutoring schools and 12 English conversation schools.
As for the future, we plan to open the TOMAS Ebina school this month, January 2023, and renew the TOMAS
Kunitachi school in February.

SupportJapan
Tollfree050.5212.7790
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
5

Next is Meimonkai, a private tutoring dispatch business.
In April 2022, the Meimonkai Sannomiya Ekimae school was renovated, whereas the Meimonkai Gokiso
school opened and the Meimonkai Tsukuba Ekimae school was renewed in October.
Under the new brand “MEDIC Meimonkai” , the Osaka main office school opened in March and the Kobe
school in April, bringing the total to 36 Meimonkai schools, 12 TOMEIKAI schools, and two MEDIC Meimonkai
schools as of the end of November 2022.

SupportJapan
Tollfree050.5212.7790
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
6

Next is Shingakai, an early childhood education business.
In April 2022, Shingakai and Konami Sports started a new brand, “Konami Sports Shinga's Academy”, with aschool opening in Shinagawa.
In August, Shinga's Club Nursery and Shinga's Club School Children’s Harumi Triton school opened, bringing
the total number of Shingakai classrooms to 24, Shinga's Club Nursery to 8, and Shinga's Club School Children
to 19 as of the end of November 2022.
As for the future, we plan to renovate Shingakai Futakotamagawa school in March 2023 in the next fiscal year
and open Shinga's Club School Children’s Futakotamagawa school in April.

SupportJapan
Tollfree050.5212.7790
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
7For the School TOMAS in-school individual tutoring business, in addition to the conventional services, such ascomplete in-school one-on-one tutoring and a self-study system that allows students to ask questions at any
time, we have started new services, such as online tutoring and AI material-based individual tutoring.
As of the end of November 2022, we had 110 schools under contract with 84 of them in operation.
School TOMAS has been recognized not only as a way to support schools' academic performance, but also asa solution to the issue of long working hours for school teachers. And we expect a further increase in inquiries
in the future.
In addition, we anticipate an increase in future revenues from the yearly expansion of grade levels of schoolsthat have already introduced the system.
Next, our vice president, Kume, will explain the dividend for the fiscal year ending February 2023.
Vice President Kume, please begin.

SupportJapan
Tollfree050.5212.7790
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
8

Kume: As mentioned every time, we consider shareholder returns as one of our most important management
subjects. This policy has not changed.
As previously announced, we plan to pay a dividend of JPY16 per share for the current fiscal year based on
the dividend for the fiscal year ending February 2022. This has not changed.
We will continue our efforts to strengthen returns to shareholders and increase corporate value.
Thank you.

SupportJapan
Tollfree050.5212.7790
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
9

Tenbo: Next, I would like to explain our future prospects for business alliances with other industries. This issomething we have been mentioning every time throughout this fiscal year, and I will explain briefly.
First, I will describe the strengthening of our capital and business alliance with Hulic Co., Ltd.
We finalized a capital and business alliance with the real estate developer Hulic Co., Ltd. in 2020. The alliance
was further strengthened in November 2021 when the company became our largest shareholder through athird-party allocation.

SupportJapan
Tollfree050.5212.7790
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
10

As for the business alliance between Shingakai and Konami Sports Co., Ltd., we started “Konami Sports
Shinga’s Academy” as a new brand through the alliance.
Konami Sports Shinga's Academy is a new one-stop type brand for schoolchildren, which will be actively
expanded to facilities owned by Konami Sports throughout Japan.

SupportJapan
Tollfree050.5212.7790
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
11

On April 1 of last year, we opened our first school building, the Shinagawa school in the Konami Sports mainbranch. This has been very well received, and we are planning to expand and increase the floor space.
The second school is scheduled to open in April this year at the Nishinomiya Annex of Konami Sports’ mainbranch as the Nishinomiya school, along with one each in the Osaka and Kobe areas.
Including these four schools, we plan to open approximately 20 schools in the future.

SupportJapan
Tollfree050.5212.7790
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
12

In addition to the alliances with Hulic and Konami Sports, our three companies have formed a business allianceand are currently developing Kodomo Depart, a building specializing in education. We will develop each of
our brands through Kodomo Depart.
The same building will also house various children's service tenants, including Konami Sport’s children's gym,a children's clinic, and a café. We expect that our enclosure strategy will progress more smoothly as we will
be able to provide an environment where children can easily attend.

SupportJapan
Tollfree050.5212.7790
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
13

It was announced last April that Hulic was selected as the project proponent for Kodomo Depart as part of the
Urban Regeneration Step Up Project implemented by Shibuya Ward.
We are planning to develop Kodomo Depart within MITAKE Link Park, a building that is planned to be
developed in the area. Shingakai, Shinga's Club Nursery, Shinga's Club School Children, and other schools arescheduled to open.

SupportJapan
Tollfree050.5212.7790
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
14

Construction is scheduled to be completed in 2026, and a total of six other redevelopment or reconstruction
projects are underway, with plans to expand to 20 buildings in the Tokyo metropolitan area by 2029.

SupportJapan
Tollfree050.5212.7790
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
15

Next, I would like to explain our business alliance with Kids Smile Holdings.
Although Shingakai has had a business alliance with Kids Smile Project inc. since 2015, we announced last
March a business alliance among four companies, including the parent companies of these two companies,
Riso Kyoiku and Kids Smile Holdings, to implement a more comprehensive alliance relationship.
Shingakai and Kids Smile Project will deploy executives to each other and develop original educational
programs and business schemes to be established through this business alliance to be implemented at nurseryschools, certified kindergartens, and other facilities nationwide.
Also, with approximately 4,000 members of the Kids Smile Project, as well as members attending nationwide
nurseries and certified kindergartens, we are introducing services to enroll in Shingakai, TOMAS, Meimonkai,
and others to a customer base that wishes to take entrance exams for elementary and junior high schools.
In addition to this, we will acquire talented human resources by establishing a hiring system and training
system aimed at acquiring talented nursery staff and strengthening our content, brand, and ability to attract
customers, thereby laying the foundation for our future growth strategy.

SupportJapan
Tollfree050.5212.7790
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
16

Next, I would like to explain the business alliance between School TOMAS and KDDI Matomete Office.
KDDI Matomete Office provides schools with hardware, such as an Internet environment and tablet
arrangements. School TOMAS has the role of utilizing its hardware to provide learning support with software.
The two companies will form a business alliance to develop the infrastructure for ICT education for public
education.
School TOMAS services are offered to schools introducing KDDI Matomete Office’s services. We don’t justpromote a mutual introduction of KDDI Matomete Office's services to schools introducing School TOMAS.
Each company intends to expand expansion to new schools.
We believe that this partnership will continue to contribute to an increase in the number of schools
introducing School TOMAS.
For my final explanation, the Common Test for University Admissions is also coming up this weekend. Juniorhigh school entrance exams have also started in Saitama. The time has come for the actual exam.
The Ministry of Education, Culture, Sports, Science and Technology (MEXT) has announced the results of asurvey on children's learning expenses, indicating that expenses on cram schools for elementary and juniorhigh school students have reached a record high.
Due especially to the COVID-19 pandemic, an increasing number of families are aiming to enroll in private
schools that offer generous ICT-based learning support. I think it is also a sign that people are becoming moreaware of the entrance examinations.

SupportJapan
Tollfree050.5212.7790
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
17

We remain committed to providing genuine educational services while still emphasizing one-on-one tutoringwith our own infection prevention measures in place.
Thank you very much for listening.

SupportJapan
Tollfree050.5212.7790
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
18

Question & Answer

Kume [M]: We will now start our question-and-answer session.
Please go ahead.
Tenbo [A]: There are a few questions we have received in advance, so I will answer them first.
We received a question regarding a topic including the external environment. When he mentioned theexternal environment, I think he was referring to the external environment of the cram school industry.
Other companies in the same industry made their announcements around the same time but just before us.
And the situation is similar. The situation seems to be continuing with increased revenues and decreased
income.
I have had opportunities to talk with other managers in the cram school industry, and they all say that the
number of inquiries and enrollments has dropped this fiscal year compared to the previous year.
I think that the slightly distorted environment is possibly due to the COVID-19 pandemic, or that the previous
fiscal year was quite a bubble as a reaction to the low membership from two years ago. However, it is pointless
to discuss such an environment, so we are determined to do our best by putting more effort into our services.
And now, the next question. Tokyo Metropolitan Goverment are planning to start an in-school cram school inTokyo. Is it feasible for municipalities and your School TOMAS to get involved?
There was an article in the newspaper the other day regarding the Tokyo Metropolitan Government's plan tostart individual tutoring or cram schools within schools.
We used to do this before at two metropolitan high schools. Of course, supplementary cram schools are fine.
But for municipalities, bidding processes are inevitable, and they tend to create a situation where the cheapest
bidder enters the market and wins.
In this case, I think it may be difficult for us to provide our services as they may not be suitable. As I am awarethat various circumstances may change, I am always concerned about it.
Let’s move on to the next question.
Kume [A]: I will answer this one.
The question is regarding how much increase in personnel, advertising, and other expenses we should expect
this fiscal year. How should we consider this cost for the next fiscal year?
I believe that a 5% to 10% price increase would be acceptable given the strength of our brand, but the person
is asking about our thoughts on our pricing strategy.
First of all, the increase in personnel expenses for this fiscal year is attributed to the increase in the numberof employees, an increase to the base salary to some extent, and the increase in personnel expenses forteachers. Some restaurants have started accepting part-time student workers, and there is some competition
within the industry, resulting in an inevitable increase in labor costs. Other expenses, such as utilities, havealso increased in price.

SupportJapan
Tollfree050.5212.7790
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
19Our company is involved in cram schools, so we consume electricity late into the night. There is no way wecan change this, and this fully affects these costs.
Roughly speaking, personnel expenses increased range from JPY350 million to JPY400 million. Then there are
the so-called utilities and utility costs, which account for slightly more than JPY100 million. Advertising costs
were slightly less than JPY100 million, which means that there was a cost increase from JPY500 million to
JPY550 million compared to the previous fiscal year.
I am sure the president will talk about this late in the next fiscal year. We are considering a 5% to 10% priceincrease as a reply to the question.
Tenbo [A]: That’s right. We have also received a question regarding sharing details of the price increase.
For the next fiscal year, we are considering a price increase in course fees for TOMAS, Meimonkai, andShingakai. As the Vice President just mentioned, we are considering the range of 5% to 10%. We have already
decided on this and are presenting it to everyone as we prepare contracts for the next fiscal year.
That is all for my explanation.
Do you have future prospects for early childhood education? We received a question that shows interest in
our future prospects for the early childhood education business.
Let’s see. There is a tendency where demand for entrance exams gradually shifts toward younger ages. The
situation has various uncertainties, and the demand for entrance exams gradually shifts toward younger ages.
Therefore, although some entrance exams are limited to the Tokyo metropolitan area, the number of kids
who take entrance exams for elementary schools and kindergartens is increasing rapidly. In this sense, I
believe there will be a trend in specializing in early childhood education and that the demand will increase in
the future.
We hope to further expand our business by firmly capturing the demand of the students at Shingakai.
We received other questions, such as any other strategies besides Kodomo Depart with Hulic or possibilities
on further strengthening of capital ties.
Kume [A]: It's hard to answer regarding capital enhancement. As we have currently announced, Hulic is thelargest shareholder with 20%. And Sundai Preparatory School owns 7%, whereas Mr. Iwasa of our company
owns 10%, along with our company's stock. They are major shareholders in many of those areas.
Hulic may have their own ideas about this, and although it is not up to us to express our thoughts, I think weshould strengthen our relationship as our policy. Please understand that this was a long time ago. Therefore,
it is a bit difficult to offer further details.
Aside from Kodomo Depart, we are currently receiving various proposals, and we will do what is possible. For
example, we have received property offers one after another that are not related to Kodomo Depart. We havealso received various partnership proposals related to our education business. So, we believe there will
obviously be other relationships in the future besides Kodomo Depart.
Tenbo [A]: The location of the property is very nice, so we are really grateful for the opportunity to acquire
such a location.
Inflation, teacher hiring, competitive pricing strategy. Since I have already answered the question about thepricing strategy, and as I mentioned about the increase in labor costs for the teacher hiring competition,
SupportJapan
Tollfree050.5212.7790
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
20

teachers are the lifeblood of our company and are also our products. Therefore, we would like to put more
effort into hiring and training.
In terms of hiring, although we continue to offer the highest hourly wage in the individual tutoring industry,
we hope to further differentiate ourselves by offering more benefits, job-hunting support, and other relatedareas.
We have also established a company specializing in hiring called Kokokara Teachers, which is gradually gaining
momentum, and we hope to put more effort into hiring teachers.
Kume [M]: I hope that explains everything. Is there anything else?
I would now like to conclude our question-and-answer session.
Tenbo [M]: Thank you for all your questions. If you have any other questions, please feel free to contact thecorporate planning department at any time.
This may have been a bit short, but I will now conclude the Q3 financial results briefing for the fiscal year
ending February 2023. Thank you very much for your time today.
Kume [M]: Thank you very much.
[END]______________
Document Notes
1.
2.
3.
4.

SupportJapan
TollfreePortions of the document where the audio is unclear are marked with [Inaudible].
Portions of the document where the audio is obscured by technical difficulty are marked with [TD].
Speaker speech is classified based on whether it [Q] asks a question to the Company, [A] provides ananswer from the Company, or [M] neither asks nor answers a question.
This document has been translated by SCRIPTS Asia.

050.5212.7790
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
21

Disclaimer
SCRIPTS Asia reserves the right to edit or modify, at its sole discretion and at any time, the contents of thisdocument and any related materials, and in such case SCRIPTS Asia shall have no obligation to provide
notification of such edits or modifications to any party. This event transcript is based on sources SCRIPTS Asia
believes to be reliable, but the accuracy of this transcript is not guaranteed by us and this transcript does not
purport to be a complete or error-free statement or summary of the available data. Accordingly, SCRIPTS Asia
does not warrant, endorse or guarantee the completeness, accuracy, integrity, or timeliness of theinformation contained in this event transcript. This event transcript is published solely for information
purposes, and is not to be construed as financial or other advice or as an offer to sell or the solicitation of an
offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal.
In the public meetings and conference calls upon which SCRIPTS Asia’s event transcripts are based, companies
may make projections or other forward-looking statements regarding a variety of matters. Such forwardlooking statements are based upon current expectations and involve risks and uncertainties. Actual results
may differ materially from those stated in any forward-looking statement based on a number of importantfactors and risks, which are more specifically identified in the applicable company’s most recent public
securities filings. Although the companies may indicate and believe that the assumptions underlying theforward-looking statements are accurate and reasonable, any of the assumptions could prove inaccurate orincorrect and, therefore, there can be no assurance that the anticipated outcome described in any forwardlooking statements will be realized.
THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION OF THE APPLICABLE
PUBLIC MEETING OR CONFERENCE CALL. ALTHOUGH SCRIPTS ASIA ENDEAVORS TO PROVIDE ACCURATE
TRANSCRIPTIONS, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE
TRANSCRIPTIONS. IN NO WAY DOES SCRIPTS ASIA OR THE APPLICABLE COMPANY ASSUME ANYRESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BY ANY PARTY BASED UPON ANY EVENT
TRANSCRIPT OR OTHER CONTENT PROVIDED BY SCRIPTS ASIA. USERS ARE ADVISED TO REVIEW THE
APPLICABLE COMPANY'S PUBLIC SECURITIES FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER
DECISIONS. THIS EVENT TRANSCRIPT IS PROVIDED ON AN "AS IS" BASIS. SCRIPTS ASIA DISCLAIMS ANY AND
ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWAREERRORS OR DEFECTS, AND ACCURACY, COMPLETENESS, AND NON-INFRINGEMENT.
None of SCRIPTS Asia’s content (including event transcript content) or any part thereof may be modified,
reproduced or distributed in any form by any means, or stored in a database or retrieval system, without theprior written permission of SCRIPTS Asia. SCRIPTS Asia’s content may not be used for any unlawful or
unauthorized purposes.
The content of this document may be edited or revised by SCRIPTS Asia at any time without notice.
Copyright © 2023 SCRIPTS Asia Inc. (“SCRIPTS Asia”), except where explicitly indicated otherwise. All rights
reserved.

SupportJapan
Tollfree050.5212.7790
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
22