Riso Kyoiku Co., Ltd.
Q3 Financial Results Briefing for the Fiscal Year Ending February 2022
January 13, 2022

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 2022

[Fiscal Period]

FY2021 Q3[Date]

January 13, 2022

[Number of Pages]

21[Time]

15:30 – 15:53(Total: 23 minutes, Presentation: 15 minutes, Q&A: 8 minutes)[Venue]Webcast[Venue Size][Participants][Number of Speakers]

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Shigenori Hirano
Masaaki Kume

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Vice President and CFO

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Presentation
Hirano: Hello, everyone. I am Hirano from Riso Kyoiku Co., Ltd. Thank you for attending this presentation.
Kume: This is Kume from Riso Kyoiku Co., Ltd. Thank you for joining us today.
Hirano: We will now begin the conference call for the third quarter of the fiscal year ending February 28, 2022.
Again, as part of our infection prevention measures, we’ve decided to hold this briefing online. We apologize
for any inconvenience this may cause, and thank you for your understanding.
Kume: Using the presentation materials, we will start by explaining our results, earnings forecast, dividends
and our progress against the medium-term management plan for the fiscal year ending February 28, 2022, as
well as the background behind our strong progress and expectations. We will then answer your questions sent
via the Q&A function. If you have any questions even during the explanation, please feel free to send them tome.
Hirano will now start his explanation about our results for the third quarter of FY2021.
President Hirano, please.

Hirano: Allow me to explain our results for the third quarter of the fiscal year ending in February 2022.

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I would like to explain the YoY changes in operating income and net income, because their growth surpasses
1,000%.
Net sales increased by JPY4.178 billion to JPY22.064 billion, operating income increased by JPY1.925 billion to
JPY2.074 billion, ordinary income increased by JPY1.741 billion to JPY2.079 billion, and net income increasedby JPY1.274 billion to JPY1.314 billion.
Even compared to the third quarter of the fiscal year ending February 29, 2020, before the pandemic, bothsales and profits were strong, and both sales and profits reached record highs for the third quarter.

As for the full-year forecast, we revised upward our net sales to JPY30 billion, operating income to JPY3.01
billion, ordinary income to JPY3 billion, and net income to JPY2.1 billion on October 8, due to our strong
performance during the first and second quarters, and we are currently on track.

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As for dividends, we have always considered shareholder return as one of the most important management
issues. Taking into account the upward revision of the full-year earnings forecast and the future businessenvironment, the dividend forecast for the fiscal year ending February 28, 2022 has been revised upward from
JPY12 per share to JPY14 per share.

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4For the fiscal year ending February 28, 2022, as I explained earlier, we are forecasting net sales of JPY30 billion,
an ordinary income of JPY3 billion, and a net income of JPY2.1 billion. For the fiscal year ending February 28,
2023, we plan net sales of JPY32 billion, an ordinary income of JPY3.2 billion, and a net income of JPY2.1
billion. For the fiscal year ending February 29, 2024, we expect net sales of JPY35.5 billion, an ordinary incomeof JPY3.7 billion, and a net income of JPY2.5 billion.

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We believe that the primary reason for the strong results and outlook is the increase in the number ofstudents. The Group's total number of students increased by 6.2% YoY to reach 27,206 students compared toNovember 2020, and by 7.9% compared to November 2019.
We believe that this was due to the fact that we adopted unprecedented measures in our industry to preventthe spread of the new coronavirus, and aggressively developed new schools.
Furthermore, with the implementation of workplace vaccination we have been able to create an environment
where students can take face-to-face classes with greater peace of mind.

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Now, I would like to zoom in on the status of each company in the Riso Kyoiku Group individually.
First of all, in the private tutoring school business, TOMAS opened 4 new schools, expanded and renovated 4schools, opened 2 new MEDIC TOMAS schools, and opened 1 new Inter TOMAS school, bringing the total
number of cram schools and English conversation schools to 103 as of the end of November 2021.
As a result, TOMAS counted 14,878 students at the end of November 2021, an increase of 4.5% compared toNovember 2020. This is an increase of 7% compared to November 2019, before the COVID-19 pandemic.

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Next, Meimonkai, our tutor dispatch business, has opened 2 new schools and expanded and renewed 1
school. TOMEIKAI has opened 2 new schools and expanded and renewed 2 schools.
As a result, Meimonkai counted 4,306 students at the end of November 2021, up 7.4% from November 2020.
This also represents an increase of 4.6% compared to November 2019.

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In addition, Meimonkai launched a new division called Meimonkai Online last term to provide online classes
that guarantee the full quality of one-on-one tutoring. The number of members is growing steadily as we
receive more applications from students anxious about going out, and students living in rural areas oroverseas.

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9In addition, Meimonkai, which has the best track record of success in medical school entrance exams out ofany tutoring center, has decided to develop MEDIC Meimonkai, a prep school specializing in face-to-face,individualized instruction for medical school entrance exams, exclusively for students who have failed in thepast. In March of this year, we opened our Osaka headquarters school, and we plan to open more than 10
schools in the next 3 years.

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10Next, our preschool education business. We opened 1 Shinkagai school, 1 Shinga’s Club Daycare school, and2 Shinga’s Club Schoolchildren schools. As of the end of November 2021, we had 24 Shingakai schools, 7
Shinga’s Club Daycare schools, and 17 Shinga’s Club Schoolchildren schools.
As a result, Shinkagai had 3,878 students at the end of November 2021, up 8.4% compared to a year before.
This also represents an increase of 19.1% over November 2019.

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Like TOMAS, Shingakai has taken all possible measures to prevent the spread of the new coronavirus. Our
instructors wear masks and face shields, we’ve reduced the number of students per class, and have increased
the space between students in face-to-face classes.
In addition, we provide online exam preparation courses and entrance exam debriefing courses to ourmembers, which have been very well received.
At Shingakai, October and November are the months for elementary school and kindergarten entrance exams,
and we have received many happy comments from those who have passed this year's exams. The number ofstudents accepted to very selective schools, such as Keio Kindergarten and Waseda Jitsugyo Elementary
School, has increased by 7.2% compared to last year.

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12Next, the in-school individual tutoring business with School TOMAS. In addition to its existing services such as
face-to-face tutoring and a self-study system that allows students to ask questions at any time, the Company
has developed new services such as online tutoring and tutoring using AI teaching materials. As a result, thenumber of inquiries from private junior and senior high schools nationwide has increased dramatically. As ofthe end of November 2021, 89 schools had contracted to use the service.
In addition to supporting the school's academic performance, School TOMAS has been very well received asa means of solving the problem of long working hours for teachers. We have high expectations for future
inquiries.
Furthermore, we expect a significant increase in sales in the next fiscal year and beyond, as we expect theschools that have already introduced the system to use it for additional grades year after year.

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Next, I would like to explain our future prospects for business alliances with other industries.
First, I would like to explain the strengthening of the capital and business alliance with Hulic Co., Ltd.
We have had a capital and business alliance with Hulic since 2020, and through a third-party allocation in
November 2021, Hulic's shareholding ratio in our company increased to 20.66%, making it our largest
shareholder.
The partnership was further strengthened, and Hulic was able to preferentially introduce us to properties inprime locations in front of stations in major areas of central Tokyo, which it owns in abundance. This will
enable us to expand our classrooms in more advantageous locations than other companies in the industry,
which we expect will lead to our growth and expansion.

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Next, as announced in April last year, Shingakai and Konami Sports Co., Ltd. have entered into a businessalliance to develop a new brand, Konami Sports Shinga’s Academy. This new brand will be a one-stop shop forschool children that will fulfill parents' wishes to combine study and sports activities.
In April this year, we will open our first school in Shinagawa at the Konami Sports main store in Shinagawa.

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15Through a 3-party business alliance between Hulic, Konami Sports, and our company, we are developing
Kodomo Department Store, a building specializing in education. The building, owned by Hulic, will house avariety of services for children, including educational services provided by the Company, exercise services
provided by Konami Sports, a children's clinic, and a cafe.
By providing these services in the same building, we hope to reduce parents’ burden and provide anenvironment that is easier for children to access. We hope that this will facilitate our strategy of locking inchildren from the age of 1, which we have been promoting.

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Next, I would like to explain the business alliance between School TOMAS and KDDI Matomete Office
Corporation.
In the wake of the pandemic that started 2 years ago, the need for ICT education and infrastructuredevelopment in schools has increased. KDDI Matomete Office will provide schools with hardware, such as theInternet environment and tablet arrangements, and School TOMAS will provide learning support using thishardware. The 2 companies will work together to develop the infrastructure for ICT education in publicestablishments.
We’ve implemented mutual referrals, by introducing School TOMAS to schools using KDDI Matomete Officeand vice-versa. In addition, we’re actively signing brand new contracts.
We are currently in the process of signing contracts with schools through this partnership, and expect to makefurther progress in the next fiscal year and beyond.
Last but not least, examinations are about to start in earnest. The time has come to prove the strength of ourdifferentiated products as an individual tutoring and preparatory school. The Omicron variant is spreading
rapidly, but we will stick to face-to-face instruction coupled with adequate infection prevention measures.
Only face-to-face tutoring can provide appropriate guidance just before the exam. The pandemic has led to
the realization that online is not the best way to deliver authentic education to students. Our company willcontinue to provide face-to-face instruction for the bright future of our children.
Thank you very much for your kind attention.

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Question & Answer

Kume [M]: Now is time for the question-and-answer session. Let’s proceed.
Hirano [Q]: This is the first question.
“I was surprised to hear a report that Try, a private tutoring company, was going to be acquired for JPY100
billion. What do you think about the market capitalization of your company considering this information?”
Kume [A]: I will answer this.
We were also surprised to read the article about the JPY100 billion acquisition of Try. I think JPY100 billion isa bit high, but I can’t speak confidently since this is a private company and I don’t know what the finances arelike. We are currently at a little more than JPY50 billion, which is half of that amount. We are ahead of themin terms of quality and content, as well as in terms of profits, so I am a little surprised.
However, it is hard to say if our market capitalization is accurate, as this is something that the market decides.
But compared to Try, of course we are superior.
Hirano [Q]: The next one is about our partnerships. “You have been promoting business and capital allianceswith other industries, such as the business alliance with Konami Sports. What’s next in that area?”
Kume [A]: We will continue to move forward with the alliances that we are currently working on, and we will
start to see more and more results from the next fiscal year or so. For example, we could create 20 locations
with Konami and Shinga’s Academy. Also, we are planning to build 20 buildings in 5 years for Kodomo
Department Store and we could decide to pursue that goal in earnest.
With KDDI, we’ve already been introduced to about 250 schools, so we’ll keep that momentum to provide
more results.
However, this is not limited to 3 companies in particular, and as we have discussed with Hulic, if othercompanies want to join our group and work together, we will continue to include them. So, in reality, if there
are areas that we want to include, for example, nutrition education or medical care, we will continue toexpand in those areas. Our goal is to exchange information with each other to implement our lock-in strategy.
Hirano [Q]: “Are junior high school entrance examinations the main pillar of the TOMAS brand? Please give
us an outline of the sales composition ratio, for example a breakdown of elementary school versus high school
students.”
Hirano [A]: The mainstay of the TOMAS brand is the junior high school and university entrance examinations.
Because of the inevitably high number of face-to-face lessons, it is difficult for students who are preparing forhigh school entrance exams to attend our school, especially those who are preparing for entrance in publichigh schools managed by the Tokyo metropolis or the prefectures. That’s why we are aiming for private juniorhigh school entrance examinations and then university entrance examinations. For the breakdown of sales,
we have about 40% of our students enrolled in elementary school, 25% to 30% in middle school, and 30% to
35% in high school.
By the way, about 80% of our students are enrolled in private combined junior high and high schools. Thismeans that students are prepared for university entrance exams starting from junior high school.

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Hirano [Q]: "Are there any tutoring schools or preparatory schools that you are aware of as rivals?"
Hirano [A]: Other tutoring schools have already completely differentiated themselves from us, so there arebasically no tutoring schools that we consider as our rivals. If I had to name names, I’d say Waseda Academy
and SAPIX are very strong in junior high school entrance examinations, so we are making efforts to improve
our performance to match them.
Hirano [Q]: “As more and more new locations are being opened and expanded and renewed, I would like to
ask you about the current state of customer acquisition for these new locations.”
Hirano [A]: As I explained earlier, we had a lot of openings last year. Growth varies slightly depending on thearea where the school was opened and it’s been relatively steady. After all, one of our strengths is that TOMAS
employees provide tutoring services for students. We also have a sales department, which is responsible forentering new locations and acquiring students. It has been working well this term, and some of our fastestclassrooms have already attracted 150 to 200 students in 3 months.
Therefore, we believe that we can continue to aggressively develop new business in the future, as the initialinvestment in new openings has been recovered at an early stage.
Hirano [Q]: “I think you opened a lot of new schools this fiscal year because you could not open any in theprevious fiscal year. Are there any plans to open new schools in the second half of this fiscal year?”
Hirano [A]: We hope to open new schools in the next fiscal year in the same manner as we did this fiscal year.
Hirano [Q]: Next question. “You mentioned that you were going to establish MEDIC Meimonkai, how muchdo you plan on expanding it in the future?”
Hirano [A]: Regarding MEDIC Meimonkai, the plan is to have 23 schools in 5 years. The plan is to open 3
schools next year, 5 the following year, and 5 the year after that, so the number of schools will probably
increase by more than 10 in 3 years. We believe that the scale of sales per school is roughly JPY100 million to
JPY200 million, so if things go smoothly, this will lead to a general increase in sales by this amount.
Are there any other questions?
Thank you very much for your questions. As we have no further question, we will now adjourn thepresentation of financial results for the third quarter of the fiscal year ending February 28, 2022.
Thank you for your attention today.
Kume [M]: Thank you very much.
[END]______________
Document Notes
1.
Portions of the document where the audio is unclear are marked with [Inaudible].
2.
Portions of the document where the audio is obscured by technical difficulty are marked with [TD].
3.
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.
4.
This document has been translated by SCRIPTS Asia.

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