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The 61st Annual ReportApril 1, 2022 - March 31, 2023

Progress and results of business

Although there was some relaxation in the pandemic response measures in a number of countries, the number of new infections overseas reached a record high in February of 2022 and the number of new infections in Japan reached a record high in August of 2022. Thus, the impact on the social and economic environment from COVID-19 in the consolidated fiscal year was greater than ever. In addition, accelerating price hikes due to the global situation cast a significant shadow over the economic situation both inside and outside of Japan. Moreover, the rapid depreciation of the yen also affected domestic economic and business trends.

In response to such changes in the business environment, domestic Center operations focused on “increasing customer perceived value,” which is a priority activity of the Mid-term Corporate Plan: Innovation 2025, and this has made steady progress. As one result of these efforts, in the third JCSI (Japan Customer Satisfaction Index) survey released on November 8th, 2022 by the SPRING (Service Productivity & Innovation for Growth) organization, Kumon received the second highest customer satisfaction score in the educational services section, and they commented, "the score for the Kumon Method has been increasing since FY2020.”
In addition to these efforts aimed at "increasing customer perceived value," Kumon has also been implementing new external media strategies, including the full-scale operation of Center web advertising as well as the usage of social networking services such as Instagram and LINE.

As a result, new enrollment and additional subject enrollment in the fourth quarter exceeded the same period the previous year, and enrollment after the free trial study campaign in February was 111.3% compared to the previous year, showing a recovery in overall enrollment. As a leading indicator, enrollment in December was 101.8% year-on-year in the monitor Centers offering the revised Japanese worksheets.

In regard to overseas Center operations, efforts were made to further improve and upgrade activities, including improving response to potential customers inquiring about enrollment. As a result, Kumon North America, Kumon South America, and Kumon Europe and Africa, which began to increase enrollment in FY2021, achieved further growth in the number of students in the fiscal year. Kumon Asia and Oceania was somewhat behind this pace but, nonetheless, it achieved a rapid recovery in enrollment during the fiscal year to lead the Kumon Group in the momentum of enrollment growth. Only in China, strongly affected by the government’s “double reduction policy” and zero-COVID policy, was there a standstill in enrollment.
In total, the five overseas regions achieved a higher degree of recovery than in the previous year, with a year-on-year enrollment of 107.8% in 2022 for the fiscal year ending on December 31, compared to 106.3% in 2021.

One more notable overseas initiative was efforts to develop our tablet study operations. This was begun as an experiment to realize the goal of “ICT appropriate to Kumon” as stated in the Mid-term Corporate Plan: Innovation 2025, and this has been further developed and verified through repeated monitoring. As of December 2022, the last month of large-scale monitoring, there were 23,705 students engaged in tablet study in the five overseas regions. Tablet study operations, under the name “KUMON CONNECT,” were begun overseas in January of 2023, and by March of 2023 enrollment had already more than doubled to 48,174 students in a period of only three months.

As for expansion into new countries, we achieved expansion into Pakistan. This initiative was sparked by the aspirations of a pioneering Instructor who wished to enable the children of Pakistan to study with the Kumon Method. This expansion was also made possible thanks to the help of business partners who share those same aspirations, and was based on careful preparations. An incorporated company was set up in 2023 as a local subsidiary, and we are determined to enable as many children as possible to develop their full potential in Pakistan.

Significant progress was also made during the fiscal year in our licensing business, which involves licensing the Kumon Method to be implemented by partner businesses. In Japan, we have started a program with the Ashinaga Foundation to provide learning support to orphans in elementary and junior high schools, and with the Deloitte Tohmatsu Well-being Foundation to provide learning support in cafeterias for children. Overseas, pilot programs for introduction of the Kumon Method into schools in Nepal and other countries has been decided. In addition, based on the results of our collaboration with BRAC, a non-profit organization from Bangladesh, as well as in response to the wishes of the government of Bangladesh, we will launch a pilot program in six "Schools of the Future" promoted by the Ministry of Science and Information & Communication Technology. Furthermore, in regard to the “2022 Survey on Overseas Development of Japanese Education in the With-COVID/Post-COVID Era,” conducted under the auspices of EDU-Port Japan, which is led by the Ministry of Education, Culture, Sports, Science and Technology of Japan and is aimed at promoting Japanese-style education overseas, a study to be jointly carried out by Kumon and Nagoya University called "The improvement of non-cognitive ability of industrial workers through habitual learning of mathematics and its measurement of its effects" to be implemented in a company in South Africa was selected. In addition to the Center business model through franchising, which has been the main pillar of the Kumon Group's business to date, efforts are steadily underway to develop the licensing business into another pillar of our operations.

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Over the past three years, the Kumon Group has worked to reform its profit and loss structure so that we will be able to invest sufficient resources in the development and operation of KUMON CONNECT, and in the implementation of other future-oriented strategies. In Japan, we have selected and concentrated on the promotion of activities and expenditures that should be prioritized, with a focus on "improving customer perceived value.” Overseas, the Kumon Group as a whole has been working on "structural conversion to a high-profit structure" as a priority item of our mid-term overseas Center operations plan. As a result, we were able to significantly change our profit and loss structure to one that is still profitable while investing resources in future initiatives.

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As a result, consolidated sales in this fiscal year were 82,059 million yen, an increase of 5,715 million yen compared with the previous fiscal year (year-on-year increase of 7.5%). Operating income was 12,085 million yen (year-on-year increase of 25.1%), ordinary income was 13,634 million yen (year-on-year increase of 14.8%), and the net income attributable to the owners of the parent company for the fiscal year was 10,227 million yen (year-on-year increase of 22.5%). The increases in operating income, ordinary income, and net income attributable to the owners of the parent company were due to the increase in sales and the ongoing reform of the profit and loss structure.

As of the end of March 2023, the total number of subject enrollments worldwide was 3.62 million.

Mitsunori Tanaka
Kumon Institute of Education Co., Ltd.