■ Growth strategy 1. Business environment Considering the business environment surrounding the "AIAI Three Education Zones" developed by the AIAI group <6557>, AIAI NURSERY in the field of licensed nursery schools is expected to experience a large shift in nursery policies from 2024, as the organization responsible for child and family services was established in April 2023 with the aim of improving the quality of early childhood education and care, and as a response to the "unprecedented decline in the number of children" in Japan. However, despite the encouragement from the government, the saturated market feeling cannot be ignored due to the declining birth rate and the significant reduction in the number of newly opened nursery schools, taking into account factors such as the resolution of the waiting list problem in the industry. We also believe that the elimination of small-scale operating companies, considering the shortage of childcare workers, is a possibility to consider. On the other hand, the number of children with developmental disabilities is increasing even in the declining birth rate, and the demand for facilities for disabled children (child development support, medical child development support, after-school day services, visit support for nursery facilities, etc.) is rapidly increasing. Considering this situation, we believe that, not only is the business environment for AIAI PLUS and AIAI VISIT positive, the business environment for the "AIAI Three Education Zones", which provides integrated child care, therapeutic care, and education, is also favorable. 2. AIAI Group Mid-term Management Plan 2023-2025 The company formulated the AIAI Group Mid-term Management Plan 2023-2025 in May 2023, which incorporated a reconsideration of the position of the tech field, the construction of new business models such as nursery school visit support (AIAI VISIT) and early childhood education programs. The target figures are listed as sales of 12-13 billion yen and operating profit of 300-500 million yen in the final fiscal year ending March 2026, and cumulative investment of 680 million yen over three years. In the first term of the plan, ending in March 2024, sales and operating profit exceeded the final year target value, and the total number of children, the total number of visits to nursery facilities, and the total number of internal license holders all exceeded the plan. The growth strategy is progressing smoothly, and there is no major change in the basic strategy of maximizing group synergy through the "AIAI Three Education Zones". Regarding AIAI NURSERY, considering the situation in which the speed of opening licensed nursery schools is slowing down throughout the industry due to the resolution of the waiting list problem, the company will slow down the speed of opening new facilities with the maturity of the market in mind. However, in addition to continuing to expand into regions with high needs and high investment efficiency, the company will promote efforts to reorganize the industry. On the other hand, due to the growing demand for facilities for disabled children, AIAI PLUS will be developed as a pillar of growth after AIAI NURSERY, and the expansion of AIAI VISIT will be fully implemented in the Tokyo metropolitan area as a new business model. Regarding the expansion of AIAI VISIT, securing specialized visiting support personnel is an important point, so we will strengthen our approach from a variety of channels and promote the excavation of potential qualified persons. 7. Corporate-related initiatives In terms of financial and capital aspects, the company will continue to improve its self-capital and aim to support the stable growth of its business from a financial perspective. In terms of human capital, we will promote the creation of a work environment in which all employees at the facilities and offices can work comfortably and foster human resources. In AIAI NURSERY and AIAI PLUS, we will increase the options for work styles based on the preferences and stages of life of the employees working in the facilities, and establish a workplace environment where work and family can be balanced.

1. Medium-term management plan "23-27 plan R".

Japan Hume (5262) formulated the medium-term management plan "23-27 plan R" in May 2023. This five-year period was positioned as a period of reform to create a growth trajectory toward a 200-year company in response to expected business changes, with the mission of "inheritance and innovation". President Masubuchi, who took office on April 1, 2023, stated the following regarding the medium-term management plan: "Even in this turbulent era, we want to inherit NHism and a good corporate culture that contribute to social capital formation, while "renewing" our management foundation for the next 100 years. To prevent the tradition of long-lasting companies from leaning towards maintaining the status quo, we will strengthen corporate governance to enhance decision-making and execution in business operations. We have also established an expanded management conference to facilitate communication between management and the field. Our company has an advantage in high value-added strategic products such as ICT tools 'Pile-ViMSys(R)', 'Wellman Reservoir(R)', composite steel pipes, EMC wall barriers, and environmentally friendly materials 'e-CON(R)'. We also aim to promote sustainable growth through reform and infrastructure building, such as fostering human resources who can take on the next 100 years."

The management target for 2026, the third year of the plan, includes sales of 36.5 billion yen, operating income of 1.7 billion yen, ordinary income of 2.55 billion yen, and net income attributable to parent company shareholders of 1.88 billion yen, ROE of 4.5% to 5.0%, and the management target for the final year, the March 2028 period, includes sales of 40 billion yen, operating income of 2.2 billion yen, ordinary income of 3.05 billion yen, and net income attributable to parent company shareholders of 2.27 billion yen, with ROE of 5.0% or higher. In the first half of the plan period, we will strengthen research and development and capital investment for the future to create a foundation for growth, and in the second half, we will recover profit levels and aim for further growth.

As a business strategy, we will build a growth foundation by promoting the main business trajectory and strengthening the strategic business. As for the business plan numbers for the March 2028 period, sales (consolidated 40 billion yen) are positioned as basic business at 22.75 billion yen, sewerage-related business at 7.75 billion yen, precast product business at 8 billion yen, and other business at 1.5 billion yen, and operating income (consolidated 2.2 billion yen) at 900 million yen for basic business, 1.6 billion yen for sewerage-related business, 1 billion yen for precast product business, and 870 million yen for other business, with corporate adjustment amount -2.17 billion yen. In order to achieve the planned figures, the main business is positioned as the existing Hume pipe sector in the basic business and sewerage-related businesses, while the strategic business is positioned as a new group of precast products (different from precast products in the general sense) in the sewerage-related business and other businesses (new businesses, etc.). The segment division reported in the financial statements will continue to be the same as before (basic business, sewerage-related business, photovoltaic and real estate business, other business) from the March 2025 period onwards.

(Authored by FISCO guest analyst Masanobu Mizuta)