■ 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. Terilogy Group's new three-year mid-term management plan.

Terilogy Holdings <5133> will transition to a holding company structure in November 2022, and revise the target numbers of the mid-term management plan annually in a rolling manner as it aims to expand and transform its group business in response to changes in the business environment. In the "New Terilogy Group Three-Year Mid-Term Management Plan" for the fiscal years 2025-2027, it set targets for sales of 8.4 billion yen, operating profit of 0.37 billion yen in 2025, sales of 9.7 billion yen, operating profit of 0.55 billion yen in 2026, and sales of 11 billion yen, operating profit of 0.8 billion yen in 2027, revising the target numbers formulated in the previous three-year plan. It plans to achieve 20.6% for the network division, 38.5% for the security division and 40.9% for the solution services division in terms of the sales composition ratio in 2027 fiscal year.

There are no major changes to the basic policy, and the group aims to become a group of professionals with innovative power, possessing free thinking, steady action and implementation strength.

Furthermore, in order to realize management that is aware of capital costs and stock prices, and to realize the sustainable growth of the group and the improvement of its medium- to long-term corporate value, it recognizes that it is important to be aware of capital costs and maintain a sound financial structure in order to meet the expectations of all stakeholders, including shareholders and investors. It regards ROE as an important indicator and aims for a self-finance income rate of 10.0% in the medium to long term.

In efforts to accelerate business development and improve employee engagement, it is implementing measures such as raising employee wages and increasing the incentive payment rate for the employee shareholding association.

As for the business environment, it anticipates that the DX of the industry will rapidly progress and that the industrial structure will also change and evolve significantly. The company sees this period of digital transformation as a great opportunity, and has set its challenge areas to be providing "cyber security technology that supports the use of safe and secure digital technology," "providing cloud services that are easy to use without burden," and "providing data management technology from log analysis and management" as the axes, aiming to contribute to customer DX promotion in both domestic and international markets.

As important measures to achieve its goals, it aims to (1) strengthen and nurture human resources for the group's reinforced and expanded stock-type business model through group cooperation, (2) further expand the group's business portfolio, and (3) pursue global business development. In addition to solving on-site issues related to information systems and security that customers face, it will also promote ambitious challenges towards "new task areas that are essential for the future society," such as tourism DX and environmental DX.

Regarding the standards for its future M&A and alliance strategies, the company aims for IT technology, specialist trading firms, sales-related areas, and acquisition of Asian and emerging IT-based technology trading firms, security solution areas, cloud technology areas, etc., with an acquired annual sales scale of 5-10 billion yen per case and an investment budget of about 10-20 billion yen.

(Authored by FISCO guest analyst Masanobu Mizuta)