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The 54th Annual ReportApril 1 2015 - March 31 2016

1. Message from the President

On April 1st of 2015 Kumon Educational Japan Co. Ltd., which was a 100% subsidiary, was merged into the Kumon Institute of Education Co. Ltd. (KIE) and the new Kumon began its 54th fiscal year. During this year we have further advanced our Next 50 Grand Design, which is the foundation of our activities and embodies our long-term vision. The Next 50 Grand Design was formulated in 2008, which marked the 50th anniversary of Kumon’s founding.

In the Next 50 Grand Design the Kumon Group pledged to develop Kumon through the process of “broadening” and “deepening,” with each Kumon Center as the core of our activities. By broadening we mean “providing learning opportunities to as many people as possible across all generations in all communities around the world.” Deepening means “pursuing the further development of the Kumon Method so that everyone can maximize their abilities.”

During this fiscal year, which was my first as President of KIE, I have put an emphasis on the concept of “making connections.” The key word “connect” is central to the Kumon Group 2014-2018 Mid-term Corporate Plan. Over the past year we have been connecting the mission, values and knowledge of Kumon to the next generation. In addition, we have been working to ensure that we connect the Kumon Method with the future by adapting to the unpredictable changes in society to come.

The global economic situation remains uncertain. In April 2015 the Nikkei stock average in Japan broke though the 20,000 point barrier for the first time in 15 years. On the other hand, beginning in August, there was a financial crisis in Greece and falls in global stock prices due to uncertainty regarding the future outlook for the Chinese economy leading to an overall slowdown in the global economy. In Japan, with these conditions in mind, an expected increase in the consumption tax from 8% to 10% was postponed. Furthermore, in addition to the crisis in Greece, countries in the EU have had to deal with financial instability, issues with refugees, and terrorism. Thus, the global social and economic environment has grown more unpredictable and unstable.

Despite these conditions, the number of Kumon students attending Kumon Centers in Japan (Math, English, and Kokugo) had grown to 1,397,000 in March 2016, an increase of 30,000 year-on-year. This is just short of the 1,400,000 student mark achieved in March 2007. However, in a reflection of the prevailing global uncertainty, the total number of students in the Kumon Group decreased by 26,000 to 4,279,000 students. As a result, consolidated sales were 90,043 million yen (previous fiscal year 90,456 million yen) and operating income amounted to 11,831 million yen (previous fiscal year 10,187 million yen), leading to a decrease in income and an increase in profit.

The past year has been one of “making connections.” In particular, we have been focused on the following three points.

1) Connecting Kumon’s mission, values and knowledge with future generations
We are carrying our mission and values onward and further improving the learning effectiveness of the Kumon Method on a global scale.
2) Connecting with the future
Kumon is adapting to a world that is increasingly unpredictable and we will continue to take on new challenges.
3) Connecting our knowledge from all around the world
We are creating and implementing a new framework for sharing of our know-how on a global scale.

This management focus will not change in the future. In my second year as President of KIE I will further clarify the future direction of Kumon while building on the foundation that has been built as a result of all of our previous activities. We will continue to provide the unchanging essence of the Kumon Method while, at the same time, working constantly to meet the challenges of the future.

In 2004 we began SAIDO Learning® and Learning for a Healthy Brain Centers, which are designed to benefit senior citizens. During this fiscal year we have been included in the social impact bond (SIB) research project sponsored by the Ministry of Economy, Trade and Industry of Japan. All of this shows the increasingly high expectations for Kumon regarding senior citizen health care.

The following is a report on the overall condition of the Kumon Group. In recent years conditions in the publishing industry have been difficult. Nonetheless, Kumon Publishing Co., Ltd. achieved sales of 4,275 million yen, which was a year-on-year increase of 8%. Further, Kumon Publishing Co., Ltd. received the grand prize of the Japan Picture Book Awards sponsored by the Mainichi Newspapers and the Japan School Library Association for the second year in a row. The 2015 winning book was 30,000 Watermelons written by Aki Bingo. In addition, Kumon Lifelong Integrated Learning Co., Ltd. which has more than 3,000 calligraphy Centers all across Japan, achieved an enrollment of 88,000 students in March 2016 and broke through the 90,000 student level after that. Moreover, in response to the steadily rising demand for English as a foreign language education of a global standard, Global Communication & Testing Co., Ltd. is now offering the TOEFL Primary® test to elementary school students.

Looking ahead, Kumon will not deviate from its present course and will strive to realize our long-term vision embodied in the Next 50 Grand Design. Kumon, as a global corporation dedicated to spreading Kumon Method education, as well as an organization that has as its mission developing individuals who can make a contribution to society, will continue to implement its unique activities as we boldly push forward into the future.

Hidenori Ikegami
President
Kumon Institute of Education Co., Ltd.