(296A) Reihu Accounting Holdings - New Analyst Report 12/24

Ren Accounting Holdings Group, composed of Ren Accounting Holdings and six consolidated subsidiaries, provides consulting services related to accounting to organizations requiring high accounting knowledge and specialized expertise, such as listed companies, major corporations, investment trusts, Commercial Reits, health care-related entities, local governments, etc.

Ren Accounting Holdings' consulting business is classified into "Consulting Business (Long)" and "Consulting Business (Short)". Consulting Business (Long) refers to continuous consulting related to accounting, involving the daily recording of transactions based on accounting policies and the preparation of financial statements, and utilizing those accounting figures for management purposes, accounting for 83.2% of the revenue for the 24/3 period, the company's main business.

Consulting Business (Short) is positioned as a by-product brought about by the trust relationship with customers of Consulting Business (Long) and involves non-continuous consulting, accounting for 16.3% of the revenue for the 24/3 period. QITABANKUAI includes education, dispatch, and introduction services related to accounting practices.

The clients of Ren Accounting Holdings Group are mostly large corporate groups that require specialized knowledge and solutions. As of the end of the 24/3 period, there were 183 client groups. The average annual fee for the company's client groups for the 24/3 period was approximately 21.8 million yen, while the average annual fees for the top 100 client groups and top 10 client groups were approximately 37.6 million yen and 187.6 million yen respectively. Therefore, the company believes that there is room for fee expansion by expanding the scope of services for many client groups.

As of the end of April in the 24th year, within the domestic Ren Accounting Holdings Group companies, there are 34 Certified Public Accountants, 11 Certified Public Accountant Exam Short Answer Exam passers, 8 qualified tax accountants, 13 successful tax accountant subject passers, 3 Certified Public Accountants in the USA, and over 200 individuals holding a Level 2 or higher Nissho Bookkeeping certification. Additionally, there are approximately 70 staff in the Vietnamese subsidiary, with about 20% holding an accountant qualification.

Regarding the consulting business, Ren Accounting Holdings places importance on the contract renewal rate of Consulting Business (Long). In advancing the group's overall business, securing talent is considered a significant challenge. While many accounting firms tend to focus on hiring experienced staff as immediate assets, Ren Accounting Holdings centers its talent strategy on securing professionals, increasing new graduate recruitment, and ensuring their development for more secure talent retention.

Consulting Services (Long) refers to a series of tasks such as journalizing economic transactions occurring daily in companies based on accounting policies, creating general ledgers, trial balances, financial statements, and utilizing these accounting figures for management purposes, either all or in part. Due to the high continuity nature of the tasks, it is named Consulting (Long).

Reiwa Accounting Holdings Group defines consulting services that are not continuously occurring due to the nature of the tasks, but are one-time consulting services with an expected end within a specific period as Consulting Services (Short). They handle a wide range of cases such as due diligence related to accounting, valuation such as stock valuation, IPO support, various opinions related to accounting, and M&A support.