JAC Recruitment Co., Ltd.

Due to the nature of the recruitment placement and job advertising businesses, the Company holds personal information of numerous registrants (job placement applicants, job posting applicants, etc.). If information leakage occurs due to regulatory violations or unforeseen circumstances, this could result in claims for damages or loss of social credibility, potentially causing serious disruption to business operations. As countermeasures, the Company obtained Privacy Mark certification (JIS Q15001) in fiscal 2006 and renews it every two years, while the compliance department conducts regular education and guidance, and the internal audit department checks management conditions.

Founder and Director/Senior Advisor Tadayoshi Tazaki and Representative Director, Chairman and President Hiromi Tazaki play important roles in determining management policy and business strategy, and together hold 33.57% of total voting rights, giving them significant influence over shareholders' meeting resolutions. If either of them becomes unable to perform their duties for any reason, this could cause serious disruption to business operations. As countermeasures, the Company is promoting the development of executive personnel, information sharing, and delegation of authority, and transitioned to a company with an Audit and Supervisory Committee in March 2022, establishing an oversight structure through the Board of Directors that includes four independent directors.

The Company operates consolidated subsidiaries in 12 countries, mainly in Asia, and there is a possibility that planned business operations may become unfeasible due to changes in the political and economic situations, laws and regulations, foreign investment restrictions, and tax systems in each country or region. Additionally, since the consolidated financial statements are presented in Japanese yen, translation risk arising from exchange rate fluctuations between the local currencies of the countries where the Company operates and the yen may affect business results. As a countermeasure, the Company has established a system to promptly consider and execute the scaling down or withdrawal of business operations in each country from the perspective of safety and profitability.

Domestic fee-charging job placement business requires a license from the Minister of Health, Labour and Welfare, and if the Company falls under any of the disqualifying conditions stipulated in Article 32-9 of the Employment Security Act, revocation of the license could cause serious disruption to business operations. In addition, if legal regulations are tightened through amendments to the Employment Security Act or other laws, restrictions may be placed on business activities. As countermeasures, the Company conducts compliance training, maintains a continuous monitoring system through the Audit and Supervisory Committee and the internal audit department, and gathers the latest information through industry associations and legal advisors.

Securing registrants is fundamental to the recruitment placement business and job advertising business, but due to the declining working population resulting from Japan's declining birthrate and aging population, as well as changes in the labor market, if the Company is unable to secure personnel that satisfy corporate job openings, this could affect business results through a decrease in the number of successful placements. As a countermeasure, the Company has established a dedicated department for registrant recruitment and is taking all possible measures, including improving recruitment efficiency.

The job change market is affected by changes in hiring trends associated with economic fluctuations, so if the economy declines more than expected, a decrease in corporate hiring appetite could reduce the number of successful placements, negatively affecting business results. As a countermeasure, the domestic recruitment placement business focuses on the mid-to-high income range, which is less susceptible to economic fluctuations.

The Company makes extensive use of information systems and communication networks in its domestic and overseas business operations. If disasters, hardware/software failures, or unauthorized access by malicious third parties occur, this could cause serious disruption to business operations and significantly affect business results. In addition, since some system maintenance is outsourced externally, there is a risk that the Company may not be able to address issues on its own when problems occur. As countermeasures, the Company is promoting redundant configurations and geographic dispersion of information systems and communication networks, and is strengthening the structure of the information systems department.

The Company Group records the majority of its revenue from domestic-related businesses, but the domestic population is expected to continue declining going forward, which is anticipated to lead to a contraction of the domestic market. As countermeasures, the Company aims for further growth through the expansion of overseas businesses, improvement of market share in domestic-related businesses, and enhancement of profitability.

If natural disasters such as earthquakes, typhoons, and tsunamis, or events such as fires, power outages, terrorism, war, or unknown infectious diseases occur, this could cause serious disruption to business operations due to stagnation of business activities from movement restrictions or the full transition of employees to remote work, significantly affecting business results. As countermeasures, the Company has established a disaster prevention manual in preparation for large-scale disasters, geographically disperses management of business assets, and has built and maintains the information systems necessary for transitioning to remote work.

The rapid technological innovation brought about by generative AI is also affecting the human resources-related industry, and in the future, in the field of high-volume recruitment job openings utilizing big data, there is a possibility that existing recruitment placement businesses could be substituted as AI achieves highly accurate job placement. As a countermeasure, the Company reduces this risk by focusing on recruitment placement for the mid-to-high income range, where the number of openings per job type is small, making direct application of generative AI difficult.