ARTNER CO., LTD.

The Group's core business is dispatching engineers to design and development departments in the manufacturing industry, and it has a high dependence on automotive-related manufacturers, which account for a large proportion of sales. If customers reduce capital expenditure and R&D due to an economic downturn, thereby reducing their use of outside engineers, or if there is a significant change in the business environment of automotive-related manufacturers, this could have a material impact on the Group's financial position and operating results. There is an inherent risk of concentration in specific customers and industries, and attention must also be paid to structural changes across the industry as a whole.

If the engineer dispatch industry experiences market contraction or an increase in new entrants, competition could intensify, potentially leading to price competition. Price competition could cause a decline in engineer unit prices, adversely affecting both sales and profit margins. The Group seeks to differentiate itself through training programs that upgrade engineers' skills, but continuous responses to changes in the competitive environment are required.

The Group regards science and engineering graduates and career engineers with work experience as important management resources. A declining birthrate leading to a decrease in the population of science and engineering students, along with intensifying competition for career hires as manufacturers become more active in design and development, could make it extremely difficult to secure excellent talent. Failure to secure talent could hinder the maintenance and improvement of utilization rates and engineer unit prices, posing a risk that could shake the foundation of business growth.

If appropriate dispatch destinations cannot be found for engineers, it could become difficult to maintain and improve engineer unit prices and utilization rates, potentially impacting the Group's financial position and operating results. The Group strives to secure and expand dispatch destinations, but the structure is such that the precision of matching customer needs with engineer skills directly affects earnings. A decline in utilization rates also leads to an increased burden of fixed costs (personnel expenses).

The Group's core business, engineer dispatching, operates under licenses based on the Worker Dispatching Act (Altner Co., Ltd.: License No. Ha 27-020513, valid until November 30, 2026, etc.), and in the event of legal violations, business licenses could be revoked or business suspension orders could be issued. Additionally, if related laws and regulations such as the Worker Dispatching Act and the Employment Security Act are revised in a manner significantly disadvantageous to the Group's business, there is a risk of serious disruption to business operations. The Group strives to establish a compliance framework through internal audits and periodic legal compliance checks.

Since engineers' labor hours are determined according to the business conditions at the dispatch destination, if amendments to relevant laws and regulations lead to stronger moves to correct long working hours, engineers' labor hours could decrease significantly, directly affecting net sales. The Group's earnings structure is linked to engineers' working hours, and stricter labor regulations constitute a structural risk factor for business performance.

The Group has obtained Privacy Mark certification and strives for appropriate management of personal information and confidential information; however, if information is leaked to outside parties for any reason, this could result in a loss of social trust and adversely affect the Group's financial position and operating results. Additionally, if a system failure occurs due to computer viruses, unauthorized access, natural disasters, or other causes, there is a risk that the stable provision of services could be disrupted. Given the nature of the engineer dispatch business, there are many opportunities to handle client companies' confidential information, making the importance of information management particularly high.

The Group has a policy of actively pursuing M&A with the aim of acquiring new specialized technical fields, which may give rise to funding needs and goodwill amortization. If synergy effects fail to materialize as expected, or if business performance does not progress as planned due to significant changes in the business environment, there is a risk that goodwill impairment losses or valuation losses on shares could arise, adversely affecting the financial position. It should also be noted that when new businesses are added through M&A, risk factors specific to those businesses are also added.

In addition to the risk that related facilities could be damaged by natural disasters caused by climate change, leading to the suspension or slowdown of business activities, there is a possibility that business costs could increase due to the introduction of carbon taxes or the strengthening of environmental regulations. Furthermore, if the Group is unable to select engineers capable of responding to customers' carbon neutrality initiatives, this could reduce its ability to respond to customer needs and affect competitiveness. The transition to a decarbonized society is also a risk factor that brings about qualitative changes in customer companies' demand for engineers.

In March 2025, the Group announced a new medium-term management plan, "Make Value for 2025 to 2029," with FY2030 (ending January 2030) as its final year, aiming to build a foundation for sustainable growth and next-generation growth. However, this plan is based on the outlook for the market environment and economic conditions at the time of its formulation, and if the market environment or economic conditions change beyond expectations, the management targets may not be achieved. Failure to achieve the plan could create a gap with investor expectations, potentially affecting the share price and cost of capital.