Human Holdings Co.,Ltd.

The staffing business is operated under the Worker Dispatching Act with the permission of the Minister of Health, Labour and Welfare, and the recruitment placement business is licensed as a fee-charging employment placement business under the Employment Security Act. If legal amendments occur or serious violations of laws and regulations arise, there is a possibility that business licenses could be revoked or business suspension orders issued. Although compliance checks and employee training are conducted by the Compliance Department and Internal Audit Office, any violation that occurs would have a material impact on business performance.

The nursing care business is regulated by the Long-Term Care Insurance Act and related laws, which govern service content, fees, facility expansion, and overall operations. If future legal amendments or revisions to long-term care insurance fees necessitate a review of service design or fee structures, there is a possibility that the revenue structure will be affected. Given the nature of a business dependent on the public insurance system, the structure is directly susceptible to the impact of policy changes.

In the staffing business and the nursing care business, the stable securing of dispatched staff and nursing care staff forms the foundation of business continuity. If sufficient personnel cannot be secured due to changes in the employment environment or labor supply-demand conditions, this could lead to lost order opportunities or a contraction in business scale. The company is working to promote recruitment and retention through training-oriented staffing in collaboration with the internet advertising and education businesses, and through the enhancement of internal qualification systems and training programs, but the risk of labor shortage is also a structural challenge for the industry as a whole.

In the childcare business, securing licensed childcare workers is essential, and in the education business, the company's policy is to hire leading industry experts as instructors. For highly specialized courses, it may be difficult to hire individuals capable of teaching, and if a shortage of childcare workers progresses, it could impede the continued operation of facilities. Although the company promotes development and retention measures through annual training plans and on-the-job training, it remains largely dependent on supply and demand in the external labor market.

The Group thoroughly enrolls all dispatched staff eligible for social insurance, creating a structure in which the company's social insurance premium burden arises in proportion to the number of dispatched staff. If future reforms to the social insurance system significantly increase the amount borne by the company, the resulting cost increase could directly pressure business performance. The profitability of the staffing business is sensitive to fluctuations in labor costs, and the impact of trends in system reform on finances is significant.

The main customer base of the education business is relatively concentrated among younger age groups, and there is a risk that the ongoing decline in Japan's birthrate could lead to a contraction of the education market as a whole. The company is addressing this through the development of educational products targeting a wide range of age groups from young children to the elderly, as well as overseas expansion, but if the birthrate decline progresses far more rapidly than expected, this could affect business performance and financial condition. Structural changes in Japan's domestic demographics are an important risk factor affecting the medium- to long-term business foundation.

Sustained business growth requires the continuous securing and development of management personnel skilled in management strategy and organizational operations. If changes in the hiring environment prevent the securing and development of personnel as planned, this could have a significant impact on business development, performance, and growth outlook from a long-term perspective. The company is working to develop and retain personnel through strengthened new graduate and mid-career hiring, the establishment of training systems, and continuous wage increases.

The Group has adopted overseas business expansion, centered on emerging markets, as one of its strategies, but risks exist including unexpected changes in laws and regulations, fluctuations in economic conditions, and social and political turmoil caused by terrorism or war. If these risks materialize, it may become difficult to continue business activities, potentially affecting performance. Country risk specific to emerging markets is more difficult to predict compared with domestic operations, and it should be noted that exposure will expand as the business expands.

The Group's policy is to actively utilize M&A as a means of business expansion, conducting prior due diligence on the target company's performance, finances, and contractual relationships. However, if unexpected events occur after an acquisition or if the acquired business cannot be developed as planned due to significant changes in market conditions, resulting in a marked decline in profitability, this could have a significant impact on performance, growth outlook, and business development. The skill of post-merger integration (PMI) is a key factor determining whether the benefits of an acquisition are realized.

The Group holds and manages a large amount of personal information, including that of dispatched staff in the staffing-related business, students in the education business, and users of the nursing care business. If a leak or unauthorized use of personal information occurs for any reason, this could affect performance through claims for damages or a loss of social trust. The company is working to strengthen its management framework through obtaining Privacy Mark certification, establishing personal information protection policies and regulations, and conducting regular employee training.