WORLD HOLDINGS CO.,LTD.

Market fluctuations and geopolitical risks (such as the situation in Ukraine and the Middle East) may reduce client companies' production plans, and industrial structural transformation driven by advances in ICT, digital technology, and robot adoption may cause a decline or change in personnel demand, potentially affecting business performance. As a countermeasure, the Group flexibly responds to changing market conditions through broad business development across the manufacturing domain (Products HR) and the services domain (Service HR).

The progression of societal labor shortages associated with the declining birthrate and aging population may make it difficult to secure personnel, potentially resulting in lost sales opportunities and increased cost ratios. In addition, a delayed response to diversifying work-style preferences could result in the company not being chosen as an employer, leading to lost sales opportunities. The Group leverages its strength of offering employees a wide range of career development options to enhance its appeal as a staffing company and secure excellent personnel.

In the real estate business, which is highly susceptible to economic conditions, a wide range of impacts on business performance are anticipated, including valuation losses on real estate held for sale due to declining property prices, rising construction costs due to increases in raw material and labor costs, and reduced consumer purchasing intent due to rising interest rates or economic downturn. The Group aims for stable growth through broad development across development, renovation, real estate asset management, and other areas, combined with careful risk management.

The telecommunications business, mainly consisting of mobile phone sales agency operations, is significantly affected by rate regulations imposed by the Ministry of Internal Affairs and Communications, and faces intensifying competition among sales agencies as well as ongoing store consolidation across the industry; business performance may deteriorate if competitive advantage cannot be secured. The business is also subject to legal regulations such as the Telecommunications Business Act, the Antimonopoly Act, and the Act against Unjustifiable Premiums and Misleading Representations, and may be affected by legal amendments. The Group aims to differentiate itself through personnel development and store improvements to enhance hospitality, seeking to benefit as a surviving player in the market.

In M&A, capital alliances, and business revitalization undertaken to develop new businesses, if post-acquisition business and management integration processes or business promotion do not proceed as planned, there is a risk that recovery of invested capital may become difficult and goodwill impairment may occur. The Group has established a dedicated organization where experienced personnel handle deal research, negotiations, and post-acquisition business planning, while aiming to improve performance through regular monitoring and enhanced oversight functions.

Since funds for acquiring land for real estate held for sale and for M&A are mainly raised through borrowings from financial institutions, changes in the financial environment or significant increases in market interest rates may affect business performance. In addition, if the financial covenants attached to the commitment line agreement and syndicated loan agreement are breached, there is a risk that the Group may become unable to raise the funds necessary to continue its business. The Group has concluded a commitment line agreement totaling ¥30,000 million with a three-year term with two major relationship financial institutions, securing a stable and flexible fund-raising framework.

As the Group handles client companies' production plans, new product development information, and personal information, if unforeseen circumstances cause information leaks or increasingly sophisticated and elaborate cyberattacks occur (such as personal information leaks, data tampering, or system shutdowns), this could lead to claims for damages or loss of social credibility, potentially disrupting business activities. The Group works to prevent such incidents through Privacy Mark certification, security education for employees, and strengthened organizational monitoring via the establishment of an information monitoring office.

If large-scale earthquakes, storms, floods, or other natural disasters occur, or if political or military tensions, terrorism, war, or epidemics increase at overseas locations, a wide range of impacts on business performance may occur, including lost sales opportunities in each segment, damage to or loss of real estate, and rising fuel and raw material prices due to supply chain disruptions. The Group has established disaster response manuals and recovery manuals, and has prepared for contingencies through advance consideration of business continuity plans.

The spread of infectious diseases such as COVID-19 may have wide-ranging impacts on business performance, including effects on sales and recruiting activities, decreased sales volume due to reduced consumer purchasing intent, and reduced or terminated transactions due to client companies scaling back production plans. The Group implements measures to prevent the spread of infection with the top priority on ensuring employee safety and maintaining employment, while pursuing business growth through risk diversification and strategic capital allocation utilizing its business portfolio spanning multiple domains.

Both physical risks—such as natural disasters caused by climate change leading to suspended operations at offices, owned real estate, and client companies—and transition risks—such as increased cost burdens and industrial structural transformation due to stricter decarbonization regulations and growing societal demands—may affect business activities and performance. The Group positions sustainability response as a key management issue and is proceeding with consideration of a Group-wide response toward realizing a decarbonized society.