LIKE,Inc.

The Comprehensive Human Resources Services Business has obtained a license from the Minister of Health, Labour and Welfare based on the Worker Dispatching Act, and if grounds falling under Article 14 of said law arise, the license may be revoked. If the license is revoked, it would impede the Group's principal business activities and have a material impact on business performance. While the Company currently recognizes no facts that would constitute grounds for license revocation, continuous maintenance of a legal compliance system is required as a future risk.

Since 2000, the operation of licensed nursery schools by corporations has been permitted, and the Group also operates licensed nursery schools within its Childcare Support Services Business. If national policy changes in the future such that corporations are no longer permitted to establish licensed nursery schools or to privatize public nursery schools, this could impact business performance and financial condition. This is a policy risk that is fundamental to the business, requiring continuous monitoring of changes in the regulatory environment.

The Nursing Care-Related Services Business is subject to regulation under the Act on Social Welfare for the Elderly, the Long-Term Care Insurance Act, and other related laws, and legal amendments or revisions to nursing care fee amounts may necessitate a review of service content and fee structures. If fee rates are reduced, this would directly impact business performance and financial condition through a decline in profitability. The Group strives to provide appropriate services in accordance with relevant laws, but the risk of institutional changes cannot be completely avoided.

On September 30, 2024, the business server of subsidiary Like Kids Corporation suffered a ransomware-type cyberattack, resulting in the encryption of accounting data, HR and payroll data, and other information, as well as the unavailability of some related business software. In response, the Company disconnected external networks and is proceeding with recovery while manually handling key operations, and is considering strengthening measures such as introducing multi-factor authentication and EDR and reviewing security policies. The risk of information leakage or system outages due to employee misdirected transmissions or external attacks cannot be completely eliminated, and a recurrence could impact business performance and financial condition.

The Group holds a large volume of personal information on service users and staff, and staff also frequently handle personal information at their places of assignment. If an information leak occurs, it could result in financial and reputational impacts such as damage claims and loss of credibility, potentially affecting business performance. As risk mitigation measures, the Company has taken out personal information leakage insurance, conducts ongoing training for all employees and staff, and has established a protection and management system.

Across all businesses—Comprehensive Human Resources Services, Childcare Support, and Nursing Care-Related Services—securing excellent, growth-motivated staff is an essential factor for business continuity and growth. If staff cannot be secured as planned, this could directly impact the performance of each business. As countermeasures, the Company is working to improve the recruiting environment through the development of a proprietary job listing site and to enhance staff satisfaction through post-hire training, but the risk of difficulty in securing staff remains due to intensifying competition in the labor market.

In the Comprehensive Human Resources Services Business, sales to the mobile industry for the fiscal year under review were ¥9,784,578 million (47.4% of composition), indicating that dependence on a single industry remains at a high level. If demand trends in the mobile industry deteriorate, this could have a significant impact on the overall performance of the Comprehensive Human Resources Services Business. While the mobile ratio has been trending downward due to active expansion into the logistics, manufacturing, call center, childcare, nursing care, and construction industries, the Company continues to maintain a policy of expanding sales to the mobile industry, so the risk of industry concentration persists.

If eligibility requirements for social insurance (employee pension and health insurance) are expanded in the future, the number of staff enrolled may increase, potentially increasing personnel expenses borne by the Group. An increase in personnel expenses would directly compress profitability and impact business performance. Currently, all staff subject to mandatory enrollment are already enrolled in social insurance, but since expansion of the eligible population through institutional reform depends on policy trends, continuous monitoring is required.

The Group is actively considering acquisitions of companies and businesses, primarily in the same or related fields, which may result in significant funding needs and impacts on business performance due to goodwill amortization. If the profitability of an acquired company declines significantly, an impairment loss on goodwill may occur, posing a risk of material impact on business performance and financial condition. There is also a possibility that expected synergy effects will not be realized, making improved precision in investment decisions and post-acquisition integration management important challenges.

The total amount of tangible and intangible fixed assets held by the Childcare Support Services Business (Like Kids Corporation) and the Nursing Care-Related Services Business (Like Care Corporation) accounts for 42.5% of consolidated total assets, representing a large asset scale. If operating income/loss for each asset group continues to be negative due to changes in the business environment or economic factors, recognition of impairment losses may become necessary, potentially having a material impact on business performance. The revenue trends of these two business segments have a significant impact on overall consolidated performance, requiring continuous revenue management.