WDB HOLDINGS CO., LTD.

If changes in employment conditions make it difficult to secure sufficient job seekers with the skills and experience required by clients, business expansion may be constrained, potentially affecting business performance. As countermeasures, the Group has established training facilities nationwide to focus on education and development, and since April 2022 has implemented continuous compensation increases. For regular-employee-type staffing, the Group has adopted area-limited hiring for assignments, and for registered-type staffing, it is strengthening its sales structure, aiming to increase recruitment numbers and reduce turnover rates.

The staffing business is subject to the Worker Dispatching Act and the Labor Contract Act, while the recruitment placement business is subject to the Employment Security Act. If a violation of these laws occurs, it could result in business suspension or revocation of licenses, potentially having a material impact on business performance. Additionally, depending on the content of future legal amendments, there is a risk that operating costs and constraints may increase. At present, there have been no instances of disqualifying events or business suspension orders, and the Group implements countermeasures whenever laws are amended.

If business development does not proceed as planned following a corporate acquisition, impairment accounting may be applied to goodwill, potentially affecting business performance. As a countermeasure, the Group conducts thorough due diligence prior to acquisitions and establishes a regular monitoring system after acquisitions to identify and mitigate risks.

Given the nature of the human resources services business, the Group holds personal information of a large number of employees and job seekers. If a leak or unauthorized use of this information occurs, it could damage the Group's corporate image and affect business performance. As countermeasures, the Group conducts employee training on information management three times per year and has established systematic mechanisms to prevent information leakage. WDB Co., Ltd. and Doko1 Co., Ltd. have obtained Privacy Mark certification.

If natural disasters such as typhoons, earthquakes, floods, or epidemics, or accidents, occur on a scale far exceeding expectations, business activities of the Group or its major clients may be suspended or become difficult to continue, potentially affecting business performance and financial position. As countermeasures, the Group assesses employees' disaster risk exposure and maintains distributed management of electronic data. In past disasters, the Group has established an emergency response headquarters led by the President and Representative Director.

In the CRO business, the Group operates in Europe and the United States. If sudden changes in the political or social systems of these countries occur, business performance may be affected. As countermeasures, the Group regularly monitors the political and social situations in the countries where it operates, maintaining a system to detect signs of risk at an early stage and reflect timely information gathering in business operations.

If revisions to social insurance premium rates or reviews of social insurance enrollment requirements associated with system reforms increase the Group's social insurance premium burden as an employer, business performance may be affected. As countermeasures, the Group is committed to thorough cost management and efficient operations, while maintaining and improving service quality to support periodic revisions of staffing fees.

If technological innovations such as AI and robotics advance labor-saving or unmanned operations among clients, demand for human resources services could decline significantly, potentially affecting business performance. As countermeasures, the Group is pursuing business development that anticipates technological innovation, while enhancing employees' skills and specialized knowledge, aiming to establish a system capable of flexible management decisions in response to the business environment.