SHUEI YOBIKO Co., Ltd.

The tutoring school industry faces the structural issue of declining birthrates, resulting in an absolute decrease in the number of children and students. In addition to a direct decline in enrolled students, the easing of entrance exam difficulty (excluding for elite schools) may weaken motivation to enroll and lower attendance rates. The Company aims to address the high demands of parents and students by providing high-quality instruction from full-time employees and a uniquely designed learning environment.

Securing human resources is extremely important for the stable and continuous provision of high-quality educational services, and if the Company is unable to secure and develop personnel as planned, this may affect business performance. To support the operation of 219 school locations across 10 prefectures nationwide, enhancing recruitment and training systems for excellent personnel and developing management-level staff are considered essential.

The Company's directly-operated schools comprise 219 locations across 10 prefectures nationwide, including 72 in Shizuoka Prefecture, 32 in Aichi Prefecture, and 28 in Hokkaido, and restructuring the organizational framework to support this wide-area expansion is a challenge. There is a high degree of dependence on specific regions, creating a risk that intensifying competition or demographic changes in these regions could directly affect business performance.

In recent years, the Company has focused on agile openings and consolidations centered on leased properties, but many existing schools are standalone facilities, which may hinder agile opening and consolidation of schools. In addition, for leased properties, there is a risk that security deposits and guarantee deposits may not be refunded depending on the lessor's circumstances.

The Company holds tangible fixed assets such as classroom facilities due to capital investment associated with the relocation and opening of schools. If the number of students falls below plan and profitability declines, or if land market prices decline significantly, impairment losses may occur and affect business performance. As countermeasures, the Company tracks monthly enrollment/withdrawal figures and enrolled student trends for schools showing signs of impairment, analyzes the causes of schools with negative operating income, and has the Internal Audit Office conduct audits and interviews for schools with large fixed asset book values.

In the event of large-scale natural disasters such as earthquakes or typhoons, fires, the occurrence or spread of epidemics, or disruptions caused by computer viruses, damage to school facilities, offices, and equipment may occur, potentially disrupting school operations and business activities. Such events are stated to potentially have a material impact on the Company's financial position and business results.

The number of students tends to increase from the second quarter onward compared to the first quarter, and disparities in quarterly revenue arise depending on the timing of enrollment into regular courses by participants of summer and winter seminars. Meanwhile, fixed costs such as personnel expenses and rent are incurred at a constant amount each month, and advertising expenses are concentrated in specific periods, resulting in a tendency for lower profitability in the first quarter.

The Company holds personal information related to a large number of students, and while it has implemented measures such as establishing internal regulations and providing employee training, there is no guarantee that information leaks will never occur. In the event of an information leak, there is a risk of damage to social credibility and the incurrence of substantial costs for response measures.