YAMADA Consulting Group Co.,Ltd.

Given the nature of the Consulting Business, expanding operations requires increasing the number of highly capable consultants, and if the Company is unable to secure the personnel it seeks, this may constrain business expansion. The Group actively recruits both new graduates and experienced personnel, and addresses this issue by enhancing internal training programs and strengthening the hiring of data processing and information analysis personnel.

The Group makes equity investments in unlisted companies through investment limited partnerships such as the Capital Solution Fund, and depending on the performance, valuation, and disposal status of investee companies, this may affect the Group's business results. Under a fund policy that pursues middle risk/middle return, the Group seeks to reduce risk by carefully sourcing investment opportunities in cooperation with major financial institutions and others.

The Group invests in real estate with low liquidity, such as reversionary interests (sokochi) and co-ownership interests, and the balance of real estate for sale as of the end of the current consolidated fiscal year amounted to ¥4,276,395 thousand. If valuations decline due to deterioration in the real estate market, or if sales at the anticipated timing or price become difficult, this may adversely affect the Group's business results and financial condition. The Group addresses this through careful selection of projects and establishment of an appropriate sales structure.

The Group operates a fund-of-funds type Fund Business that invests in funds related to US real estate, and the investment balance as of the end of the current consolidated fiscal year was ¥3,966,302 thousand (the Group's contribution ratio: 18.5%). If valuations decline due to trends in the US real estate market, interest rate fluctuations, exchange rate fluctuations, or other factors, or if the initially expected distributions are not obtained, this may adversely affect the Group's business results and financial condition. The Group strives to reduce risk through an independent selection process and continuous monitoring.

Due to the nature of its business, the Group frequently handles confidential and personal information of customers, and should any such information be leaked externally, this may adversely affect business results due to a decline in social credibility and other factors. Under the leadership of the Group Risk Management and Compliance Committee, the Group has established a privacy policy and security policy, and strives to thoroughly manage information through training sessions for officers and employees, among other measures.

The Group holds registrations and licenses essential to the execution of each business, including registration as a Type II Financial Instruments Business and Investment Management Business required for the Investment Business, a real estate broker's license required for the Real Estate Consulting Business, and a general worker dispatching business license required for education and training operations. Should any of these be revoked, this may impede the execution of each business and adversely affect business results.

As consulting projects grow larger and more complex, involving more stakeholders, the completion of service provision tends to take longer, and the number of projects in which the fee amount changes from what was initially agreed under the contract is increasing. If the timing of recognition of large success fees and the like is delayed beyond a quarter or a fiscal year, this may affect the Group's business results. The Group is strengthening its ability to respond to projects through thorough progress management.