FULLCAST HOLDINGS CO., LTD.

Regarding the permit granted by the Minister of Health, Labour and Welfare (valid for 5 years) based on the Worker Dispatching Act and the Employment Security Act, if the permit is revoked or a business suspension order is issued due to non-compliance with permit standards, disqualifying causes, or violations of laws and regulations, the provision of services may become impossible to continue, potentially having a material impact on business performance. As a countermeasure, the Company strives to prevent legal violations in advance by strengthening corporate compliance and risk management.

If the enforcement, amendment, or reinterpretation of the Worker Dispatching Act, Labor Standards Act, Employment Security Act, Work Style Reform-related laws, Immigration Control Act, My Number Act, Food Sanitation Act, Act on Control and Improvement of Amusement Business, etc. is implemented in response to changes in social conditions, it may have a material impact on the business of the Group. In addition, if the burden of social insurance premiums increases due to the expansion of the scope of application of social insurance and employment insurance, and this cannot be absorbed through pass-through to customers or operational efficiency improvements, it may have a material impact on business performance. The Company strives to collect information on legal amendments in a timely manner and grasp such changes at an early stage.

In new business development through the establishment of new companies, M&A, business alliances, etc., if the initially expected synergy effects are not obtained due to uncertain factors, legal regulations, or changes in the environment, and business revenue falls below the plan, it may have a material impact on business performance. In addition, with respect to shares of affiliated companies, investment securities, and goodwill, if impairment processing becomes necessary due to a significant decline in fair value or substantial value resulting from deterioration in the performance of investee companies, this may also have a material impact on business performance. The Company's policy is to sell shares of affiliated companies and investment securities for which business synergies are not expected.

The Company manages staff and client company information in a database, but if servers simultaneously fail due to disasters such as earthquakes, cyberattacks, human error, etc., this may cause significant disruption to operations. In addition, if personal information is leaked for any reason, this may result in loss of social credibility, decline in sales, claims for damages, etc. As countermeasures, the Company implements server redundancy and backup, stricter access authorization controls, and enhanced internal audits.

The business structure centered on the Short-Term Staffing Support Business has become less susceptible to economic trends due to the structural shortage of workers, but if an economic downturn beyond the Group's expectations occurs, it may affect operating results and financial condition. As countermeasures, the Company continuously engages in regular monitoring of economic and market trends, promotes sales strategies tailored to area and customer industry characteristics, and works to improve profit margins through productivity gains.

If a dispatched staff member dies, is injured, or falls ill while performing work at a client's workplace, the Company, as an employer, bears the obligation to provide disaster compensation under the Labor Standards Act and other laws, and may bear liability for damages exceeding the scope of insurance coverage. In addition, the Company may face lawsuits and claims for damages from client companies due to staff negligence or wrongful acts, or selection errors in placement services. As countermeasures, the Company thoroughly implements safety and health education, maintains comprehensive business liability insurance, and has established a legal crisis management system staffed by legal personnel.

In the human resources services industry, if excessive employee turnover occurs, it may affect business operations. As countermeasures, the Company works to enhance employee training and implement measures to improve motivation, but there is a risk that securing personnel will become difficult due to intensifying competition in the labor market.

The Company bears foreign exchange fluctuation risk in foreign currency-denominated transactions, such as business transactions with overseas operators and dividends received from overseas affiliated companies. Even if the local currency value does not change, the value after conversion into yen at the exchange rate at the time of financial closing may affect operating results and financial statements. In addition, acquisitions of overseas companies also give rise to local regulatory risk and country risk. As a countermeasure, the Company seeks to mitigate risk through foreign exchange forward contracts and other means as necessary, while taking exchange rate trends into consideration.

If natural disasters such as typhoons, earthquakes, or tsunamis, or infectious diseases occur or spread on a scale exceeding expectations, this may affect the business activities of the Group or its business partners, and may affect operating results and financial condition. As a countermeasure, the Company has formulated a BCP (Business Continuity Plan) and reviews it as appropriate, preparing to continue or promptly restore important business operations even in the event of an emergency.

If business locations or the supply chain are damaged due to the intensification of natural disasters caused by climate change, this may result in lost business opportunities due to the suspension of business activities. In addition, there is a risk of loss of social credibility if the Company's efforts to address climate change are evaluated as insufficient, as well as a risk of increased response costs due to the introduction of new climate change-related laws and regulations. As a countermeasure, based on the TCFD recommendations, the Company continuously analyzes the impact of climate change-related risks and opportunities on its business and strives for proactive information disclosure.