Rococo Co. Ltd.

With the growth of the BPO and Cloud Solution Business markets, new entrants from other industries are increasing, requiring differentiation through one-stop services, security, and advanced technology capabilities. If the Group fails to establish a clear competitive advantage strategy amid accelerating technological innovation, this may affect its business and operating results. As countermeasures, the Group is engaged in gathering market trend information, securing and developing excellent personnel, strengthening sales capabilities, and creating cross-selling opportunities.

There is a risk that changes in the volume of outsourced work due to economic fluctuations, a shift from outsourcing to insourcing from a personal information protection perspective, and failure to capture DX promotion needs could affect the business. While demand growth is expected against the backdrop of a declining working population, corporate globalization, and advances in digital technology, delayed response to environmental changes may worsen operating results. As a countermeasure, the Group continuously analyzes market trends and explores shifts toward high-growth fields.

The Event Service Business, which provides ticketing services for concerts, stage performances, and other events, has revenue that is heavily affected by event scale and frequency. If the number of events handled decreases significantly due to event cancellations from an outbreak of an unknown infectious disease or other unforeseen circumstances, this may have a material impact on the Group's business and operating results. As countermeasures, in addition to acquiring new clients, based on past experience responding to the COVID-19 pandemic, the Group has established a system to minimize impact on the entire Group by transferring personnel from this business to other divisions.

Due to the nature of its business, the Group handles customers' personal information and confidential information of business partners, and thus faces risks of information leakage due to computer virus intrusion, cyberattacks, or unforeseen circumstances. If an information leak occurs, it is expected to result in a decline in social credibility and costs from damage claims, which may affect the Group's business and operating results. As countermeasures, the Group has built a strict information management system through obtaining ISO27001 and Privacy Mark certification, establishing information management regulations, and conducting training for all officers, employees, and outsourcing partners.

The Group positions human resources as its most important management resource, and if recruitment and training do not proceed as planned, or due to employee turnover, this may cause significant disruption to business strategy. Amid intensifying competition for talent in the IT and BPO industries, securing excellent personnel is key to business expansion. As countermeasures, the Group is working to strengthen new graduate internships and career recruitment, and to create a comfortable working environment through measures such as promoting childcare leave and remote work.

There is a risk that the Group's services could become obsolete due to falling service prices from increased competition, rising labor costs from engineer shortages, the emergence of new business models by competitors, and unexpected technological innovation. If these risks materialize, they may affect the Group's business and operating results. As countermeasures, the Group is working to enhance service value through analysis of the latest trends, provision of new services, and strengthened recruitment and personnel development.

The Group may continue to conduct M&A aimed at expanding business scale and acquiring new technologies, and there is a risk that issues such as unrealized expected synergies, failure of integration control, and unmet business development plans may materialize. If such issues occur, they may affect the Group's business and operating results. As countermeasures, the Group has established a decision-making system that includes legal, financial, and labor due diligence, examination of synergies with existing businesses, and internal procedures such as approval by the Board of Directors.

Founder and Representative Director and President Kazuhiko Hasegawa plays an important role ranging from determining management policy and strategy to launching new businesses and making management decisions for the entire Group, and if he becomes unable to perform his duties for unforeseen reasons, this may affect the Group's business and operating results. As countermeasures, the Group is strengthening its management organization through information sharing among officers and employees and delegation of authority, working to establish a system that does not overly depend on him.

The Group is subject to various legal regulations, including the Personal Information Protection Act, the Labor Standards Act, the Worker Dispatching Act, and the Subcontract Act, and faces risks of declining social credibility due to legal violations and impacts on business strategy from unfavorable regulatory amendments. If these risks materialize, they may affect the Group's business and operating results. As countermeasures, the Group implements employee training, strengthens its compliance promotion system, holds regular information exchanges with labor and social security attorneys and legal counsel, and monitors legal compliance status through the Risk Management Committee and internal audits.

The Group has subsidiaries in China, the Philippines, and Poland to which it outsources part of its operations, and faces country risk in that changes in the political, economic, and social conditions of each country could make it difficult to continue business. If these risks materialize, they may affect the Group's business and operating results. As countermeasures, the Group continuously gathers information on legal and regulatory trends in each country and has established a system for sharing information with local legal counsel and accounting firms.