CAREERLINK CO., LTD.

The staffing business operates under a "General Worker Dispatching Business License" based on the Worker Dispatching Act, while the placement business operates under a "Fee-Charging Employment Placement Business License" based on the Employment Security Act. If either license is revoked for any reason, business activities would be restricted. In addition, if contracting transactions are determined by the respective prefectural labor bureaus to constitute "disguised contracting" (gisou ukeoi), there is a risk of receiving administrative dispositions such as business suspension. Amendments to the Labor Standards Act, the Personal Information Protection Act, the Immigration Control Act, and other laws may also affect business activities and operating results.

In FY2026 (ending March 2026), the BPO-Related Business division within Clerical Staffing Services accounted for 59.8% of total net sales, and within this, the proportion of contracting transactions with government offices, particularly local governments, is high. If net sales from contracting transactions with local governments were to decline sharply, this could have a significant impact on the Group's overall performance. As countermeasures, the Group is working to expand contracting transactions with private companies, strengthen dispatching operations in the CRM-Related Business division and General Clerical Business division, and expand the base of Manufacturing Staffing Services.

In the staffing services business, securing registered staff and working staff is fundamental to business continuity. If staff acquisition does not proceed as intended due to changes in employment conditions or labor demand, the Group may be unable to meet client needs, potentially affecting business activities and operating results. The Group implements measures such as continuous recruitment through internet, newspaper, and magazine advertisements, regular contact with unplaced staff, education and training support, and employee promotion systems; however, there is a risk that intensifying competition in the labor market could make staff acquisition difficult.

The core BPO-Related Business division has a high proportion of business with government offices and local governments, and delays or missteps in the introduction of innovation and technology could lead to a decline in competitiveness and a resulting decrease in net sales. In addition, in the utilization of rapidly expanding AI technology, insufficient response to ethical risks such as leakage of confidential information, copyright infringement, and the promotion of discriminatory expressions could damage social trust and affect business activities and operating results. The Group is building a response framework through securing specialized personnel and introducing external expertise, but there remains a risk that personnel acquisition may not proceed as intended.

With the ongoing decline in birthrate and aging of the population, there is a high likelihood of further decreases in the working-age population, creating a risk of a shrinking supply base for the staffing services business. The Group is working to develop diverse work arrangements for women, older workers, persons with disabilities, and foreign nationals, as well as developing low-headcount operations through DX promotion; however, if the Group fails to appropriately respond to demographic changes, business activities and operating results may be affected as the labor market contracts.

The Group may continue to conduct M&A as a means of business expansion. If the Group is unable to adequately control the management, business, or assets of an acquired company, or if personnel or clients are lost, the expected benefits of the acquisition may not be achieved. If business development does not proceed as originally planned, there is a risk that the investment amount may not be sufficiently recovered, which could affect the Group's financial position and operating results. The Group strives to avoid risks in advance through rigorous due diligence, but there is a risk that unforeseen circumstances may arise due to changes in the domestic and international economic environment and other factors.

The Group's services are susceptible to fluctuations in domestic and overseas economic conditions and changes in economic circumstances. A sudden economic downturn caused by global price increases, changes in monetary policy, or geopolitical risks such as the situations in the Middle East, Ukraine, and Taiwan could lead to a sharp decline in orders from clients. A sudden deterioration in economic conditions due to unforeseen events could significantly change the supply-demand balance in staffing services, potentially affecting business activities and operating results.

Numerous competitors exist in the staffing services industry, and the advancement of labor-saving through DX and AI development creates a risk of increased entry from other industries. The Group seeks to differentiate itself through proposals for operational efficiency and rationalization leveraging know-how cultivated in the BPO-Related Business, but if competition intensifies further or the Group fails to respond appropriately and in a timely manner to change, business activities and operating results may be affected.

The Group handles large volumes of personal information, including registered staff, working staff, job placement applicants, employees, and client information, as well as specific personal information including My Number data. If leakage or unauthorized use occurs, this could result in a loss of social trust, damage to corporate image, and claims for damages. The Group has implemented measures such as obtaining Privacy Mark certification, developing personal information protection manuals, obtaining ISO/IEC 27001 certification, and formulating ISMS basic policies; however, the risk of information security incidents due to unforeseen circumstances such as cyberattacks or unauthorized access remains.

Recruiting and developing excellent employees is essential to providing high-value-added staffing services. If the recruitment and development of necessary personnel does not proceed as intended, or if core personnel leave the company, business expansion could be hindered. The Group strives to recruit and develop excellent personnel throughout the year, but there is a risk that intensifying competition in the labor market and population decline could make personnel acquisition difficult, potentially affecting business activities and operating results.