Alue co., Ltd.

The training programs for new employees, which are the mainstay of the Group's business, are directly linked to the number of new graduates hired by large companies. If the number of new graduate hires declines due to a decrease in the young labor population or economic fluctuations, demand in the core "New Employee/Young Employee" segment may decline, potentially affecting the Group's financial position and business performance. Currently, business remains solid amid an active hiring market driven by economic recovery, but it inherently contains structural demographic risk.

Numerous companies, including training firms and consulting firms, have entered the human resource development and training market, and further intensification of quality and price competition is expected. If the Company is unable to maintain its competitive advantage over other companies in terms of customization capabilities and support for embedding training outcomes through assessments, this may affect the Group's financial position and business performance. Continuous strengthening of differentiating factors is essential.

The destinations for the overseas dispatch training and language training program "ALUGO BOOT CAMP" are mainly in Asian countries such as India and the Philippines, while Overseas Classroom-style Training is conducted in China and Singapore. If external environmental changes such as terrorism, infectious disease outbreaks, or natural disasters occur, it may become difficult to continue providing services, which could affect the Group's financial position and business performance. The Company addresses this by establishing a crisis management system in cooperation with external organizations and setting implementation criteria based on the Ministry of Foreign Affairs' overseas safety information.

The corporate service "ALUGO" and the cloud-based e-learning system "etudes" depend on the internet, in-house systems, and communication networks, creating a risk of system failure due to computer virus infection, unauthorized intrusion, cyber attacks, natural disasters, and other causes. If a failure occurs, it may result in an inability to provide services to customers, a decline in social credibility, claims for damages, and increased restoration costs. The Company works to prevent such incidents by establishing server management and monitoring systems through external vendors and implementing security measures.

In the course of its business operations, the Company holds personal information and confidential information of client companies and their employees, creating a risk of information leakage or unauthorized use due to unauthorized access by third parties, human error, or intentional acts by employees. If a leak occurs, it may result in a decline in social credibility and claims for damages, potentially affecting business operations and performance. The Company addresses this through obtaining Privacy Mark certification, establishing information management regulations, setting up a dedicated department, and conducting regular training.

Securing instructors, who determine the quality of classroom-style training, and Filipino coaches who conduct one-on-one English conversation lessons for the corporate service "ALUGO," is key to business continuity. If it becomes difficult to secure coaches due to social conditions in the Philippines, infectious diseases, economic fluctuations leading to rising compensation levels, or legal amendments, significant disruption to the provision of core services may occur, potentially affecting the Group's financial position and business performance. The Company addresses this by establishing a coach management system at its subsidiary, ALUE PHILIPPINES INC.

Since the overseas dispatch training and language training program "ALUGO BOOT CAMP" falls under business activities regulated by the Travel Agency Act, the Company is registered as a Type 1 Travel Agency (Travel Agency registered by the Commissioner of the Japan Tourism Agency, No. 1930). If the Company becomes subject to grounds for refusal of registration renewal or grounds for revocation, its registration could be revoked or it could be ordered to suspend service provision, which would affect its financial position and business performance. The Company recognizes that no such grounds currently exist, but acknowledges this as a risk should any such grounds arise.

Bunshiro Ochiai, the founder and Representative Director and President, plays a critical role across all aspects of business activities, from determining management policy and business strategy to developing new services. If he becomes unable to continue performing his duties for any reason, this may affect the Group's financial position, business performance, and future business promotion. The Company is working to reduce this dependence through information sharing at Board of Directors meetings and management meetings and by strengthening its management organization, but the degree of dependence remains high at present.

Revenue from corporate services is linked to clients' human resource development plans, and since new employee training is concentrated in April, sales and profit are structurally skewed toward the second quarter (April to June). Meanwhile, since fixed costs such as personnel expenses are incurred continuously on a monthly basis, sales and profit tend to be smaller in the first quarter (January to March) and third quarter (July to September). If second-quarter performance is weak, this may have a direct and significant impact on full-year business performance.

If an instructor or coach is involved in an accident, incident, or misconduct, whether as a perpetrator or as a party affected, measures such as suspending that person from conducting training may become necessary, potentially affecting business performance. Furthermore, regardless of how the Group responds, if negative reputation spreads through investors, mass media, the internet, or society at large, social credibility may be damaged, potentially affecting business operations and performance. Given the business model that relies heavily on externally contracted personnel, managing reputational risk is an important challenge.