Living Platform,Ltd.

The Group operates its business under numerous laws and regulations, including the Long-Term Care Insurance Act, the Comprehensive Support for Persons with Disabilities Act, and the Child Welfare Act, and has obtained designations (valid for six years) from prefectural governors and others for each business location. If long-term care compensation is reduced, laws/regulations are revised or abolished, or application standards are changed, or if the Group receives administrative sanctions (revocation of designation or business suspension), this could have a material impact on business development and results. At present, no grounds for business suspension or designation revocation have arisen, but the Group is addressing this through continuous strengthening of its compliance framework.

Nursing care staff and childcare workers are in a state of chronic personnel shortage, and securing personnel in line with business expansion has become a key management issue. If the personnel shortage becomes severe, it may become difficult to accept users, leading to a decline in occupancy/utilization rates and directly affecting business results. The Group is working to improve staff retention rates through the active acceptance of foreign workers with specified skills, improved treatment, and enhanced education systems and employee benefits.

The Group procures funds for acquiring self-owned properties through financial institution borrowings and other means when opening new facilities. As of the end of the consolidated fiscal period, the balance of interest-bearing debt (including lease obligations) was ¥6,538 million, with a dependence ratio of 54.0% against total assets and an equity ratio of 16.7%, indicating a relatively high level of financial leverage. Future interest rate increases or difficulty in raising funds as planned could affect business development and results.

The Group operates paid nursing homes and group homes on buildings and land under long-term lease contracts, and some of these are treated as operating leases and are not recorded on the balance sheet. If lease accounting standards are revised in the future to require the recognition of operating lease assets and liabilities, the equity ratio would decline further from its current level, and an increase in assets subject to impairment could necessitate the recognition of impairment losses.

The Group's revenue is directly linked to the number of elderly persons, children, and persons with disabilities using its services, and results would deteriorate if the planned number of users cannot be secured. In particular, in the Nursing Care Business and Childcare Business, there is a risk that difficulty in accepting users due to personnel shortages could lead to a decline in utilization/occupancy rates. Securing occupancy during the ramp-up period of newly opened facilities remains an ongoing challenge.

In the Nursing Care Business, Disability Support Business, and Childcare Business, there is a relatively higher risk compared to other industries of accidents such as falls, abuse/violence, food poisoning, and outbreaks of infectious disease. Should a serious accident or spread of infectious disease occur and the Group be held responsible, this could affect business development and results. The Group is working to strengthen thorough employee education on accident prevention, abuse prevention, and risk management, as well as enhancing safety and hygiene management.

The majority of the Group's operating locations are leased under relatively long-term lease contracts, creating a structure in which mid-term cancellation, short-term facility closure, or rent renegotiation is difficult. Even if profitability deteriorates, fixed cost burdens continue, and if continued use becomes difficult due to the landlord's bankruptcy or other reasons, this could affect business development and results.

In the nursing care service market, intensifying competition is expected due to new market entrants, and there are signs that the competitive environment has also been intensifying in recent years in the Disability Support Business. In the Childcare Business, competitive risk is currently considered low due to excess demand, but if the childcare market shrinks rapidly in the future, competition could intensify. The Group is working to achieve long-term continued use by users through service differentiation.

The Childcare Business primarily targets children aged 0 to 5, and if the declining birthrate progresses rapidly, the childcare market could shrink significantly, affecting business development and results. Although the current situation is one of excess demand, there is a risk that medium- to long-term demographic changes could affect the business foundation.

Representative Director Hirofumi Kaneko, as the founder, plays a key role in driving management policy and business strategy, and if he were to become unable to continue his duties, this could affect business results and future growth potential. The Company is working to build a management structure that reduces excessive dependence on a specific individual by establishing information-sharing systems among officers and executives and by promoting the modularization, standardization, and documentation of operations.