Poppins Corporation

The declining birthrate has accelerated since the COVID-19 pandemic, with the number of nursery school users decreasing for three consecutive years, from 2.71 million in 2024 to 2.68 million in 2025. Since revenue from the Educare Business is directly linked to the number of children and students enrolled, if the Company is unable to secure the expected number of enrollments, this could affect operating results and financial position. On the other hand, the Company expects the underlying number of children on waiting lists for nursery places to remain elevated, driven by rising female labor participation rates and an increase in dual-income households.

National and local government policies—such as babysitter usage support programs (Children and Families Agency discount vouchers, Tokyo Metropolitan Government support programs), the Long-Term Care Insurance Act, and subsidies for licensed nurseries—significantly affect business growth. If these systems are scaled back or changed, revenue could decline across the Childcare, Educare, Silver Care, and Training businesses. As a countermeasure, the Company works to closely monitor policy trends and maintain a balanced business portfolio.

The effective job openings-to-applicants ratio for childcare workers reached 3.88x in January 2026, further exceeding the previous year's 3.78x, and competition to recruit nannies, babysitters, and care staff has also intensified. If human resource acquisition does not proceed as planned, delays may occur in the operation of existing facilities and in the opening schedules for new facilities, which could affect operating results and financial position. As countermeasures, the Company is operating a new personnel system, expanding regional recruitment and leased employee housing, and strengthening recruitment and training through the use of DX.

The Company holds large volumes of personal information across a wide range of age groups, including children, elderly individuals, guardians, and registered personnel candidates. Should a leak occur, it could lead to a loss of social trust, withdrawal of users and children from facilities, and impacts on the opening of new facilities, thereby affecting the business as a whole. The Company obtained ISO27001 certification in 2017 and has established a framework for monitoring information incidents through monthly quality management meetings and reporting to the Risk Management Committee.

Against the backdrop of a declining number of children on waiting lists, competition for nursery school contracts has intensified, and price competition has emerged in some regions. In the Childcare and Silver Care businesses as well, if competition intensifies due to new entrants from major companies in other industries or an increase in providers of similar services, this could affect operating results. As countermeasures, the Company maintains high value-added, high-quality services, differentiates the Poppins brand, and closely monitors competitive trends.

Core businesses such as Licensed Nurseries & Certified Childcare Centers, Certified Nurseries & On-site Company Nurseries, and long-term care insurance services are subject to regulations including the Child Welfare Act, the Long-Term Care Insurance Act, and the Food Sanitation Act, and violations carry the risk of license revocation. If regulations are strengthened or changed in the future, this could increase operating costs or force a reduction in business scale. As countermeasures, the Company is diversifying its operating formats and strengthening and cultivating its Childcare Business, which is not bound by government-set pricing, in order to balance its business portfolio.

The Company procures funds for capital expenditures related to the opening of new childcare facilities and for M&A investments through borrowings from financial institutions, with the interest-bearing debt ratio at 18.2% for FY2023 (ending December 2023), 23.8% for FY2024 (ending December 2024), and 14.8% for FY2025 (ending December 2025). Borrowings may increase going forward in connection with new facility openings and expanded M&A activity, and if fund procurement cannot proceed as planned due to sharp fluctuations in interest rates or changes in financial conditions, this could constrain capital expenditures and new business initiatives.

In the Childcare and Educare businesses, which serve children from infancy through school age, and the Silver Care Business, which serves elderly individuals requiring long-term care, it is difficult to completely eliminate the possibility of unforeseen accidents occurring during service provision. If a serious accident occurs and the Group is held responsible, this could affect business operations and operating results through a loss of trust, brand damage, and litigation costs. As countermeasures, the Company conducts regular training and enforces manual compliance based on ISO9001, shares incidents and prevents recurrence through monthly quality management meetings, and maintains insurance coverage.

Since services are provided at facilities and in clients' homes, an outbreak of an unknown infectious disease could make it difficult to operate facilities due to a large number of absent childcare workers and care staff, and could also affect operating results through an increase in babysitting service cancellations, among other effects. In addition, if childcare and after-school facilities operated nationwide are damaged by a large-scale natural disaster, there is a risk that service provision could become impossible due to the suspension of facility operations. The Company addresses these risks through infectious disease countermeasures, stockpiling, drills, and the development of business continuity plans overseen by the Risk Management Committee.

Representative Director and President Maiko Todoroki, together with her relatives and asset management company, hold 60.9% of the total number of issued shares (excluding treasury shares), resulting in a concentration of voting rights among specific shareholders. Should the major shareholder's ownership ratio decline for any reason, this could affect the Company's stock market price and the status of voting rights exercised, among other matters. While Ms. Todoroki has stated a policy of giving consideration to the interests of minority shareholders as well, this should be recognized as a structural governance risk.