MEITEC Group Holdings Inc.

If the company's social credibility is undermined due to violations of corporate governance policy, disregard for compliance, or conduct contrary to social ethics, this could affect business performance and financial condition. A similar risk arises if misconduct not only at the company but across the worker dispatching industry as a whole leads to the spread of misperceptions about the industry. As a countermeasure, the company has obtained certification as an "Excellent Staffing Agency" (優良派遣事業者) from the Ministry of Health, Labour and Welfare, and continues compliance awareness activities for clients.

Since the company permanently employs engineers as regular employees, with a target of 13,500 engineers by the end of March 2029, a decline in the number of dispatched staff, the utilization rate, working hours, or dispatch fee unit prices would raise the cost ratio and could have a material impact on business performance and financial condition. Key triggers include a decrease in labor demand from major manufacturing clients due to changes in domestic and overseas economic conditions, and increased cost pressures. As countermeasures, the company is working to rapidly optimize the supply-demand balance through its best-matching system and to develop engineers and enhance their added value.

Securing a sufficient quantity of talented personnel, particularly engineers, is a critical factor directly linked to business earnings; if intensifying recruitment competition or a decline in the company's credibility makes it difficult to secure talented personnel, this could affect business performance and financial condition. The company has shifted its hiring policy from a focus on new graduates to expanding mid-career hiring in order to adapt to changing conditions. A decline in recruiting capability would also directly affect the achievement of the medium- to long-term business expansion target (a workforce of 13,500 by the end of March 2029).

A large number of engineers are engaged in highly confidential core processes such as clients' design and development work, giving them extensive opportunities for direct contact with confidential information; information leakage is recognized as a significant risk that could damage client trust. If confidential information is leaked, this could result in a breakdown of trust with clients and adversely affect business performance and financial condition. As a countermeasure, the company has clearly stated relevant policies in the employee code of conduct at each group company and has established information security standards to ensure thorough awareness among group employees.

Due to the nature of the outsourcing business, centered on the staffing business, the company handles large volumes of personal information, and if an unforeseen leakage incident occurs, it could affect business performance and financial condition. The company addresses this by having each group company obtain Privacy Mark certification and by establishing personal information management systems. Proper management, protection, and use of personal information is regarded as a social responsibility.

Group companies operate their businesses under licenses for worker dispatching and fee-charging employment placement services obtained from the Minister of Health, Labour and Welfare; if statutory requirements are no longer met, the company could lose its licenses and business continuity could become difficult. In addition, related laws and regulations, including the Worker Dispatching Act, are subject to continuous review, and if revisions significantly disadvantageous to the group are made, this could have a material impact on business performance and financial condition. The company addresses this through thorough legal compliance and compliance awareness activities.

If unforeseen new accounting standards or tax systems are introduced or changed, this could adversely affect business performance and financial condition. In addition, if differences of opinion arise with tax authorities regarding tax filings, there is a risk of unexpected tax payment obligations. The securities report does not describe specific countermeasures.

The short-term and medium- to long-term management plans are based on market outlooks at the time of formulation, and if market conditions or the economic environment change more dramatically than anticipated, the management plan may not be achieved. Management identifies sharp increases in resource prices, tense international conditions, and yen depreciation as major risks that could worsen corporate earnings. At present there are no signs of direct impact, and the utilization rate is expected to remain steady.

If important facilities of the company group or its clients are damaged by natural disasters such as earthquakes or unforeseen accidents, this could affect business performance and financial condition. Given the business model in which engineers work on client premises, damage suffered by clients directly affects the group's operations as well. The securities report does not describe specific countermeasures.

Because there are frequent opportunities to access clients' internal information, disputes related to confidential information may arise; and because the company constantly employs a large number of workers who work on client premises, disputes with internal and external workers may also occur. Various disputes may also arise in connection with the execution of business strategies such as M&A, and if these develop into litigation, reputational damage and liability for damages could arise, potentially affecting business performance and financial condition. The securities report does not describe specific countermeasures.