SHINGAKUKAI HOLDINGS CO., LTD.

The subsidiary SG Soken Co., Ltd. repeatedly engages in short-term buying and selling of ETFs, which increases the trading volume and may expand losses on sales, adversely affecting operating income. In addition, if stock prices decline sharply due to a significant slump in the stock market or changes in economic conditions, there is a risk that investment gains/losses and net assets could deteriorate through an increase in valuation losses/losses on sales of securities and a decrease in valuation gains/gains on sales. The Group's revenue is heavily weighted toward fund management-related business, resulting in a structure that is highly susceptible to stock market fluctuations.

The cram school (juku) industry is highly susceptible to the effects of the declining birthrate, which reduces the absolute number of children and students. If the number of births declines rapidly in the future, or if sluggish personal consumption leads to a decrease in education-related spending, performance may be affected. This risk directly threatens the revenue base of the Group's core education-related business and represents a structural, long-term challenge.

The subsidiary Shingakukai Co., Ltd. actively opens and relocates classrooms to expand into new areas and reinforce presence in existing areas, but there are cases where it cannot secure its first-choice location, or where competition with other companies prevents it from gathering the planned number of students. In such cases, classrooms may be closed, potentially resulting in losses. Since classrooms are mainly leased properties, the company states it is able to respond flexibly with relocations in response to changes in the school-age population and neighborhood conditions.

The education-related segment focuses student recruitment on summer, winter, and spring courses as well as the new school term, so the number of students in ongoing courses tends to gradually increase toward the end of the period, with revenue tending to be higher from the second quarter onward. Meanwhile, expenses show little quarterly variation throughout the year, creating a structural seasonal fluctuation risk in which profitability tends to be lower in the first half. If this fluctuation falls short of plan, it could affect full-year performance.

The subsidiary Shingakukai Co., Ltd. holds a substantial amount of student data, and while it states that it exercises the utmost care in its management, if roster data were to leak to outside parties for any reason, it could damage the company's credibility and affect its business performance. Although no leakage incidents have occurred to date, the handling of personal information constitutes a significant compliance risk for education businesses.

In the education-related segment, it is necessary to plan and regularly recruit and train full-time and part-time instructors in order to expand into new areas, and if the necessary personnel cannot be secured, performance may be affected. Since the quality of educational services is directly linked to the quality and quantity of instructors, intensifying competition for hiring and rising turnover rates pose a risk of hindering the execution of business expansion plans.

The subsidiary Shingakukai Co., Ltd. operates classrooms across the country, and if a large-scale natural disaster or viral infectious disease outbreak occurs at these locations, it could disrupt the conduct of operations. This is said to have the potential to materially affect business performance and financial condition, and because of the nationwide network of locations, there is also a risk that multiple sites could be affected simultaneously.

The Group operates a diverse range of businesses—including cram schools, sports clubs, real estate, fund management, and merchandise sales—through five subsidiaries and one affiliated company, creating a structure in which fluctuations in the performance of each business affect consolidated results. In particular, the fund management-related business accounts for a high proportion of revenue, creating a risk that the Group's overall performance could be significantly affected by trends in financial markets.