The following are risks of the business of the Company that may have a significant effect on investment judgments to be made by investors. Please note that any matters related to the future are assumed by the Company Group as of the end of the preceding consolidated fiscal year.
- Risks regarding legal regulations, etc.
The Company Group has operated various businesses, including education, welfare and publishing businesses, and in each business, the Company Group is subject to various applicable laws and regulations. The Company Group has endeavored to consolidate its compliance management and is currently further strengthening its legal compliance initiatives, including providing all employees with legal compliance training. The business results of the Company Group may, however, be affected by amendments to applicable laws or regulations, changes of legal interpretation or new creation of legal regulations.
- Risks regarding the occurrence of a disaster
The head office and main offices of the Company Group are located in Tokyo or other urban regions. Prior to the occurrence of the Great East Japan Earthquake, we created our countermeasure manuals for fire, earthquake and new types of influenza. After the Great East Japan Earthquake, we have established a business continuity plan (BCP) and revised the countermeasure manuals. If, however, any incident beyond the scope of our prediction, such as earthquake, seismic sea wave, typhoon, flood or any other natural disaster, or fire, electric power outage, epidemic of infectious disease, dispute or act of terrorism, illegal activities occurs and the business activities of the Company Group is suspended or the business operation of the Company Group is impaired, the business results of the Company Group may be affected by the situation. Furthermore, even if facilities or systems of the Company Group are not damaged, the same risk may occur to us if our customers or business partners suffer considerable damage in such situation.
- Risks regarding the management of personal information
The Company Group obtains and keeps various personal information in every course of its business, from planning, production, sale and distribution of goods / services. We recognize that the proper management of personal information is one of the fundamentals of our business activities as well as one of our social responsibilities. We therefore comply with applicable laws and internal regulations, guidelines, manuals, etc., in obtaining, keeping, using or disposing of, etc., personal information, and have further taken full measures to prevent any unauthorized access from the outside. If, however, a leakage of personal information occurs due to unforeseen circumstances, the Company Group may lose confidence in society and the business results of the Company Group may be affected.
- Risks regarding trouble of the information system
Many aspects of the business of the Company Group rely on information / telecommunication network. With the aim of lowering the possibility of the occurrence of system troubles, the Company Group has implemented various measures, such as measures to strengthen the system for its safety operation, strengthen security, and redeply its servers to data centers. If, however, the stoppage of the information system, loss or leakage or falsification, etc., of information occurs due to electric power outage, a disaster, defect in software or equipment, infection of computer virus, unauthorized access or any other incident beyond the scope of our prediction, our business activities may be interfered and the business results of the Company Group may be affected.
- Risks regarding the management of elder care business
The Company Group has expanded its business of “housing for the elderly with home-care services provided” (“Housing for the Elderly”) which was institutionalized in 2011, and we have endeavored to create a society in which the elderly lives at ease. Although we have developed the Housing for the Elderly business in accordance with the Long-Term Care Insurance Act, Act on Securement of Stable Supply of Elderly Persons' Housing and other applicable laws, if the current social security systems or current laws or regulations change or are amended, the business results of the Company Group may be affected.
In the light of the safety and health management of users under the business for welfare service for the elderly, there is a possibility that any material live-threatening issue (such as an accident, food poisoning and group infection) may occur. If, therefore, a lawsuit is instituted or the Company Group suffers a reputational damage in this regard, the business results of the Company Group may be affected.
- Risks regarding the child-raising aid business and the operation of classrooms / private tutoring school business
The Company Group has endeavored to create an environment in which parents may entrust their children to a business entity at ease and to decrease the number of children on waiting lists for childcare services. To achieve these, the Company Group has operated its child-raising aid business and “certified centers for early childhood education and care” and day-care centers. In the light of the safety and health management of users of the institutions operated for infants and children before school age, there is a possibility that any material live-threatening issue (such as an accident, food poisoning and group infection) may occur. If a lawsuit is instituted or the Company Group suffers a reputational damage in such situation, the business results of the Company Group may be affected.
The Company Group has also operated classrooms and private tutoring schools for infant children to high school students across the country, and the Company Group has endeavored to create an environment for safe schooling, such as providing guidance related to traffic safety and crime-prevention and developing an emergency plan. If, however, any incident that threatens the safety of users occurs, the Company Group may lose confidence in society and the business results of the Company Group may be affected.
- Risks regarding the business trend in the publishing market
The Company Group has sold and distributed publications to cover various life styles such as pictorial books which satisfy children’s intellectual curiosity and other intellectual education materials, study-aid books and dictionaries that meet the school study need, and publications related to cooking, health, cultivation and entertainment. In addition, we have endeavored to enhance the contents to be sold and distributed in the electronic book market which is expected to grow. In the publication market, however, the sales of books and magazines are on a downward trend, and the volume of the advertising income in the publication business is susceptible to the effect of overall economic conditions. If an acute change in the market occurs, the business results of the Company Group may be affected.
- Risks regarding the copyrighted work resale system
The Fair Trade Commission officially announced an idea to abolish the so-called “copyrighted work resale system” in a paper titled “Regarding the Treatment of the Copyrighted Work Resale System” issued on March 23, 2001. There are many individuals and entities to express a dissenting view, and the idea has been rejected as being premature. If the system is abolished in a future, however, the publication industry as the whole and the business results of the Company Group may be affected.
- Risks regarding the consignment sales system
In the publication industry, there is a business practice called “consignment sales system (or the sale under the condition that the consignee has the right to return unsold publications back to the consigner)”. Although the Company Group has set aside a “provision for returned goods” to make up for a loss for returned goods under this system, if the volume of returned goods increases beyond our prediction, the business results of the Company Group may be affected.
- Risks regarding intangible property rights
Various intangible property rights (including copyrights and rights of publicity) exist in connection with contents (such as publications) that the Company Group has produced and distributed. It would be difficult to fully prevent risks of legal dispute (such as copyright holder’s claims for suspension of publication or compensation for damage) in the future. If such a dispute arises, the business results of the Company Group may be affected.
- Risks regarding overseas business development
The Company Group has developed private tutorial school business in Asian countries, which business includes sales, production, purchase of goods and publications, and the Company Group will endeavor to actively expand such overseas business. In this regard, the Company Group has endeavored to strengthen its business base by collecting information regarding amendments to applicable laws and change of legal interpretations as well as information regarding actions to be taken by local administrative agencies. In the light of overseas business development, any political, social or economic destabilizing factor or factors in the relevant country or region, such as natural disaster, infectious disease, creation of or amendment to applicable laws or regulations, may surface. Under such circumstances, the business results of the Company Group may be affected.