Hiring restraint and deteriorating business performance due to COVID-19

「During the interim consolidated accounting period, there were no new major risks or significant changes to the business risks described in the annual securities report that management recognized as potentially having a material effect on the financial position, operating results, or cash flows of the consolidated companies, among the matters concerning business conditions and financial matters described in this Semiannual Report.」

「During the current consolidated fiscal year, the Japanese economy showed signs of a gradual recovery as economic activity moved toward normalization following the lifting of restrictions on activities related to COVID-19.」

「Meanwhile, customer-attraction activities by companies related to events and leisure are gradually recovering as the impact of COVID-19 has declined.」

「During the first quarter of the current consolidated cumulative period, the Japanese economy showed signs of a gradual recovery as restrictions on activities introduced to prevent the spread of COVID-19 were eased in stages and personal consumption, including travel and dining out, recovered.」

「Regarding COVID-19, we have determined that its impact on the Group's business and operating results is currently minor and have made accounting estimates, including those relating to tax effects. However, as there are many uncertainties regarding when the situation will subside, we will continue to closely monitor developments.」

「The outlook for the effects of COVID-19 remained uncertain. We assumed that the impact of these conditions on recruitment activities would gradually recover from the effects of COVID-19 through the end of the current consolidated fiscal year.」

「The outlook for the effects of COVID-19 remained uncertain. We assumed that the impact of these conditions on recruitment activities would gradually recover from the effects of COVID-19 through the end of the current consolidated fiscal year.」

「During the current consolidated fiscal year, the Japanese economy remained under severe conditions as the effects of the prolonged spread of COVID-19 continued. The movement of people and goods stagnated and restrictions on corporate activity were repeatedly imposed following repeated declarations of a state of emergency and the implementation of priority preventive measures. In the fourth quarter, uncertainty over the outlook continued due to renewed spread caused by new variants and soaring resource prices.」

「During the first nine months of the current fiscal year, the Japanese economy remained under severe conditions as the effects of the prolonged spread of COVID-19 continued. The movement of people and goods stagnated and restrictions on corporate activity were repeatedly imposed following repeated declarations of a state of emergency and the implementation of priority preventive measures. Although the lifting of the state of emergency in October following a decline in infections raised expectations for an economic recovery, concerns over renewed spread due to the emergence of new variants remained, and uncertainty over the outlook continued.」

「During the first six months of the current fiscal year, the Japanese economy remained affected by the spread of COVID-19. Corporate activity was restricted by the stagnation in the movement of people and goods following the declaration of a state of emergency and the implementation of priority preventive measures, and the outlook remained uncertain. Under these economic conditions, hiring activity in the restaurant and service industries, which were affected by sluggish personal consumption and other factors, continued to show signs of bottoming out. In Shizuoka Prefecture, our strategic region, the effective job-offers-to-applicants ratio in August 2021 rose 0.32 points year on year to 1.23, but employment conditions had not fully recovered.」

「Under these circumstances, regarding employment conditions, hiring activity in the food service and service industries, which were affected by weak personal consumption and other factors, continued to show signs of bottoming out. In Shizuoka Prefecture, our strategic region, the active job openings-to-applicants ratio in May 2021 rose 0.03 points year on year to 1.08x, but employment conditions had not yet fully recovered.」

「Under these conditions, the Group focused on measures to expand sales of 『ワガシャ de DOMO』, a service providing a recruitment management system with a subscription-based billing model.」

「At the end of the first six months of the current fiscal year, we assumed that conditions would gradually improve from the second half of the Group's fiscal year, from September 2020 to February 2021. Although some improvement was actually observed in the third quarter, the outlook remains uncertain due to the arrival of a third wave of infections and other factors. Based on information available when preparing the consolidated financial statements for the third quarter, we assumed that the impact of these conditions on recruitment activities would gradually improve but remain for a certain period after the end of the current consolidated fiscal year, and made accounting estimates including those relating to tax effect accounting.」

「Under these economic conditions, hiring freezes and other developments occurred amid uncertainty over corporate performance and the suspension of activities in the restaurant and service industries due to requests to close temporarily. In Shizuoka Prefecture, our strategic region, the effective job-offers-to-applicants ratio in August 2020 fell 0.68 points year on year to 0.88, and difficult employment conditions continued.」

「Under these economic conditions, regarding employment conditions, hiring freezes and similar developments occurred because of uncertainty over corporate performance and the suspension of activities in the food service and service industries in response to requests to suspend operations. In Shizuoka Prefecture, our strategic region, the active job openings-to-applicants ratio in May 2020 was 1.06x, down 0.52 points year on year, and employment conditions were deteriorating rapidly.」

「In addition, due to the economic stagnation and other effects of the COVID-19 pandemic, which has been spreading since the beginning of 2020, companies seeking workers were expected to restrain hiring and reduce their willingness to hire. In such circumstances, the Group's operating results or financial position could be affected. Amid the slowdown in the movement of people and goods caused by the ongoing spread of COVID-19, companies have experienced deteriorating performance and hiring freezes, affecting the performance of our Group, whose principal business is human resources services. The effective job-offers-to-applicants ratio in Shizuoka Prefecture for March, announced by the Shizuoka Labour Bureau on 28 April 2020, was 1.22, down 0.43 points year on year, reflecting the rapid deterioration in employment conditions.」