Business Risks

The Takashima Group manages risks based on the "Takashima Group's Basic Policy for Risk Management," with the President and CEO as the Chief Risk Management Officer.

The Building Materials segment, which accounts for a significant portion of the Group's sales, is significantly affected by changes in private capital investment, public works, and the number of housing starts.
In the Industrial Materials segment, a slump in domestic private capital investment, and in the Industrial Materials segment and Electronics & Devices segment, reduced production by customers due to worsening economic conditions in overseas countries, especially in Asia, may have a negative impact on the Group's business performance and financial status.
Consumer goods and materials may also be affected by sluggish personal consumption.
We respond to changes in the economic situation by reviewing our sales policies as necessary.

Policy changes such as reductions in the purchase price (residential use) and feed-in tariff (industrial use) of surplus electricity by electric power companies, delays in the acceptance of renewable energy applications by electric power companies, and output curtailment regulations may affect demand and have a negative impact on the business performance and financial condition of our group. We are working to develop and develop sales measures in response to policy changes and deal with these.

Our group's transactions include import and export transactions with overseas companies and transactions in foreign currencies at overseas bases, and there is a risk of exchange rate fluctuations in these foreign currency-denominated transactions. It is impossible to completely eliminate the impact of exchange rate fluctuations, and this may affect our business performance and financial condition.
We are dealing with this by taking measures such as forward exchange contracts to hedge the risk of exchange rate fluctuations and mitigate the impact of exchange rate fluctuations.

Our group takes advantage of the characteristics of being a trading company to plan, develop, and propose optimal solutions for each customer with an emphasis on the field, thereby achieving customer satisfaction. In these functions, planning, development, and proposal capabilities are key, and if these functions cannot be utilized in a comprehensive manner, it may affect the business performance and financial condition of the Group.
Not only do each business division plan, develop, and propose, but the Corporate Planning Department also provides support to provide more optimal solutions.

In most industries in which the Group is involved, there is very severe price competition. Some of our competitors have more research, development, manufacturing, and sales resources than the Group, and are constantly introducing products with new functions at low prices to the market. Price competitiveness is a major factor in whether or not we can receive orders, and a decrease in transactions or a decline in profit margins due to price pressure may affect the business performance and financial condition of the Group.
By providing solutions to customers that are unique to our company, we strive to provide added value that is not influenced solely by price competition.

If the business situation of the Group's business partners faces financial problems due to market fluctuations or industry restructuring, it may affect the business performance and financial condition of the Group.
We deal with this by taking preservation measures according to the credit status of our business partners.

Our Group invests in certain business partners to maintain long-term business relationships, and if we determine that the decline in the value of these investments is not temporary, we impair the investments.
Therefore, if the performance of the investment target becomes poor due to a worsening market, etc., and losses or unrecoverable losses not reflected in the current book value occur, this may affect our Group's business performance and financial position.
We regularly verify the value of investments in business partners and determine whether or not to continue investing in them.

The Group holds fixed assets. If it determines that an impairment loss should be recognized for an asset or asset group that is subject to accounting standards for the impairment of fixed assets, the book value of the asset or asset group will be reduced to its recoverable amount and the amount of such reduction will be recorded as an impairment loss for the relevant period, which may have an adverse effect on the Group's business performance and financial position.

The Group's inventory may decrease in value due to factors such as a decline in demand due to an economic downturn, the emergence of new products from competitors in each market, and a drop in the market price of seasonal products, which may affect the Group's business performance and financial position. We keep track of inventory status, especially long-term inventory status, in a separate framework, and hold regular meetings with executives from the business and administrative departments to confirm the status of long-term inventory and consider countermeasures.

Natural disasters such as earthquakes and floods, fires, accidents, etc. may damage company buildings and assets, suspend sales and head office functions, and incur restoration costs, which may affect the Group's business performance and financial position.
Each Group company has created a business continuity plan (BCP) to clearly state how to respond in the event of an accident.

The Group provides various products in accordance with specified quality control standards, but if unforeseen quality problems or accidents related to product liability occur, this may affect the Group's business performance and financial position.
For suppliers and manufacturing contractors with whom we have repeated transactions, we clarify their responsibilities regarding the quality of goods and products in the basic transaction contract and take measures to hedge risks.

The business conducted by our Group is subject to various legal regulations, such as the Construction Business Act, the Subcontract Act, and the Antimonopoly Act. If our Group were to commit an illegal act, it could affect our business performance and financial situation.
We carry out our daily operations in accordance with the company policy of compliance, and in the unlikely event that a problem is discovered, we take measures to prevent recurrence, including rewards and punishments, and deal with it appropriately.

Our Group holds many trade secrets related to technology, sales, and other businesses.
Our Group has established a thorough system for information management, but there is a possibility that information may leak to the outside due to unforeseen circumstances and be illegally obtained and used by a third party. If such an event occurs, it could affect our business performance and financial situation.
We have established a specialized organization to handle information systems and are taking information security measures based on the latest technological trends.

In order to maximize the Group's corporate value, the Group has positioned the enhancement of corporate governance as an important management issue and is implementing a variety of measures.
However, if the expansion and diversification of business, etc., causes a situation in which the construction, maintenance and operation of an adequate internal control system cannot keep up, it may become difficult to conduct business appropriately, which may affect the Group's performance and financial position.
To ensure the proper conduct of business and the reliability of financial reporting, the Group has constructed, developed and operates a system that ensures that the relevant internal controls function effectively.