Semba Tohka Industries Co.,Ltd.

Although quality management systems such as HACCP and FSSC have been introduced, product accidents due to accidental causes or quality problems affecting society at large may occur, which could affect business performance and financial position. As a countermeasure, the Quality Assurance Committee meets monthly, and a foreign matter contamination prevention system incorporating the concept of food defense has been established.

In addition to the risk of sharp increases in raw material prices and stable procurement due to abnormal weather, rising utility costs and raw material prices accompanying the depreciation of the yen may lead to higher manufacturing costs, which could affect business performance and financial position. As a countermeasure, the company strives to revise product prices appropriately in line with raw material prices and implement cost reduction measures.

In overseas operations, exchange rate risk, rising labor costs due to inflation, and product accidents caused by the use of pesticides that do not meet Japanese food hygiene standards may occur, which could affect business growth and performance. As a countermeasure, the company utilizes local staff networks and external consultants to appropriately and timely grasp trends in local laws, regulations, and tax systems.

Information related to production, logistics, sales, and development is managed by computer, and if an information system failure occurs due to unauthorized access or unpredictable computer virus infection, it may disrupt customer service and incur costs, affecting business performance and financial position. As a countermeasure, the Information Security Committee takes the lead in promoting security measures, and insurance is maintained in preparation for information leakage.

The company is subject to various legal regulations such as the Food Sanitation Act, the Product Liability Act, and the Containers and Packaging Recycling Act, and responding to the enactment and enforcement of new laws or legal regulations applicable to new businesses may affect business performance and financial position. As a countermeasure, the company has established the "Semba Toka Kogyo Group Code of Conduct" and set up an internal reporting hotline to develop its compliance framework.

Various assets, including business-use real estate, may become subject to impairment accounting depending on declines in market value or future cash inflow conditions, which could affect business performance and financial position. As a countermeasure, the company conducts quarterly assessments of impairment indicators and strives to revise prices in line with appropriate selling prices for assets expected to see declining profitability.

With major production facilities concentrated in Moka City, Tochigi Prefecture, if a large-scale earthquake, natural disaster, or pandemic occurs, production line disruptions could affect business performance and financial position. As a countermeasure, the company conducts regular equipment inspections and disaster prevention inspections, and works on disaster countermeasures such as diversifying its supply chain.