PIA CORPORATION

If a global infectious disease outbreak such as COVID-19 spreads, or a new infectious disease emerges, events may be cancelled or postponed in the domestic leisure and entertainment market that forms the business foundation of the Group, restricting business activities. This could have a material impact on business performance. Based on the past impact of COVID-19, this is explicitly recognized as a risk.

The balance of cash and cash equivalents at the end of the current consolidated fiscal year was ¥54,749 million, an increase of ¥8,448 million from the end of the previous fiscal year. Cash flow from operating activities increased by ¥13,145 million; however, changes in the environment surrounding financial and capital markets could affect financing conditions and other factors. While the Group is strengthening its financial base through efficient allocation of funds and cooperation with financial institutions, the risk of changes in the external environment remains.

The Group relies on communication networks connecting computer systems, and if the network is disconnected due to a natural disaster or accident, business operations could effectively become impossible. In addition, a temporary increase in load due to concentrated access could make it difficult to access servers or cause system outages. Although the Group currently maintains thorough measures and systems, business performance could be affected if a failure occurs.

There is a risk that crimes involving unauthorized intrusion into computers by external parties could result in the Group's sites being altered, or important data being erased or improperly obtained. Should such incidents occur, business performance could be affected. Although the Group currently maintains thorough measures and systems, risks associated with increasingly sophisticated cyberattacks continue to exist.

The Group holds personal information of a large number of customers, and if unauthorized access, leakage, loss, or falsification occurs, the Group's credibility and brand value could be damaged, potentially affecting business performance and financial condition. As countermeasures, the Group has appointed a person responsible for promoting personal information security management and dedicated personnel, conducts continuous audits by the Internal Audit Office, and has strengthened measures to prevent unauthorized network access and tightened access authority management.

If a large-scale disaster such as the Great East Japan Earthquake occurs, the Group's business activities could be restricted, potentially affecting business performance. Even if the Group itself is not directly affected, it could suffer indirect damage due to disasters affecting partner companies and others. Furthermore, secondary effects such as a decline in social infrastructure capacity due to restrictions on electricity use and other resources, and a decline in personal consumption sentiment, could also affect business performance.