SIG Group Co., Ltd.

In the information services industry, there is a risk that customers' IT investment may decrease due to a deterioration in economic conditions or an economic downturn. The Group strives to grasp market trends and technological advances ahead of time and respond at an early stage, but if customers reduce their IT investment, it may have a material impact on the Group's business activities and business results.

In information system development, securing highly specialized engineers is of the utmost importance, and business growth and profits are heavily dependent on human resources. The Group promotes recruitment of new graduates and mid-career hires as well as development through a certified qualification system, but if the Group is unable to secure human resources as planned or if the turnover rate increases, it may affect the Group's business activities and business results.

In lump-sum contract-type development projects, there is a risk that initially minor issues may develop into major problems as the project progresses. The Group conducts customer requirement analysis before order receipt and progress management for each process after order receipt, but if unforeseeable development delays, quality issues, or post-delivery defect responses occur, it may affect business results.

There is a risk that internal computer systems may be subject to external attacks or unforeseeable failures. The Group has implemented measures such as data center relocation through cloud migration, redundancy, strengthened firewalls, and membership in the Nippon CSIRT Association, but if new threats, communication failures, or system troubles caused by illegal acts occur, it may affect the Group's business activities and business results.

The Group may handle personal information in the course of work for clients, and if an information leak occurs, there is a risk of decreased sales due to loss of trust and liability for damages. The Group has implemented measures such as establishing a personal information management system, obtaining Privacy Mark certification, and appointing managers in each department, but complete elimination of risk is difficult, and there are concerns about the impact on business results.

The information services industry has numerous operators ranging from large to small scale, creating risks of price competition and increased new entrants. The Group strives to improve its technical capabilities and services, but if the Group's competitiveness relatively declines, it may affect business activities and business results due to a decrease in orders and operation and maintenance contracts.

In the information services industry, changes in new technologies and services occur extremely rapidly, creating a risk that innovative technologies or market environment changes beyond expectations may occur. The Group constantly monitors trends in technological innovation and takes measures to respond, but if the Group is slow to respond to change, it may affect business activities and business results.

Several of the Group's subsidiaries (SIG Co., Ltd., ACT Information Service Co., Ltd., U.I. Solutions Co., Ltd., and A-Creation Co., Ltd.) have obtained licenses for worker dispatching business, and there is a risk that legal violations, regulatory changes, or the inability to renew licenses could impede business continuity. In addition, if delays in payments to partner companies occur under the Act on the Promotion of Subcontracting Small and Medium-sized Enterprises, there is a possibility that this could also affect business results.

The Group has four consolidated subsidiaries: SIG Co., Ltd., ACT Information Service Co., Ltd., U.I. Solutions Co., Ltd., and A-Creation Co., Ltd. If these affiliated companies fail to achieve expected results due to changes in the business environment or other factors, it may become necessary to recognize impairment losses on goodwill or valuation losses on shares of affiliated companies, which may affect the Group's business results.

There is a risk that business activities may be suspended or restricted due to natural disasters, social infrastructure failures, the spread of infectious diseases, or similar events. The Group has implemented measures such as BCP measures utilizing data centers, development of telework environments, health management guidance, and encouragement of vaccination, but if a large-scale disaster or the spread of an infectious disease occurs, it may adversely affect the business activities of the Group and its business partners and affect business results.