IBOKIN Co.,Ltd.

The Group's business operations depend on numerous permits and licenses, including the specific construction business license under the Construction Business Act, the industrial waste collection & transport and intermediate processing licenses under the Waste Management Act, and metal scrap dealer and secondhand dealer licenses. If the Group fails to comply with these standards, it may be subject to administrative dispositions such as revocation of permits/licenses or business suspension orders, which could have a material impact on its business results and financial condition. As a countermeasure, the Group is promoting the establishment of a compliance framework and developing systems capable of appropriately responding to regulatory revisions and new legislation.

The Group conducts its operations using numerous production facilities and heavy machinery. Should a serious accident or occupational injury occur, the burden of restoration costs and compensation payments may arise, potentially affecting business results and financial condition. The Group has established a Health and Safety Committee and thoroughly implements safety management through continuous safety education for employees, hazard prediction activities, and inspection patrols.

In the Metal Business, ferrous and non-ferrous metal scrap is handled as raw material, and net sales and cost of sales are affected by market price fluctuations. Since selling prices and purchase prices generally move in tandem with market prices, the impact on profit is typically limited; however, because processing from purchase to sale takes a certain number of days, there is a risk that profit and loss may fluctuate significantly if market prices change sharply over a short period. The Group monitors market conditions through independent analysis and information sharing with business partners, and seeks to minimize the impact by adjusting the timing of purchasing, production, and shipment.

The Demolition Business mainly consists of projects under contract arrangements. Due to the nature of demolition work, it can be difficult to estimate the proceeds from the sale of valuable materials, which may deviate significantly from actual sale amounts, and the actual man-hours required may differ from initial estimates, creating uncertainty regarding project profitability. The Group addresses this through order-taking activities that give due consideration to profitability, thorough progress management for each project during the construction period, and appropriate adjustments to construction methods as needed.

Demolition work and industrial waste processing/processing require advanced technical skills, making the recruitment and development of excellent personnel a key management issue. If the Group fails to secure or develop human resources, or if excellent personnel leave the company, this could affect business results and financial condition over the long term. The Group addresses this by actively promoting support for qualification acquisition, conducting training programs, and pursuing mid-career hiring of qualified personnel.

In connection with the handling of industrial waste, noise, vibration, dust, and wastewater are generated at demolition work sites and during intermediate processing, creating a risk of environmental liability. Should unforeseen spills or leaks occur, or should future tightening of environmental regulations lead to additional costs or compensation, business results and financial condition could be affected. Under ISO14001 certification obtained in 1999, the Group sets annual environmental targets, and at its stable-type final disposal site, implements environmental management through strict acceptance criteria and water quality testing, among other measures.

If transactions occur with criminal organizations, including anti-social forces, the Group could become involved in fraud or illegal transactions, and the resulting loss of social reputation could affect business results and financial condition. In addition to verification procedures against anti-social forces at the start of new transactions and inclusion of exclusion clauses in contracts, the Group continuously conducts information sharing and training in cooperation with the police and neighboring companies through participation in the Hyogo Prefecture Corporate Defense Countermeasures Council.

The Group holds a large amount of customer personal information and various types of management information. Should this information be leaked externally, a decline in social credibility could lead to lost sales and compensation expenses, adversely affecting business results and financial condition. Under ISO27001 certification obtained in 2021, the Group has established information management policies and administrative procedures, and conducts education, training, and security measures for officers and employees.

Should facilities such as production sites suffer catastrophic damage due to natural disasters such as earthquakes or accidents such as fires, this could result in decreased sales due to operational disruption and the incurrence of restoration costs, as well as impact business results and financial condition due to rising outsourced waste processing costs. The Group has formed an alliance network with approximately 30 companies, and in the event of a disaster, seeks to minimize damage by continuing scrap and waste processing operations through this network.

Should economic activity stagnate due to a global outbreak of infectious disease, this could result in a combination of effects, including impacts on the Demolition Business segment from delayed commencement or completion of demolition work, impacts on the Environmental Business segment from decreased volumes of waste and recycled resources handled, and impacts on the Metal Business segment from sharp declines in resource prices such as ferrous scrap. The Group's policy is to maintain stable management through securing sufficient equity capital and funds and implementing a sound management strategy.