FREESIA MACROSS CORPORATION

The Group has positioned aggressive business expansion through the acquisition of domestic and overseas companies at the core of its management strategy; however, failure to achieve profit plans in new business areas or a longer-than-expected period before securing stable earnings may affect the Group's financial position and operating results. As a countermeasure, the Group has established a system of careful deliberation by the Board of Directors and direct supervision by officers following acquisitions, and seeks to reduce risk by reviewing management as necessary.

The Group holds multiple listed and unlisted securities, and fluctuations in stock market conditions or deterioration in the operating results or financial position of investee companies may cause the valuation of held securities to rise or fall, which may affect the Group's financial position and operating results. Through deliberation on acquisitions by the Board of Directors and selection of investees with emphasis on indicators such as PBR, the Group restrains investment in overvalued stocks and seeks to reduce the risk of valuation losses.

Significant changes in the Japanese real estate market due to domestic and overseas economic factors may affect the Group's financial position and operating results. As a countermeasure, the Group in principle purchases real estate that can be sold at a certain level after enhancing its added value, and secures a certain degree of liquidity even in periods of market deterioration through careful decision-making with approval by the Board of Directors and other bodies, as well as through diversification of owned real estate into small lots.

Changes in various laws and regulations in the domestic and overseas markets in which the Group operates, and situations arising from such changes, may affect the Group's financial position and operating results. Related departments, centered on the administrative department, continuously gather information on the revision and abolition of legal regulations, and take measures to minimize risks and maximize opportunities associated with such changes.

The Group's syndicated loan and commitment line agreements are subject to financial covenants, and a violation thereof could result in the loss of the benefit of time and require lump-sum repayment or other measures, which may have a material impact on the Group's financial position and operating results. As a countermeasure, the Group seeks to reduce this risk through continuous improvement of its financial position by increasing retained earnings.