CHIYODA INTEGRE CO.,LTD.

The components handled by the Group are supplied to electronics and electrical equipment manufacturers in fields such as OA equipment, video equipment, communication equipment, and audio equipment, and sales trends of final products tend to fluctuate significantly depending on trends and the status of competing products. Fluctuations in demand for final products affect both the demand volume and delivery prices of the components handled, and production conditions, inventory conditions, and competitive conditions also influence price formation, resulting in a high risk of impact on business performance. No specific countermeasures by the Group are explicitly stated.

There are concerns that the supply-demand balance of raw materials could temporarily become disrupted due to factors such as surges in oil prices or a rapid increase in demand in the Chinese market. If raw material procurement becomes extremely difficult or purchase prices rise significantly, this could adversely affect business performance. The Group strives to secure stable supply and maintain optimal prices by procuring from multiple manufacturers both domestically and internationally, and adopts a policy of responding to price increases through negotiations with customers.

The electronic and electrical components handled by the Group are subject to rapid technological innovation, frequent changes in customer needs, and frequent introduction of new products, and if the business environment changes due to the emergence of unexpected new technologies or new components, prompt response may become difficult. If a response is delayed, business performance may deteriorate due to obsolescence of existing components handled or loss of customers. The Group seeks to address this by grasping customer needs, enhancing added value through the concentration of its own technologies, and expanding new customer development and the range of components handled both domestically and internationally.

The Group conducts global business operations centered on the Asian region, and the financial statements of overseas local subsidiaries are prepared in local currency and then translated into yen using the average rate during the period (for revenues and expenses) and the period-end rate (for assets and liabilities). Even if the value in local currency does not change, the amount after conversion to yen fluctuates, so fluctuations in exchange rates may affect business performance and financial condition. The securities report does not specify concrete hedging measures or other countermeasures against foreign exchange risk.

If a major earthquake, terrorist attack, or other event causes production activities to halt or results in large-scale damage to social infrastructure, or if the spread of an infectious disease becomes prolonged or severe, business activities, business performance, and financial condition may be significantly affected. The Group seeks to reduce the risk of production stoppages by diversifying manufacturing sites and implementing disaster prevention and earthquake resistance measures. As a response to infectious diseases, the Group has established a “countermeasures headquarters” and has implemented measures such as refraining from business trips and meetings, utilizing online systems, and arranging employee work arrangements such as working from home and staggered commuting hours.

Since the Group conducts global business operations centered on the Asian region, changes in the political and economic conditions of each country and revisions to laws and tax systems may affect business performance and financial condition. If dependence on a specific country is high, deterioration of conditions in that country poses a risk of directly impacting business continuity. The securities report does not specify concrete countermeasures against country risk.

The Group applies the “Accounting Standard for Impairment of Fixed Assets,” and when the recoverable amount of grouped fixed assets falls below the book value, it is necessary to recognize the difference as an impairment loss. If asset value declines due to future changes in the business environment or other factors, this may adversely affect business results through the recording of impairment losses. The securities report does not specify concrete countermeasures to curb impairment risk.