TAKEBISHI CORPORATION

Deterioration in the economic environment in Japan, China, Southeast Asia, and other regions, as well as changes in market trends in related industries such as Industrial Equipment Systems, Semiconductors & Devices, social infrastructure, and information and communications, and a decrease in demand from business partners, may affect business performance. Since the Group operates in a wide range of business areas, there is a risk that sluggish demand in a specific sector could spread to overall consolidated business performance. An appropriate management structure has been established through the Risk Management Committee.

The Group procures products based on sales agency (special dealer) and dealer agreements with Mitsubishi Electric Corporation, OMRON Corporation, and companies of the Mitsubishi Electric group, and changes in the business or sales strategies of these major suppliers may affect operating results and financial condition. In addition, in the wholesale and sale of mobile phones in the information and communications business, changes in strategy by telecommunications carriers and primary agencies pose a similar risk. A high degree of dependence on specific suppliers creates vulnerability to changes in procurement conditions.

Amid an anticipated decline in the working population due to aging, intensifying competition for talent, and accelerating labor mobility, if recruitment activities and the design and operation of human resource systems are inadequate, this may lead to a shortage of core personnel and a decline in employee engagement, making it difficult to maintain competitiveness. The Group's competitiveness depends on securing excellent human resources over the long term, and a shortage of personnel could directly affect operating results.

The Group records goodwill and other assets for shares acquired through corporate acquisitions, and if the performance of affiliated companies falls below initial expectations due to rapid changes in the business environment or competitive landscape, a decline in excess earning power may result in impairment losses on goodwill and other assets, which could have a material impact on operating results and financial condition. If the response to changes in the business environment after M&A is inadequate, there is a risk that financial losses will materialize.

In business activities including transactions denominated in foreign currencies, fluctuations in exchange rates among major currencies, including the US dollar, may affect operating results and financial condition. Currency hedging transactions using forward foreign exchange contracts are conducted to minimize the impact of short-term fluctuations, but medium- to long-term foreign exchange risk that cannot be fully covered by hedging remains.

In the event of a large-scale natural disaster such as an earthquake or storm/flood damage, or a global pandemic of a new type of infectious disease, the suspension or restriction of business activities may affect operating results and financial condition. For the Group, which has business locations both in Japan and overseas, a widespread disaster or the spread of an infectious disease is a risk that could simultaneously affect multiple locations. The Group is working to establish a rapid response system through the Risk Management Committee.