SAKAI Holdings CO.,LTD

In the Mobile Communication Device Sales Business, commission income from new contracts, upgrades, continuation fees, etc., accounts for 39.0% of net sales (equivalent to ¥4,727,367 million in composition ratio for FY ending September 2025). Transaction terms such as commission amounts, applicable payment periods, and ratios to call charges may be changed based on the business policies of mobile communication carriers, and if a significant change in terms occurs, it could have a material impact on business performance. The Group has entered into an agency agreement with one mobile communication carrier, resulting in a structure with high dependency on a specific carrier.

In the mobile communication device sales industry, competition over products and services is intensifying, with numerous agencies nationwide. Due to rising terminal prices, the customer replacement cycle tends to lengthen, and if the market share of SIM-free compatible models increases significantly, it could have a material impact on sales volume and revenue. Similar risks arise if it becomes difficult to secure best-selling products or price-competitive products.

In the Renewable Energy Business, electricity is sold to power companies at a fixed selling price for 20 years, but revenue may fluctuate due to the timing of concluding electricity supply-demand contracts, coordination with installation regions, significant changes in weather or climate, and output control. In particular, output control directly reduces power generation output, affecting electricity sales revenue. If these factors coincide, they could have a material impact on the financial position, business performance, and cash flows.

The Solar Power Generation & Electricity Sales Service requires certification from the Ministry of Economy, Trade and Industry based on the "Act on Special Measures Concerning Procurement of Renewable Energy Electricity by Electricity Utilities," and applications tend to be concentrated. If this act and related laws and regulations are revised in the future, it could have a material impact on business development and the revenue structure. If response to legal amendments is delayed, there is a risk of hindering certification acquisition and business continuity.

There are no legal entry restrictions in the funeral industry, and in addition to mutual aid associations for ceremonial occasions, internet-based funeral services and entrants from different industries such as railway companies, agricultural cooperatives, and consumer cooperatives are expanding nationwide. Competition is intensifying due to the combination of high market growth potential and low entry barriers, and further new entrants could reduce the Group's market share and profitability. Intensifying competition could also lead to downward pressure on funeral service unit prices.

Funeral demand depends on the number of deaths, and according to estimates by the National Institute of Population and Social Security Research, an average annual increase of approximately 0.66% is expected toward a peak in 2040, but the actual number of deaths may fall below the estimate. In addition, funeral unit prices vary significantly depending on the number of mourners and attendees and the type of altar, and there are also fluctuations due to seasonality and the occurrence of disasters. If these factors coincide, they could have a material impact on the financial position, business performance, and cash flows.

The Mobile Communication Device Sales Business, Insurance Agency Business, and Funeral Services Business all handle a large amount of customers' personal information. Although measures such as formulating "Basic Regulations for Handling Personal Information," strengthening security systems, and employee training have been implemented in each business, if loss or leakage occurs due to unforeseen circumstances, it could have a material impact on the financial position and business performance due to loss of trust and claims for damages, among other consequences. In particular, compliance with the Ministry of Internal Affairs and Communications guidelines is required in the telecommunications field.

In the Insurance Agency Business, commissions are received from each insurance company, but transaction terms such as the commission amount, the applicable payment period, and the ratio to premiums paid by customers may be changed based on the business policies of the insurance companies. In addition, the order volume from insurance companies may also change depending on each company's business policies, and if a significant change in terms or a decrease in order volume occurs, it could have a material impact on the financial position and business performance.

If financial problems arise at an insurance company to which insurance solicitation business has been outsourced, resulting in a sale to another company, a merger, or similar events, or if problems occur with the products handled or the handling of personal information, consumers' willingness to purchase insurance may decline. If there is a significant change in the business environment of a contracted insurance company, it could have a material impact on the revenue of the Group's Insurance Agency Business.

The Group leases land for opening funeral halls, and has provided security deposits for some properties. If the security deposits are not returned due to the bankruptcy of the lessor or similar events, it could affect the financial position. In addition, some land is under fixed-term land lease agreements, and if continued leasing is not possible after the lease period ends, it could become difficult to continue operating the relevant hall, which could have a material impact on business performance and cash flows.