Strategy

Risk Factors

Among the matters concerning such things as business situation and accounting situation stated in the securities report, the following matters may have a significant effect on investor decisions.
Furthermore, matters concerning the future in the document are based on the judgment of the Group as of the end of the current consolidated fiscal year.

(1) Financial situation

Group sales are mainly for Japan, and there may be an effect on the Group's operating results and financial situation as a result of corporate revenue and capital investments due to economic fluctuation in Japan as well as public investment trends. In addition, some of the Group's sales, production, and purchases are conducted in Asia and worldwide. As such, there may be an effect on the Group's operating results and financial situation due various regulations and changes in the political, economic, and social situations in each region.

(2) Market environment

The Group is proceeding with the development of high value-added products for customers as well as proposal activities, but the market where business will be expanded into is being affected by various factors such as economic fluctuations and changes in customer purchasing channels, and we are being exposed to fierce competition. Based on these factors, there are cases where the Group's predominance cannot be maintained or acquired, and there may be an effect on the Group's operating results and financial situation.

(3) Regulatory compliance

The Group is subject to various legal regulations, such as product quality, transaction-related, environment, labor, safety and health, accounting standards, and taxation. The Group complies with the legal regulations and endeavors to construct a compliance system, such as by enacting the “KOKUYO Group Code of Conduct,” in order to conduct corporate activities in accordance with social ethics and comply with said code of conduct. However, in cases where these legal regulations cannot be complied with, there may be an effect on the Group's operating results and financial situation. In addition, in cases where the current legal regulations are amended or new legal regulations, etc. are added, there may be an effect on the Group's operating results and financial situation, such as restrictions on the Group's business activities or the necessity for investments for the purpose of other measures, etc.

(4) Quality assurance

The Group conducts commercialization examinations based on external standards, such as JIS standards and industry standards, as well as internal standards. Furthermore, we endeavor to improve quality as one combined value chain, from handling at call centers to delivery and after-sales service. However, a recall may occur due to the occurrence of unforeseen circumstances. With respect to product liability compensation, although we have insurance coverage, there is no guarantee that we can completely cover the amount of the loss, and there may be an effect on the Group's operating results and financial situation. In addition, this may result in a negative effect on the brand value of the Group.

(5) Purchasing and procurement

The raw materials used by the Group are base paper, resin, steel, etc., which are purchased from domestic and overseas suppliers. In addition, some of the products sold by the Company are also purchased from domestic and overseas suppliers, and we conduct forward exchange contracts with respect to some foreign currency-denominated transactions. In some cases, the prices of these raw materials and purchased products may be affected by worldwide demand trends and exchange rate fluctuations, and there may be an impact on the Group's operating results and financial situation.

(6) Information security

The Group possesses confidential business information as well as customer information and personal information obtained in the course of business. In addition to strengthening the management concerning the handling of this information, the Group strives to take measures against system failures and leaks of information outside the company due to virus infections and cyber attacks. However, the destruction, falsification, and leaks of important data as well as system suspension, etc. may be caused due to attacks and other factors that exceed Group assumptions. As a result, there may be an impact on the Group's operating results and financial situation.

(7) Natural disasters, etc.

In preparation for the occurrence of natural disasters, such as earthquakes and typhoons as well as outbreaks of infectious diseases, such as new influenza strains, the Group has established plans with respect to the necessary measures and procedures in order to strive for the continuation of business and early recovery, and is engaged in efforts for thorough crisis management. However, it is difficult to avoid all risks of natural disasters and infectious diseases, and an occurrence on a scale beyond that assumed by the Group is conceivable. In such cases, there may be an impact on the Group's operating results and financial situation, such as the scaling back of business activities.

(8) Fluctuations in the market value of securities

The Group owns investment securities. There is a possibility of the market value of investment securities worsening due to factors such as fluctuations in the financial market, which may affect the Group's operating results and financial situation.

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