Business Risks

The effects of climate change

　In the energy business and the aqua business, the demand for our services is affected by the weather, especially the temperature and water temperature. In the event of abnormal weather such as cold summer or warm winter, the demand may change from the expected demand, which may affect the business performance and financial position of the Group.

Competition with other companies

　There are many competitors in the energy business, information and communication service business, etc. that have greater capital, technological and sales capabilities than the Group. In recent years, with the liberalization of the retail market for city gas and electric power, and the provision of optical line wholesale services by NTT East and West Japan, competitive relationships are becoming more intense.

　In addition, there is a risk that competition among energy companies such as LP gas, city gas, and electric power will intensify, and the expansion of our earnings base will not progress as planned. As a countermeasure, in the LP gas business, we will work to automate operations by utilizing the ABCIR + S strategy, reduce costs by improving operational efficiency such as delivery operations and meter reading, expand new areas, and acquire new customers through M & A. In the city gas business, we are working to acquire companies (M & A), expand multiple transactions by promoting TLC, strengthen relationships with customers by enhancing security systems, and expand our business foundation. In the information and telecommunications business and CATV business, we are working to promote new customer acquisition and prevent cancellation by enhancing price competitiveness such as efficient allocation of customer acquisition costs, discount services by subscribing to broadcast and communications sets, discounts on smartphone sets in collaboration with major mobile carriers.

　However, if competition with these competitors intensifies beyond the expectations of the Group, it may affect the Group's business results and financial position.

Technology obsolescence in information and communication service business, CATV business, etc.

　In the information and communication service business, CATV business of the Group, technological innovation is progressing at a remarkable speed. In order to respond to such new technologies, we are securing and training engineers by enhancing education and training programs, but if technological innovation causes obsolescence of our products and services or loss of the market, Insufficient capital investment to provide new services may lead to a decline in competitiveness and may affect the Group's business results and financial position.

Relationships with suppliers, outsourcers, and subcontractors

　The Group purchases products in many businesses, including gas and petroleum, construction and real estate, CATV, IT and telecommunications services, and aqua. The Group also outsources or subcontracts some of its operations to other companies. If any of these suppliers, subcontractors, or subcontractors were to experience any problems, making it difficult for us to provide our customers with stable products and services, the Group's operating results and financial condition could be affected.

Dependence on a specific business partner or contractor

　The Group's software development business is highly dependent on specific system integrators, but by accurately responding to high-level demands, we cultivate system construction and operation know-how and build stronger relationships. However, if there is a change in the business conditions or business strategy of the business partner system integrator, it may affect the business results and financial position of the Group.

　The Group's broadband services are sold to individuals mainly through direct sales or home appliance mass retailers after receiving lines from carrier operators, but the business strategies of carrier operators, home appliance mass retailers, etc. If there is a change in the above, it may affect the business performance and financial position of the Group.

　In addition, as a mobile business, the Group is engaged in the agency business of SoftBank Corp. and the MVNO business of renting lines from NTT DoCoMo Corp. If there are significant changes in the business strategies, agency measures, line rental prices, etc. of each company, it may affect the Group's business results and financial position.

Occurrence of unprofitable transactions in order receiving business

　In the Group's construction and real estate businesses, we perform appropriate construction management for orders and subcontracting operations from major manufacturers and general contractors. However, if profitability deteriorates due to circumstances such as the failure to satisfy acceptance inspection conditions of customers, such as some sort of trouble or delays in delivery, the Group's operating results and financial condition may be affected.

　However, if profitability deteriorates due to additional man-hours or unexpected accidents during development due to defects after delivery, requests for changes in development methods from customers, addition of specifications, etc., the Group's business results and financial condition may be affectded.

Business alliance and M & A

　The Group has policy that will proactively engage in business alliances and M & A when it is expected that synergistic effects with existing services can be expected, or when it is determined that the introduction of new services may lead to future business development. The business division in charge constantly keeps track of the income and expenditure status of individual investment projects, and reviews the business plan as necessary to strictly manage the recoverability of investment funds. However, if the business of the partner company or the business to be transferred does not progress as planned and the expected results are not achieved, it is assumed that an impairment loss on the acquired shares, etc. will be recorded, and the business results and financial condition of the Group will be affected.

Recovery of investment funds

　The energy business, CATV business, information and communication service business, which form the core of the Group's business, are making large capital investments to expand their business. In addition, in order to develop and introduce new technologies, provide new services associated with them, and expand our business, we may be forced to change or review our existing investment plans. We are verifying the investment effect and reviewing the investment plan as appropriate, but there is a possibility that the initially expected investment return may not be expected due to major changes in the situation such as economic trends and market trends. In that case, the recovery of investment funds may be delayed. The division in charge keeps track of the income and expenditure status of individual investment projects, and reviews the business plan as necessary to strictly manage the recoverability of investment funds. However, if it is not possible to respond to changes in the environment such as sudden changes in economic conditions or sudden decline in demand, and there is a high possibility that investment results cannot be expected, it may be need to impair fixed assets and it may be affect the business performance and financial position of the group.

Risks related to overseas business development

　The Group is engaged in overseas business development and transactions with overseas companies in the energy business, aqua business, information and communication service business, etc. We collect information on the market environment, policy trends, etc. using our company and outsourced companies, but if there is a serious obstacle to business development or transactions due to social turmoil such as restrictions on local business practices, laws and regulations, soaring labor costs, exchange rate fluctuations, terrorism, it may affect the business performance and financial position of the group.

Credit management / credit risk

Credit management

　The Group has formulated internal rules, such as credit management rules, and is working to develop and strengthen systems related to credit management and credit management for business partners. However, the Group's operating results and financial position may be affected by the deterioration in the business conditions of business partners, delays in the collection of accounts receivable and loans, and the occurrence of bad debts, etc.

Market risk

Fluctuations in gas purchase prices and exchange rates

　Most of LP gas in the energy businesses depends on imports, so it is affected by market conditions and exchange fluctuations due to geopolitical factors and the balance between supply and demand. In order to minimize the effects of market conditions and exchange fluctuations, we may carry out hedging transactions for partial fixation. This is done to reduce the impact on the selling price due to the sharp rise in raw material prices, but if the product price at the time of actual purchase falls sharply unexpectedly it may result in loss and affect the Group's business results and financial position.

Risk of deterioration of real estate market

　The Group is engaged in the real estate business, but if the real estate price drops significantly, it will be necessary to reduce the valuation of the real estate for sale or to impair the company's real estate and it may affect the business performance and financial position of the Group.

Impact of funding structure and interest rate trends

　The Group is working to strengthen and expand its management base in the energy business, construction and real estate business, CATV business, information and communication service business, aqua business, etc. In addition, we have endeavored to reduce interest-bearing debt and improve the equity ratio through cash flow management based on the medium-term management plan. However, there is a risk that interest-bearing debt will increase and the risk of rising interest rates will increase as investment expands through M & A. When raising funds, we will reduce the risk of rising interest rates by optimizing the balance between long and short term and raising fixed interest rates for long-term borrowing, but if there is a sharp rise in interest rates, it will affect the business performance and financial condition of the Group.

System risk

Management of personal information

　As a business operator handling personal information, the Group has established a "Personal Information Protection Policy" and discloses it on our website. The Group pays close attention to the handling of customer information based on laws and regulations such as the Personal Information Protection Law and internal rules, but in the unlikely event of unauthorized login, cyber attacks, etc., large-scale leakage of customer information, etc. In the event of such a situation, the business performance and financial position of the Group may be affected by the loss of social credibility due to rumors and the payment of compensation for damages.

Information system failure

　The Group provides information and communication service businesses, and provides services using its own information processing systems, data centers, and its own lines. We take great care to prevent system failures, but there is a possibility that information systems may stop or malfunction due to equipment defects, human error, large-scale natural disasters, etc. If it becomes difficult for the Group to continue to provide services due to the accident, the Group's business performance and financial position may be affected by the loss of social credibility due to rumors and the payment of compensation for damages.

Risks related to building an in-house business system

　The Company and group companies may place orders with companies within the group for the purpose of efficiently developing their own business systems. On the other hand, if there is a shortage of development personnel, delays in delivery of the project may hinder business operations, which may affect the Group's business results and financial position.

About Cyber Attacks

　In recent years, cyber attacks have become more sophisticated and complex. In response, our group has established a cross-departmental information security system and continues to implement various security measures and incident response training. Additionally, in the event of an incident, our CSIRT (Computer Security Incident Response Team) takes measures to minimize the impact of cyber attacks.
　However, if a cyber attack surpasses these measures and causes significant disruption to our core information systems, it could potentially affect the business performance and financial condition of our group.

Compliance risk

Legal regulation

　Since the Group's business is so diverse, there are many related laws and regulations and regulatory agencies. For example, the Act on Ensuring the Security of Liquefied Oil and Gas and the Optimization of Transactions, the Gas Business Act, the Building Lots and Buildings Transaction Business Act, the Construction Business Act, the Broadcasting Act, the Telecommunications Business Act, the Youth Internet Regulation Act, etc. In addition, it is subject to the Specified Commercial Transactions Law and the Gift Labeling Law, which are applied to businesses such as door-to-door sales, and the Subcontract Law, which is common to businesses that use subcontractors. Furthermore, since many businesses are directly connected to general consumers, the number of applicable laws and administrative guidance tends to increase due to the recent strengthening of consumer protection administration. In the future, there is a possibility that legal regulations, etc. that cannot be predicted at present may be established, and if these cannot be dealt with appropriately, guidance and detection from administrative authorities, etc. will be received, and it is based on rumors. The loss of social credibility may affect the Group's business results and financial position.

Occurrence of troubles and complaints and proceedings

　In the process of conducting business activities of the Group, troubles and complaints may occur regardless of whether the other party is a corporation or an individual. In order to prevent the occurrence of such troubles and complaints, we thoroughly educate our employees and strive to provide polite and accurate explanations to our customers (including potential customers). In addition, if necessary, specialized departments such as the Legal Office and the Compliance and Risk Management Office play a central role in conducting legal and credit considerations such as pre-checking contract documents and credit management of contractors. When a trouble or complaint occurs, we will endeavor to resolve it as soon as possible, pursue the cause of the problem, and prevent the recurrence of similar cases. The status of these activities is reported to the Board of Directors and the Board of Corporate Auditors according to their importance to management. However, if those troubles and complaints are prolonged or become a social problem, or if a lawsuit is filed, the Group will suffer from the loss of social credibility due to rumors and the burden of costs for resolving damages and it may affect the business performance and financial condition of the company.