The MIRAIT Group is exposed to the following risks that could affect its operating results and financial position.
The probability and timing of materialization of such risks and the impact on the Group’s operating results are not stated because they are not reasonably predictable.
Forward-looking statements contained herein are based on the Group’s judgment as at the end of the fiscal year ended March 31, 2020.
1.Risks associated with excessive dependence on particular clients
The main clients of the MIRAIT Group are telecommunications carriers such as the NTT Group. Owing to the fact that they account for a large portion of net sales, their capital expenditures or technological breakthroughs and other factors could affect the Group’s business results.
Against this backdrop, the Group is accelerating its efforts in transitioning the business structure by shifting from the telecommunications carrier business to the solutions business and creating new business opportunities beyond its traditional business domains and technologies.
2.Risks associated with safety and quality issues
In the event of serious accidents, quality issues or other contingencies, there may be severe consequences which may result in the loss of clients’ confidence and restrictions on the Group’s operating activities, affecting its business results.
The MIRAIT Group is therefore wholly committed to ensuring safety and quality controls needed to deliver quality engineering and services that deserve customers’ trust and appreciation, by leveraging the integrated safety and quality management system adopted by its business companies.
3.Risks associated with the management of critical information
The MIRAIT Group may access critical information, such as technical data and personal information provided by clients.
In the event of unforeseen information leakage or malicious use of such information, the Group may suffer liability for damages with potential impact on its financial results. Such event may also result in the loss of client’s confidence, affecting the Group’s business results.
The MIRAIT Group is therefore wholly committed to the prevention of leakage of classified information through the use of ISMS (information security management system) adopted by its business companies.
4.Risks associated with uncertainties regarding clients’ credit quality
If uncertainties arise regarding the credit quality of a client, the MIRAIT Group may not be able to receive payments for construction work or may be forced to delay projects, which could affect the Group’s business results.
The MIRAIT Group therefore adopts measures to avoid credit risks, such as the use of external credit agencies for client credit risk management, and contract document reviews by the legal section.
5.Risks associated with assets held by the Group
The MIRAIT Group holds assets such as securities that are necessary for its business operations. Significant fluctuation in market prices thereof could affect the Group’s business results.
The MIRAIT Group therefore adopts measures to avoid risks associated with fluctuations in value of such assets, such as by assessing its securities holdings both quantitatively and qualitatively and gradually reducing those that have less significance for the Group’s business.
6.Risks associated with natural disasters
The occurrence of contingencies such as severe natural disasters and the spread of epidemic diseases could cause direct damage on the MIRAIT Group’s employees, subcontractors and facilities, or cause supply chain disruptions delaying the procurement of materials and equipment, which may affect the Group’s business results.
The MIRAIT Group has adopted countermeasures against events such as natural disasters including earthquakes and the spread of epidemic diseases, including the formulation of a business continuity plan (BCP), establishment of a system to confirm the safety of employees, conducting of evacuation drills and adopting of new workstyles.
7.Risks associated with overseas businesses
The MIRAIT Group operates businesses in countries outside of Japan, primarily in Asia and Oceania. Significant changes in the political and economic climate, currency exchange rate and the legal and regulatory framework, or the spread of epidemic diseases in these countries could cause rapid rises in material prices and labor costs, which may affect the Group’s business results.
The MIRAIT Group is striving to prevent and mitigate such risks by gathering information within the Group and by appropriately diversifying the countries in which the Group operates.