Risk Map
We conduct periodic risk reviews to identify and assess the risks surrounding our business, taking into account factors specific to our operations and industry.
To clearly define the impact of various risks on our company, we develop and disclose a risk map that assesses their potential severity and probability.
Changes in Economic Conditions
Risks
Since our group is mainly engaged in the restaurant business in Japan, our group's business, performance, and financial position may be affected by fluctuations in the Japanese economy and the effects of government economic policies. In particular, a slump in personal consumption due to a lack of wage increases accompanying the recent sharp rise in prices, as well as increases in raw material prices, labor costs, and utility costs, could affect the Group's business, performance, and financial position.
Response to Risks
To address these risks, the Group continuously monitors changes in economic policies, market environments, and consumer trends. By reflecting these insights in various sales policies, investment policies, and productivity improvement measures, we strive to maintain a stable earnings structure capable of adapting to environmental changes.
Changes in the Domestic Market Environment and Competition with Other Companies
Risks
In the restaurant market, the Group competes with companies operating restaurant and izakaya (Japanese style pub) chains and fast food chains, as well as individual and family-run restaurants. In addition, we may also compete with companies operating convenience stores and supermarkets that sell prepared foods and boxed lunches in the home meal and lunch box markets. These competitors may compete with us in terms of food prices, taste and quality, menu variety, store location, facility attractiveness, atmosphere and comfort, delivery and takeout services, staff skills, social reputation of the restaurant brand, benefits such as point cards, and tax treatment such as the application of reduced tax rates. If we are unable to gain an advantage over these competitors, our group's business, performance, and financial position may be affected.
In addition, the number of restaurant outlets of companies operating restaurant chains in Japan currently accounts for a relatively low percentage of the total number of restaurant outlets in the country compared to the number of outlets of companies operating fast food and coffee shop chains as a percentage of the total number of outlets, and there is no guarantee that restaurant chains, including our group, while we recognize that there is room for further growth of restaurant chains, there is no guarantee that restaurant chains will continue to grow in Japan.
Following the outbreak of the COVID-19, consumers' motivations for selecting eating out opportunities have changed, and the competitive environment has changed, with demand for delivery and takeout services becoming more regular. The Group is implementing and expanding measures such as the expansion of delivery and take-out services in response to this environment, but if the delivery market in Japan expands and delivery services become more widespread in the future, restaurants that were not previously competitors will increasingly enter the delivery market and competition in the delivery market may intensify, and that the Group's dependence on delivery services provided by third parties will increase, making it more susceptible to the conditions and quality of such services.
Response to Risks
To address these risks, the Group continues to develop and improve affordable and delicious menu items through a mass-merchandising system that utilizes a vertically integrated platform. In addition, we are optimizing our brand and store portfolio as well as our store network by introducing new management techniques, such as the "multi-brand" format—which leverages our existing store network to sell products from different brands within a single location. We have also embarked on e-commerce business via the internet and external sales business in supermarkets and other outlets. Furthermore, for delivery services, we have introduced a system to maintain consistently competitive service quality and pricing by utilizing both our proprietary delivery network and third-party delivery services.
Changing Consumer Preferences
Risks
Sales in the Group's restaurant business are strongly influenced by consumer preferences and social trends related to food and beverage.
In particular, the experience of the COVID-19 epidemic has reduced consumers' opportunities and willingness to eat out, and while eating out has become a more special occasion than in the past, consumers' preferences have changed as they seek more satisfying dining opportunities and demand for specialty restaurants and popularity of high quality, high unit price menus has increased. In this environment, consumers' preferences are changing as they seek more satisfying dining opportunities.
If the Group is unable to accurately grasp or predict consumer preferences, or if measures such as brand conversions and surveys of planned store opening areas are not successful, the Group's business, performance, and financial position may be affected.
In particular, Gusto, the main brand in our group's restaurant business, has the largest number of restaurants in our group and accounts for a large percentage of our group's sales and profits, If the concept of Gusto's menu, price range, and service is not supported by customers, the Group's business, performance, and financial position may be affected.
Response to Risks
To address these risks, the Group continuously strives to understand consumer needs and customer feedback regarding our menus, reflecting these insights in brand development, store opening policies, and menu development. Furthermore, we endeavor to respond swiftly to changes in lifestyles and preferences by analyzing big data, such as customer POS data and mobile application coupon data.
Food Accidents
Risks
Ensuring food safety is of the utmost importance in our Group’s core businesses—namely, the restaurant business and the e-commerce and external sales businesses. Despite the implementation of measures to prevent food-related incidents, should a serious food safety issue such as a mass food poisoning event occur due to our Group’s operations, it could not only cause significant inconvenience to our customers, but could also lead to administrative penalties, a deterioration of our brand image and social credibility, a decline in sales, response-related costs, and potential civil litigation.
Particularly in the case of delivery and takeout services, there is an increased risk of food accidents compared to in-store dining, as food may be handled inappropriately under conditions beyond the Group’s control—such as delays in consumption or delivery after the food has been provided by the Group to consumers or third-party delivery services.
In addition, with the expansion of our e-commerce and external sales business, there is a possibility of food-related incidents occurring in connection with products sold by our Group. This may include product recalls due to actual or potential violations of the Food Sanitation Act or the Food Labeling Act.
Moreover, even if a food safety incident were to occur at a competitor, our Group’s business performance could be adversely affected. This could result from a general decline in the reputation and credibility of the restaurant industry, reduced consumer willingness to dine out, disposal of stock containing the problematic ingredient, or a temporary surge in the market price of such ingredients due to industry-wide disposal and restocking efforts.
Response to Risks
To prevent food accidents, we have obtained ISO 22000 certification for our purchasing, menu development, internal audit, and quality control departments, as well as all of our central kitchens. Based on assessments of foreseeable food safety risks, we have established and operate under strict hygiene management rules to ensure the safety and peace of mind of our customers.
For example, for products manufactured at our central kitchens, we verify the appropriateness of processing conditions, monitor critical control points during production, and only ship products that fully meet our established standards with no deviations.
In terms of ingredient procurement, we have set rigorous supplier standards. In accordance with our procurement management regulations, we inspect local factories and production processes and source ingredients only from suppliers that meet our criteria.
At the store level, we apply hygiene management methods based on the HACCP concept to maintain consistent product quality. As part of our hygiene compliance monitoring system—including general practices such as handwashing and employee health management—our dedicated Quality Control Group conducts unannounced inspections from the production site to the store. Any risks identified are addressed in collaboration with relevant departments.
As a general rule, outsourced products not manufactured in-house are consolidated at our own central kitchens, which also function as logistics hubs. These kitchens conduct regular spot checks not only during production or procurement but also during distribution, to ensure that only products meeting our standards enter circulation.
Bacterial tests, as well as inspections for pesticide residues, allergens, and other potential hazards, are conducted in our in-house laboratories. This system allows us to make swift decisions and take appropriate action. Approximately 100,000 samples are tested annually.
Difficulty in Procuring Food Materials and Indirect Materials and Price Hikes
Risks
The Group’s performance is subject to the risk of being significantly affected by procurement instability and soaring prices of raw materials caused by various fluctuations in the external environment. Specific factors include the progression of domestic and international inflation, outbreaks of epidemics, extreme weather and natural disasters, energy shortages, logistics disruptions, government import restrictions, international fishing quotas, supplier bankruptcies, and supply chain disruptions due to significant cyberattacks (such as ransomware). These factors could lead to an increase in the cost-of-sales ratio and adversely affect business performance. Additionally, rising geopolitical risks, political turmoil, food hygiene issues, and shipping restrictions or reputational damage caused by environmental pollution also constitute risk factors. In particular, as the procurement of ingredients spans across the globe, the cost of foreign currency-denominated transactions is directly impacted by fluctuations in foreign exchange rates. Since the Group does not currently engage in currency hedging, sudden exchange rate movements may deteriorate our business, results, and financial position.
Response to Risks
To address these risks, the Group implements a diversified procurement strategy aimed at ensuring stable supply and suppressing cost fluctuations. We mitigate the risks of supply disruption and price hikes through geographical diversification, the establishment of procurement systems from multiple suppliers, long-term contracts, and direct negotiations with producers and manufacturers. Furthermore, we secure alternative supply routes to prepare for potential supply halts caused by cyberattacks on our business partners. In addition to these efforts, we conduct regular hygiene audits of our suppliers to ensure the thorough quality of all procured items.
Labor Management Risks
Risks
The Group employs a diverse workforce, including full-time, contract, and many part-time and temporary employees, who are engaged in operations at our restaurants, factories, logistics facilities, and in delivery services. Significant changes have occurred in the labor regulations and environment affecting both fixed-term and indefinite-term employees. These include the phased introduction of overtime caps for large enterprises since April 2019 under the Work Style Reform, the mandatory requirement to take annual paid leave and revisions to the Article 36 Agreement special clauses effective April 2019, and the establishment of legal provisions for "equal pay for equal work" in April 2020. Furthermore, the national weighted average minimum wage following the fiscal 2025 revision has reached 1,012 yen. Due to these regulatory responses and shifts in the labor environment, it may become extremely difficult for the Group to maintain the employment of high-quality personnel, and labor costs could soar. Moreover, any violation of labor-related laws or regulations by the Group could lead to administrative improvement orders from regulatory authorities or claims from employees, potentially impacting the Group’s business, results, financial condition, brand image, and social credibility.
Response to Risks
To address these risks, the Group provides labor data to management on a weekly basis and takes measures to prevent violations of labor-related laws and regulations. In addition, we maintain a system in which the current situation is checked and countermeasures are discussed and immediately implemented at monthly labor improvement meetings attended by directors, the executive officer in charge of human resources, and the general manager of the sales division. In addition, we are striving to maintain employment by implementing specific measures such as curbing long working hours by shortening business hours and systematically taking paid leave.
Securing Human Resources
Risks
The Group relies on a large number of part-time and temporary employees for operations at its restaurants and merchandising centers. In the future, if the recruitment environment deteriorates due to rising wages, increased recruitment costs, growing domestic labor demand, or a worsening labor shortage caused by a declining birthrate and aging population, the Group may be unable to secure the necessary number of employees at an appropriate cost. This could lead to increased labor costs to maintain staffing, revisions to store opening plans, or temporary closures of certain stores, potentially impacting the Group’s business, results, and financial position.
Response to Risks
To address these risks, the Group positions "Human Capital" as its most vital management resource and is actively investing in it through initiatives such as expanding the employee referral system, introducing an employee point program, maximizing working hours by fostering a correct understanding of "annual income walls" (social security and tax thresholds), introducing a "spot crew" system, and reviewing personnel systems for both regular and part-time/temporary employees. Furthermore, to create a work environment that accommodates diverse talent, we are implementing various measures to improve employee satisfaction, including shortening operating hours during the year-end and New Year holidays, suppressing long working hours, ensuring the acquisition of paid leave, and promoting health and productivity management. Simultaneously, we are actively driving Digital Transformation (DX) to improve operational efficiency and productivity through the introduction of serving robots and new POS systems, expanding the use of self-checkout and table-top payment systems, and developing seat guidance and table clearing display systems.
Lease of Real Estate
Risks
There is a possibility that failure to reach an agreement during the renewal of existing store leases could lead to store closures. Additionally, the potential for increased real estate leasing costs could impact the Group’s business, results, and financial position.
Response to Risks
To address these risks, for fixed-term lease agreements and ordinary lease agreements with demolition clauses that carry a risk of closure, a specialized internal department has initiated a new policy this fiscal year to conduct annual face-to-face meetings with landlords to facilitate closer information exchange. Furthermore, when negotiating for contract renewals, we strive to prevent closures by initiating negotiations earlier than the standard period (typically six months prior to contract expiration), thereby securing a longer timeframe for careful and thorough discussion. To mitigate the risk of rising leasing costs, we aim to reduce risk by negotiating rent reductions for stores where rent is higher than the market rate, and by seeking to secure longer contract terms for stores where rent is currently below the market rate.
Climate Change
Risks
With the increasing trend on a global scale to rationalize energy use and to curb climate change such as laws and regulations to combat global warming, we recognize that climate change is one of the key risks affecting the sustainability of our Group's business. Transition risks related to climate change (e.g., the risk that procurement and energy costs will increase due to the introduction of carbon taxes, higher electricity prices, and other environmental regulations to combat global warming; the risk that the Group's brand image and social credibility will be damaged because the Company is perceived as not environmentally conscious) and physical risks (i.e., acute risks such as plant and logistics outages and store closures due to typhoons, floods, and storm surges, and chronic risks such as a decline in food quality and price hikes due to increases in average temperatures and changes in weather patterns) may affect the Group's business performance.
Response to Risks
To address these risks, the Group is undertaking initiatives such as reducing energy consumption, promoting the use of renewable energy, and developing eco-friendly stores to mitigate the impact of the potential introduction of carbon taxes. Furthermore, to respond to changes in electricity prices, we are working to curb power consumption at each site (stores, central kitchens, and the head office) in a manner appropriate to each location. Regarding the impact of natural disasters such as floods and storm surges, we have established and are operating emergency communication systems through safety confirmation systems for all employees, information sharing based on the Group Emergency Response Regulations, and the setup of a disaster portal site. We are also implementing measures such as deploying portable generators at certain merchandising centers and offices.
Additionally, the Group deliberates and reviews these risks and measures as appropriate through a promotion framework centered on the Group Sustainability Committee. The details of these reviews are reported to the Board of Directors as necessary.
Infectious Diseases
Risks
Demand in the restaurant market may fluctuate as consumers' opportunities to eat out and their willingness to eat out decrease due to outbreaks of infectious diseases such as the COVID-19. In addition, outbreaks of infectious diseases may result in restrictions on restaurant operations due to requests from government agencies.
A decrease in the number of customers visiting our stores due to this, or a prolonged period of such a decrease, could affect our Group's business, performance, and financial condition . In addition, negative rumors about the possibility of infection at our group's stores may damage our group's brand image and social credibility, which may affect our group's business, performance, and financial position.
Response to Risks
To address these risks, the Group recognizes its restaurants as an integral part of the "social lifeline" for local communities. Under a policy of contributing to the maintenance of social functions by continuing operations while implementing thorough measures to prevent infection and its spread—thereby avoiding confusion caused by disorderly responses—we have established a framework and a Business Continuity Plan (BCP) to maintain operations while prioritizing the safety of our customers and employees.
Regarding the response to COVID-19, we established a group-wide task force and strictly adhered to government and industry guidelines to thoroughly implement measures to prevent contact and droplet transmission, putting the safety of customers and employees first. Furthermore, we have executed swift and flexible measures, including providing products and services tailored to changes in lifestyles during the pandemic, expanding delivery and takeout services, optimizing our store portfolio by leveraging the strengths of our multi-brand strategy, and improving productivity through the promotion of Digital Transformation (DX).
Dependence on IT (Information Systems)
Risks
The Group’s restaurant operations and business processes—including ingredient procurement, logistics, food processing, store operations, and order management from both internal and external sources—are highly dependent on information systems. Should various failures occur within the Group’s information systems due to software malfunctions, computer viruses, or external cyberattacks, it could obstruct the efficient operation of our restaurants and the timely delivery of food to consumers. Furthermore, such incidents could result in the loss of critical data or the incurrence of response costs, potentially impacting the Group’s business, results, financial condition, brand image, and social credibility.
Response to Risks
To address these risks, the Group implements robust security measures to ensure the stable operation of its various systems. We have established a specialized internal department that receives support from external experts to maintain a framework capable of preventing external attacks and responding swiftly to any system failures. Through these initiatives, we strive to mitigate risks and ensure business continuity.
Internal Control over Financial Reporting
Risks
The Group considers the establishment and operation of internal control over the reliability of financial reporting as one of our important management issues. Although the entire Group is continuously working to inspect and improve the management system, we cannot deny the possibility that significant deficiencies may be discovered in the Group's financial reporting. In addition, there is no guarantee that we will always be able to establish and operate effective internal controls in the future. Furthermore, due to the inherent limitations inherent in internal control, if the Group's internal control over financial reporting does not function effectively in the future, or if material deficiencies are found in internal control over financial reporting, the reliability of the Group's financial reporting may be affected.
Response to Risks
To address these risks, the Group aims to enhance the establishment and operation of appropriate internal controls by maintaining a strong awareness of accounting compliance and fostering deeper communication with internal and external stakeholders, including auditing firms.
Large Borrowings and Violation of Financial Covenants
Risks
The Group has significant borrowings from financial institutions. Due to these existing debts, the Group may face restrictions on new financing, be more vulnerable to economic downturns, or find its competitiveness lagging behind peers with higher equity ratios. Furthermore, some of the Group’s borrowings, including those under syndicated loan agreements and syndicated commitment line agreements, are subject to financial covenants. If the Group breaches these covenants, it may, upon the request of the lenders, forfeit the benefit of time (accelerate repayment) regarding the relevant agreements. This would necessitate the immediate securing of funds for debt repayment, which could impact the Group’s financial position and cash flow. If such funds cannot be secured, it is anticipated that the Group may also forfeit the benefit of time for other borrowings, which could potentially have a detrimental effect on the Group’s continued existence.
Response to Risks
To address these risks, the Group monitors indicators such as financial leverage that affect financial covenants through the Board of Directors and other bodies as appropriate. In the event that a breach of financial covenants becomes a possibility, the Group consults with financial institutions to secure waiver agreements in advance (agreements whereby financial institutions waive their contractual rights that would otherwise become exercisable due to a breach of financial covenants), thereby aiming to stabilize its financial standing.
Application of Impairment Accounting
Risks
The Group records significant amounts of property, plant and equipment, goodwill, and other intangible assets on its consolidated statement of financial position. Impairment tests for these assets are conducted using estimates of future cash flows based on assumptions established through the appropriate collection of past experience and available information. In the event of occurrences that significantly affect the outlook of these assumptions, such as substantial inflation, impairment losses may be incurred, potentially impacting the Group’s results. As of the end of December 2025, the Group recorded 210,718 million yen in property, plant and equipment, 157,636 million yen in goodwill, and 10,269 million yen in trademark rights on the consolidated statement of financial position.
Response to Risks
To address these risks, the Group is strengthening earnings management for its businesses and stores. In addition, we have formulated a medium-term plan and are striving to enhance monitoring of not only the achievement of annual plans but also the progress of the medium-term plan.
Natural Disasters
Risks
Since the Group has stores and merchandising centers located throughout Japan, in the event of a major earthquake, windstorm, flood, tsunami, heavy snowfall, or pandemic of an infectious disease, the Group's head office, stores, merchandising centers, and other buildings, machinery, and equipment could be damaged, or store operations, operation of merchandising centers, logistics of raw materials or attendance of employees could be disrupted.
In addition, if such natural disasters cause restrictions or stoppages in the supply of lifelines (water, electricity, and gas), interruptions in distribution networks, stoppages in delivery services due to difficulties in procuring gasoline and other supplies, damage to client plants and warehouses, shortages of energy and supplies, large-scale employee shortages, or disruptions in public transportation, the Group's operations, business performance, and financial position could be affected.
In particular, since the Group's stores and merchandising centers are concentrated in the Tokyo metropolitan area, a large-scale disaster in the Tokyo metropolitan area could have a negative impact on the Group's business, performance, and financial position.
In addition, even if it does not lead to a natural disaster, if unseasonable weather occurs, demand in the restaurant market, including our Group's, may be affected by a decrease in consumers' opportunities and willingness to eat out.
Response to Risks
To address these risks, the Group has established a system to set up a Disaster Response Headquarters based on the Group Emergency Response Regulations. Centered around this headquarters, we have developed a framework for rapid response based on our Business Continuity Plan (BCP).
Intellectual Property Rights
Risks
The Group considers trademark rights related to the logos of its restaurants, such as "Gusto," "Bamiyan," "Syabuyo," and "Jonathan's," as well as trademark rights for menu items like the "Gusto Cheese-in Hamburger" and for products sold externally, to be extremely important for brand image and marketing. To protect these trademarks, the Group endeavors to acquire trademark rights in appropriate countries and regions. However, there is a possibility that the Group may unintentionally infringe upon the intellectual property rights of others, or that new risks in trademark management may arise due to business expansion such as through M&A. Furthermore, there is a possibility that sufficient trademark rights may not have been acquired in certain countries or regions.
Additionally, to preserve its intellectual property rights, the Group may need to initiate litigation against third parties who use the Group's trademarks without authorization. However, there is a possibility that such unauthorized use cannot be detected in a timely manner, or that the Group's claims may not be fully recognized in litigation. In such cases, the Group's business, brand image, and social credibility could be affected.
Response to Risks
To address these risks, the Group ensures the appropriate management and operation of trademarks and other intellectual property through a specialized internal department. In addition to this risk management, the Group appropriately protects its proprietary business and technical information—including menu recipes, menu pricing, store operation know-how, technology, and data—according to its characteristics. This includes management that meets the requirements for the protection of know-how and data under the Unfair Competition Prevention Act.
Damage to Public Trust due to Harmful Rumors
Risks
In the event of negative publicity or evaluation of our Group's brand image and social credibility, such as inappropriate postings or publication of images related to our Group or its related persons on the Internet, etc., our Group's brand image and social credibility may be damaged, regardless of the truth or falsity of the content, this may affect our group's business, performance, and financial position.
In addition, even a negative reputation or evaluation regarding our group's competitors, if it were to cause a decline in the social reputation or reputation of the restaurant market as a whole, our group's business, performance, brand image, and social credibility could be affected.
Response to Risks
To address these risks, the Group collaborates with external specialized consulting firms to strive for the early detection of risk indicators. Simultaneously, should inappropriate posts be identified on the internet, we endeavor to take swift and appropriate action.
Leakage of Personal Information
Risks
The Group retains the personal information of many customers in the operation of its mobile apps, delivery business, takeout business, and payment settlement. The Group pays utmost attention to the protection of users' privacy and personal information, and strives to comply with relevant laws and regulations, and manages information appropriately. However, it is difficult to completely eliminate the possibility of leakage or misuse of information outside the Group due to unauthorized access, or unintentional violation of laws and regulations. In the event of leakage of such personal information outside the Group or violation of laws and regulations, the Group's brand image and social credibility may be affected, and the Group's business, performance, and financial position may be affected due to response costs, disciplinary actions by the authorities, or lawsuits filed by customers.
Response to Risks
To address these risks, the Group implements security measures to ensure the stable operation of its various systems. We have also established a specialized internal department that receives support from external experts to maintain a framework for preventing external attacks and responding swiftly to various system failures. Through these efforts, we strive to mitigate risks and protect our customers' information.
Laws and Regulations
Risks
The Group's business is restricted by various laws and regulations, including the Food Sanitation Law, Labor Standards Law, Food Labeling Law, and Act Against Unjustifiable Premiums and Misleading Representations. Future changes in social conditions and other factors may result in revisions of various laws and regulations, the enactment of new laws and regulations, changes in the interpretation of laws and regulations, and the expansion of the scope of regulations, which may restrict the business activities of our group. In addition, the Group may be subject to administrative penalties from regulatory authorities or lawsuits from third parties, should violations of laws and regulations or misconduct by the Group's officers and employees come to light. If these risks materialize, the Group's business, performance, financial position, brand image, and social credibility may be affected
Response to Risks
To address these risks, the Group participates in various industry associations to gather information and has established a system to monitor and collect data on laws and regulations relevant to our business through experts, business partners, and government websites. When regulations are revised, the relevant departments collaborate to ensure thorough awareness of the changes and maintain a framework for full compliance.
Furthermore, the Group has established the "Skylark Group Charter of Corporate Behavior and Code of Conduct" to ensure that all activities adhere to laws and social ethics. We have also implemented internal and external compliance hotlines for reporting and consultation to facilitate the early detection of legal violations. In addition to strengthening fraud prevention measures through compliance education and continuous process improvement, we strive to proactively identify potential risks that could lead to functional failures in our business processes during normal operations. We have also established an "Anti-Bribery Policy" regarding the treatment of foreign public officials and maintain a framework to comply with the Unfair Competition Prevention Act.
Human Rights Issues
Risks
If human rights violations are committed by the Group or its business partners, or if human rights violations in the Group's supply chain are discovered, the Group's performance and financial position could be affected due to a decline in trust in the Group among customers and business partners. This could have a negative impact on the Group's performance and financial position.
Response to Risks
To address these risks, in February 2023, the Group formulated the "Skylark Group Human Rights Policy." This policy expresses our understanding of and support for international human rights principles and standards, including the United Nations' Guiding Principles on Business and Human Rights, the International Bill of Human Rights (consisting of the Universal Declaration of Human Rights and the International Covenants on Human Rights), the Convention on the Rights of the Child, and the ILO (International Labour Organization) Declaration on Fundamental Principles and Rights at Work.
Furthermore, the Group is committed to preventing human rights violations throughout the entire supply chain by implementing a human rights due diligence framework. As part of this process, the Group identifies human rights violation risks across all stakeholders, conducts evaluations, and extracts high-priority risks through the creation of risk maps; specific measures have been in progress since 2023. In December 2023, we also signed the United Nations Global Compact, a global sustainability initiative, and are promoting sustainability measures in compliance with its Ten Principles across four areas: human rights, labour, environment, and anti-corruption.
M＆A
Risks
The Group actively pursues M&A both domestically and internationally as part of its strategy for sustainable growth. However, despite thorough preliminary research and evaluation, there is a risk that the acquired business may not develop or operate as planned, or that the anticipated synergies may not materialize. In such cases, impairment losses on goodwill may occur, which could adversely affect the Group’s performance and financial position.
Response to Risks
When selecting M&A targets, the Group conducts detailed due diligence. Furthermore, we proceed by fully considering various factors, including market trends, customer needs, the target company’s business performance, financial condition, and market competitiveness, the Group’s business portfolio, and the results of risk analysis associated with the M&A.