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Risks for Businesses and Others

Last updated: June 26, 2019

We are a consolidated subsidiary of JFE Holdings, Inc. and its wholly-owned subsidiary JFE Steel Corporation. These two parent companies hold a 67.7% share of our corporate voting rights. The primary service provided by our group is systems integration, which involves planning, design, development, and maintenance of computer systems. Corporations account for a high proportion of our client base. Our group's operating results and profitability are naturally influenced by external factors such as financial conditions and other risks.

1. Group Operations

(1) The Domestic Economy and Trends in Information Technology Investment

The group's customers represent a wide cross-section of industries, including manufacturing, distribution, finance, and service. General economic conditions and investment tendencies among our customers affect our group's operating performance. Additionally, our group competes against various entities to attract orders.

For the current consolidated accounting period, JFE Holdings, Inc. and JFE Steel Corporation together accounted for 42.9% of sales within our group.

(2) Other factors can cause performance fluctuations, including the following:

  • Status of project management in systems development
  • Factors affecting quality requirements and delivery timetables for the systems we develop
  • Factors affecting maintenance tools and techniques related to systems development, maintenance, and operations
  • Factors affecting cost-cutting for systems development, maintenance, and operations

2. Expenses Related to Retirement Benefits

Our group calculates retirement benefit expenses and obligations based on various actuarial assumptions, such as discount rates. When actual results diverge from such assumptions, the influence is recognized and accounted for. This poses the risk of unexpected changes in expenses recognized and obligations recorded for future periods.

3. Risks to Information Security

Leaks of personal information and/or confidential information acquired from customer companies, computer viruses infections, violations of intellectual property rights, and other issues may lead to loss of social credibility, lawsuits, or demands for compensation, ultimately affecting our performance.

4. The Effects of Wide-Scale Disasters on Business Operations

If a wide-scale natural disaster (for example, an earthquake or the outbreak of a new influenza strain or other disease) affects a large number of group employees or causes widespread damage at major offices or facilities, the consequences could well affect our business operations and operating performance.