Business Risks | IR information | MIRAIT ONE Corporation

Business Risks

The MIRAIT ONE 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, 2023.

1.Risks associated with excessive dependence on particular clients

The main clients of the 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.
Thus, the Group is expediting the transition of its business structure from the telecommunications carrier business to the solutions business and shifting to “MIRAI(future) Domains,” which is positioned as new growth areas, as well as 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 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.

3.Risks associated with the management of critical information

The Group may access critical information, such as technical data and personal information provided by clients and business partners. In the event of unforeseen information leakage or malicious use of such information, the Group may suffer liability for damages and others with potential impact on its financial results. Such event may also result in the loss of client’s and business partner's confidence, affecting the Group’s business results.
The Group is therefore wholly committed to the prevention of leakage of classified information through the use of ISMS (information security management system).

4.Risks associated with uncertainties regarding clients’ credit quality

If uncertainties arise regarding the credit quality of a client or a business partner, the 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 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 material procurement and price hikes

In the event of difficulty in the material supply or delays in delivery due to natural disasters, war, terrorism, or epidemics of novel infectious diseases, or in the event of rising construction costs due to soaring prices of raw materials, equipment and materials, and energy, construction projects may be suspended or delayed. Furthermore, the Group's business performance may be affected if clients hold back on investments or postpone investment decisions.
The Group therefore meticulously manages the process to minimize the extension of the construction period by, for example, prioritizing the processes that are not experiencing shortages of supplies. In addition, measures are taken to mitigate the risk of rising construction costs by incorporating into contract clauses the terms and conditions for raw material price increases, and by passing the higher costs on to construction prices.

6.Risks associated with assets held by the Group

The 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 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.

7.Risks associated with natural disasters, etc.

The occurrence of contingencies such as severe natural disasters and the spread of epidemic diseases could cause direct damage on the Group’s employees, subcontractors and facilities, or cause outage of lifeline utility and fuel shortage. In such an event, construction may be halted and the contracted construction period may be delayed, which may affect the Group’s business results.
The 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.

8.Risks associated with overseas businesses

The 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, or rapid rises in material prices and labor costs in these countries may affect the Group’s business results.
The 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.

9.Risks associated with climate changes

As problems caused by global climate change are becoming more apparent, companies are required to give consideration to the environment mainly by reducing greenhouse gas emissions and industrial waste. Such consideration is often required of not only individual companies but also all companies in the supply chain. If the Group companies and partner companies fail to take appropriate measures, our business with suppliers may be restricted and the Group’s business performance may be affected.
To respond to this, the Group clarified its commitment to “building and maintaining an environmentally friendly society” as its material issues. The Group also endorsed the Task Force on Climate-related Financial Disclosures (TCFD) to analyze risks and opportunities in the Group’s business in line with its framework. Furthermore, we are working to identify greenhouse gas (GHG) emitted through our business activities and are committed to initiatives and other measures to reduce it and to further reduce industrial waste.

10.Risks associated with M&A

The Group strives to expand its business domains and transform business models through M&A with which synergy effects are expected, with the aim of increasing corporate value of the Group. However, if outcomes such as the profit growth and synergy effects expected from an M&A target company are not realized, the Group’s business performance may be affected.
To avoid this, before conducting an M&A, the Group carefully examines whether the M&A is in line with the Group’s growth strategy. We also consider the outlook for future market trends, business plans, and synergies with the Group. In the post-merger acquisition integration process, the Group identifies the items to be implemented and the timeframe for their achievement, strengthens monitoring, and works to maximize synergy effects.

11.Risks associated with legal compliance

The Group is authorized and licensed under laws and regulations including the Construction Business Act, Telecommunications Business Act, and Radio Act, and conducts its business activities in accordance with relevant laws and regulations in business operations. In the event of a violation of any of these laws, the Group's business performance and credibility may be affected.
The Group therefore closely monitors legal revisions and other developments in the relevant internal departments and promptly shares such information within the Group, reviewing internal regulations as necessary. In addition, efforts are continuously made to ensure compliance with laws and regulations by conducting awareness-raising activities for employees of the Group and partner companies, and by establishing an effective internal audit and consultation system.