Matters related to business performance, financial position, and other information described in the Annual Securities Report that may have a material impact on the decisions of investors include those outlined below. Forward-looking statements in the text are based on judgements made by the Ryoyo Group as of January 31, 2022.
| Loss of commercial rights | |
| （Description of risk） In principle, the term of distributor and principal distributor contracts signed with suppliers is one year. There is a risk that commercial rights will be lost if such contracts are either not renewed or are cancelled mid-term in the event the supplier’s business performance worsens, its policies change, or a corporate reorganization occurs, etc., or there are revisions to distribution channels. |
（Risk mitigation measures） The Ryoyo Group strives not only to maintain and expand its existing business, but also to develop new business models and develop new business drivers. The Ryoyo Group aims to be a trading company that offers added value with unique strengths as a solution provider by offering support ranging from edge to cloud computing. |
| Investment risk | |
| （Description of risk） The Ryoyo Group may invest in its business partners with the aim of future growth. However, there is a risk it will be necessary to record an impairment loss on such investments as the business performance of a company invested in may differ significantly from its performance at the time of the investment. |
（Risk mitigation measures） When making an investment, the Ryoyo Group carefully considers the financial position of the company to be invested in, the feasibility of its business plan, investment returns, and other factors, and the Board of Directors deliberates on the investment. In addition, the financial position and progress of the business of the company invested in is monitored regularly after investment. |
| Disposal of inventories | |
| （Description of risk） The Ryoyo Group maintains a certain level of inventory to ensure stable supply of products to customers, which is the key function of a trading company. However, there is a risk of disposal of inventories because of customer demand falling below our initial expectations due to market fluctuations or other circumstances. |
（Risk mitigation measures） The Ryoyo Group works to maintain appropriate inventory levels and prevent slow moving inventories by collecting information regarding demand forecasts for customers and supply conditions at suppliers. We have also introduced a valuation loss system to assess the future salability of inventories, and we work to mitigate losses in the event of disposal of inventories. |
| Indemnification risk | |
| （Description of risk） There is a risk that the Ryoyo Group will be subject to claims, etc., from entities with which contracts have been concluded or other third parties in the event that the Group is found liable for defects with products it handles or is involved in litigation related to intellectual property rights. |
（Risk mitigation measures） The Ryoyo Group has established the Quality Assurance Department and the Legal Affairs Department and constantly makes efforts to improve the quality and reliability of the products it handles and to avoid infringing intellectual property rights. When suppliers or contractors are involved, the Group strives to reduce indemnification risk using written contracts. |
| Foreign exchange risk | |
| （Description of risk） The Ryoyo Group undertakes foreign currency denominated transactions, including importing and exporting. There is a risk that sales and cost of sales will fluctuate due to the impact of foreign exchange rates, and that non-operating income and expenses will be incurred at the time of settlement of receivables and payables or as of the closing date. |
（Risk mitigation measures） The Ryoyo Group works to reduce the impact of foreign exchange rate fluctuations utilizing forward exchange contracts and other means. |
| Collection of accounts receivable | |
| （Description of risk） The Ryoyo Group provides credit in its transactions with customers in Japan and overseas. There is a risk that difficulties may arise with respect to the collection of accounts receivable due to a rapid deterioration in management or bankruptcy of a customer. |
（Risk mitigation measures） The Ryoyo Group sets credit limits for each customer according to their public credibility and financial condition and undertakes transactions within those limits. Depending on the degree of risk, the Group also works to minimize risk for collection of accounts receivable through factoring and other means. |
| Shareholding risk | |
| （Description of risk） The Ryoyo Group owns the shares of specific business partners to further strengthen business alliances and maintain and strengthen stable business relations. There is a risk that valuation loss may be recorded in the future due to a decline of the stock market or poor business performance of the companies in which the Ryoyo Group has purchased stocks. |
（Risk mitigation measures） With regard to listed stockholdings, the Ryoyo Group verifies the appropriateness of continuing to hold stocks based on qualitative judgements including non-financial information, in addition to quantitative judgements based on the short-term business performance and stock price, and reports the results to the Board of Directors. |
| Natural disasters and infectious diseases | |
| （Description of risk） There is a risk that the Group’s business activities will be impacted in the event of a halting of business operations or the disruption of supply chains due to a natural disaster, such as an earthquake, windstorm, flood, fire, or eruption, or an outbreak of an infectious disease such as COVID-19 in the countries or regions in which the Ryoyo Group conducts business operations. |
（Risk mitigation measures） The Ryoyo Group has established a disaster prevention taskforce headed by the President & CEO with systems for mitigating the impact of various disasters and infectious diseases which are expected to have a major impact. With the spread of COVID-19, the Group implemented infection control measures including promotion of telecommuting, the wearing of masks, and thorough handwashing. |
| Country-based risks | |
| （Description of risk） There is a risk that the Group’s business activities could be affected in the event of changes in the political, economic, or social environment, revisions to laws and taxation systems, or the outbreak of social disorder due to such events as terrorism or war in the countries or regions where the Ryoyo Group is engaged in business. |
（Risk mitigation measures） The Ryoyo Group regularly obtains information on overseas business risk from local experts and has established systems for responding appropriately when risks arise. |
For inquiries and requests,
please fill in and send the form below.