Risks and Variable Factors
The risks and variable factors that may have an impact on the business results, financial position, cash flows, etc., recognized by the Company at the end of the consolidated fiscal year under review are as described below. We will continue to make efforts to avoid the impact of these risks to the best of our abilities when they arise.
- 1. Information management
- 2. Impact of revisions to disclosure-related laws and regulations and changes in accounting standards
- 3. Retirement benefits
- 4. Impact from the stock market
- 5. Seasonal fluctuations in net sales
1Information management
Customer data handled by the Company comprises confidential information not yet disclosed and personal information, including those where insider trading regulations apply. In the unlikely event of a data breach or information leakage, there may be an adverse impact on trust in the Company and the Company's business results. For this reason, the Company establishes and strengthens both its systems and operations, such as by obtaining PrivacyMark certification and ISMS certification in limited scope to respond to information security needs. At the same time, the Company has formulated various regulations including insider trading management regulations, and strives to ensure confidentiality such as by thoroughly conducting employee education.
In light of the trend toward digitization of disclosure documents such as those published on the Electronic Disclosure for Investors' Network (EDINET), the service content provided to our customers has evolved to effectively utilize digital technologies. For this reason, from the perspective of preventing accidents involving information leakages, the Company places the highest priority on ensuring customer information security, and is striving to build an even stronger management structure.
In addition, regarding to the Company's internal documents as well, the Company conducts reviews of the information management regulations, and strives to manage the information by creating and operating the information management execution manual, which constitutes the detailed enforcement regulations.
2Impact of revisions to disclosure-related laws and regulations and changes in accounting standards
Many of the disclosure-related documents that form the basis of our business are prepared in accordance with the Financial Instruments and Exchange Act and the Companies Act. However, in recent years, more appropriate disclosures have been required from the perspective of investor protection, and laws and related systems have been revised frequently.
In addition, Japan's accounting standards have been converging with International Financial Reporting Standards (IFRS), with multiple revisions being made over the past few years and various studies continuing to be conducted.
Furthermore, discussions regarding the digitization of the general meeting of shareholders process are underway, and some impact is expected on the printing of notices of convocation of general meeting of shareholders, which is the Company's main product.
As a result, these revisions may affect the Company's net sales because the number of pages and the number of required copies for disclosure-related documents, for which the Company accept orders, are expected to fluctuate due to changes in the contents.
Disclosure means and methods have also been changed frequently, such as the advancement of EDINET, and it may be necessary to continue to support the disclosure affairs of customers by making major system modifications.
The Company always collects and analyzes all information related to the disclosure system and accounting standards, and fully shares the information with each department within the Company so that it can quickly grasp such revisions and take quick countermeasures.
3Retirement benefits
Retirement benefit liability varies depending on the trends in retirement benefit obligations and pension assets. However, the Group's financial condition and business results may be adversely impacted if there is a change in actuarial assumptions, or if pension assets decrease due to deterioration in the operating environment.
4Impact from the stock market
Regarding the preparation of disclosure-related documents, in which the Company specializes, there are two types of documents; continuous disclosure documents such as securities reports and notices of convocation of general meetings of shareholders, and irregular disclosure documents such as application documents for initial public offerings and financial documents. Among these, orders for irregular disclosure documents may be impacted by the stock market, in which case the Company's sales and profits may be significantly impacted.
In order to mitigate this impact, the Company aims to stabilize its business performance by developing sales activities to actively accept orders for continuous disclosure documents and providing services that accurately meet customer needs.
In addition, a decrease in the number of listed companies will lead to a decrease in the Company's sales and profits as it will lead to a decrease in the number of customers.
5Seasonal fluctuations in net sales
Net sales of the Company experience seasonal fluctuations as most of our customers have fiscal years that end in March. As a result, net sales of the Company tend to be higher in the first quarter (June to August) than in other quarters.