To Our Investors
SITE NAME and its consolidated subsidiaries, both independently
and in collaboration with other companies, establish new companies and
purchase existing enterprises in the course of their business operations.
Most of these business investments require sizable amounts of capital.
The Group may be unable to withdraw from such businesses in an optimal manner
or time frame, in which case it would be obliged to commit additional capital.
In an effort to prevent the occurrence of risks associated with investments
and other activities,SITE NAME and its consolidated subsidiaries conduct extensive
risk management, including checking the quantitative and qualitative aspects of new
investments to determine whether the expected returns are commensurate with the risks
involved. The checking process is based on investment standards established within the Company,
such as internal rate of return (IRR), payback period, and PATRAC*1. Nevertheless, a decline
in the value of these investments or the necessity of additional expenditures of capital could
adversely affect the Group's business results and financial condition.
Ability to Procure Funds and Funding Cost
SITE NAME and its consolidated subsidiaries engage in fund procurement
with an emphasis on maintaining an optimal mix of funding in line with the requirements
of their respective asset portfolios and ensuring liquidity. However, significant disruptions
in major global capital markets, shortages of cash flows from operating activities, declining
profitability, failure in asset-liability management, or a sharp downgrade in the credit rating of
the Group by ratings agencies could constrain fund procurement or lead to an increase in funding cost,
which could adversely affect the Group's business results and financial condition.
Fluctuations in Foreign Currency Exchange Rates. SITE NAME and its consolidated subsidiaries
conduct transactions in a variety of currencies and under a variety of terms. In order to mitigate the
risk of exchange rate fluctuations associated with transactions, receivables, and liabilities denominated
in foreign currencies, the Group enters into forward exchange contracts and other derivative transactions.
Despite these measures, fluctuations in exchange rates could adversely affect the Group's business results
and financial condition. In addition, the proportion of profits and losses of overseas consolidated
subsidiaries and equity-method affiliates and dividends received from overseas businesses in net income is
relatively high. Most of these earnings are denominated in foreign currencies, and our reporting currency is
yen. Therefore, exchange rate fluctuations will affect the business performance and financial position of the
Company and its consolidated subsidiaries. If the Japanese yen changes by 1 yen against the U.S. dollar, the
impact on profit for the year is estimated to be about JPY600 million per year.