Business Risks, etc.
The following is a description of items that may become a risk factor in the business development of the Tenox Group and items that may have a significant impact on the decisions of investors. Based on recognition for the existence of such risk factors, the Group shall prevent them from occurring and shall strive to take appropriate measures if they do occur.
Note that items regarding the future were determined at the end of the current consolidated fiscal year, and that business risks, etc., are not limited to these items.
The Tenox Group mainly uses existing precast piles in our pile construction, and cement-based solidifying materials in our soil improvement construction. If external factors cause an increase in the price of these major materials, and if the Group is involved in price competition in which the increase cannot be sufficiently passed on to the product price, it may adversely affect the Group’s business performance and financial condition.
Technical Development Capability
In order to differentiate itself from other companies, the Tenox Group has worked for many years to accumulate technology and expertise related to foundation construction. Moreover, in addition to cultivating outstanding engineers based on our management philosophy of having a technological orientation, the Group has acquired numerous patents. Developing new construction methods requires a great deal of time and money, yet there is no guarantee that such investments will always be recovered. Furthermore, if various risks inherent in technological development become apparent (for example, if our technology is made obsolete by new technology relating to developments by other companies), it may adversely affect the Group’s business performance and financial condition.
Defects in Construction Projects
The Tenox Group performs construction based on quality control standards that comply with various laws and regulations, including the Building Standards Act. For the pile construction and soil improvement work conducted by the Group, we conduct thorough preliminary surveys before executing work. However, ground is composed of various soil types, and there is always the possibility that construction defects will occur due to unforeseen events. If a claim for damage compensation due to a defect is filed, it may adversely affect the Group’s business performance and financial condition.
Bad Debt Risk
If unexpected bad debt risk of our business partners becomes apparent, and if it becomes necessary to post additional losses or provisions related to said risk, it may adversely affect the Tenox Group’s business performance and financial condition.
Work at construction sites consists mainly of outdoor activities surrounded by large heavy equipment. The Tenox Group recognizes that there is a higher risk for occurrence of serious work accidents compared to other industries. The Group thoroughly implements on-site safety and hygiene education that begins with organizing and tidying of the work site, and we put our utmost effort into preventing accidents.
Additionally, the Group is enrolled in various insurance policies to prepare for the unlikely event of financial loss. However, if a serious accident such as a death accident occurs, the human loss is accompanied by a loss of trust from society, the incurrence of disaster response expenses including compensation, etc., and a decline in earnings due to construction delays. Such cases may adversely affect the Group’s business performance and financial condition.
The Tenox Group operates businesses overseas. There is the possibility that the Group’s business performance or financial condition may be adversely affected by unexpected changes to legal systems, political situations, or economic conditions in those overseas regions.
Also, there is the possibility that the Group’s business performance or financial condition may be adversely affected by exchange rate loss caused by sudden fluctuations in exchange rates.
In order to facilitate the execution of our business, the main offices of the Tenox Group are located in the suburbs of the Tokyo metropolitan area. There is the possibility that the Group’s business performance or financial condition may be adversely affected if these areas are struck by a major earthquake which greatly exceeds the envisioned scale, or by other major natural disasters, accidents, etc.
Also, there is the possibility that the Group’s business performance or financial condition may be adversely affected if there is decreased revenue, etc., due to a delay in construction caused by secondary effects such as stoppage of logistics functions or other problems resulting from a major disaster.