The following section describes the main matters relating to the Group’s business and financial situation that may be considered risk factors and other matters that may have a significant impact on investors’ decisions.
The Group’s policy is to recognise the possibility of these risks occurring and to endeavour to avoid their occurrence and to respond to them if they do occur, but investment decisions regarding the Company’s shares should be made after careful consideration of this section and the other sections of this document as well as the other sections.
The forward-looking statements below are based on the Group’s judgment as of the end of the current financial year and may differ from actual results due to the uncertainties inherent in them.

１. The use of outsourcing in production

The Group manufactures the components and processes at the heart of its products in-house at the Group’s plants, including those of its consolidated subsidiaries, for vibration simulation systems, and at its own plants for measuring systems. Parts assembly and outgoing inspection are carried out at our plants. For parts and processes that do not need to be manufactured in-house, the policy is to actively utilise subcontractors, and many of these are outsourced in accordance with designs drawn up by the Company. In principle, the Company secures multiple subcontractors and strives to reduce procurement risks, but if a situation arises where there is a problem with procurement from subcontractors, this may affect the Group’s delivery date management, quality management, etc.

２. Increase in interest-bearing debt balance due to acquisition of head office and production sites

The Group opened the Advanced Technology Centre for Environmental testing in November 2015. Furthermore, during the year under review, the Group established IMV TECHNO VIETNAM CO.,LTD and acquired land and buildings for the establishment of e-Test Centre Japan. These purchases were financed by loans from financial institutions, etc., which may cause an increase in the interest burden in the future.

３. Seasonal fluctuations

The Group’s sales tend to be concentrated in the months of March and September due to the execution of budgets by suppliers and other circumstances, and results in the second and fourth quarters tend to be higher than in other quarters. The Group’s sales ratio to the public sector is expected to increase in the future. This trend may intensify in the future, depending on an increase in the proportion of sales to public authorities. In addition, depending on the timing of the booking of large projects, this may become a factor in monthly fluctuations. In addition, delays in the acceptance inspection of vibration simulation systems and other factors may cause fluctuations in operating results due to delays in the period.

４. Decline in domestic demand

The Group has a high proportion of domestic sales, accounting for approximately 64% of total sales in the current financial year. Therefore, the Group is actively expanding sales overseas and responding to new testing demands in Japan, such as next-generation energy and electric vehicles, etc. However, if the recovery of domestic demand in the existing automobile industry, etc. is slower than expected, this may become a variable factor in business results.