Business Risk

The following primary risk factors to which the Company and its Group are subject may exert a significant influence on investor decisions. Issues that may not necessarily be relevant as risk factors are also presented below in keeping with Company's vigorous efforts to disclose information to its investors.
The Directors and Executive Officers periodically and as needed, identify and evaluate the business risks associated with the Company and its Group. These risks are then reflected as appropriate onto the management plan for that fiscal year. Internal rules are also in place to ensure risk is managed appropriately for the entire Group.
Risks are generally managed by the relevant department as they are executing their work in conformity with the internal rules. Risks that span multiple departments are reviewed by a cross-organizational committee, then managed appropriately.
The Risk Management Committee headed by the Executive Officer and President manage risks that could have a significant impact, minimizing the impact that the risk poses on management by preventing the materialization of the risk and responding swiftly and accurately should the risk materialize. Employees also receive periodic training on relevant laws, internal rules, and manuals.
However, the operating environment surrounding the Company and its Group remains harsh and the Company's business operations may be significantly affected if the following risks materialize. Risks are listed in the order of importance determined by the magnitude of the potential impact on the business and likelihood of occurrence.
The forward-looking statements included in the following represent estimates as of the moment.

(1) Decommissioning of Fukushima Daiichi Nuclear Power Station

	Level of impact	Very high	Occurrence possibility	High
Potential risk	The Company is pushing forward with decommissioning and other work steadily and with attention to safety at the Fukushima Daiichi Nuclear Power Station in accordance with the Mid-and-long-Term Roadmap towards the Decommissioning of TEPCO HD's Fukushima Daiichi Nuclear Power Station (hereinafter the "Mid-and-long-Term Roadmap"). However, there are technically uncertain and unresolved issues, such as fuel debris retrieval which has never been done before, and it is possible that the decommissioning work will not progress as planned for the next 30 to 40 years. In addition, decommissioning work requires the understanding of the regional community and society, but insufficient information dissemination, human error, and the occurrence of problems may cause difficulties in gaining the trust of such community and society and implementing the work steadily. Although plans are to discharge ALPS treated water based on the government's basic policy, there is a possibility that the discharge will not be implemented steadily due to delays in preparation work and lack of understanding from the local community and society at large. If these decommissioning efforts do not proceed smoothly and the process is longer, business performance, financial condition and operations of the Company and its Group (hereinafter "the TEPCO Group") may be affected.
Response measures	As this decommissioning challenge is unprecedented in the world, the Company has developed the "Mid- to Long-term Decommissioning Action Plan" based on the Mid-and-Long-Term Roadmap, which is a major goal to be pursued, and also on new information and findings that are gradually obtained. To "balance recovery with decommissioning" and "to fulfill our responsibility to Fukushima", we will communicate the progress made in decommissioning work and future projections even more carefully and in an easy-to-understand manner to gain the understanding of the region and society. The Company will continue to collect new information and knowledge one by one through Unit 1 containment vessel internal survey and trial fuel debris retrieval from Unit 2, and flexibly revise the "Mid- to Long-term Decommissioning Action Plan" in order to systematically and steadily work toward the completion of decommissioning in 30 to 40 years while paying close attention to safety. In working on ALPS treated water dilution and discharge facilities, we will prioritize safety and communicate progress to parties concerned and society at large, while cooperating sincerely with safety checks by municipalities and IAEA reviews to secure objectivity and transparency as part of efforts to gain trust from parties domestic and abroad. In addition, the Company will strengthen and expand its efforts to minimize the adverse impact on reputation by listening carefully to the opinions of local residents and other parties concerned and taking appropriate measures as needed. Furthermore, the Company will take multilayered measures to reduce the amount of contaminated water generated, including repairing the building's roof and paving the inner side of land-side impermeable wall, and waterproofing some parts of the building.

 

(2) Stable supply of electricity

	Level of impact	Very high	Occurrence possibility	High
Potential risk	Large-scale disasters, accidents at facilities, sabotage, including terrorist acts and riots, problems in procuring fuel, and the outbreak of infectious disease are among the contingencies that could render the Company unable to provide a stable supply of electric power. Such cases could affect the TEPCO Group's business performance and financial condition, while damaging public trust and imposing negative impact on business operations.
Response measures	The balance of supply and demand will first be assessed in the planning stage. Supply-side measures (e.g., open recruitment of kW) and demand-side measures (e.g., demand response) will be developed in line with the discussions and decisions of the government and the Organization for Cross-regional Coordination of Transmission Operators (OCCTO). In daily operations, the Company will check on the short-term supply and demand projections on a weekly-basis to quickly identify any signs of supply and demand crunches. In addition, Group-wide Supply and Demand Emergency Guidelines will be revised as needed to implement emergency measures during a supply and demand crunch smoothly and appropriately. Furthermore, during an electricity supply and demand crunch, the Company will check on the supply and demand emergency measures that are being deployed by TEPCO PG, build necessary structures for addressing the crunch, and disseminate information at the right moment to avoid widespread outages. Specifically, in preparation for increasingly severe and wide-spread natural disasters, facilities are being reinforced based on the damage projections issued by the Cabinet's Central Disaster Prevention Council with a focus on strengthening electricity resilience. To prevent accidents at facilities, aging facilities are being updated systematically and efficiently to maintain stable supply. To protect against acts of terrorism, riots and other acts of sabotage, the Company is maintaining close ties with relevant organizations from ordinary times. To reduce the overall damage caused these contingencies, facilities that connect multiple transmission grids are multiplexed to minimize the scope and duration of outages due to equipment failure. In order to quickly recover damaged facilities, digital technology will be actively used, electricity supply methods such as storage batteries and electric cars as distributed power sources will be diversified, resources to aid in recovery will be secured, a Group-wide structure for disaster response developed, internal training on various hazard scenarios conducted, and coordination with parties concerned such as the Japan Ground and Maritime Self-Defense Force, government, municipalities, general transmission and distribution operators will be strengthened. With regard to fuel procurement, JERA will continue to work to procure fuel as stably and flexibly as possible by leveraging the flexibility of its fuel portfolio and fuel trading by JERA Global Markets, while the Company monitors the situation. Regarding measures against infectious diseases, the Company will continue to reinforce basic infection control measures and utilize telework and staggered work hours to ensure the health and safety of its employees, while taking appropriate response measures by monitoring for social trends driven by the spread of infection.

 

(3) Nuclear power generation and nuclear fuel cycle

	Level of impact	Very high	Occurrence possibility	High
Potential risk	The revision of Japan's nuclear policy and the tightening of safety regulations by the Nuclear Regulation Authority may impact operations of the TEPCO Group's nuclear power generation and nuclear fuel cycle businesses, as well as the Group's business performance and financial condition. Nuclear energy is an important power source not only from the perspective of achieving carbon neutrality, but also from the perspective of providing a stable supply of low-cost electricity and strengthening resilience. The Company is strengthening safety measures and promoting organizational reforms with strong determination not to repeat a severe accident. However, in the event that in-house construction, inspection and other technical responses are prolonged or restoration of trust from siting communities and society at large fails to progress due to incidents such as the ones related to nuclear material protection and unfinished construction work for the safety measures in FY2020, the outlook for the restart of nuclear power plant will become uncertain, thermal fuel costs will rise, unnecessary fuel assets will be generated, and the asset value of power generation facilities will be changed. These situations could impact the TEPCO Group's business performance and financial condition. The back-end of decommissioning, including spent fuel reprocessing, disposal of radioactive waste, and dismantling of nuclear power generation facilities, requires large capital spending and a long period of operation. Institutional measures have been taken to ensure that these processes are implemented properly and without delay. Specifically, a system is in place for nuclear power operators to contribute to the cost required for spent fuel reprocessing and radioactive waste disposal, and a system is also in place to set aside a reserve for the cost of dismantling nuclear power generation facilities. Although such government measures have mitigated uncertainties related to the back-end business, factors that could affect the TEPCO Group's business results and financial condition include revision of the government systems, a higher estimate for future costs outside of these measures, operating conditions at JNFL's Rokkasho Reprocessing Plant and other facilities, and procedures for the decommissioning of the uranium enrichment plant at the same site.
Response measures	With regard to nuclear power generation, the Company will steadily implement the corrective action plan submitted to the Nuclear Regulation Authority in September 2021 to strengthen the nuclear material protection function, which is an urgent issue for the power plant. As part of efforts to continually improve safety, multiple biometric authentication devices have been introduced to prevent inappropriate entry or permission from being erroneously granted, and a system to promote improvements in nuclear security has been built under the leadership of management while investing increasing human resources, including hiring from experts from outside the company, and injecting additional resources into facilities. Furthermore, part of the headquarter functions has been moved to Kashiwazaki City, Niigata Prefecture where the nuclear power plant is located to promote site-oriented, regionally symbiotic business operations through integrated management of the head office and the power plant. With regard to the back-end business, the Company will ease uncertainties by taking appropriate actions in accordance with national policies and related institutional measures, while closely monitoring future trends in policies and systems. The Company will also cooperate in the promotion of nuclear fuel cycle projects, including the Rokkasho Reprocessing Project and the uranium enrichment project. With regard to the final disposal of high-level waste, the Company, as a waste generator with fundamental responsibilities, established an information desk for inquiries as part of its cooperation with the government and the Nuclear Waste Management Organization of Japan (NUMO) to actively promote understanding for the realization of geological disposal.

 

(4) Electricity sales volume, sales price, and power source procurement costs

	Level of impact	Very high	Occurrence possibility	High
Potential risk	Electricity sales volume may be directly impacted by temperatures and the weather, economic and industrial activities, power savings, energy conservation and policies to realize carbon neutrality in addition to competition in the retail market. The retail price and profits could also be affected by competition in the retail market. In addition, trading trends on fuel markets and whole sale electricity market, and foreign exchange market could affect power source procurement costs. As a result of the above, the TEPCO Group's business performance and financial condition might be affected, though the "fuel cost adjustment system" and the "fuel cost, etc. adjustment system" will cushion the impact of some fluctuations in fuel prices, foreign exchange rates, and wholesale market prices on performance.
Response measures	Soaring fuel prices and wholesale electricity costs as a result of the invasion of Ukraine and changes in the power source procurement structure has impacted the financial state of the TEPCO Group. In response, the Company will gradually increase the retail prices of electricity for customers contracted under the Special High-voltage and High-voltage plans from some time after April 2023. We will submit a request to increase to Low-voltage regulated rates to the METI Minister and raise low-voltage liberalized rates at the same time. Before raising the retail rates, management will be streamlined thoroughly, power saving programs will be expanded and power from restarted nuclear power plants will be included in calculations for the new retail prices to reduce the effects of increase in wholesale prices on the retail price, to reduce the burden on our customers while also improving the TEPCO Group's financial state. In addition, for power source procurement costs, risks will be managed appropriately by introducing hedged trading using electricity derivatives while building a competitive power source portfolio by expanding supplies to cut costs. Capturing the trend toward carbon neutrality and the extreme variability of international fuel prices, the Company will offer services that meet the needs to customers and society by transforming its business model to a "local production for local consumption" equipment services provider to secure stable profits.

 

(5) Customer services

	Level of impact	High to very high	Occurrence possibility	High
Potential risk	Customer service in violation of laws and regulations and other issues could significantly undermine customer satisfaction and public trust in the Group's services and affect the business performance, financial condition and smooth operations of the Group.
Response measures	To realize concrete strategies in the Comprehensive Special Business Plan, the TEPCO Group established a new Group Corporate Philosophy in July 2021, based on which the Group will build a new corporate culture that dares to innovate for customers, and strives to be a company that customers can continue to trust and choose. At TEPCO Energy Partners, which carries out sales activities, in addition to providing practical training/education and maintaining scripts to improve customer services, the Company utilizes "customer feedback" collected through sales calls and visits to improve operations and post examples of major improvements on the website. The Company is implementing various measures that seek to improve sales quality while also preventing recurrence of inappropriate incidents including administrative dispositions, such as video explainers for services and improving the readability of forms. The quarterly Sales Quality Management Committee headed by the President of TEPCO Energy Partners with lawyers and consumer interest group directors as outside members evaluates these initiatives across the Company and formulates an improvement policy, while also checking the status of measures to prevent recurrence of administrative dispositions. The CX Enhancement Office is responsible for supporting and checking the improvement efforts of each department to prevent the occurrence of inappropriate incidents.

 

(6) Thermal power generation fuel costs

	Level of impact	High to very high	Occurrence possibility	High
Potential risk	The prices for liquefied natural gas (LNG), crude oil, coal and other fuels change according to factors that include international fuel market conditions and foreign exchange market trends, which could affect the TEPCO Group's business performance and financial condition. In particular, a global surge in fuel prices due to the situation in Ukraine might affect the TEPCO Group's business performance and financial condition.
Response measures	At JERA, efforts are being made to respond to risks associated with fuel price fluctuations through price competitiveness that leverages a world-class procurement scale, a fuel portfolio with strong responsiveness to price fluctuation risks, and fuel trading and hedging in the futures market through JERA Global Markets.

 

(7) Changes in the electricity business structure and energy policy

	Level of impact	High to very high	Occurrence possibility	Medium
Potential risk	The TEPCO Group's business performance and financial condition could be affected by changes to the policy environment such as changes in energy policy, including structural changes in the electricity industry and as well as tighter regulations related to global warming.
Response measures	The Company will comprehensively and proactively collect necessary information on energy policies, systems related to the electricity business, and trends in environmental regulations, and explain the TEPCO Group's approach through various forums in cooperation with relevant sections while taking necessary measures.

 

(8) Securing safety, quality control, and preventing environmental pollution

	Level of impact	High to very high	Occurrence possibility	Medium to high
Potential risk	The TEPCO Group works to secure safety, control quality and prevent environmental pollution while focusing on maintaining highly transparent and reliable information disclosure. However, the smooth execution of operations could be affected if the public's trust in the Group is violated by such events as 1) the occurrence of an accident, fatality or large-scale emission of pollutants into the environment as the result of such causes as operational error or breach of laws or internal regulations, and 2) in appropriate public relations and information disclosure.
Response measures	With the aim of fulfilling social responsibilities, the TEPCO Group has established the "TEPCO Group Charter of Corporate Conduct" to unite under a commitment to act with integrity, comply with laws, regulations, and rules with a high level of ethical awareness, putting the highest priority on safety and strict compliance with corporate ethics. Placing top priority on safety in all aspects of business activities, the TEPCO Group has developed rules and measures that are effective in safety activities and compliance with laws and regulations, which are evaluated and improved on an ongoing basis. In terms of quality control and environmental management, rules and manuals have been established to reinforce thorough compliance, and the status of compliance is checked through internal audits and necessary improvements are made as appropriate. The nuclear operation business is especially committed to improving safety and quality based on an on-site and actual-products perspective by instructing managers to check and improve the status of on-site equipment and personnel on a regular basis. These efforts will be continuously improved based on guidance and advice from external experts. With regard to information disclosure, efforts are being made to convey necessary information accurately and promptly to our customers, local communities, and society at large.

 

(9) Corporate ethics and compliance

	Level of impact	High to very high	Occurrence possibility	Medium to high
Potential risk	The TEPCO Group works to firmly establish business operations that comply with corporate ethics. However, the violation of laws and regulations or other acts contrary to its corporate ethics could damage public trust in the Group and affect smooth business operations. The nuclear power business, under the policy to foster safety culture among workers, is conducting training and dialogue activities to clarify specific actions that each worker is required to take in real situations. However, if such efforts prove insufficient, TEPCO Group's social credibility could be undermined and smooth business operations may be negatively impacted.
Response measures	The "TEPCO Group Charter of Corporate Conduct" and the "Code of Conduct Related to the Corporate Ethics and Compliance Policies of the TEPCO Group" have been established to clarify the Company's direction and specific actions to be followed by directors and employees. The TEPCO Group Corporate Ethics Committee, chaired by the President and composed of members including external experts, has been formed to deliberate and decide on various measures to firmly establish corporate ethics and receive guidance and advice on the status of implementation. A manager and staff members in charge of corporate ethics assigned to each organization ensure that activities to firmly establish corporate ethics are implemented by the TEPCO Group as a whole. In addition, periodic awareness surveys are conducted to check the degree to compliance with corporate ethics, and the future action policy is determined based on the survey results. Furthermore, corporate ethics hotlines are set up within and outside the Company for use by the entire TEPCO Group with the aim of preventing violations of corporate ethics across the Group. In the nuclear power generation business, in response to the incident related to nuclear material protection at the Kashiwazaki-Kariwa Nuclear Power Station, the Company is working to improve internal communication and employee motivation through dialogue between the management and power plant workers, which led to the creation of the "Purpose of the Power Station", and the appointment of external experts, in order to achieve a power station that is trusted by regional residents.

 

(10) Information management and security

	Level of impact	High to very high	Occurrence possibility	High
Potential risk	The TEPCO Group maintains information important to its operations, including a large volume of customer information. The Group strictly manages information through means that include internal regulations and employee training, but leaks of such information due to cyber incidents and human error could damage public trust in the TEPCO Group and affect its smooth business operations.
Response measures	To deal with increasingly sophisticated and advanced cyber incidents, efforts are being made to strengthen security by all possible means, including defensive measures, constant monitoring, and response and recovery training. As the TEPCO Group recognizes that the protection of customer information is particularly important, system measures have been taken, including restrictions on data export to external storage media, while educating and enlightening employees about the impact of information leaks on customers and society.

 

(11) Procurement of materials and goods

	Level of impact	High	Occurrence possibility	High
Potential risk	Occurrence of large-scale disasters, the spread of infectious disease, international conflicts, tension between the US and China have disrupted the supply chain. This could put upward pressure on procurement costs and strain procurement plans, affecting Group's business performance, financial condition, and smooth operation. Delays in deliveries and production shutdowns due to geopolitical issues exemplified by the invasion of Ukraine, semi-conductor shortages and factory shutdowns like those seen at the height of COVID could affect the stable supply of electricity. Furthermore, if the TEPCO Group or its suppliers is found to be complicit in the destruction of the environment or in the infringement of human rights in the TEPCO supply chain, TEPCO's social credibility could be lost affecting business operations.
Response measures	To ensure the sustainability of the supply chain, the Company has instituted a supplier registration system that checks the suitability of the supplier beforehand, and diversified its supplier base to increase competition and expand opportunities to collaborate with various suppliers. Risks from delays in deliveries of materials, such as semi-conductor shortages, and productions will be avoided by using alternative products, managing stock, and adjusting schedules to avoid stockouts, in addition to sending in orders early. Furthermore, in light of the growing interest in environmental problems and human rights issues as well as its importance, the Company has recommitted to realizing a sustainable society through its supply chain as a whole: the "TEPCO Group Basic Procurement Policy" was revised accordingly and a new "Sustainable Procurement Guide" issued to suppliers while also monitoring on the progress made on environmental and human rights issues and building trust with suppliers through dialogue.

 

(12) Initiatives related to climate change, etc

	Level of impact	High	Occurrence possibility	Medium
Potential risk	Having announced targets to "Reduce CO2 emissions originating from the sale of power to 50% of FY2013 levels by 2030" and "Reduce CO2 emissions originating from the supply of energy to essentially zero by 2050", the TEPCO Group is striving to contribute to the realization of carbon neutral society. However, the passing of the GX Promotion Bill which will introduce growth-oriented carbon pricing and other tightening of CO2 emissions regulations, increase in consumers self-generating and self-consuming electricity using solar power and storage batteries, and decline in sales volume from the spread of local generation and local consumption could negatively affect the TEPCO Group's business performance, financial conditions, business operations and corporate image. Change in investor behavior driven by ESG concerns may also affect the TEPCO Group's financing and stock price.
Response measures	While working on both long-term stable supply and CO2 reduction, the Group will shift its business focus onto "carbon neutrality" and integrate its efforts to focus on two pillars of 1) developing renewable energy and other zero-emission power sources, and 2) promoting the electrification of energy demand. For the tightening of regulations, the Company will proactively gather information from a wide range of sources on the information on the design of systems to address climate change including the GX Promotion Bill, and explain the TEPCO Group's approach through various forums in cooperation with relevant sections while implementing necessary measures. As society transitions to a large-scale power sources and bulk power transmission society to a local generation, local consumption society based on self-generation and self-consumption, the Company will radically shift the business model from an electricity (kWh) sales model to an equipment and services business focusing on our ties with our customers. This new business will be expanded on a society, community, and "town-" basis across regions. The country-wide expansion of the equipment and services/aggregation business will be placed at the core of the business model transition, and alliances will be built with various business partners. For the change in investor behavior driven by ESG concerns, a structure of incorporating global ESG trends into management has been put in place through the appointment of the ESG Committee and ESG Officer, and efforts are underway to identify and address ESG issues, enhance ESG information disclosure in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), implement measures according to the Carbon Neutrality Roadmap, while also engaging with shareholders and investors to expand their understanding of our businesses and initiatives.

 

(13) Financial markets conditions

	Level of impact	High	Occurrence possibility	High
Potential risk	Domestic/foreign stocks and bonds held as pension plan assets and other portfolios may affect the TEPCO Group's business performance and financial condition as their market values change in line with conditions in the stock and bond markets. Moreover, future interest rate movements and other factors may affect the Group's interest payments.
Response measures	Efforts are being made to reduce financial risks for the entire TEPCO Group and mitigate impact on performance through diversified investment of pension plan assets and reduction of retirement benefit obligations by introducing the defined contribution pension plan. For interest payments, efforts are being made to reduce the risk of interest fluctuation by procuring funds through the issue of fixed rate bonds.

 

(14) Management reform initiatives based on the Comprehensive Special Business Plan

	Level of impact	High	Occurrence possibility	Medium to high
Potential risk	In order to fulfill its responsibilities to Fukushima, the TEPCO Group will continue to work on discontinuous management reforms, including productivity reforms, promotion of reorganization/integration and other forms of collaboration, and the strengthening of its business base, with the aim of securing funds for compensation and decommissioning and improving corporate value. As an operator of nuclear power plants, the Group will undertake fundamental reforms by placing the top priority on restoring trust of regional residents and society at large, but if trust is not fully restored and the management reforms do not proceed as planned, the Group's business performance, financial condition, and operations may be affected.
Response measures	In order to realize management reforms based on the Comprehensive Special Business Plan, action plans specifying responsible persons, deadlines, and objectives to be achieved have been prepared and are in progress. The progress of each action plan is monitored according to its level of importance, and the plans will be achieved through the PDCA cycle. For the purpose of regaining the trust of the regional community and society at large, management reforms, including nuclear operations, will be steadily implemented to allow autonomous organizational improvements based on Group-wide efforts, including the upper management, to recognize one's weaknesses/issues. The Group will increase its corporate value by streamlining management through productivity reforms based on "Kaizen" (continuous improvement) and by providing new values centered on carbon neutrality and disaster prevention.

 

(15) Acquisition of TEPCO shares by the Nuclear Damage Compensation and Decommissioning Facilitation Corporation (NDF)

	Level of impact	High	Occurrence possibility	Medium to high
Potential risk	On July 31, 2012, TEPCO issued Preferred Stocks (Class A Preferred Stocks and Class B Preferred Stocks; collectively, the "Preferred Stocks") through private placement with NDF. Class A Preferred Stocks carry voting rights to be exercised at the General Meeting of Shareholders as well as the right to convert the shares into Class B Preferred Stocks and Common Shares. Class B Preferred Stocks do not carry voting rights at the General Meeting of Shareholders, unless otherwise provided for in laws and regulations, but have the right to convert the shares to Class A Preferred Stocks and Common Shares. The NDF holds more than half of the total voting rights by underwriting the Preferred Shares, so that the exercise of such voting rights at the General Meeting may affect TEPCO Group's business operations. If NDF exercises its right to convert Class B Preferred Shares into Class A Preferred Shares, or if it exercises its right to convert the Preferred Shares into common shares, there is a possibility that the existing shares will be diluted. In particular, if the right to convert into common shares is exercised, the dilution of the existing shares may result in a decline in the share price of the holding company TEPCO HD, and if NDF sells such common shares on the market, the share price of the holding company TEPCO HD may be further affected depending on the market environment at the time of sale.
Response measures	Placing the top priority on fulfilling its responsibilities to Fukushima, the TEPCO Group will make its upmost efforts to restore public trust and enhance its corporate value.

 

(16) Businesses other than electric power

	Level of impact	High	Occurrence possibility	Medium
Potential risk	To achieve the profit goals in the Comprehensive Special Business Plan, the TEPCO Group will advance the asset services/aggregation business, next-generational urban development business, and other non-electric power businesses. Various issues, including changes in the Group's management condition, changes in customer needs, increasing competition with rival companies, stricter regulations, changes in economic conditions, including foreign exchange rates and international fuel markets, political uncertainty, regulatory changes, and natural disasters, could cause actual results to differ from forecasts at the time of investment/financing, and may affect the Group's business performance and financial condition.
Response measures	Investment in new business fields is implemented within the range of defined management resources in priority order, based on the business portfolio strategy set out in the Comprehensive Special Business Plan. Investment decision for each project is made by the Investment Management Committee based on the assessment of profitability and strategic effects in accordance with predetermined hurdle rate criteria. Launched projects are monitored periodically and unprofitable businesses are closed or downsized with the aim of improving investment performance through selection and concentration.