a. Products
The Group’s products mainly consist of the precious metals gold, silver, and platinum; the main raw materials used in their production are the recycled raw materials containing the various precious metals. As a general rule, the purchase price is based on the market price for precious metal bullion and the market prices are affected by changes in the international commodities market and fluctuation in exchange rates. The prices of these products are also determined based on the market price. The Company employs commodity futures to avoid pricing risk attendant to fluctuating prices, but it is possible that changes in the price of precious metals could affect certain segments of the operating results.

b. Commodities
A large portion of the Group’s processed raw materials for food products, which consist mainly of seafood, meat, and agricultural products, come from overseas. Both the purchase and sales price of these products are affected by fluctuations in commodity market prices and exchange rates. The Company addresses these changes by using forward exchange contracts and passing on price changes to customers; however, these changes could affect certain segments of the operating results.

The Group purchases a wide range of products from overseas for the food business, including processed seafood ingredients comprised mainly of surimi, shrimp, crab, squid, octopus, and processed agricultural products comprised mainly of fresh vegetables, dried vegetables, and frozen vegetables; processed meat and other livestock products comprised mainly of eggs and various types of meat such as beef and poultry. The Group also sells various products, to food manufacturers on a wholesale basis. The Group will carry out strict labeling of food products as specified by law, and will expend every effort to strengthen its quality control training and contamination countermeasures for overseas food products. However, operating results could be affected if food safety problems were to occur and measures such as a ban on imports were imposed.

There is a trend towards stricter environmental laws as a result of growing societal concern over environmental issues. If regulation of the precious metals-related business were increased, various measures such as increasing capital expenditures might become necessary to meet the stricter regulations. The Company also conducts various operations including collecting, transporting, and processing waste as a business covered by the Waste Disposal and Public Cleaning Law, and the continuation of our business is based on the major assumption that the Company complies with the various laws.
In addition to establishing corporate ethics rules, which clearly state corporate ethics and legal compliance in writing, the Group has created compliance rules to set forth how compliance is to be implemented, and is working to achieve compliance in all business activities.

The Company uses poisonous and toxic substances but appropriately processes the waste liquid and atmospheric emissions, taking the environment into consideration. However, operating results could be affected if a problem were to occur with the management of these materials for any various reasons, including an accident at the plant.