We are fully aware of our duties and obligations as managers entrusted by shareholders to operate a business with important social responsibilities related to airports that serve large numbers of people and handle large volumes of important cargoes. With our mission and corporate philosophy firmly in mind, we strive to develop and implement corporate governance to secure and raise corporate value and earn profits to be shared with shareholders.
Internal Control System
We have established a basic policy for the internal control system through a resolution by the Board of Directors, and strive to develop and operate the system accordingly.
We have established a Compliance Committee chaired by the president and whose members include all representative directors and standing auditors. The Committee examines important matters that must be addressed to ensure that the execution of work duties by executives and employees is in compliance with laws and ordinances, articles of incorporation, and in-house rules. It works to achieve various objectives throughout the Group including maintaining or improving proper operations, preventing compliance violations, and avoiding or reducing legal risks.
Based on its mission and corporate philosophy and basic policy for the internal control system, the Group resolutely refuses to have any connections with antisocial forces. If antisocial forces make unreasonable demands of it, the Company works in close collaboration with parties such as company lawyers and the police and cuts off all connections with the antisocial forces. These efforts are led by the Compliance Committee.
In addition, we have made our mission, corporate philosophy, and basic policy for the internal control system known to our officers and employees, and we are making every effort to ensure the proper operation of internal controls, including the elimination of antisocial forces, through our daily business and auditing activities.
The Group will make further efforts to improve its compliance system and continue to manage its businesses in a manner that complies with laws and ordinances.
Internal Control over Financial Reporting
The Audit Office is responsible for internal audits and reports directly to the president. It handles reports on internal controls related to the Financial Instruments and Exchange Act and conducts audits and evaluations from a broad perspective in order to ensure proper operations. The Group is aware of the importance of ensuring trustworthy disclosures, such as financial reports, and it will continue to strive to further develop, operate, and improve effective internal controls.
The Group builds, operates, and manages facilities and functions required by airports and is responsible for supporting the safe operation of airports and airline services.
Therefore, it has created and strives to improve its own integrated risk management system in order to ensure there are no obstructions to airport operations and flights if a risk were to materialize. The Group has established a Risk Management Committee comprised of directors, department heads, and subsidiaries. This Committee ascertains and properly manages risks and works to improve the Group's risk management system.
Since Group operations are related to infrastructure for heating, cooling, waterworks & drainage management and telecommunications at Haneda Airport, stable operation is essential for its business. In additionally, since the airport plays a significant role in disasters and other emergency situations, the Group is aware that stable supply and smooth restoration measures in normal and emergency situations are very important for it.
Risk from Dependence on Specific Customers
As the Group is located at an airport and provides facilities and functions required at airports, its major customers are airline and aviation related companies. If airline and aviation related companies streamline their businesses or revise their business plans to cope with a stagnant aviation demand, we can expect a drop in real estate occupancy rates and a decline in usage of heating and cooling services and waterworks and drainage services.
The Group will continue to endeavor to minimize risks by meeting customers' various needs appropriately and flexibly and maintaining a relationship of mutual trust.
Risk Related to Government Measures
Changes in airport planning and management policy, etc. by the Government, administrative authorities and airport companies who operate and manage the airports may affect the Group's business plans and management and financial status. The Group has endeavored to respond to any change swiftly by closely monitoring changes in policy by the Government and authorities.
In the event of a natural disaster, such as an earthquake, the business plans and management and financial status of the Group may be affected due to damage to the facilities it owns and temporary shutdown of the airport's functions. The Group has conducted a seismic diagnosis of all its facilities and reinforcement work has been carried out as required. We are also insured against fire and earthquakes. In order to be able to respond properly in the event of a natural disaster, we have been developing systems to communicate internally and with relevant authorities, to gather information, and to restore operations promptly.
Risk from Natural Environmental Factors
The management and financing status of the District Heating & Cooling Business and Waterworks & Drainage Management Business tend to be affected by seasonal factors each year. While cool summers and warm winters decrease demand for cooling and heating system and waterworks and drainage services and may result in lower-than-forecast net sales, sales in extremely hot summers and cold winters may exceed the projections.
Risk from Overseas Businesses
Overseas business operations may affect business performance due to unforeseen circumstances arising from the political, economic, and social conditions of the country concerned, and unexpected changes, etc. in laws and regulations.
The Group is working to reduce the risk by collecting information on the countries' risks, etc. related to local laws and business development through local business subcontractors.
Risk from Other Fluctuations in the Business Environment, Etc.
The Group is subject to risk from fluctuations in the business environment arising from contingent factors other than those mentioned above, and such fluctuations may affect its operating results and financial position.