Kyokuto Co., Ltd.

In the household clothing cleaning industry, the peak demand period occurs during the seasonal changeover from winter to summer clothing, and the Company's sales and profits tend to be concentrated in the first half of the fiscal year. Since the results of this peak demand period significantly affect full-year performance, there is a risk that poor weather or weak demand during the first half could adversely affect overall annual results. No specific countermeasures have been disclosed by the Company.

Demand for household cleaning services has been on a declining trend since peaking in 1993, and is expected to continue decreasing due to sluggish personal consumption driven by consumers' cost-saving orientation and the declining birthrate and aging population. There is a risk that the overall contraction of the market will continue to put pressure on the Company's sales and revenue base. The Company's policy is to seek out laundry demand that has shifted to being handled within households by improving quality and enhancing counter services.

The Building Standards Act prohibits the use of flammable petroleum solvents at cleaning factories and plants located in commercial and residential zones, and the Company's existing factories and plants are subject to this regulation. It is necessary to promote facility improvements in response to the regulation, and such efforts may affect the Company's business performance. The Company's policy is to proceed promptly with improvements based on the basic policies of the relevant government ministries.