Kanemi Co.,Ltd.

The Company's performance is structurally linked to the store-opening policies of Uny Co., Ltd. and UD Retail Co., Ltd. (both subsidiaries of PPIH), the primary tenant destinations for the Tenant Business, and FamilyMart Co., Ltd., the primary delivery destination for the Wholesale Business. If these business partners curtail store openings or shift strategy, this could directly affect the Company's number of stores, factory utilization, and net sales. The Company opens new stores and factories in line with these business partners' store-opening policies, leaving limited room for independent store-opening decisions.

Because the Tenant Business requires small-lot procurement at the store level, the Company is highly dependent on food wholesalers capable of delivering to individual stores. The combined procurement share of the top three suppliers company-wide, including the Wholesale Business, reached 82.0% in FY2024 (ending February 2024) and 80.6% in FY2025 (ending February 2025). If a major supplier experiences deteriorating business conditions, changes in delivery arrangements, or supply stoppages, this poses a risk of serious disruption to raw material procurement. Because fresh food items are the primary raw materials, securing alternative sources of supply is difficult.

The Company maintains factory facilities and hygiene management under the Food Sanitation Act, but food safety and security issues have become a social concern in recent years, and risks arising from the external environment cannot be entirely eliminated even with thorough countermeasures. If a food hygiene problem occurs, it could damage the Company's social credibility and adversely affect its business performance. The Company intends to continue strengthening its food hygiene management system, particularly with respect to manufacturing and processing equipment.

The Company operates 290 stores in the Tenant Business, mainly in the Chukyo area, and 13 factories in the Wholesale Business across the Tokai, Kanto, Kansai, and other regions. If store facilities or factory production equipment suffer severe damage from a large-scale natural disaster such as an earthquake or typhoon, coupled with disruptions to electricity, water, and gas supplies, it could become difficult to continue operations or maintain factory utilization. Due to concentrated operations in specific areas, there is a risk that multiple sites could be affected simultaneously in the event of a widespread disaster. Such an occurrence could materially affect the Company's business performance and financial position.

Capital expenditures are deliberated and decided by the Board of Directors and other bodies based on profitability and risk assessments, with monitoring conducted by the management committee and others after investment. However, if the actual outcome deviates from the plan to an extent not anticipated at the time of the investment decision, and the expected effects are judged unattainable, impairment losses may be recognized. Recognizing an impairment loss would directly and adversely affect the Company's financial position and business performance. This risk remains ever-present as large-scale investments, such as new factory construction in the Wholesale Business, continue.

The prepared foods business is labor-intensive, and a shortage of personnel due to weakened recruiting competitiveness or employee turnover is recognized as a significant business risk. The difficulty of securing human resources is increasing year by year. Although the Company is implementing countermeasures such as revising rules to enable more flexible working arrangements to improve hiring and retention rates, if the securing and development of human resources fail to keep pace with the business growth strategy, this could affect business performance.

The Company's business performance is directly affected by general consumer trends in the consumption of sushi, bento, and other prepared foods, and is also influenced by overall trends in the general merchandise store and convenience store industries. If demand declines due to changes in consumers' food preferences, a growing tendency toward frugality, or the emergence of competitors, this could affect net sales in both the Tenant Business and the Wholesale Business.