MEIJI ELECTRIC INDUSTRIES CO.,LTD.

In FY2026 (ending March 2026), the Company's non-consolidated sales to the Toyota Group amounted to ¥31,035,063 thousand (46.2% of sales), and sales to the automotive-related industry as a whole reached ¥34,274,429 thousand (51.0% of sales), indicating an extremely high degree of dependence on specific customers. Should the Toyota Group's capital expenditure trends stagnate, this could have a direct and material impact on the operating results of the Company and its group. As a countermeasure, the Company is working to expand sales to the electrical, electronic, and semiconductor industries as well as the machine tool and industrial machinery-related industries, and to expand its global business.

Purchases from OMRON Corporation, a major supplier, amounted to ¥8,759,153 thousand in FY2026 (ending March 2026), representing 14.3% of total purchases, and changes in OMRON's management policies or sales policies could affect the operating results of the Company and its group. The basic distributor agreement is renewed in principle every year, and under the terms of the contract, it may be terminated without prior notice in the event of a material breach or difficulty in performance. Although the agreement is concluded with the aim of maintaining a friendly and continuous relationship, the risk of contract termination cannot be eliminated.

The Company's group has established overseas subsidiaries in the United States, the United Kingdom, China, and the Kingdom of Thailand, and most overseas transactions are export transactions from Japan to these subsidiaries. While efforts are made to cover foreign exchange fluctuation risk in principle through forward exchange contracts, the occurrence of international financial risks or unforeseeable economic events could affect the Company's group's operating results and financial position.

Political and social risks such as war, terrorism, and epidemics are inherent in each country where overseas subsidiaries are located, and the occurrence of such events could affect the Company's group's operating results and financial position. As a countermeasure, the Company works to gather information through overseas offices' information networks, support from within Japan, and the use of external consultants.

Since 1996, the Company has consolidated all group logistics operations into a single logistics center in Nagoya City. Should a large-scale disaster such as an earthquake or storm/flood damage, or an accident, occur at this center or in the nationwide delivery network, there is a risk that product supply to customers would stop, as the Company has no alternative means. This could temporarily affect the Company's operating results, and there exists a structural vulnerability due to the consolidation into a single location.

The Company has obtained a general construction business license and a specified construction business license under the Construction Business Act in relation to the installation of Industrial Equipment and Measuring Equipment, and these require renewal every five years. Although the Company currently recognizes no facts that would constitute grounds for revocation, if the license were to be revoked for some reason, this could affect the operating results of the Company and its group. As a countermeasure, the Company continuously obtains information on amendments to relevant laws and regulations and thoroughly ensures compliance.

Large-scale equipment projects are often completed and delivered at the end of the fiscal year, and since many major customers have a fiscal year ending in March, capital expenditure tends to be concentrated at the fiscal year-end, resulting in the Company's group's performance being weighted toward the second half of the fiscal year. In FY2026 (ending March 2026), fourth-quarter sales were ¥22,542,754 thousand (29.5% of the total), and operating profit was ¥1,483,106 thousand, demonstrating a pronounced second-half weighting; if first-half performance falls short of plan, the impact on full-year results would be significant. As a countermeasure, the Company thoroughly manages delivery schedules for large-scale equipment projects.

The Company has its main bases in Japan, and there is a risk of equipment damage or production stoppage due to natural disasters such as earthquakes, typhoons, and heavy rain. The impact of infectious disease outbreaks on business activities is also anticipated, and should events beyond expectations occur, this could have a material impact on the Company's financial position and business performance. As a countermeasure, the Company strives to strengthen information sharing with suppliers and major customers.