RENT CORPORATION

The industrial machinery and construction machinery rental business requires continuous substantial capital investment due to the need to hold large quantities of rental assets, and investment funds are, in principle, procured through borrowings or lease contracts. If changes in economic conditions, deterioration of creditworthiness, or other factors make it difficult to raise funds, this may affect business performance and financial condition. While the Group strives to maintain good relationships with financial institutions and leasing companies, this financial risk is structural in nature given the characteristics of the industry.

Certain borrowings are subject to financial covenants requiring that net assets be maintained at 75% or more of a base value, and that ordinary income/loss not result in losses for two consecutive periods. If these covenants are breached, there is a risk that the Company could lose the benefit of the term and be required to repay the borrowings in a lump sum. While no breach events have occurred at present, a sharp deterioration in business performance could have a material impact on the Company's financial condition.

Customer companies' capital expenditures tend to increase every year from October to March, causing the Group's net sales and operating profit to be concentrated in the second and third quarters of the consolidated fiscal year. In the results for FY2025 (ended May 2025), operating profit for the fourth quarter was ¥-51 million, clearly reflecting the impact of seasonal fluctuation. This concentrated structure creates a risk that a decline in demand during a specific period could have a significant impact on full-year performance.

The Group applies the

Securing and developing excellent personnel with diverse industry knowledge, knowledge of rental assets, and qualifications is fundamental to business operations, and the Group conducts recruitment of new graduates and experienced personnel as well as training programs by job type and rank. However, if recruitment and development plans do not proceed as scheduled, this could affect business operations. Against the backdrop of the declining birthrate and intensifying competition in the labor market, the difficulty of securing personnel remains consistently high.

In the industrial machinery and construction machinery rental industry, major companies have been actively grouping other companies in the same industry, leading to consolidation and increasing oligopolization within the industry. There are concerns that the Group's competitiveness could decline as larger companies, with superior capital strength, gain an advantage in DX/GX adaptation and price competition. Although the Group is actively pursuing M&A and alliances with other companies in the same industry, if oligopolization accelerates rapidly, this could affect business performance and financial condition.

Because a large volume of rental assets is recorded as fixed assets, depreciation and other fixed costs account for a higher proportion of cost of sales than in other industries. While the Group strives to control fixed costs through timely and appropriately sized capital investment and extending the usable life of assets through maintenance, if an unexpected and sharp change in the business environment causes a decline in net sales that cannot be absorbed by fixed cost reductions, this could have a material impact on business performance and financial condition.

If new legislation, amendments, or changes in interpretation occur with respect to labor-related laws, the Road Transport Vehicle Act, the Road Transportation Act, the Secondhand Articles Business Act, and other legal regulations, or accounting standards, there is a risk that responding to such changes may require significant time and cost. In particular, if amendments to lease accounting standards result in the recognition of right-of-use assets and liabilities related to assets subject to operating leases and leased branch offices and yards, this could affect management indicators such as the capital adequacy ratio, and could also give rise to the possibility of future impairment losses on right-of-use assets.

The Group holds confidential information, including personal information of customers and employees, and has established security measures such as intrusion prevention and data encryption, as well as a management framework through its Information Security Committee. However, if cyberattacks exceeding expectations or unforeseen unauthorized use result in the leakage of important information or personal information, or in the suspension of business activities, this could affect business performance and financial condition.

If unexpected events occur after the implementation of an M&A transaction, or if business development does not proceed as planned, the Group may fail to achieve the expected synergy effects, and there is a risk that impairment losses on assets, including goodwill, may arise. In addition, in joint ventures with partner companies, there is a risk that decision-making may be delayed due to differences in management philosophy. Note that, pursuant to a resolution of the Board of Directors in July 2025, the Company plans to terminate its joint venture agreement with Marubeni Corporation and acquire all shares held by the Marubeni group in MaxRent Vietnam Co., Ltd. and PT. Max Rent Indonesia, and has also resolved to make a capital increase of VND 50 billion (approximately ¥300 million) in MRV.