NICHIBAN CO., LTD.

Raw materials such as plastic film, paper, and natural rubber are subject to the effects of petroleum market conditions, natural disasters, and geopolitical risks, and price surges could have a material impact on the Group's financial position and business results. In addition, certain raw materials are dependent on specific suppliers, creating a risk that procurement could become impossible in the event of a disaster or bankruptcy affecting such suppliers. In response, the Group implements purchasing from multiple suppliers, maintains appropriate inventory levels, and reduces costs through productivity improvements, while seeking to appropriately pass through remaining price increases to product prices.

If manufacturing facilities or logistics bases suffer significant damage due to natural disasters such as earthquakes or floods, or unforeseen accidents such as fires or explosions, this could have an extremely significant impact on the Group's financial position, business results, and cash flows (likelihood: high, impact: extremely significant). The Group conducts emergency response drills based on its emergency response rules, including the establishment of emergency response headquarters, along with various maintenance activities, and actively promotes business continuity planning (BCP) initiatives.

If important information, including personal data, is leaked due to cyberattacks, system failures, disasters, or other causes, this could have a material impact on the Group's financial position, business results, and cash flows (likelihood: high, impact: significant). Based on its IT security policy and personal information protection policy, the Group provides ongoing information management training for employees and implements system-level security measures.

The introduction of carbon taxes could raise the cost of raw materials such as FSC-certified paper, resin, and rubber; the strengthening of GHG emission regulations could increase costs for purchasing environmental value and updating equipment; and difficulty in procuring natural resource-derived raw materials due to climate change could increase the financial burden on the Group (impact of carbon tax and regulatory tightening risk: medium; impact of decline in investor ESG evaluation and natural resource procurement risk: significant). The Group is responding through diversification of suppliers, leveling of capital expenditures based on long-term investment plans, and reorganization of production sites based on CO2 emission reduction targets.

In the medical, industrial adhesive tape, and stationery markets, changes in consumer demand associated with sustainability initiatives and work-style reforms could affect sales. In addition, if return practices at the time of seasonal product transitions or sales discount practices for distributors result in significant amounts, this could have a material impact on the Group's financial position and business results. The Group manages loss risk through immediate identification of demand changes using sales data and through accounting treatment related to variable consideration (adjustments to refund liabilities and revenue recognition).

If sales prices decline due to intensified competition from market contraction or new entrants, or if the pass-through of rising raw material prices and inflation to product prices is delayed, this could have a material impact on the Group's financial position, business results, and cash flows. The Group continuously strengthens its brand power and differentiates itself from competitors through its proprietary technological capabilities, quality, and timely provision of high-function, high-value-added products.

If inappropriate conduct or serious quality problems occur, this could lead to a decline in the reputation not only of the product concerned but of the Group's products as a whole, potentially having a material impact on the Group's financial position, business results, and cash flows. Under a management framework centered on a quality management system based on the Group's quality policy, the Group works to maintain quality at each stage of product planning, manufacturing, procurement, and sales.

If a decline in market interest rates or changes in the investment environment lead to a deterioration in investment returns on pension assets, this could increase retirement benefit obligations and have a material impact on the Group's financial position, business results, and cash flows. To minimize investment yield risk, the Group diversifies its investments across different types of investment targets.

If social activity stagnates due to the emergence of new virus variants or other causes, this could reduce demand for products and services, make it difficult to operate business sites, and disrupt the supply chain, potentially having a material impact on the Group's financial position, business results, and cash flows. The Group has established a business continuity framework through the establishment of multiple business and logistics bases, development of BCPs, flexible working arrangements such as telework and staggered work hours, and the use of remote meetings.

Management that emphasizes ESG and efforts toward realizing a sustainable society significantly affect stakeholder evaluation, and failure to respond appropriately could lead to a decline in social reputation and have a material impact on the Group's financial position and business results. The Group promotes efforts to fulfill its corporate social responsibility through environmental activities centered on ISO14001, compliance with green procurement guidelines, technological innovation toward solvent-free products, and promotion of women's empowerment and work-life balance.