Okura Industrial Co., Ltd.

Because the Company supplies products to a wide range of industries through the Synthetic Resin Business, New Materials Business, and Building Materials Business, changes in demand trends or in the market environment resulting from technological innovation could lead to a decline in product demand or a fall in product prices. This may affect the Company's business results and financial condition. The Company's policy is to respond by flexibly formulating alternative business plans.

The main raw materials for films manufactured in the Synthetic Resin Business are petrochemical products, and fluctuations in crude oil prices and foreign exchange rates significantly affect raw material price trends. If the Company is unable to pass on price fluctuations to product prices, this may adversely affect its business results and financial condition. There is no description of specific hedging measures by the Company; the basic policy is to flexibly formulate alternative business plans.

A large portion of sales of Optical Functional Film (LCD-Related Materials)-related products in the New Materials Business is destined for China, reflecting the concentration of manufacturing bases of customer optical component manufacturers and final product manufacturers in China. If changes occur in China's economic, political, legal, or social conditions, this could disrupt product delivery and affect the Company's business results and financial condition. The Company's policy is to respond by flexibly formulating alternative business plans.

Since products in the Building Materials Business are mainly used as construction materials for housing, a decline in demand or intensified price competition resulting from a decrease in new housing starts could affect the Company's business results and financial condition. This entails a structural risk of shrinking demand in the domestic market amid the ongoing decline in the birthrate, aging population, and population decrease. The Company's policy is to respond by flexibly formulating alternative business plans.

In some product fields, such as those for industrial applications, the pace of technological innovation is rapid and the market environment is changing sharply, creating a risk that the utilization rate of invested equipment could decline significantly before capital recovery is complete. In such cases, extraordinary losses such as impairment losses may occur, which could affect the Company's business results and financial condition. The Company's policy is to respond by flexibly formulating alternative business plans.

In some product fields, such as those for industrial applications, the pace of technological innovation is rapid, and the market environment continues to change dramatically. If existing products or equipment become technologically obsolete, demand may decline or equipment may need to be retired early, which could affect the Company's business results and financial condition. The Company's policy is to respond by flexibly formulating alternative business plans.

If a product defect occurs, the Company may be held liable for damages, which could affect its business results and financial condition. As a countermeasure, the Corporate Center works to implement preventive activities against quality risks and to prepare emergency responses in the event of a crisis, while the Company has also taken out product liability insurance (PL insurance) to cover product liability claims.

Because production facilities for the New Materials Business and the Building Materials Business are concentrated in Kagawa Prefecture, natural disasters such as earthquakes, typhoons, and tsunamis, as well as infectious diseases, accidents, fires, power outages, wars, and terrorism, could cause severe disruption to production facilities or significant stagnation of economic activity, potentially having a substantial impact on business activities. As a countermeasure, the Company is working to minimize the impact of business disruption by dispersing production facilities located in coastal areas of Kagawa Prefecture to inland, mountainside areas that are not at risk of tsunamis and have stable ground.