TIGERS POLYMER CORPORATION

Approximately 42% of net sales are attributable to Honda Motor Co., Ltd. Fluctuations in Honda's business performance, contract termination, changes in procurement policy, price reduction requests, and other factors could adversely affect the Group's operating results and financial position. As countermeasures, the Group is working to strengthen trust through enhancement of product added value and to expand sales of hoses and rubber sheets for applications other than automotive parts.

Domestic automotive parts production depends on multiple suppliers outside the Group. If supply shortages during peak demand periods or quality control issues occur, this could adversely affect operating results and financial position, as well as damage relationships with customers. The Group addresses this by maintaining good relationships with suppliers and securing multiple suppliers capable of responding with alternative production.

There is a possibility of recalls due to defects in automotive parts and other products. Although the Group has product liability insurance, if the coverage amount does not cover the final burden, the resulting significant costs could adversely affect operating results and financial position. The Group addresses this by establishing quality control standards and conducting production activities under strict management standards.

In overseas business development in the Americas, China, and Asia, there are inherent risks such as unexpected changes in laws and regulations, difficulty securing personnel, inadequate infrastructure, and social disruption risks such as terrorism and war. If these risks materialize, they could disrupt overseas business activities and adversely affect operating results and financial position. The Group addresses this by preparing business continuity plans for each business site.

Approximately 54% of net sales are generated by overseas bases, and the yen conversion of foreign currency-denominated transactions, including those in US dollars, is affected by exchange rate fluctuations. In particular, yen appreciation could adversely affect the business. The Group seeks to avoid this risk by entering into forward exchange contracts as necessary.

If a natural disaster such as an earthquake or flood, or an infectious disease pandemic occurs in regions where the Group conducts business, business operations could become difficult, and a significant decrease in net sales or substantial recovery costs could adversely affect operating results and financial position. The Group prepares business continuity plans for each business site to enable early resumption and continuation of corporate activities.

If there is a significant decline in the market price of assets or a decline in profitability due to deterioration of the business environment, impairment losses on fixed assets may arise through the application of impairment accounting, which could adversely affect operating results and financial position. Capital expenditure plans are formulated based on each company's demand forecasts, and the Group strives to reduce this risk by confirming and adjusting profitability during the approval process for investment projects.

Under the defined benefit lump-sum retirement payment system and the aggregate-type corporate pension fund system, changes in actuarial assumptions such as the discount rate, and fluctuations in the market value of pension assets or the investment environment, could adversely affect operating results and financial position. The Group seeks to mitigate this risk by transitioning part of the defined benefit corporate pension system to a defined contribution pension system.

If cyberattacks including ransomware, unauthorized access, internal misconduct, or other incidents result in the leakage, falsification, or loss of customer information, trade secrets, design information, etc., or in the shutdown of core systems or production management systems, this could result in recovery costs, damage compensation, decreased sales, loss of credibility, and a medium- to long-term decline in earning capacity due to leakage of technical information. The Group is working on cybersecurity measures in collaboration with external security specialist organizations, building backup systems, developing internal regulations, conducting employee education and training, and establishing an incident response framework.