MORIROKU COMPANY, LTD.

Honda Motor Co., Ltd. and its group companies account for more than 90% of net sales in the Resin Processed Products Business, and fluctuations in that company's automobile production volume and sales trends directly affect the Group's business results and financial condition. As countermeasures, the Group is promoting the acquisition of new customers by integrating its proprietary resin processing technology with chemical materials technology, and is also working to expand its customer portfolio through an M&A transaction implemented on April 1, 2026.

If military conflicts, political instability, sanctions measures, disruption of transportation routes, or sharp changes in resource prices such as crude oil and naphtha occur, this may affect business results and financial condition through surges in raw material prices, rising energy costs, procurement delays, and logistics disruptions. The Group strives to mitigate these impacts by securing multiple procurement sources, optimizing inventory levels, diversifying logistics routes, monitoring business partner conditions, and monitoring by the Board of Directors.

The Group provides petrochemical products made from naphtha to a wide range of industries, and fluctuations in raw material market conditions and supply-demand balance may affect the market conditions of individual products, thereby affecting business results and financial condition. The Group seeks to reduce risks from market fluctuations by concluding transaction contracts based on naphtha price-linked formulas and by entering into contracts with business partners that fix the quantity and price of inventory products.

Exchange rate fluctuations arising from foreign currency-denominated transactions and the translation of overseas subsidiaries' financial statements into yen may affect business results and financial condition. The Group hedges foreign currency-denominated transactions through forward exchange contracts and strives to minimize translation risk.

The Group's major domestic sites in Japan are concentrated near the anticipated epicenter areas of a Tokyo Inland Earthquake and a Nankai Trough megaquake, and in the event of a major earthquake, these key sites could be directly damaged, potentially causing delays or interruptions to operations. The Group has established a BCP basic policy that prioritizes employee safety above all else, and has put in place an early recovery framework through the development of disaster prevention systems, stockpiling, evacuation drills, and a business continuity plan that is reviewed annually.

If a serious quality defect occurs in a manufactured product, it may affect business results and financial condition through substantial cost burdens and a decline in corporate reputation. The Group implements quality control under ISO9001 and ISO/TS16949 certification, and has established a system for prompt and reliable market response in the event a problem occurs.

If confidential information or personal information is leaked or lost due to external cyberterrorism, computer virus intrusion, or infrastructure failures caused by natural disasters, this may affect business results and financial condition. The Group promotes the protection of information assets through the establishment of information system security regulations, implementation of safety measures for hardware, software, and data, and information security education for employees.

If legal regulations concerning product sales, safety standards, hazardous substance emissions, and the like are strengthened or newly enacted in the various countries where the Group operates, this could lead to restrictions on business activities and increased compliance costs, thereby affecting business results and financial condition. The Group actively gathers information on regulatory trends in each country and shares it within the Group, while also maintaining a system for prompt market response in the event of a conflict with legal regulations.

If significant changes in the business environment or deterioration in earnings make it necessary to recognize an impairment loss on tangible fixed assets and other holdings, this may affect business results and financial condition. The Board of Directors monitors the performance and equipment utilization status of each site to detect early signs of impairment, and verifies the appropriateness of new investments at Board meetings using economic evaluation indicators such as NPV and IRR.

For some purchased items, the Group has a high degree of dependence on specific suppliers, and if supply is interrupted or delayed due to disasters, accidents, quality problems, deterioration in the supplier's business condition, geopolitical factors, or other causes, this may affect production and sales activities. The Group promotes diversification and resilience of its supply chain by securing multiple procurement sources, evaluating alternative options, reducing procurement risk through regional diversification, and confirming suppliers' BCP arrangements.