MATSUMOTO YUSHI-SEIYAKU CO.,LTD.

The Group sells products worldwide, primarily in the Asia region, and the ratio of overseas sales remains at a high level. Much of overseas sales is denominated in US dollars, exposing trade receivables to foreign exchange risk. The Group takes measures such as offsetting risk through matching foreign-currency-denominated receivables and payables and exchanging currency at favorable rates, but states that it cannot completely avoid the risk.

A major portion of the raw materials used by the Group is derived from crude oil, and crude oil prices fluctuate due to conditions in the Middle East region, supply-demand balance, exchange rate movements, and other factors. Increases in raw material prices resulting from rises in crude oil prices may affect business performance. As a countermeasure, the Group states that it aims to secure profits by developing high-quality products through its technological capabilities and by promoting cost reductions.

The Group holds listed and unlisted shares as investment securities, and if the market value or substantial value falls significantly below the book value, recognition of a valuation loss becomes necessary. Recognition of such valuation losses may affect the Group's financial position and business performance. The securities report does not describe specific countermeasures, and this risk is recognized as one dependent on market conditions.