Showa Holdings Co., Ltd.

JTRUST ASIA PTE. LTD. (JTA) has filed multiple damage claim lawsuits against the Company's group in Thailand, Singapore, and Japan, stemming from the convertible bond issue of equity-method affiliate Group Lease PCL. (GL), with total claims exceeding at least USD 210 million. In January 2024, a damages judgment of USD 124 million against GLH became final, and in June 2025 a new lawsuit was filed against GL in the Thai Civil Court seeking 7,169,005,187.50 Thai baht (approximately ¥28.8 billion equivalent), with disputes continuing to expand. The Company is asserting its legitimacy in cooperation with legal counsel, but depending on the course of litigation, there is a possibility of a material adverse effect on the Company group's management and operations.

Group Lease Holdings PTE. LTD. (GLH), formerly a consolidated subsidiary of the Company, received a liquidation order from the Singapore High Court in March 2024 following a company liquidation petition filed by JTA, and liquidation proceedings by the Liquidator are ongoing. In addition, a provisional asset freeze order of USD 130 million remains in effect, restricting the disposal of GLH's assets. While the Company group has explained that the financial impact is limited, additional losses may arise depending on the progress of the liquidation proceedings.

Regarding loan receivables held by GLH, a subsidiary of GL, the Thai Securities and Exchange Commission (Thai SEC) raised allegations in 2017 concerning misconduct by former GL officers and overstatement of interest income, and an investigation by the Thai Department of Special Investigation (Thai DSI) is still ongoing. The Company group has not been able to identify the basis for the Thai SEC's allegations, and although the full amount was already written off as a loss in the fiscal year ended March 2018 when the issue came to light, the investigation's progress may affect the Company group's management and operations. The Company is fully cooperating with the Thai DSI investigation while asserting its legitimacy.

GL Finance PLC. (GLF), a subsidiary of equity-method affiliate GL, received notice from the National Bank of Cambodia in September 2024 of the revocation of its finance leasing license and company liquidation, and has entered liquidation proceedings. As the liquidation proceedings progress, an equity-method investment loss may arise, but at present a definite figure cannot be calculated. The Company will continue to gather information and consider the matter, and will disclose any impact in a timely manner once determined.

The Company group operates primarily in Southeast Asia, including the Kingdom of Thailand and the Republic of Singapore, with a high ratio of overseas sales and the majority of profit dependent on overseas affiliated companies. Fluctuations in exchange rates directly affect the consolidated financial statements after conversion into yen, creating a risk that a sharp yen appreciation could worsen business and financial performance. The structure entails a structural vulnerability of high dependence on specific regions and currencies.

In the Digital Finance Business, which provides financing for motorcycles and agricultural equipment mainly in Thailand and other Southeast Asian countries, there is a risk of delinquency and credit losses arising during the average 32-month leasing period due to economic fluctuations and other factors. Allowance for doubtful accounts is recorded based on assessments of individual collectability and historical credit loss ratios, but if unforeseen credit losses occur, additional allowances may be required, potentially affecting financial position and business results. The Company strives to maximize recovery through measures such as holding used vehicle auctions.

Sudden changes in political activity, terrorism, social unrest, and legal amendments in Japan and overseas locations (Thailand, Singapore, Cambodia, etc.) may affect the Company group's business results and financial position. Political instability in Southeast Asia, on which the majority of profit depends, poses a risk directly linked to business continuity.

Synthetic rubber, natural rubber, compounding chemicals, and other main raw materials used in the Rubber Business are at risk of price increases due to soaring commodity markets and rapid yen depreciation. Rising procurement costs may affect business results and financial position through increased manufacturing costs, and disruptions in quantitative procurement may also affect production volume.

Each business of the Company group depends on computer systems and communication networks, and if a system outage or data leak occurs due to natural disaster, accident, cyberattack, computer virus, or other cause, sales and business activities may become difficult, potentially causing direct damage and loss of trust. The Digital Finance Business and e-commerce sites collect personal information (address, name, credit card numbers, etc.), and in the event of an information leak, legal disputes and impacts on business results may also arise.

Some products in the Rubber Business are subject to regulation under the Food Sanitation Act and the Pharmaceutical Affairs Act, and social responsibility may be questioned in the event of a product accident. In addition, all businesses are subject to legal, accounting, and tax laws and regulations, and unexpected legal amendments may affect business results and financial position. The Company strives to maintain quality control and production management systems, but it is impossible to eliminate product defects or complaints entirely, and their occurrence may significantly affect social credibility and business results.