Bando Chemical Industries, Ltd.

Although the Company implements risk hedging measures such as forward exchange contracts for a substantial portion of foreign-currency-denominated monetary receivables, exchange rate fluctuations may affect business performance. In addition, as the Company strengthens its overseas production and sales systems, changes in economic conditions in various regions may affect business performance and financial condition. The Company's policy is to continue implementing appropriate risk hedging measures.

The Group is strengthening its overseas production and sales systems, and changes in economic conditions in various regions may affect business performance and financial condition. The higher the dependence on a specific region, the more susceptible the Group becomes to economic downturns or political changes in that region. The Group seeks to diversify risk by strengthening its systems across the entire Group.

The Group supplies parts to automobile manufacturers, OA equipment manufacturers, consumer product manufacturers, and others. If defects arising from products supplied by the Group occur, the Group may be required to bear contractual or legal costs associated with recalls and other measures. The Group positions product quality as the most important matter for maintaining and developing its business, and implements various measures and countermeasures to maximize quality assurance; however, the occurrence of a recall may affect business performance.

Raw material prices may rise in conjunction with increases in crude oil prices, and if supply-demand disruptions or greater-than-expected increases in material and fuel prices continue, business performance may be affected. As countermeasures, the Group is strengthening efforts such as considering alternative materials, correcting or raising product prices, and reducing total costs; however, it is difficult to completely avoid market fluctuations. The Group continuously monitors market prices and supply-demand conditions while negotiating delivery times and prices with suppliers.

Business activities may be significantly affected by natural disasters such as the Tokai earthquake, Tonankai-Nankai earthquake, and typhoons, or by the spread of infectious diseases. Occurrences on a scale exceeding the Group's assumptions are also conceivable, in which case business performance may be affected due to a contraction of business activities. The Group is working to establish a product supply system through mutual complementation among production sites, as well as formulating plans and developing systems for business continuity and early recovery.

If the market value of tangible fixed assets or intangible assets held by the Group declines, or if such assets fail to generate the expected cash flows, a decline in profitability may make it impossible to recover the invested amount, potentially necessitating impairment accounting. If impairment accounting is implemented, it may have a significant impact on business performance. As a group holding a variety of assets, the Company needs to continuously monitor changes in asset value.