Nippon Sheet Glass Company, Limited

The Company has recorded cumulative net losses of approximately ¥28.4 billion over the past five years and carries liabilities exceeding ¥500,000 million in total, and had faced difficulty refinancing over ¥100,000 million in borrowings maturing by the end of March 2026. As a countermeasure, on March 24, 2026, the Company announced a capital restructuring (the Transaction) combining a third-party allotment of new shares to Apollo Fund totaling approximately ¥165.0 billion with a quasi-debt-equity swap (quasi-DES) of ¥140,000 million by the four Main Financial Institutions, and has already completed the refinancing. However, execution of this third-party allotment is conditional upon shareholder meeting approval and obtaining approvals and permits under competition laws and other regulations in various countries, and there remains a risk that improvement in financial soundness will be delayed if these conditions are not satisfied.

The Company Group has recognized substantial assets, including goodwill and intangible assets, arising from the acquisition of Pilkington (in 2006), and conducts impairment tests annually. In FY2023 (ended March 2023), the Company recognized a full impairment of ¥48.8 billion in goodwill and intangible assets related to the European Automotive Glass Business, and in FY2025 (ended March 2025), it recorded additional impairments of ¥1.4 billion in CGU goodwill for the South American Architectural Glass Business and ¥3.4 billion in CGU goodwill for the North American Automotive Glass Business. Should business performance fail to improve as expected going forward, or should business contraction or withdrawal occur due to worsening economic conditions, additional impairment losses may arise.

In the European market, which accounts for the majority of the Company's net sales, geopolitical risks such as economic stagnation, rising raw material prices, Russia's invasion of Ukraine, conflict in the Middle East, and US-China trade friction and tariff measures have deteriorated the business environment. In response to worsening supply-demand conditions in Europe, the Company implemented early production suspension of two float furnaces in Germany (in FY2025, ended March 2025), and in the current fiscal year is proceeding with a review of the automotive glass production structure centered on Germany and Italy; should market conditions deteriorate further, additional impairment losses may arise.

Of net sales to external customers in the current fiscal year, the Architectural Glass Business accounted for 43% and the Automotive Glass Business accounted for 52%, together representing over 90% of sales, directed toward the construction and housing industry and the automotive industry. Demand in these industries tends to fluctuate in line with cyclical changes in consumer sentiment, and in the automotive industry, there are also risks from industry structural change driven by CASE advancement and increased purchasing power and customer concentration resulting from consolidation among automakers. Although the Company seeks to mitigate the impact through a shift toward high-value-added products, profit margins may decline due to entry by competitors and other factors.

The Company Group, which conducts business in countries and regions around the world, is exposed to foreign exchange fluctuation risk, including in the process of translating local currency-denominated assets and liabilities into yen, as well as interest rate fluctuation risk affecting interest expenses and financial assets and liabilities. Although the Company hedges these risks through forward exchange contracts and interest rate swap transactions, complete elimination of risk is difficult, and particularly given the current high level of interest-bearing debt, rising interest rates directly increase the financial burden.

The Company Group competes not only with domestic and overseas glass manufacturers but also with manufacturers of alternative materials such as plastics and metals. Should competitors achieve technological development, patent acquisition, or commercialization ahead of the Company, or should alternative technologies gain market acceptance, product development investments may fail to generate the profits originally anticipated. Development of new products and technologies requires considerable time and expenditure, and maintaining competitive advantage requires selective and focused allocation of resources; failure to anticipate technological innovation or respond promptly could have a significant impact on business performance and financial condition.

Glass manufacturing requires raw materials such as silica sand and soda ash, as well as energy sources such as heavy oil, natural gas, and electricity, and there is a risk that surging crude oil prices due to deteriorating conditions in the Middle East and other factors will push up energy and raw material and fuel costs. Although the Company hedges through commodity derivative transactions and swap transactions, the impact of price increases cannot be entirely eliminated, and should relationships with major suppliers be terminated or contracts breached, procurement conditions may worsen or supply disruptions may occur.

In the current fiscal year, a float furnace at Concepción, Chile was temporarily suspended due to a nearby wildfire, resulting in a recorded loss of approximately ¥900 million related to equipment damage and production stoppage. Should production activities be disrupted due to increased natural disaster risk from climate change, pandemics, supply chain disruptions, or other causes, production capacity for certain products may decline significantly, and there is a risk of losses not covered by insurance. Although the Company has formulated business continuity plans (BCPs) at major sites and conducts regular disaster-prevention inspections and maintenance, complete prevention and mitigation remain difficult.

The Company Group is subject to various laws and regulations in numerous jurisdictions, including Japan, Europe, the Americas, and Asia, covering competition law, environmental regulations, import/export controls, taxation, and sanctions, and there is a risk that changes in laws or their application could result in business restrictions, increased costs, fines, or civil damages claims. In addition, execution of the Transaction is conditional upon obtaining approvals and permits under domestic and foreign competition laws, inward direct investment regulations, and the Foreign Subsidies Regulation, and delays or failure to complete these procedures would directly affect the business strategy. The Company has taken measures such as establishing an Ethics and Compliance Committee and revising the

The Company Group holds and uses a wide variety of confidential information and data in its business activities, and there is a risk that information systems could be disrupted or confidential information leaked due to cyberattacks, computer virus infections, natural disasters, communication failures, and other causes. Although the Company implements protective measures such as utilizing external specialized services and providing employee training, the importance of updating information systems and controls is increasing, and should an incident occur, it could have a significant impact on business performance and financial condition.