A&A Material Corporation

In the housing and non-housing sectors, new construction investment continues to trend downward, while the renovation market shows some elements of growth. In the industrial materials and thermal/cold insulation construction fields as well, there is significant uncertainty regarding both order volumes and prices due to domestic economic trends. If a significant economic fluctuation or deterioration in economic conditions occurs, it may affect the business performance and financial position of the Group. No specific countermeasures are described.

The Group holds receivables such as accounts receivable and notes receivable from customers, and pays close attention to credit management and receivables protection. However, if a customer's business condition deteriorates, receivables collection risk may materialize, potentially adversely affecting the financial position.

The Group strives to ensure product quality and performance under a thorough quality control system; however, if an unexpected serious defect occurs, it may lead to a decline in corporate reputation and affect business performance and financial position. Details of specific quality control methods are not disclosed.

The Group conducts business in Southeast Asia, including Indonesia, where risks such as political turmoil, sudden changes in financial conditions, and abrupt legal and regulatory changes by local governments exist. If these risks materialize, they may disrupt overseas business activities and affect business performance and financial position.

In addition to the incurrence of compensation and support costs for health impairments caused by asbestos, the filing of damages lawsuits may affect the Group's business performance. The asbestos issue is a potential legal risk stemming from past business activities, and the scale of future cost incurrence is uncertain at this time.

The Group has multiple production and sales sites both domestically and overseas. If a disaster such as an earthquake occurs at any of these sites, depending on the extent of the damage, it may affect business performance and financial position. There is no description of specific countermeasures such as a business continuity plan (BCP).

If changes in the international situation cause a surge in energy and raw material prices or disruptions in logistics, this may result in increased energy costs, higher procurement costs, and procurement delays, potentially affecting business performance. As countermeasures, the Group is promoting fixed cost reductions, planned inventory stockpiling, and risk diversification through diversification of procurement sources and methods.

The Group pays attention to consideration for the working environment, response to revisions and tightening of laws and regulations, and thorough safety management; however, if an occupational accident or unforeseen incident occurs, it may affect corporate value and business performance. Increased costs to respond to revisions and tightening of laws and regulations are also recognized as a potential risk.