Powdertech Co., Ltd.

Natural disasters such as earthquakes, typhoons, and torrential rains, as well as infectious disease pandemics, could cause employee casualties, damage to production facilities, logistics disruptions, and impacts across the entire supply chain, potentially having a material impact on business performance through production stoppages and shipment delays. As countermeasures, the Company has formulated a BCP and is advancing early recovery of production sites, securing alternative production systems, and diversifying procurement sources for key raw materials, while conducting regular training and reviews.

If customer or business partner information, trade secrets, or technical information is leaked, altered, or lost due to cyberattacks, unauthorized access, or internal misconduct, it could result in a decline in social credibility as well as liability and litigation risks. As international circumstances change and ICT technology advances, cyberattacks are becoming more sophisticated and elaborate. Although the Company has implemented measures such as strengthened access controls, employee training, and confidentiality agreements, there is no guarantee that all risks can be avoided.

For raw materials and auxiliary materials procured domestically and internationally, if supply shortages, price surges, or transport delays occur due to fluctuations in the economic environment, significant changes in political and economic conditions, or large-scale natural disasters, this could lead to production stagnation and cost increases, potentially having a material impact on profitability and business performance. Since dependence on specific raw materials or specific regions increases the potential impact, the Company seeks to reduce risk through securing multiple procurement sources, maintaining appropriate inventory levels, conducting supplier selection audits, and shifting to in-house production.

If operations are suspended due to equipment failure or aging, this could result in lost sales opportunities and liability for damages within the supply chain, potentially having a material impact on business performance. In addition to preventive maintenance, the Company has established an emergency response system, an Incident Management Plan (IMP), and a Business Continuity Plan (BCP) for supply continuity and production resumption, and seeks to reduce risk through securing spare parts, regular maintenance, and staff training.

If quality issues occur with products such as carriers, which hold a high global market share, or food-related Oxygen Absorbers, the impact on customers and society would be significant, potentially having a material impact on business performance, including reputational decline. Under a quality control system based on ISO9001 introduced in 1995, when problems occur, the Company pursues root causes and implements measures to prevent recurrence.

As chemical substance regulations are tightened around the world, if the use of the diverse range of chemical substances handled by the Group is banned or restricted, this could disrupt product supply and have a material impact on business performance. A specialized department regularly monitors the enactment and revision of laws and regulations both domestically and internationally, and the Company has established a system to respond promptly to regulatory changes related to relevant chemical substances.

In the carrier business, demand may gradually decline due to reduced printing opportunities resulting from the spread of telework and paperless initiatives, as well as industry consolidation among office equipment manufacturers. In the New Functional Materials business, demand may fluctuate significantly due to conditions in the semiconductor industry, technological innovation, and geopolitical factors, and may be affected by price competition. The Company is responding by developing next-generation carriers, promoting cost reduction measures, and tracking demand trends in the semiconductor industry while deepening and expanding its core technologies.

Demand for Oxygen Absorber-related products fluctuates due to seasonal factors and trends in inbound tourism, and significant fluctuations in sales volume could have a material impact on business performance and financial condition. The Company strives to grasp demand trends in a timely manner and achieve optimal production, while increasing the proportion of high-value-added products with relatively less demand volatility, aiming to maintain stable production and profitability.

Tightening greenhouse gas emission regulations and rising emissions credit prices could increase costs and expand the burden of capital investment, and in the event of environmental pollution caused by leakage of hazardous substances or deviations from emission standards, business suspension, remediation costs, and loss of credibility could have a material impact on business performance. The Company addresses these risks through environmental management based on ISO14001, conversion to energy-efficient equipment and introduction of renewable energy, wastewater management through automatic monitoring, and appropriate management of hazardous chemical substances including PRTR-designated substances.

If the effectiveness of governance declines due to difficulty responding to rapid changes in the business environment or deficiencies in internal controls and decision-making processes, compliance risks such as legal violations or improper business execution could materialize, potentially having a material impact on business operations and performance through administrative sanctions, liability for damages, and loss of social credibility. The Company strives to prevent risks and detect them early through evaluation of the Board of Directors' effectiveness, utilization of outside directors, and strengthening the development and operation of internal control and compliance systems.