WISE HOLDINGS CO., LTD.

Our group, which operates businesses in Japan and Asia, faces risks from the impact of infectious disease outbreaks and global economic fluctuations. In the automotive industry, a major client base, domestic demand may shrink due to overseas production shifts and strengthened global procurement. As countermeasures, we are implementing various cost reduction measures and working to detect performance fluctuations early and respond swiftly.

For our group, which operates manufacturing and processing businesses, the procurement of raw materials and supplies is essential, and price increases may adversely affect operating results and financial condition. In addition to improving production efficiency and the efficient use of raw materials, we are promoting measures such as strengthening collaboration with suppliers to shorten production lead times and improving the accuracy of order forecasts.

Most of our group's products and services are exposed to competition from other companies, creating a risk that selling prices may decline due to continued price competition. To avoid deteriorating profitability from price declines, we are implementing measures such as improving productivity, reducing costs, and withdrawing from unprofitable products.

If defects or other issues arise in our products or services, this may adversely affect operating results and financial condition through damage compensation or loss of credibility. We work to improve quality by establishing our own quality standards, thoroughly comply with relevant laws and regulations, and reduce risk by taking out liability insurance to prepare for serious troubles.

Our group has consolidated subsidiaries overseas, and is affected by exchange rate fluctuations when converting foreign currency-denominated financial statements into yen. If exchange rates fluctuate significantly, this may adversely affect operating results and financial condition on the consolidated financial statements.

If tangible and intangible fixed assets, including goodwill acquired through corporate acquisitions and business facilities and real estate, fail to generate the expected cash flows, impairment processing may become necessary, which could have a material adverse effect on operating results and financial condition. We continuously monitor asset profitability and manage the outlook for investment recovery.

Unforeseen legal violations or costs incurred for legal compliance may adversely affect operating results and financial condition. We gather necessary information through membership in various industry associations, and have established an internal control committee within the group to strengthen risk management activities and promote employee education and system development.

If abnormal events such as pandemics or large-scale natural disasters occur at a scale exceeding expectations, operations at multiple business sites may become difficult, adversely affecting operating results and financial condition. We are promoting BCP formulation, and working to accelerate and streamline business recovery through site-specific responses, changes to working arrangements such as telework, establishment of codes of conduct, and activation of response manuals.

With numerous group companies both in Japan and overseas, if a group company commits a legal violation or incurs a massive loss, this could result in loss of social credibility and have a material impact on business performance. We strengthen group-wide governance by supervising the execution of duties by group company directors based on the "Affiliated Company Management Regulations" and through a system of receiving regular reports on each management item.

If it becomes difficult to secure talented personnel and personnel with excellent management capabilities for business expansion, new product development, and quality improvement, or if labor costs increase significantly to secure such personnel, this could lead to a decline in new product development capability and quality, affecting business performance. We work to retain personnel through continued new graduate and mid-career hiring, building various educational programs, and improving the working environment through work-style reforms.