TOSO CO.,LTD.

Sales in the Interior Decoration Business are affected by fluctuations in private housing investment and public works investment. In a downturn in the construction industry, sales may decline significantly. The Group seeks to mitigate this impact by providing high value-added products and expanding its business scope.

The Group uses materials such as steel sheets, aluminum, and natural wood that are subject to market price fluctuations, and purchase prices may also vary due to strengthened resource and environmental protection policies. Rising material procurement costs could push up product costs and directly affect business performance. No specific countermeasures are disclosed in the securities report.

As the Group handles imported products and materials from overseas, procurement costs rise when the yen depreciates. Although risk is hedged through forward exchange contracts, it is not possible to eliminate all effects, and residual risk may affect business performance.

The Group operates businesses in the Republic of Indonesia and the People's Republic of China, and significant changes in the political and economic conditions or legal systems of these countries could materially affect the continuity of local operations and profitability. Geopolitical risk and regulatory changes are cited as the main concerns.

With production sites located both domestically and overseas, there is a risk that buildings and production facilities could be damaged by sudden events such as large-scale earthquakes, natural disasters caused by climate change, or fires, resulting in temporary suspension of operations and substantial restoration costs. This could affect both business performance and financial condition.

If the outbreak or spread of infectious diseases disrupts sales activities or the production and logistics systems, this could affect the Group's business performance. In addition, prolonged economic deterioration and sluggish personal consumption due to the spread of infection in Japan could also spill over into the Group's financial condition.

Welfare products such as canes are classified under Others, and this business is exposed to the risk of demand fluctuations due to changes in consumer preferences. Unlike the Interior Decoration Business, it has low correlation with construction investment, but it is a business area sensitive to changes in lifestyle and the needs of the elderly.