H-ONE CO.,LTD.

Sales to the Honda Group accounted for approximately 90% of consolidated revenue for the current fiscal year, and if order volumes from the Group were to decline, this could have a material impact on the Company's financial position and results of operations through a significant decrease in revenue. In addition, Honda Motor Co., Ltd. is another affiliated company holding 20% or more of the Company's issued shares, meaning a dependency relationship also exists in terms of capital. As countermeasures, the Company is working to secure orders from the Honda Group while also focusing on expanding transactions with other automobile manufacturers.

The automobile industry is in a period of transformation marked by progress in electrification and the expansion of CASE and MaaS. If products using new materials or new manufacturing technologies gain acceptance in the market and among customers, this could affect the Company's financial position and results of operations through a decline in the share of existing products and manufacturing methods. Under the medium-term management plan "Change 2027," the Company has set forth "shifting resources toward technology and development" as a key initiative, actively allocating management resources to research and development of high-performance Automobile Frames and related manufacturing technologies. The Company is also working on the development of new technologies and products aimed at creating new value over the medium to long term.

If a significant defect exists in a product and the Company is held liable for a serious accident, claim, recall, or similar matter, this could affect the Company's financial position and results of operations through the incurrence of substantial countermeasure costs or a decline in orders resulting from reputational damage. The Company has established a quality assurance system based on international quality management standards and is continuously working to improve quality. To prepare for unforeseen circumstances, part of this risk is covered by product liability insurance.

If the Company fails to appropriately respond to environmental regulations being strengthened by various countries or to requests from stakeholders for contributions to decarbonization, this could affect the Company's financial position and results of operations through lost business opportunities resulting from a decline in social evaluation. With the goal of "achieving carbon neutrality by FY2050 (ending March 2051)," the Company is working to reduce Scope 1+2 greenhouse gas emissions through the implementation of energy-saving measures and a switch to electricity derived from renewable energy sources. For Scope 1 through 3, since purchased steel sheet accounts for the majority of emissions, the Company is advancing technology development such as considering a switch to steel sheet with a lower environmental impact and utilizing recycled aluminum processing technology.

If the carrying amount of property, plant and equipment and intangible assets used in business operations becomes unrecoverable due to changes in the business environment or other factors, the Company's financial position and results of operations may be affected through the recognition of impairment losses. Under the key initiative "improving profitability of existing businesses" in the medium-term management plan "Change 2027," the Company strives to improve the business performance of each company, including consolidated subsidiaries and equity-method affiliates, while working to identify risks at an early stage through monthly monitoring of business plans.

Liabilities for retirement benefits fluctuate depending on trends in retirement benefit obligations and pension assets, and if there are changes in actuarial assumptions or a decrease in pension assets due to a deterioration in the investment environment or other factors, this could affect the Company's financial position and results of operations. Details regarding the impact of actuarial assumptions are disclosed in the notes to the consolidated financial statements (Employee Benefits).

Deferred tax assets are recognized based on an assessment of recoverability using forecasts of future taxable income and other factors. If it is determined that recovery is not possible due to a deterioration in business conditions, or if there are changes in the tax system including tax rate changes, deferred tax assets may be reduced, affecting the Company's financial position and results of operations. Under the "improving profitability of existing businesses" initiative in the medium-term management plan "Change 2027," the Company strives to improve the business performance of each company and to identify risks at an early stage through monthly monitoring.