JRC Co.,Ltd.

The Group, which holds a domestic market scale of just under ¥8 billion in the Conveyor Parts market, is exposed to the risk of declining sales if foreign companies or others enter the Japanese market on a large scale. Although such entry is not currently anticipated, the impact on the business model, which relies on recurring business as its earnings foundation, would be significant. While the Group avoids dependence on specific customers or suppliers through diversification, structural responses are required to address intensifying competition across the overall market.

There is a risk that the Conveyor Parts market itself will contract due to the shrinking of domestic manufacturing or technological innovations that render existing Conveyor Parts unnecessary. The Group aims to expand the market through total support ranging from on-site inspection and proposals to design, installation, and construction work, but if market contraction materializes, it could have a material impact on the Group's business and performance.

Fluctuations in the prices of steel materials such as pipes and shafts, bearings, rubber, paint, and other key raw materials used in Conveyor Parts directly affect manufacturing costs. A rise in raw material prices could squeeze profitability and have a material impact on the Group's business and performance. There is no specific description of hedging measures against price fluctuation risk, indicating a high degree of dependence on market conditions.

If defects in products or services, or design or construction issues, in material handling equipment for waste treatment facilities, water treatment facilities, and biomass power generation facilities cause serious human or physical accidents, this could have a material impact on the Group's business and performance. Since the main customers are facilities for government agencies, there is also a risk of loss of social credibility and order cancellations in the event of an accident.

The Environmental Plant Business primarily involves the delivery of equipment and construction work for sanitation-related facilities of government agencies, and there is a risk that the business environment could deteriorate due to reviews or reductions of subsidy programs for local governments and private operators resulting from national policy changes, or due to reductions in private capital investment caused by an economic downturn. Given the business structure's high dependence on public investment, policy trends could directly affect performance.

The pace of technological innovation in the robot solutions field is remarkably fast, and the Group continuously works to research and acquire the latest technologies. However, if the Group fails to respond appropriately to environmental changes caused by technological innovation that exceeds expectations, this could lead to a loss of competitiveness and have a material impact on the Group's business and performance.

Expanding the Robot SI Business requires securing and developing highly skilled engineers, technical sales personnel, and project management talent. In a highly competitive labor market, failure to secure excellent talent could constrain the provision of high-value-added services and business expansion, and could have a material impact on performance.

If procurement delays occur for control devices and other components of robot systems due to disruptions in semiconductor supply and demand, this could directly lead to delays in the delivery of robot systems and have a material impact on the Group's business and performance. There is no specific description of measures to stabilize the supply chain, leaving a residual risk of dependence on the external environment.

The number of potential shares from stock acquisition rights issued as stock options for directors, executive officers, and employees stood at 1,193,760 shares as of April 30, 2025, equivalent to approximately 9.3% of the total number of issued shares. If these stock acquisition rights are exercised in the future, the value per share could be diluted, affecting the interests of existing shareholders.

The Group is actively pursuing M&A to expand its Conveyor Business, Environmental Plant Business, and Robot SI Business, as well as to enter new business areas. However, if a business does not progress as planned after acquisition, this could have a material impact on the Group's financial condition and performance. Although the Group states that it conducts multifaceted examinations at the time of acquisition, there is limited description of the specific management framework for post-acquisition integration risk (PMI).