YAMAE GROUP HOLDINGS CO.,LTD.

The Group, whose business is centered on the "Food" and "Housing" segments, is affected by demographic structural changes such as domestic economic trends, population decline, and the falling birthrate and aging population, as well as price surges in handled products and rising logistics costs due to overseas conditions and exchange rate movements. When these factors overlap, both sales and profit may be adversely affected. In particular, since the Kyushu and Okinawa area accounts for more than 50% of net sales, a deterioration in the economic environment of that region would have a significant impact on business performance.

More than 50% of the Group's net sales are concentrated in the Kyushu and Okinawa area, and if unforeseen events occur in market trends such as the economic environment, demographic structure, housing demand, or natural disasters in that area, the impact on business performance would be significant. The Group is currently working to expand its area of operations centered on the Kanto and Kansai regions, including overseas, but regional concentration risk will continue until the diversification effect becomes apparent.

Amid heightened awareness of food safety and security, if a problem involving food safety and quality assurance occurs, including accidental causes, it could damage the Group's credibility and adversely affect its business results. The Group operates bento and prepared food manufacturing plants and thus bears product liability risk, and is working to strengthen its systems through the development and employment of specialized personnel and on-site inspection to verify raw materials in person.

Sophisticated cyberattacks by nation-states or organizations, zero-day vulnerabilities, supply chain attacks, and combined attacks targeting critical infrastructure could cause prolonged system outages, data tampering, data leakage, or disruption of logistics. The Group has implemented backup lines and security measures based on its information security regulations and basic policy, but complete defense is difficult given the increasing sophistication of attack methods, raising concerns about the impact on business activities, credibility, and financial condition.

The Group is actively pursuing M&A, capital alliances, and business alliances in line with its medium-term management plan, but changes in the business environment and uncertainty may prevent the originally expected synergies from being realized. In addition, if it becomes necessary to recognize impairment losses on goodwill and other assets recorded at the time of organizational restructuring, this could have a material impact on business results and financial condition. The Group conducts due diligence and economic value assessments before proceeding, but such risks cannot be completely eliminated.

Supply and demand issues for marine products due to the decline in international marine resources and expanding fish consumption in Western and emerging countries, decreases in the supply of food raw materials including grains, and construction materials such as plywood with high dependence on overseas sources may experience unstable prices and supply due to exchange rate fluctuations and geopolitical risks. If a supplier becomes unable to supply due to unforeseen events, this would affect the Group's business continuity and business results.

Securing and developing personnel with specialized knowledge, communication skills, and management capabilities is an urgent priority for growth and expansion; however, if the Group is unable to secure personnel as planned due to changes in employment conditions, or if recruitment costs rise, this could have a significant impact on business results and financial condition. In addition, excessive workloads or inappropriate labor management could lead to a loss of credibility, and the Group is working to improve treatment, enhance internal training programs, and improve the working environment.

The Group has raised funds through interest-bearing debt to finance aggressive investments such as organizational restructuring and the construction of distribution centers, and if financial market turmoil, credit rating downgrades, or changes in financial institutions' lending policies occur, this could restrict fund procurement and increase procurement costs. At present, given its relationships with financial institutions, the Group sees no concerns regarding new financing, but future uncertainty cannot be ruled out.

The Group has recorded numerous tangible and intangible fixed assets, including goodwill arising from M&A, and if a gap between business plans and actual results, or a decline in fair value, prevents the generation of expected future cash flows, it may become necessary to recognize impairment losses. The occurrence of impairment losses carries the risk of significantly worsening business results on a temporary basis, and while the Group is working to improve profitability, this risk could materialize due to changes in the business environment.

The Group holds customer personal information obtained through its business activities as well as employee information including My Number data, and if this information were to leak externally, it could damage the Group's credibility and lead to claims for damages, thereby affecting business results and financial condition. The Group strives to strengthen its management system through the establishment of internal regulations and thorough employee training, but this risk continues to exist against the backdrop of increasingly sophisticated cyberattacks.