ONOKEN CO.,LTD.

In the export and import operations of steel products, primarily in Asia, losses may arise from a global economic downturn, intensified competition, or policy changes, tightened regulations, or political instability in specific countries or regions. As a countermeasure, the company continuously investigates country risk in exporting and importing countries and enters into contracts only after ascertaining the circumstances of the counterparty country and counterparty for each transaction.

In transactions denominated in foreign currencies, exchange rate fluctuations may affect operating results and financial condition. As a general rule, hedging measures such as forward exchange contracts are employed; however, there is no guarantee that such risk can be completely avoided, and depending on future exchange rate movements, an impact on business performance may occur.

Since the company sells steel products from inventory, failure to appropriately respond to fluctuations in the steel market may have a material impact on operating results and financial condition. As a countermeasure, the company continuously gathers information from suppliers and the media and has established a system to detect market fluctuations at an early stage through information sharing via internal meetings and other means.

Since business funds are primarily procured through borrowings from financial institutions, in a future phase of rising interest rates, funding costs may increase, potentially affecting operating results and financial condition. As a countermeasure, the company continuously seeks to improve fund efficiency and examines and implements the best financing methods in response to changing circumstances.

The company holds trade receivables from approximately 8,000 customers, and if a default occurs due to the bankruptcy of a specific customer or similar events, this may affect operating results and financial condition. The company sets credit limits for all customers and reviews them periodically, and works to reduce bad debt risk through credit research agency investigations and the use of bankruptcy insurance, among other measures.

Retirement benefit expenses and obligations are calculated based on actuarial assumptions such as the discount rate and long-term expected rate of return on plan assets; a decline in the discount rate or deterioration in investment returns may affect future expenses and obligations. As an investment policy, the company adheres strictly to a risk-reducing investment approach and receives periodic investment reports from Dai-ichi Life Insurance Company and Nippon Life Insurance Company.

If fraudulent or unlawful acts are committed by officers or employees, this may affect operating results and financial condition. The company conducts regular audits through cooperation between the Internal Audit Office and directors serving as Audit and Supervisory Committee members, and periodically conducts awareness activities for all employees using a compliance manual to ensure thorough understanding.

If natural disasters such as earthquakes or typhoons, or pandemics, occur, activities at business locations and among employees over a wide area may stagnate, potentially affecting operating results and financial condition. To minimize damage and enable swift recovery, the company has established a crisis management manual and implemented disaster prevention measures.

The company is subject to a wide range of laws and regulations, including those relating to trade, antitrust, patents, taxation, foreign exchange control, and construction business, and tightened regulations may restrict business activities, with increased compliance costs potentially affecting operating results and financial condition. In addition, the company holds a Specific Construction Business License from the Minister of Land, Infrastructure, Transport and Tourism under the Construction Business Act (License No.: MLIT Minister's License (Special-4) No. 8648) and is required to maintain the conditions for this license.

The company holds confidential information and personal information belonging to customers, business partners, and itself, and if a system failure or information leak occurs due to intentional acts, including cyberattacks, or negligence, this could lead to stagnation of business activities and a decline in social credibility, potentially affecting financial condition and operating results. While specific countermeasures are not detailed in the annual securities report, the company is working to establish an information security management system.