MATSUDA SANGYO Co.,Ltd.

In the Precious Metals Business, market prices for gold, silver, platinum, palladium, etc., and in the Food-Related Business, commodity market conditions for Marine Products, Livestock Products, Agricultural Products, etc., as well as exchange rate fluctuations, directly affect purchase and selling prices. The Group seeks to avoid market risk through commodity forward transactions and forward exchange contracts, but full hedging is difficult, and price declines during manufacturing and inventory holding periods may result in losses such as inventory valuation losses, which could affect business performance.

The Food-Related Business imports Marine Products such as surimi, shrimp, squid, and crab, Agricultural Products such as vegetables and frozen vegetables, and Livestock Products such as chicken, pork, beef, and eggs, and sells them to food manufacturers and others. If a problem related to food safety occurs, there is a risk that import bans or other measures could be imposed. The Group is working to strengthen quality control guidance for overseas production areas and measures against foreign object contamination, but if a problem occurs, it could have a material impact on business performance.

Against the backdrop of growing social interest in environmental issues, environmental laws and regulations are tending to become stricter, and when regulations related to the Precious Metals Business are tightened, additional capital investment burdens may arise. In addition, the Group conducts Industrial Waste Collection, Transport & Treatment business based on the "Act on Waste Management and Public Cleansing," and compliance with various laws and regulations is a fundamental premise for business continuity. The Group has established the "Matsuda Sangyo Group Global Code of Conduct" and "Compliance Regulations" to address this, but the cost of dealing with tightened regulations could affect business performance.

Toxic and deleterious substances are used in the manufacturing process, and the Group implements environmentally appropriate treatment of waste liquids and atmospheric emissions. However, if problems arise in management due to a plant accident or similar event, it could affect business performance through environmental contamination or legal sanctions.

Both the Precious Metals Business and the Food-Related Business conduct business activities in various countries and regions overseas, and if unexpected events arise due to changes in the political, economic, or social environment in these countries or regions, it could affect business performance and financial condition. No specific countermeasures are described, and continuous monitoring is required against the backdrop of heightened geopolitical risk.

If natural disasters such as earthquakes and floods, or abnormal weather due to climate change, occur in the countries or regions where business activities are conducted, this could affect the production or procurement of products handled in the Food-Related Business, thereby affecting business performance and financial condition. The Group is advancing the introduction of a safety confirmation system, the implementation of disaster prevention drills, business continuity measures, and the development of supply systems, but complete avoidance of damage is difficult, and there is a risk of procurement delays or the stagnation or suspension of business activities.

Much of the Group's business activities depend on computer systems and communication networks, and system failures, malfunctions, or the shutdown of data center functions could disrupt business activities. Furthermore, if customer information or other personal information is leaked due to unforeseen events including cyberattacks, this could result in a loss of social trust and substantial costs, potentially affecting business performance and financial condition.

While the Group takes measures such as securing multiple supply sources to ensure a stable supply of products, some materials depend on procurement from a limited number of suppliers. If supply is disrupted due to geopolitical risk or other factors, or if alternative procurement becomes difficult, this could result in production delays, increased costs, and delivery delays, potentially worsening profitability.

The Group acquires intellectual property such as patents to protect its own technology, but there is a risk of being sued for unintentional infringement of third parties' intellectual property rights. In addition, if the Group's own patents fail to provide sufficient protection against competitors' technologies, or if an injunction is ordered against the sale of its products or services, this could affect business performance and financial condition.