KYORITSU CO., LTD.

The Information & Digital Business, Print Media Business, BPO Business, and Environmental Business are capital-intensive industries, and the balance of tangible fixed assets as of the end of March 2026 stood at a high level of ¥166,230 million (40.5% of total assets). If revenue declines sharply and the operating rate falls, the burden of fixed costs such as labor costs, depreciation, and lease payments will increase, adversely affecting business performance. The high fixed-cost structure amplifies the downside risk to earnings.

Due to price competition among companies in the printing industry and price reduction demands from customers, order prices in the Print Media Business have continued a gradual downward trend. If competition intensifies further and order prices decline further, this could affect business performance. The Group's policy is to respond through cost reductions and productivity improvements via capital investment.

As of the end of March 2026, the balance of interest-bearing debt stood at ¥133,490 million, with the ratio of interest-bearing debt to consolidated total assets at a high level of 32.5%. If revenue declines sharply and the operating rate falls, funds available for repayment may decrease, potentially preventing repayment as planned. While the Group aims to improve its financial condition, the risk to its financial position remains.

Although the majority of borrowings are procured at fixed interest rates, a portion of working capital and other funds are procured at variable interest rates, creating a risk that procurement costs could increase more than expected in a rising interest rate environment. Future fluctuations in the interest rate environment could affect business performance. The Group strives to gather information on the interest rate environment and aims to achieve stable, medium- to long-term fund procurement.

The combined revenue from the top five customers, including MonotaRO Co., Ltd., K's Holdings Corporation, and Belluna Co., Ltd., accounts for 25.1% of consolidated revenue, indicating a high degree of dependence on specific customers. If these customers experience deteriorating business performance or change their transaction policies, this could have a material impact on the Group's business performance. The Group strives to maintain these relationships by continuing to make proposals on speed, quality, and cost under a customer-first policy.

With the advancement of digitalization in the Information & Digital Business, Print Media Business, and BPO Business, the importance of information systems is increasing. If information leakage or misuse occurs due to employees or outsourcing companies, this could damage corporate trust, lead to loss of customers, and result in liability for damages, thereby affecting business performance. The Group maintains Privacy Mark certification (obtained in 2008) and ISO27001 certification (obtained in 2013), and works to properly manage personal information through the development of various regulations, employee training, and audits.

The Group's production facilities are concentrated in Honjo City, Saitama Prefecture, and its adjacent areas. If production activities were to be halted due to a large-scale earthquake or other disaster in this region, it could have a significant impact on business performance. Additionally, if a pandemic or large-scale natural disaster of a scale exceeding expectations occurs and makes business operations difficult, it could significantly affect the Group's financial position and business results. Disclosure of measures to diversify against this geographic concentration risk is limited.