PLATZ Co.,,Ltd.

Major business partners such as rental wholesalers, welfare equipment leasing operators, and elderly care facilities primarily engage in public services under the regulation of the Long-Term Care Insurance Act and related laws, and the system reforms conducted every five years and the long-term care fee revisions conducted every three years directly affect the earnings of these business partners. Depending on the content of system reforms, the purchasing power of business partners may decline, potentially impacting the Group's business performance and financial position. No specific individual response measures to system changes by the Group are disclosed in the securities report.

The Group procures parts and products primarily from overseas and has a production base in Vietnam, and is therefore exposed to fluctuation risks in the US dollar, Vietnamese dong, and euro. In periods of yen depreciation, yen-denominated cost of sales tends to increase, leading to a decline in gross profit margin; in the 31st fiscal period (July 2022 to June 2023), the gross profit margin declined to 28.5%. As hedging measures, the Group conducts forward exchange contracts, currency swaps, and currency option transactions; however, for transactions not subject to hedge accounting, mark-to-market valuation at fiscal period-end may cause significant fluctuations in ordinary income and net income for each quarter.

Products are manufactured based on quality standards such as JIS at the equity-method affiliate SHENGBANG METAL CO.,LTD., overseas suppliers, and consolidated subsidiary Yamato Sangyo Co., Ltd., but there is no guarantee that product defects can be completely eliminated. If a large-scale recall occurs, in addition to substantial cost burdens, it could damage the brand and reduce credibility, potentially leading to litigation with third parties. The Group maintains product liability insurance, but there is a possibility that the amount of damages could exceed the insurance coverage.

The Group develops and designs major components for medical and nursing-care electric beds in-house and outsources manufacturing to specific overseas suppliers, resulting in a high current degree of dependence on these suppliers. If any circumstance disrupts the transaction and makes procurement of major components difficult, although switching to alternative suppliers is considered possible, this may impact business performance and financial position. Maintaining continuous and favorable business relationships is cited as a response measure.

Production bases and suppliers are concentrated in Vietnam and East Asia, centered on SHENGBANG METAL CO.,LTD., creating country risk from political and economic instability in each country or deterioration of relations with neighboring countries. If difficulties arise in procuring major components or if procurement costs rise due to inflation, this may impact business performance and financial position. No specific diversification measures are disclosed in the securities report.

Against the backdrop of an expanding long-term care market driven by the growing elderly population, new entrants from other industries and business expansion by competitors are expected to accelerate. If price competition or other factors intensify beyond the Group's expectations, this may impact business performance and financial position. The Group states it will take all possible measures, but specific details of competitive response measures are not disclosed in the securities report.

In addition to steel, a major raw material for medical and nursing-care electric beds, the Group's flagship product, crude oil prices, which serve as the raw material for resin components and urethane foam, fluctuate due to global supply-demand balance and economic conditions in various regions. If these prices rise sharply and it becomes difficult to pass on the increase to sales prices, this may impact business performance and financial position through a decline in gross profit margin. No specific hedging measures are disclosed in the securities report.

The Group's daily operations are based on a sales management system, and if an unpredictable system failure occurs due to natural disasters, hardware failure, network malfunction, computer viruses, or other causes, this could disrupt business continuity and impact business performance and financial position. The Group recognizes that it has secured sufficient safety, but this does not guarantee the complete elimination of failures.

The Group holds customer information and confidential business and technical information in the course of its business activities, and risks such as unauthorized access, tampering, and leakage exist. Although an information management system has been established and reasonable technical measures have been implemented, if an incident such as information leakage were to occur, this may impact business performance and financial position.

The Group is promoting market development in the East Asia region, centered on China and South Korea, and may face unforeseen risks from changes in laws and regulations related to import/export controls, investment restrictions, repatriation of profits, and transfer pricing taxation. If regulatory changes occur due to political or economic factors in each country, this may impact business performance and financial position. At present, the Group is steadily building up sales results in China and South Korea, and plans to develop products suited to the needs of each country and to build distributor networks going forward.