MAMIYA-OP CO.,LTD.

Consolidated operating income is highly dependent on the Electronic Equipment Business segment, and if orders for gaming machine peripheral equipment in the core gaming machine-related business slow down, it could significantly affect the Group's business performance. As countermeasures, the Group is promoting the expansion of transactions with OEM customers, the expansion of sales of proprietary brand products such as compact automatic ticket vending machines and the I-GINS Autonomous Navigation System, the expansion of revenue in the Sports Business and Real Estate Business, and the development of new business areas.

Gaming venues are subject to regulations such as the "Act on Control and Improvement of Amusement Business, etc.," and the use of card units between machines and other products supplied by the Company on an OEM basis requires obtaining a usage permit or submitting a usage notification. If these laws and regulations are amended, it could have a negative impact on the sale and installation of such card units and other products, potentially affecting business performance. The Group addresses this through the use of external experts and strengthened support from specialized departments.

In Bangladesh, a production base for the Sports Business, social conditions are unstable, including the establishment of an interim government in August 2024, creating a risk of production disruption or shipment suspension leading to delivery delays. The Group addresses this by strengthening local communication channels, enhancing security measures at factory facilities, and utilizing crisis management contractors.

There is a global tightening of supply and demand for raw materials, particularly semiconductors, as well as extended logistics lead times and rising logistics costs, mainly related to shipping. If these effects continue over the long term, they could adversely affect the Group's business, financial position, and operating results. As a countermeasure, the Group is diversifying and decentralizing procurement sources and considering alternative materials.

With the aim of establishing new business areas following the Electronic Equipment Business and Sports Business, the Group engages in investment activities through various means, including investments in existing operating companies. However, if the businesses targeted for new investment do not progress as planned, the Group may be unable to recover its investments, potentially affecting business performance and financial condition. The Group addresses this by verifying investment profitability, such as internal rates of return, and thoroughly identifying and managing risks.

The Company and some domestic subsidiaries make purchases denominated in foreign currencies, and sudden exchange rate fluctuations could generate foreign exchange gains or losses, affecting business performance and financial condition. The Group mitigates exchange rate fluctuation risk through the use of forward exchange contracts.

Sales to Nippon Game Card Co., Ltd., the major customer of the Electronic Equipment Business segment, account for 49.2% of consolidated net sales, and changes in that company's business performance or transaction policies could directly affect the Group's business performance. Countermeasures include developing new business partners, renewing the business model, expanding sales of proprietary brand products, and maintaining and expanding market share through ICT solutions.

Each business segment continuously develops new products using new technologies, but if unexpected troubles delay the development schedule and market launch, it could affect business performance. The Group addresses this by establishing product development processes, managing progress, and thoroughly sharing information.

Concerns over rising crude oil prices due to Russia's invasion of Ukraine and political instability in the Middle East persist, and intensification or prolongation of military conflicts could lead to sustained high raw material prices, heightened geopolitical risk, and accelerating global inflation, all of which could affect business performance. The Group addresses this by diversifying and decentralizing procurement sources and considering alternative materials.

The syndicated term loan agreement and commitment line agreement include financial covenants related to the maintenance of net assets and profit levels, and a breach of these covenants could result in the loss of the benefit of time for the loans and a demand for lump-sum repayment. The Group aims to stabilize its financial structure by diversifying funding methods, including bond issuance, and by expanding stable business profits.