YUASA FUNASHOKU CO., LTD

The Group conducts credit sales transactions with numerous business partners, and unforeseen events such as the bankruptcy of a business partner may cause problems in the collection of receivables. The Group strives to avoid credit risk through the collection of credit information and periodic review of credit limits, but it may be difficult to respond to a sudden deterioration in a business partner's financial condition.

Purchase prices for rice and livestock products can fluctuate significantly over relatively short periods, and price fluctuations associated with rice crop conditions and distribution circumstances, as well as import restriction measures on meat, may affect business performance. In the Group's core Food Wholesale (including processed foods, alcoholic beverages, chilled products, and sugar) business, there is a risk that rising procurement costs could squeeze profitability.

Most of the investment securities held by the Group are listed stocks, and a decline in stock market conditions may result in valuation losses, affecting business performance and financial condition. Depending on market trends, unrealized losses on held shares could materialize, posing a risk of impact on the income statement.

Interest-bearing debt includes borrowings at variable interest rates, and in a future rising interest rate environment, increased interest payments may adversely affect business performance. In particular, if interest rates rise sharply due to a shift in monetary policy or other factors, there is a risk of increased financial costs.

Employee retirement benefit obligations are calculated based on actuarial assumptions such as the discount rate, and changes in economic conditions or deterioration in the investment environment for pension assets may increase the cost burden. If the discount rate declines or investment returns deteriorate, there is a risk of increased retirement benefit expenses or expansion of unrecognized obligations.

In the food industry, safety issues such as foreign object contamination and labeling violations have attracted significant public attention, and in the meat industry there are concerns about the spread of avian influenza and porcine epidemic diarrhea. Should these problems occur, disruptions to production and distribution could significantly affect the Group's procurement and sales activities.

The Group operates rice milling plants and restaurants within the Hotel Business Segment, and the occurrence of food poisoning or foreign object contamination issues could significantly affect business performance and corporate credibility. Although strict hygiene management, quality control, and manufacturing process control are implemented, it is difficult to completely eliminate risk even with thorough countermeasures in place.

Deferred tax assets depend on estimates of future taxable income, and if the assumptions and premises underlying profit plans change, deferred tax assets may be reduced and additional tax expenses may be recorded. If the outlook for future taxable income deteriorates due to a decline in business performance or other factors, there is a risk of an adverse impact on financial condition.

If the financial condition of a business partner deteriorates and its ability to pay declines, an additional provision for allowance for doubtful accounts or bad debt losses may occur, affecting business performance. Provisions are made based on historical default rates for general receivables and on individual assessment of recoverability for specific receivables, but there is a risk that the Group may be slow to respond to sudden changes in the economic environment.