CHORI CO.,LTD.

The Group positions China as an important business region, both as a consumption market and manufacturing base, with FY2025 sales reaching approximately ¥47,500 million. If the business environment deteriorates due to fluctuations in the Chinese yuan, changes in the financial system, tax system, or legal system, deterioration in Japan-China relations, or developments in the US-China trade friction, this could have a material impact on business results and financial condition. As countermeasures, the Group has established a China General Representative position, is building an information-gathering framework in collaboration with external experts, and is constructing a global alternative supply chain to diversify risk.

The Group operates globally and conducts transactions in various currencies, and therefore bears the risk that purchasing costs, manufacturing costs, and selling expenses will fluctuate due to unforeseen exchange rate movements. In addition, interest rate increases resulting from changes in domestic and overseas monetary policy could lead to increased interest burden and difficulty in raising funds. The Group mitigates the impact of fluctuations by entering into forward foreign exchange contracts and manages fund efficiency across the Group using a cash management system.

The Group handles a diverse range of products including textile materials, chemicals, and transportation equipment, and therefore bears the risk that purchasing costs will fluctuate due to raw material price changes caused by supply-demand imbalances, trade policy, wars, and other factors. Since each product forms its own distinct market conditions, the impact could be extensive if multiple market fluctuations occur simultaneously. As a countermeasure, the Group seeks to avoid risk by passing on raw material price fluctuations to selling prices in a timely and appropriate manner.

In handling a wide variety of products including textile materials, Apparel Products, and chemicals, the Group may be forced to recognize valuation losses if selling prices decline or inventory turnover periods lengthen due to deteriorating market conditions. To optimize inventory levels, the Group implements demand forecasting based on historical trends, purchasing management based on orders from business partners, and securing customer pickup guarantees.

As of the end of March 2026, the Group held shares and equity investments with a book value of ¥12,000 million, and may be forced to recognize valuation losses due to declines in the market value of listed shares or deterioration in the financial condition of unlisted investee companies. The Board of Directors regularly reviews the significance and effectiveness of holding these securities, and considers selling those deemed to lack holding significance in order to reduce holdings.

The Group extends credit to domestic and overseas customers through diverse commercial transactions and investments and loans, and there is a risk that delays or defaults in receivables collection, or the need to revise investment and loan plans, may arise due to deteriorating business performance of business partners or significant delays in the business plans of investee companies. The Group works to minimize risk by setting credit limits by business partner in accordance with credit management regulations, obtaining collateral and guarantees, and utilizing trade credit insurance, while also fully evaluating synergies with existing businesses and investment profitability before making new investments.

With numerous overseas bases and business partners, the Group bears the risk that receivables collection may be delayed or become uncollectible due to changes in the political, economic, and social conditions of various countries, foreign exchange regulations, regional conflicts, and other factors. The Group takes measures such as monitoring conditions in collaboration with experts in each country, utilizing trade insurance, repatriating funds to Japan through dividends from overseas subsidiaries, and managing receivables balances for specific countries through country risk limits.

As the Group conducts business globally using information systems, unauthorized access, cyberattacks, and other external threats could lead to leakage of confidential information or business disruption, potentially affecting business results and financial condition. Based on the "Chori Group Information Security Basic Policy," the Group has established related regulations and conducts training and attack testing for officers and employees, working to maintain the integrity of information systems and thorough information management.

As a specialized trading company that positions "people" as its most important management capital, the Group may experience reduced business momentum, affecting its business results, if it becomes difficult to secure excellent talent amid a tightening labor market and declining birthrate/aging population. The Group is strengthening its human capital by actively pursuing new graduate and career hiring (in FY2025, the number of career hires secured was comparable to that of new graduate hires), promoting diversity, equity & inclusion, and conducting engagement surveys through external organizations.

If war, civil unrest, terrorism, or disruption to logistics and supply chains occurs in countries or neighboring regions where the Group's overseas bases and business partners are located, this could seriously impede sales activities and investment/lending activities, affecting business results and financial condition. The Group is establishing a framework for monitoring conditions in collaboration with experts in each country, thoroughly improving the business environment and sharing information through consolidated business-axis management, and diversifying risk by building a global alternative supply chain.