SAN-AI OBBLI CO.,LTD.

During a global infectious disease outbreak, restrictions on cross-border travel could reduce fuel handling volumes in the Aviation-Related Business, and the spread of infection among employees could disrupt manufacturing, logistics, safety, and sales activities. While the petroleum and gas-related businesses are expected to see resilient demand as daily necessities, there is also a risk of declining fuel oil demand due to stagnation in logistics and production activities. As a countermeasure, the Group strives to maintain business continuity by reviewing BCPs at each business site and thoroughly implementing infection prevention measures.

The Group owns numerous facilities handling hazardous materials, including aircraft refueling facilities at Haneda Airport, petroleum product shipping terminals such as the Tokyo Oil Terminal, the Saga Natural Gas Pipeline, and service stations and LP gas filling stations nationwide. If natural disasters such as earthquakes, torrential rain, or rising temperatures, or accidents, cause fuel supply disruptions, soil contamination, or LP gas cylinder leaks, restoring operations could require significant time and cost. As countermeasures, the Group is reviewing BCPs, reinforcing oil depot facilities, and maintaining fire and earthquake insurance coverage, among other measures.

Against the backdrop of a global shift toward carbon neutrality, the spread of EVs and all-electric homes is progressing, and the petroleum and LP gas markets are expected to contract over the medium to long term. Competition is intensifying not only among industry peers but also with companies in other industries such as electric power, raising concerns about the impact on operating results and financial condition. As a countermeasure, under the medium-term management plan for FY2024–FY2026 (ending March 2026), the Group aims to evolve its business portfolio to align with a low-carbon, circular society and is promoting investment in growth businesses, including through M&A.

The Group's main petroleum products are heavily dependent on imports from the Middle East region, and fluctuations in crude oil prices and exchange rates directly affect procurement costs. In February 2026, reports of attacks on Iran by Israel and the United States and the closure of the Strait of Hormuz caused global concerns over crude oil supply, and if such conditions persist, they could significantly affect the Group's overall performance through broad-based stagnation of the domestic economy. As countermeasures, the Group is working to secure liquidity on hand, build multiple supply chains, and advance business portfolio transformation.

The Group holds tangible fixed assets such as aircraft refueling facilities, petroleum product shipping terminals, service stations, and filling stations, as well as intangible fixed assets acquired through M&A. If asset value or profitability declines due to the materialization of business risks, impairment losses on fixed assets may become necessary, which could affect operating results and financial condition. As countermeasures, the Group thoroughly examines recoverability before making investments and regularly verifies discrepancies against investment plans, implementing improvement measures as needed.

The Group holds core systems such as the Haneda Airport refueling system as well as confidential business and customer information, and if a system outage or information leak occurs due to a cyberattack, computer virus, or unauthorized access, business continuity could be severely disrupted. The risk of information leaks has also newly emerged with the expanding use of generative AI in business operations. As countermeasures, the Group has established a basic information security policy, obtained cyber insurance, and formulated and disseminated rules governing the use of generative AI.

The Group manufactures and sells chemical products such as Antiseptic and Antifungal Agents, Petroleum-Based Solvents, and automotive chemical products. If an unforeseen product accident occurs that results in a recall or product liability claim, the resulting damages and loss of business trust could affect operating results and financial condition. As a countermeasure, the Quality Assurance Committee conducts prior review of all manufactured products to prevent claims arising from product defects.

If the price of securities held declines significantly due to economic conditions or stock market fluctuations, valuation losses may occur, which could affect operating results and financial condition. As a countermeasure, the Group regularly reviews the benefits of holding such securities from both qualitative and economic rationality perspectives.

The Group is subject to numerous laws and regulations, including the Fire Service Act, the Product Liability Act, the Liquefied Petroleum Gas Safety Act, the Gas Business Act, the Act on the Prevention of Disasters in Petroleum Industrial Complexes, and environmental laws. There are concerns about administrative sanctions in the event of violations, as well as business constraints and increased compliance costs resulting from significant future regulatory changes. As countermeasures, relevant departments gather and respond to information on legal amendments, the Code of Ethical Conduct is thoroughly disseminated, and a whistleblowing consultation desk has been established to enable early detection and correction of legal violations.

The Group holds personal information related to vehicle inspections handled at service stations as well as consumer data for LP gas and city gas. If personal information is leaked due to inadequate information security or employee misconduct, the resulting damages and loss of social trust could affect operating results and financial condition. As countermeasures, the Group provides employee training such as e-learning, conducts internal audits on the handling of personal information, and updates management records to ensure thorough and appropriate management.