ITOCHU ENEX CO.,LTD.

If changes in the business environment or stagnation in performance occur at domestic or overseas investees, the Company Group may suffer disadvantages such as failure to achieve expected returns, the need for additional capital contributions, difficulty in withdrawing investments, or delays in obtaining information due to governance deficiencies. The Company conducts deal screening and decision-making based on investment criteria, regular investment reviews by the responsible department, and monitoring to strengthen governance at investees.

Due to a declining domestic population resulting in fewer customers, energy conservation, and the increase in electric vehicles, sales volumes of petroleum products, LP gas, electricity, and other products are expected to continue declining, resulting in a certain level of annual revenue decrease. As countermeasures, the Company is promoting new business development through the establishment of the Investment Strategy Office, expansion of automobile-related businesses through M&A, maintenance and expansion of LP gas customer numbers, and strengthening of electricity retail under the TERASEL brand.

If the asset value or profitability of store real estate, energy supply facilities, power generation facilities, and other assets declines due to the materialization of business risks, impairment losses may need to be recognized, which could affect operating results. The Company manages this risk through rigorous screening at the time of acquisition based on investment criteria, regular post-investment monitoring, and a mechanism for disposing of and replacing unprofitable assets under its EXIT rules.

There is a risk that trading gains and losses may be affected by fluctuations in the procurement prices of petroleum products, LP gas, and electricity. For petroleum products, the Company sets loss limits under its merchandise balance management regulations; for LP gas, it passes on price changes to customers through a CP-linked sales price formula; and for electricity, it seeks to mitigate price fluctuation risk through alliances with major electric power companies and the introduction of a fuel cost adjustment system.

If carbon taxes are introduced and other environment-related laws and regulations are enacted or strengthened around the world as part of global warming countermeasures, the Company Group's business activities may be restricted, or the Company may be forced to restructure its businesses. As part of its sustainability initiatives, the Company is formulating and implementing measures to address climate change.

If the decline in the working population due to the falling birthrate and aging population, along with labor market fluidity, prevents the Company from securing and developing personnel with the advanced knowledge, skills, and experience needed to upgrade existing businesses and develop new ones as planned, competitiveness may decline, affecting operating results. The Company is promoting recruitment and development measures based on its basic policy on human resource strategy.

As cyberattacks become more sophisticated, unauthorized access or virus intrusion could result in leaks of confidential information or personal data, or suspension of information systems, which may hinder business continuity, damage the Company's reputation, or result in significant claims for damages. The Digital Strategy Department, in collaboration with ITOCHU Corporation, is implementing measures such as system redundancy, virus countermeasures, dataless operations, and enrollment in information leakage liability insurance.

If tangible fixed assets such as CS (Car Life Station) locations, petroleum and gas bases, power plants, and automobile dealerships deployed nationwide are damaged by a large-scale natural disaster (earthquake, typhoon, flood, etc.), it could affect operating results. The Company has established a business continuity framework through measures such as maintaining seismic standards for facilities, insuring the majority of assets against fire, formulating BCPs and conducting regular drills in each region nationwide, and establishing alternative sites in Hiroshima and Fukuoka.

If violations of the wide range of applicable laws and regulations occur, or if unexpected laws and regulations are enacted, amended, or abolished, this could hinder business continuity through increased additional costs, administrative sanctions, or damage to social credibility. The Company has established and operates a compliance framework within its corporate governance structure.