Okayamaken Freight Transportation Co., Ltd.

The Company Group conducts business operations based on laws and regulations such as the Motor Truck Transportation Business Act and the Freight Forwarding Business Act. If new legal regulations that cannot currently be anticipated are introduced, or existing regulations are strengthened in the future, business activities may be restricted. In addition, in preparation for the tightening of environmental regulations, the Group is voluntarily promoting the introduction of low-emission vehicles and thorough eco-driving practices, but an increase in regulatory compliance costs is also anticipated.

Since the Company Group's business activities are mainly conducted using vehicles on public roads, there is an inherent risk of serious unforeseen accidents such as traffic accidents. Although traffic safety and accident prevention measures are implemented through employee training, if a serious accident occurs, it may have a material impact on the Group's financial position and operating results due to damages compensation and other costs. The Group continues to build a system that prioritizes respect for human life above all else, but it is difficult to completely eliminate this risk.

The motor truck transportation business is labor-intensive, and securing and developing high-quality human resources is fundamental to business continuity. Due to factors such as the overtime work limit regulations that took effect in April 2024 (the so-called "2024 Problem"), it may become increasingly difficult to secure human resources, including drivers. Although the Group strives to retain employees by promoting "work style reform" and improving the working environment, if it is unable to sufficiently secure and develop human resources, it may have a material impact on the Group's financial position and operating results.

The Group holds various types of customer information, including handling slips containing customers' personal information in services such as Heart Sanchokubin and moving services. Despite efforts to thoroughly manage information, if information were to leak externally, it could result in a loss of public trust as well as claims for damages, which may have a material impact on the Group's financial position and operating results. Compliance with confidentiality obligations and strengthening the information management system remain ongoing challenges.

There is a risk that vehicles, equipment, and other assets may be damaged by natural disasters such as earthquakes and typhoons, or by the increasing frequency of abnormal weather due to global warming. Disruption of transportation routes could directly impede the continuous provision of services. Given the nature of the business, which mainly involves vehicle transportation using public roads, the Group is susceptible to the effects of natural disasters, which may have a material impact on its financial position and operating results.

The Group uses a large amount of fuel in its business operations, and there is a risk that a sharp rise in fuel prices due to geopolitical factors such as conditions in the Middle East could lead to increased transportation costs. In addition, since the Group procures part of the funds necessary for its business activities from financial institutions, a sharp rise in interest rates could increase funding costs. If these cost increases exceed the amount that can be passed on to customers through price adjustments, it may have a material impact on the Group's financial position and operating results.

The Company Group holds fixed assets for business use, and if a decline in profitability or a drop in market value leads to a decrease in asset value, it may be necessary to recognize an impairment loss. The recognition of an impairment loss may temporarily have a material impact on the Group's financial position and operating results. Changes in the business environment and trends in the real estate market pose a risk that could affect asset valuation.

The Company Group holds shares of financial institutions, shippers, and affiliated companies in the same industry, and therefore bears the risk of price fluctuations in the stock market. If unforeseen market fluctuations occur in the future, valuation losses on held securities may arise, which may have a material impact on the Group's financial position and operating results. Addressing the market risk of the stock portfolio, including cross-shareholdings, remains a challenge.