TAMAI STEAMSHIP CO., LTD.

In the Ocean-going Shipping Business, freight revenue and chartering fee revenue may fluctuate significantly depending on shipping market conditions (changes in maritime transport volume, intensifying competition, vessel supply-demand balance, etc.) at the time of renewal of medium- to long-term contracts or conclusion of spot transport contracts. The Group strives to secure stable revenue primarily through medium- to long-term contracts, while also seeking to reduce the risk of market fluctuations by adjusting the balance between owned and chartered vessels and between long-term and spot contracts.

While the majority of revenue from freight and chartering fees in the Ocean-going Shipping Business is denominated in US dollars, there are also substantial yen-denominated expenses such as vessel repair costs and general administrative expenses, and the balance of US dollar-denominated income and expenses is affected by exchange rate fluctuations. The Group implements hedging measures such as forward exchange contracts, but complete avoidance is difficult, and depending on exchange rate conditions, this may affect business performance and financial condition.

The price of fuel oil for vessels operated in the Ocean-going and Coastal Shipping Businesses fluctuates depending on crude oil market conditions, and in periods of rising prices, fuel costs for operations increase, affecting profit and loss. The Group has established bunker surcharges and fuel price fluctuation adjustment fees with some shippers to pass on cost increases, but if not all increases can be passed on, this may affect business performance and financial condition.

The Group borrows from financial institutions to procure funds for vessel construction and long-term working capital, and borrowings for ocean-going vessel construction procured at variable interest rates are affected by interest rate fluctuations. The Group strives to reduce this risk by reducing interest-bearing debt and fixing interest rates, but future interest rate fluctuations may affect business performance and financial condition.

Syndicated loan agreements concluded to borrow funds for the construction of ocean-going vessels contain financial covenants, and if these covenants are breached, there is a risk that lump-sum repayment of the relevant debt may be demanded. If lump-sum repayment is demanded, this may have a material impact on the Group's financial condition.

For fixed assets such as owned vessels, if their fair value declines significantly or their profitability deteriorates, impairment losses may arise based on the "Accounting Standard for Impairment of Fixed Assets." The recognition of impairment losses directly affects the Group's business performance and financial condition.

In the event of a marine accident, there is a risk of loss of life, cargo, and vessel damage, as well as a risk of marine pollution from fuel spills. The Group has implemented measures such as establishing a ship safety management system based on the ISM Code, conducting regular training and education for crew members, conducting emergency response drills, and taking out various types of insurance to compensate for losses, but depending on the scale of an accident, this may affect business performance and financial condition.

There are risks such as unauthorized external access to core business systems, computer virus infection, and data loss due to natural disasters. The Group has implemented measures such as installing antivirus software, using firewall systems, and storing backup data, but in the event of information leakage or data loss, this may affect business performance and financial condition.

The shipping industry is subject to various public regulations, including laws and regulations of various countries, regions, and international organizations, for the safety of vessels and safe operation. Compliance with these laws and regulations may result in increased costs and restrictions on business development, which may affect the Group's business performance and financial condition.

The Group's business activities extend to various regions around the world, including Japan, and are exposed to a variety of risks, including adverse political and economic factors, public regulations such as trade restrictions and U.S. tariff measures, social disruption caused by war, terrorism, piracy, infectious diseases, and geopolitical risks, and natural disasters such as earthquakes, tsunamis, and typhoons. Should these risks materialize, they may affect the Group's business activities and business performance.