ASAGAMI CORPORATION

Domestic and overseas economic trends, crude oil price movements, and customers' logistics policies in the Logistics Business, as well as changes in market trends in the Real Estate Business and Printing Business, may affect the Group's business results and financial condition. This risk spans multiple segments, and fluctuations in crude oil prices in particular directly affect logistics costs. The Group addresses this risk by building a system for immediate response through information gathering and communication with customers, and by pursuing new business opportunities and cost reduction.

If large-scale equipment or facilities are damaged by large-scale natural disasters such as earthquakes or typhoons and business operations are paralyzed as a result, this may affect the Group's business results and financial condition. As the Group holds numerous fixed assets such as logistics facilities and real estate leasing facilities, there is a risk that damage could extend over a wide area. The Group has established a system to flexibly set attendance arrangements in the event of a disaster, ensuring the safety of employees' families and minimizing the impact on customers.

If the spread of infectious diseases such as the novel coronavirus causes consumer activity to stagnate and results in stagnation of the business operations of customers or of the Group's own businesses, including the Wedding Printing business, this may affect the Group's business results and financial condition. This also includes risks affecting employees' working arrangements, such as situations that make commuting to work difficult. The Group has implemented measures such as the use of telework to ensure business continuity.

The Group owns a large number of trucks, trailers, and other vehicles in the Logistics Business, and if a serious traffic accident occurs, it may reduce customer trust and social credibility, thereby affecting business results and financial condition. Although the Group has implemented accident prevention activities such as installing digital tachographs on all vehicles and conducting safe driving training, complete elimination of such risk is difficult. In the event of an accident, the site and the head office administrative department coordinate to build a system for sharing preventive measures against recurrence of similar accidents with customers.

The Group is subject to various legal regulations in its Logistics, Real Estate, Printing, and other businesses, and if laws and regulations are enacted or amended, the associated response costs or operational changes may affect the Group's business results and financial condition. Although the Group places importance on compliance-oriented management, there is a risk that the burden of response could increase depending on the frequency and scope of regulatory changes. When laws are amended, the Group gathers information from various experts and responds by revising internal rules, among other measures.

The Group holds fixed assets such as logistics facilities and real estate leasing facilities, and if impairment losses are recognized due to a decline in the market value of land and buildings, this may have a material impact on the Group's business results and financial condition. Deterioration in real estate market conditions or changes in the business environment could trigger impairment. When the need for impairment processing that would significantly affect business results arises, the Group's policy is to disclose information appropriately.

The Group holds securities, and if a significant decline in stock prices occurs due to deterioration in the securities market, this may affect business results and financial condition through the recognition of valuation losses, among other effects. In the event of a sudden change in market conditions, the value of the securities held could be significantly impaired within a short period. The Group's policy is to respond through appropriate information disclosure.

The Group raises funds through borrowings, and if interest rates rise significantly due to changes in financial markets, this may affect business results and financial condition through increased interest expenses. Since changes in the interest rate environment affect overall borrowing costs, there is a risk of increased financial burden. The Group strives to exchange information appropriately with its lenders to ensure they have a sufficient understanding of the Group's situation.

If important data is deleted or improperly obtained due to computer virus infection, unauthorized access, employee error, or other causes, this may affect business results and financial condition. Although the Group implements information security measures such as entry/exit management, backups, and the installation of antivirus software, there remains a risk that it may not be able to fully respond to events beyond expectations. The Group has established a response system through the establishment of an internal reporting hotline and information sharing at the Compliance Committee.

Although the Group pays attention to credit management when receivables arise in each business, if unforeseen circumstances lead to concerns about a customer's creditworthiness and receivables become difficult to collect, this may affect business results and financial condition. Receivables management is required across multiple businesses, and consideration must also be given to the risk of concentration with specific customers. The Group works to gather information on customers on an ongoing basis to detect concerns about creditworthiness at an early stage.