TOYO WHARF & WAREHOUSE CO.,LTD.

Changes in domestic and overseas economic, political, and social conditions, changes in public regulations, tightening of environmental regulations, changes in logistics resulting from advances in IT technology, and intensified competition accompanying customers' logistics rationalization may affect the Group's financial position and operating results. The Group operates the Warehousing Business, Port Transportation Business, Motor Transportation Business, International Logistics Business, and other businesses both domestically and overseas, and is structured to be broadly affected by changes in the business environment. As countermeasures, the Group is working to expand sales and strengthen its management foundation through logistics proposals that respond to customer needs, timely and appropriate capital investment, and the promotion of IT technology adoption.

If logistics facilities located throughout Japan and in Russia, Kazakhstan, Thailand, and China suffer severe damage due to large-scale disasters such as earthquakes, typhoons, or heavy rainfall, this may have a material impact on the Group's financial position and operating results. This risk is increasing due to the intensification of disasters caused by recent climate change. As countermeasures, the Group is implementing renewal and reinforcement investments for aging facilities, periodic review of its BCP (Business Continuity Plan), strengthening of disaster prevention systems, and thorough disaster prevention education and training.

Two consolidated subsidiaries conduct logistics operations based in Russia, and economic sanctions and other measures following Russia's invasion of Ukraine may significantly disrupt the operations of the local subsidiaries, which may affect the Group's financial position and operating results. Changes in political and economic conditions may also affect business continuity across overseas bases in general, including Kazakhstan, Thailand, and China. As a countermeasure, the Group has established a system to continuously monitor local conditions and is taking thorough measures to ensure the safety of resident staff.

The Company was named as a defendant in a lawsuit for damages filed on March 28, 2022, and a petition for expansion of claims setting the claim amount at ¥5,157 million (excluding late payment charges) was submitted and served as of June 10, 2024; the outcome of this matter may affect the Company's financial position and operating results. The Company holds that there is a discrepancy in the recognition of the facts and intends to respond appropriately after carefully reviewing the complaint. There is also a risk that various other lawsuits may arise in connection with the Group's overall business activities.

The Group's cross-shareholdings have an acquisition cost of ¥2,509 million against a consolidated balance sheet amount (fair value) of ¥11,116 million, resulting in an unrealized gain of ¥8,606 million; however, a significant decline in share prices due to sudden changes in economic conditions or the management condition of the issuing companies may affect the Group's financial position and operating results. These shares are held primarily for the purpose of maintaining and strengthening relationships with business partners.

The Group provides comprehensive logistics services utilizing its information systems network; however, if a system failure or information leakage occurs due to a disaster, accident, crime, or other cause, a decline in social credibility and other factors may affect the Group's financial position and operating results. As countermeasures, the Group is introducing information security measures such as the latest technologies and data backup, and is working on developing internal systems and employee education.

The Group holds substantial fixed assets, including buildings and land, and if a decline in the fair value of fixed assets due to economic fluctuations or other factors, or a decline in the profitability of asset groups, results in an inability to recover the amount invested, an impairment loss may be recorded, which may affect the Group's financial position and operating results.

Retirement benefit obligations are calculated using estimated figures such as the discount rate and salary increase rate, and the amount of the obligation fluctuates in accordance with changes in these figures. In addition, since the trust assets of the retirement benefit trust consist primarily of shares contributed by the Company, if unexpected share price fluctuations result in the expensing of actuarial differences or other effects, this may affect the Group's financial position and operating results.

If a decline in the working-age population and intensified competition for labor make it difficult to secure sufficient personnel necessary for providing comprehensive logistics services such as cargo handling, this may affect the provision of logistics services. As countermeasures, the Group is working to secure personnel and develop a comfortable working environment in order to improve retention rates.

The Group procures necessary funds primarily through borrowings from financial institutions, and if unexpected social or economic changes cause tightness in financial markets, resulting in sudden changes in fundraising conditions or interest rates, this may affect the Group's financial position and operating results. At present, there are no impediments to raising funds for capital investment or refinancing working capital, and borrowing interest rates remain stable.