SUZUYO SHINWART CORPORATION

In the construction, maintenance, and operation of customers' information systems and the provision of cloud services, the Group holds information assets including personal information and customer information. If an information leak occurs, including at outsourcing partners, this could lead to claims for damages from customers and loss of credibility. As countermeasures, the Group maintains and promotes ISMS and Privacy Mark certification and has established a management structure through the Information Security Committee.

The Group utilizes in-house systems to provide information services. If a network disconnection occurs due to a disaster or accident, or if servers stop due to concentrated access, service provision to customers could be disrupted, potentially resulting in contract cancellations. The Group strives for stable operation by enhancing facilities and equipment and strengthening its monitoring system, but complete prevention is difficult.

In the Information Services Business, if project deliverables fail to conform to contracts or contain defects, or if significant specification changes during the development stage lead to increased work hours, this could affect the Group's financial position and operating results. The Group has established a quality enhancement system through thorough operation of its project profit/loss management system, visualization of quality, and maintenance of QMS certification, but unexpected factors cannot be completely eliminated.

The continuous acquisition and development of talent capable of responding to business expansion and technological innovation is recognized as an important issue, and the Group is focusing on recruitment and training activities. If recruitment and development activities do not proceed as planned, this could reduce the Group's business execution capabilities and affect its financial position and operating results.

The Information Services Business is affected by economic trends, customer companies' system development status, and competitor trends. Changes in this business environment could affect the Group's financial position and operating results. In particular, curtailment of customers' IT investment and intensifying competition directly affect order volume and profitability.

The Warehousing Business, Port Transport Business, and Land Transport Business are each affected by economic trends, consumer trends, and customer companies' management decisions and logistics rationalization, among other factors. Changes in the business environment could affect the Group's financial position and operating results. Progress in customers' logistics rationalization and in-house handling of logistics functions poses a risk of declining handling volumes.

Fuel costs for transport vehicles in the Logistics Business are affected by fluctuations in crude oil prices, while facilities in the Warehousing Business and Cloud Services Business are affected by fluctuations in electricity rates. The Group seeks to pass on price increases to customers, but if sufficient pass-through is difficult, profitability could deteriorate, affecting the Group's financial position and operating results.

The Information Services Business and Logistics Business are subject to various legal licenses and regulations. If laws and systems are revised, the Group may be forced to incur increased compliance costs or change its business strategy. Responding to these changes could affect the Group's financial position and operating results.

If a large-scale earthquake, typhoon, or other natural disaster, or a fire, occurs at a business office of the Group or its customers, business activities could become difficult to conduct. In addition, the outbreak of a large-scale infectious disease could indirectly affect business performance, and the Group considers it difficult to objectively estimate such impact. The Group has taken measures such as insurance contracts, regular backups, and establishment of a work-from-home environment.

The Group holds numerous fixed assets for business operations. If there is a significant decline in market value or future cash flows are not expected, impairment processing may be performed. If impairment processing is carried out, this could affect the Group's financial position and operating results.