KEIYO GAS CO., LTD.

If a serious leak, explosion, or other accident occurs in relation to gas manufacturing or supply, it may disrupt the stable supply to customers, and if it results in injury or property damage, it could lead to litigation, damages payments, and loss of social trust. As countermeasures, the Company conducts regular maintenance of manufacturing and receiving facilities, measures against aging pipelines, establishment of a 365-day, 24-hour security system, and training of security personnel.

Since the Company's business base is concentrated in northwestern Chiba Prefecture, if a large-scale earthquake or other disaster occurs in this area, it could cause serious damage to supply facilities such as pipelines and customers' gas equipment, potentially affecting business performance through disruption of city gas supply and the cost of restoration. As countermeasures, the Company implements seismic reinforcement of pipelines, gas supply shutoff measures to prevent secondary disasters, development of standards, and company-wide regular training.

Intensifying competition resulting from gas retail liberalization and other factors may lead to customer attrition and downward pressure on gas sales prices, potentially affecting business performance. As countermeasures, the Company promotes expanded sales of Kurashi Support Service and proposals to commercial customers to improve environmental and economic performance, striving to acquire new customers and prevent customer attrition.

If a serious failure occurs in the core information systems responsible for monitoring gas manufacturing and supply and calculating gas and electricity charges, or if the Company is subject to a cyberattack, stable supply and smooth service provision may be impaired, potentially affecting business performance. As countermeasures, the Company has installed systems in disaster-resistant buildings, implemented redundancy in communications and systems, various security measures, incident response training, and targeted attack email training.

The price of LNG and other raw materials for city gas is affected by fluctuations in crude oil prices and exchange rates, and such fluctuations may affect business performance. In addition, unforeseen circumstances affecting LNG imports due to changes in the international situation could disrupt stable raw material procurement. Although the raw material cost adjustment system allows for reflection in gas sales prices, the time lag before reflection may cause performance impacts to extend beyond the fiscal period.

Since gas sales volume fluctuates depending on air and water temperature, it may vary significantly due to climate change such as warm winters or extremely hot summers. In addition, changes in energy consumption behavior, such as growing customer awareness of conservation, may also affect business performance. As countermeasures, the Company strives to expand gas demand by growing industrial demand and gas air-conditioning demand, which are less affected by temperature, and by expanding sales of gas appliances.

The government has declared "carbon neutrality by 2050," and if changes in national energy policy or the implementation of new environmental policies intensify competition and significantly change the environment surrounding the Group, it may affect business performance. As countermeasures, the Company is proceeding with the supply of carbon-offset city gas, the introduction of carbon-free electricity, and the development of renewable energy power sources.

In the electricity retail business, fluctuations in trading prices on the wholesale electricity exchange may affect business performance. As countermeasures, the Company strives to curb income and expenditure fluctuation risk through diversification of electricity procurement and the use of derivative transactions.

In large-scale investments such as real estate development, system development, the renewable energy business, and new businesses, subsequent changes in economic conditions may prevent the expected results from being achieved, potentially affecting business performance. In addition, for projects with a long investment recovery period, costs may be concentrated in the initial investment stage, which could adversely affect short-term income and expenditure. As countermeasures, the Company has established a careful investment decision-making process in which the investment purpose, business feasibility, profitability, and risk of each project are evaluated and submitted to the Board of Directors and the Executive Officers' Committee for deliberation.

As a public utility operator, the Company manages the personal information of a large number of customers, and if such information were to leak outside the Company, it could result in loss of social trust and the occurrence of damages payments and other costs. As countermeasures, the Company has established regulations concerning information system security and personal information protection, and regularly checks compliance with information handling requirements at all outsourcing partners that handle customer information.