TOKAI LEASE CO.,LTD.

If a lease asset storage facility located nationwide suffers disaster damage and becomes non-functional, the immediate impact would be limited as other facilities could cover the shortfall; however, if recovery is prolonged, this could affect business performance and financial condition. The temporary building and unit house leasing business depends on a network of facilities, and in a scenario where multiple facilities are damaged simultaneously, there is a risk that supply capacity could be significantly reduced.

If roads are severed due to natural disasters or other causes, the Group would respond with alternative supply from other facilities; however, if road restoration is prolonged, this could disrupt the nationwide supply of lease assets and affect business performance and financial condition. Given the characteristics of a business model premised on a nationwide distribution network, a long-term closure of trunk roads poses a risk that directly affects the ability to fulfill orders.

If computer virus infections or unauthorized access result in loss of information, data tampering, or leakage of personal or confidential information, the resulting suspension or disruption of information systems could severely impede business activities. The leakage of customer information also poses a risk of damaging social credibility, and while appropriate security measures are implemented, complete protection is difficult to guarantee.

If procurement difficulties or price surges occur for steel frames, steel plates, urethane, and other primary raw materials used in temporary buildings and unit houses, the immediate impact can be avoided through inventory buffers if the situation is temporary; however, if it becomes prolonged, this could affect business performance and financial condition. Given the nature of leased products, it is difficult to pass on increased raw material costs to lease rates in the short term, creating a risk of pressure on profitability.

If violations of laws and regulations or actions contrary to social norms occur, the Group could lose the trust of customers and other stakeholders, potentially affecting business performance and financial condition. The Group addresses this through the establishment of conduct guidelines and regular implementation of compliance training, but continuous efforts are needed to ensure thorough compliance across the entire Group.

Demand trends among private companies in the construction and petrochemical industries, as well as government agencies, which are the Group's main users, could directly affect the Group's business performance in terms of both order volume and unit prices. A contraction in construction investment, a decrease in public works projects, and restraint in private capital investment during economic downturns pose a risk of reducing demand for leasing temporary buildings and unit houses, thereby affecting revenue.