DAIMARU ENAWIN Co.,Ltd.

The Group depends on imports for almost the entirety of its LP gas procurement, and is therefore directly affected by fluctuations in commodity trading prices and foreign exchange rates arising from changes in international political and economic conditions. If increases in purchase prices cannot be fully passed through to selling prices, earnings may be compressed. As a countermeasure, the Group is promoting optimization of its business portfolio toward products and services other than LP gas.

LP gas, the Group's core product, faces intensifying competition from all-electric systems and city gas, creating a risk that sales volume will decline if users switch to other energy sources. Customer attrition resulting from intensified competition would directly affect business performance. The Group is responding by strengthening its proposal capabilities, including emphasizing the advantages of LP gas as a backup energy source during disasters.

LP gas consumption is affected by air and water temperature, with sales volume decreasing in summer and increasing in winter, resulting in a structure where sales and profit are weighted toward the second half of the fiscal year. If unusual seasonal patterns occur (such as a warm winter), the impact on business performance may be magnified. The Group aims to mitigate seasonal fluctuation risk through optimization of its business portfolio toward products and services other than LP gas.

LP gas sales are subject to regulations such as the Act on the Securing of Safety and the Optimization of Transactions of Liquefied Petroleum Gas and the High Pressure Gas Safety Act. In April 2024, a ministerial ordinance revision imposed restrictions on excessive sales activities, mandated thorough implementation of the three-part pricing system, and required provision of pricing information. The medical/industrial gas business is subject to regulations such as the Pharmaceuticals and Medical Devices Act, and the Aqua business is subject to the Food Sanitation Act, among others; legal amendments and drug price revisions could affect business performance. The Group encourages employees to obtain various qualifications and conducts internal compliance training, while examining response measures to current legal amendments.

The high-pressure gases supplied include flammable, oxidizing, and toxic substances. If a leak, ignition, or explosion occurs, it could cause significant harm to people and equipment, materially affecting business performance. It is difficult to completely eliminate the inherent dangers of gas itself, so potential risk always exists. The Group continuously conducts safety training, including encouraging acquisition of various qualifications, disaster prevention drills, and delivery contests.

In the Aqua business, mineral water is manufactured under a quality control system based on HACCP standards; however, if quality issues arise due to external factors such as radioactive contamination, it could affect business performance through decreased product reliability or suspension of sales. The Group's policy is to address quality issues stemming from external factors on a case-by-case basis with expert advice.

If the recovery of invested amounts becomes unlikely due to deteriorating profitability arising from worsening business conditions, the book value of fixed assets held by the Group may need to be written down to the recoverable amount, resulting in an impairment loss that could affect business performance and financial condition. The Group addresses this by conducting economic feasibility calculations based on profit plans when making capital expenditure decisions and by thoroughly managing monthly budget-versus-actual performance.

The Group positions M&A as an important management strategy; however, if the expected synergies or business expansion effects are not achieved due to changes in the business environment after an acquisition, an impairment loss on goodwill may occur, affecting business performance. To improve the precision of due diligence, the Group is accumulating M&A expertise and utilizing specialists, while thoroughly managing monthly budget-versus-actual performance.

Given the nature of the business handling high-pressure gas, if an outbreak of an infectious disease such as novel influenza or COVID-19 causes the disaster/accident response manual and education/training systems to malfunction, it could affect the Group's management condition. The Group seeks to avoid such malfunctions by advancing BCP systems, including IT adoption and remote work arrangements.