NIPPO LTD.

If defects occur in the Group's products or goods after sale, the Group may receive proportional compensation claims for recall costs and other expenses incurred by sales destinations. Although the Group makes every effort to ensure thorough quality control, depending on the nature of the defect, this could materially affect business performance. In response, the quality assurance departments of each business division operate quality management systems and conduct internal quality audits, while the Quality Assurance Control Division oversees company-wide continuous improvement.

If confidential information of business partners is leaked, the Group may face suspension of transactions or compensation claims, which could affect business performance. Under the Basic Policy on Information Security, the Group has established the Trade Secret Management Regulations and Personal Information Management Regulations, and has implemented measures such as a principle of prohibiting the removal of confidential materials and non-dataless PCs, restricting access to external memory devices, and establishing rules for sending and receiving email attachments. A flow has also been established to minimize the spread of damage in the event of a leak.

If the use of information systems or information infrastructure is restricted or suspended due to cyberattacks or other actions by third parties, this could hinder the operation of management and business activities and affect business performance. In response, the Group has resolved system vulnerabilities based on guidance from specialized service providers, and has changed operational practices such as password locks and introduced software that immediately detects and responds to signs of cyberattacks.

If changes occur in the supply chain due to changes in the business policies of partner companies, including Resonac Corporation, or changes in customers' procurement policies, this could affect business performance. The Group is working to strengthen collaboration with partner companies while striving to mitigate risk by enhancing its own added value within the supply chain.

If the recovery of invested amounts becomes unlikely due to declining business profitability related to owned fixed assets or other factors, the Group may record impairment losses under accounting standards related to fixed asset impairment, which could affect business performance. In response, in addition to verifying investment profitability at the time of investment decisions, the Group has strengthened monitoring of business profitability after investment, establishing a system to identify early warning signs and take countermeasures.

The Group operates 11 factories domestically and internationally. If buildings or equipment suffer catastrophic damage due to fire, earthquake, typhoon, or other events, this could require enormous restoration costs and result in reduced or halted production and shipping activities, potentially having a material impact on business performance. The Group has established a risk management manual summarizing disaster prevention activities during normal times and procedures and systems from initial response to business resumption in the event of an emergency, and is engaged in continuous inspection.

If raw materials for plastic molded products or goods and materials are subject to price increases due to soaring resource prices and such increases cannot be passed on to selling prices, or if stable procurement becomes difficult due to supply tightness, this could affect business performance. In response, the Group shares information such as production plans among customers, suppliers, and the Group itself, working to level out production activities through supply-demand adjustment and inventory holding.

The Group operates globally in Japan, ASEAN, and Greater China, and is subject to legal regulations in each country. If legal regulations that cannot currently be anticipated are established in the future and the Group fails to comply with them, business activities could be restricted and business performance could be affected. The Group works to obtain early information and take proactive measures in consultation with experts well-versed in the legal regulations of each country.

Amid global operations based in Japan, ASEAN, and Greater China, if lockdowns or similar measures are implemented in various countries due to the spread of infectious diseases, this could reduce or halt production activities at the Group and its business partners, affecting business performance. The Group has established a risk management manual summarizing infection prevention activities during normal times and cluster prevention and business resumption procedures in the event of an emergency, maintaining a system for rapid and effective response through continuous inspection.