ALTECH CO., LTD.

The Group operates trading and preform businesses in China, Thailand, Indonesia, and Vietnam, and procures goods and raw materials from Asia, the Americas, and Europe. Significant changes in the political, economic, legal, or social conditions of these countries, or tightening of regulations on business activities, imports and exports, etc., could make it difficult to conduct business as planned and adversely affect performance. Uncertainty in the global economy continues due to the confused situations in Russia-Ukraine and the Middle East, and escalation or prolongation of these situations carries the risk of directly hitting performance through soaring raw material prices and supply chain disruptions.

Against the backdrop of the confused situations in Russia-Ukraine and the Middle East, the risk of soaring raw material prices has become apparent. The Group procures goods and raw materials from a wide range of regions across Asia, the Americas, and Europe, and price surges directly affect the cost structure. If procurement costs rise due to escalation or prolongation of these situations, the Group's business performance may be adversely affected.

The Group holds fixed assets and lease assets such as real estate, machinery and equipment, molds, and office equipment, and is exposed to impairment risk arising from declining profitability. As of the end of the consolidated fiscal year, the necessary accounting treatment under impairment accounting rules has been completed; however, if profitability declines further in the future, additional impairment losses may occur, adversely affecting business performance.

The Group conducts import/export transactions with overseas business partners and operates overseas businesses, and foreign exchange market fluctuations affect foreign-currency-denominated assets, liabilities, revenues, and expenses, as well as the yen-converted amounts of the financial statements of overseas consolidated subsidiaries. The Group seeks to reduce risk mainly through derivative transactions such as forward exchange contracts, but these do not guarantee complete avoidance or reduction of risk. If exchange rate fluctuations exceed expectations, the Group's business performance may be adversely affected.

The PET bottle preforms produced by the Group are sold mainly to major customers, and the proportion of sales to major customers is expected to remain at a high level going forward. If these major customers experience a decrease in orders due to poor sales of beverage products, changes in sales plans, deterioration of business conditions, etc., and the Group is unable to promptly secure alternative sales channels, this could have a material adverse effect on business performance. The Group strives to maintain long-term stable business relationships by establishing a system for stable supply of high-quality products, but the high degree of dependence itself constitutes a risk factor.

The Group operates businesses in Japan, China, Thailand, Indonesia, and Vietnam, and if a large-scale natural disaster such as a major earthquake, heavy rain, or tornado, or an epidemic of an infectious disease such as a new strain of influenza occurs, normal business activities may become difficult. Damage to facilities, power outages, suspension of transportation and communications, supply chain damage, restrictions on the movement of people, etc., could cause delays or stoppages in the shipment of goods and products to business partners, potentially affecting business continuity. As countermeasures, the Group confirms the seismic resistance structure of leased buildings, conducts regular inspections, and participates in disaster prevention drills, but the risk remains that it may not be able to fully respond to disasters exceeding expectations.

The Group procures goods and raw materials from a wide range of regions across Asia, the Americas, and Europe, and is exposed to the risk of supply chain disruption due to compound factors such as geopolitical risk and natural disasters and infectious diseases. The securities report explicitly states that the confused situations in Russia-Ukraine and the Middle East could cause supply chain disruption, and stagnation in procurement directly affects product supply capacity. In particular, if business continuity at overseas locations becomes difficult, this could hinder stable supply to domestic and overseas business partners.

In China, Thailand, Indonesia, and Vietnam, where the Group operates, if regulations on business activities, investment, imports and exports, etc. are tightened or changed, it may become difficult to conduct business as planned. Changes in the legal systems and political conditions of each country are difficult to predict, and this also entails the risk of increased regulatory compliance costs or being forced to withdraw from business. The Group states that it strives to avoid the occurrence of risk and minimize its impact, but specific details of regulatory countermeasures are not disclosed in the securities report.