Gifu landscape architect Co.,Ltd.

The Group's business is subject to legal regulations such as the Construction Business Act, and violations of laws or unexpected legal amendments or new regulations could restrict operations. It is explicitly stated that if the Group's construction business license (Minister of Land, Infrastructure, Transport and Tourism License (Special-4) No. 275, valid until December 2027) were to be revoked, this would have a material impact on business performance and financial condition. Currently, the company states there are no grounds for revocation, but continuous maintenance of a legal compliance system is essential.

The Group operates public works, green space, and residential landscaping construction businesses with government agencies, corporations, and individuals as clients. Investment trends among government agencies and corporations, as well as consumer spending trends among individuals, are susceptible to economic conditions. In a downturn, a decline in order volume could directly affect business performance and financial condition. Although the Group seeks to mitigate this risk by diversifying its client base broadly, the downside risk from macroeconomic factors cannot be eliminated.

In the fiscal year under review, Sekisui House, Ltd. (16.7%), Sekisui House Chubu Construction Co., Ltd. (11.8%), and Daiwa House Industry Co., Ltd. (8.8%) together accounted for approximately 37.3% of net sales, indicating a high degree of dependence on specific clients. If orders from these three companies decline, it could have a material impact on business performance and financial condition. Although the company has set a policy of acquiring new clients and expanding its revenue base, dependence remains at a high level at this time.

The prices of materials used in landscaping and greening construction fluctuate based on supply and demand balance, and outsourcing costs utilized for construction work also vary depending on the busy and slow seasons of construction demand. If material prices and outsourcing costs rise beyond the Group's expectations, construction profitability could deteriorate, affecting business performance and financial condition. The securities report does not explicitly describe specific hedging measures or price pass-through mechanisms for cost fluctuation risk.

Keishokan Co., Ltd., a subsidiary, holds Osaka Prefectural Governor's License (Special-7) No. 163438 (obtained in July 2025, valid until July 2030), and grounds for revocation exist under Article 29 of the Construction Business Act. Maintenance and management of licenses is required across the Group as a whole, and revocation of a license for any reason could affect the Group's business continuity. Keishokan's license was only recently obtained in July 2025, making the establishment of a legal compliance system across the Group an important issue.

Maintaining and improving the quality of landscaping and greening construction work requires personnel with specialized knowledge and skills, as well as sensibilities such as aesthetic creativity for handling living trees, and securing and developing such personnel is not easy. If personnel cannot be secured and developed as planned, it could lead to a decline in construction quality and loss of order opportunities, affecting business performance and financial condition. Amid worsening labor shortages across the construction industry as a whole, competition for personnel in the highly specialized landscaping field is expected to intensify further.

The Group's operations involve a large amount of outdoor work, inherently carrying the risk of occupational accidents. If a serious occupational accident occurs, it could result in delays in the completion of construction projects, affecting business performance and financial condition. The company currently conducts safety and health management, including site patrols by construction department heads, and states that no serious occupational accidents have occurred to date, but given the nature of outdoor work, it is difficult to reduce this risk to zero.

Since landscaping construction is primarily conducted outdoors, it is directly susceptible to adverse weather such as prolonged rain and heavy snow, as well as natural disasters. If construction projects are delayed in completion due to inclement weather or natural disasters, it could affect business performance and financial condition. Amid concerns over an increasing frequency of extreme weather events associated with climate change, this risk may increase over the medium to long term.