Meiho Facility Works Ltd.

Changes in corporate capital expenditure appetite driven by economic conditions and business trends, shifts in the competitive landscape with existing construction contractors, and changes in the construction market's evaluation of CM methods could affect performance. The Company provides PM services using CM methods across a wide range of facilities, from office construction to production and research facilities, and any decline in capital expenditure demand would directly lead to a decrease in orders received.

The fee business is structured to be less susceptible to fluctuations in costs such as material and outsourcing expenses; however, for fixed fees determined in advance on a man-hour basis, stable revenue cannot be secured if man-hour estimates are inappropriate or if employee labor productivity declines. Given the nature of fixed-fee contracts, the Company bears any cost overruns, creating a risk of deteriorating profitability.

If a malfunction occurs in the web-based information-sharing system used to disclose and share process information from the customer's planning stage through ordering and construction, or in the customer DX support system, this could increase man-hour costs due to reduced operational efficiency and require recovery efforts, potentially affecting performance. A shortage of related skills is also a factor that heightens system operation risk.

Under construction contracts, the Company bears liability for non-conformity with contract terms regarding constructed works, and if a material non-conformity occurs, it could affect operating results and corporate reputation. Although the Company strives for thorough quality control through rigorous construction management, it is difficult to completely eliminate the risk of defects given the complexity of construction projects.

PM services provided through CM depend on personnel with highly specialized expertise as a source of competitiveness, and any difficulty in securing talented personnel would directly affect performance. The Company seeks to secure talent by leveraging its credibility and name recognition as a listed company while improving both business performance and employee treatment, but competition for talent is intensifying across the construction and real estate industries as a whole.

As the promotion of digitalization in operations increases the volume of information assets held, unauthorized external access or intentional or negligent loss of information by insiders could affect performance. The Company has implemented measures such as obtaining ISO27001 certification and introducing an information security management system based on the PDCA cycle, but complete protection is difficult given the increasing sophistication of cyber threats.

Due to customer needs, completion timing and construction schedules tend to be concentrated in the second half of the fiscal year, and past performance has therefore been weighted toward the second half. Depending on order status, including the timing of orders received, and project progress in the second half, full-year performance could be significantly affected, making it difficult to judge the full-year outlook based solely on first-half results.

If amendments to or tightening of laws such as the Construction Business Act and the Building Standards Act occur, or if a violation of laws or regulations occurs resulting in a business suspension order or license revocation by regulatory authorities, this could disrupt business activities and affect operating results and financial condition. Maintaining the Company's specific construction business license (valid from November 1, 2024 to October 31, 2029) and its registration as a first-class architectural design office (Tokyo and Osaka) is a prerequisite for business continuity.

If the progress schedule of individual projects changes during the course of a project due to customer circumstances or other factors, this could significantly affect sales and profit for the fiscal year in question. Given the nature of CM services, performance is highly susceptible to customer-side decision-making and circumstances, making it challenging to maintain the accuracy of earnings forecasts.

In the event of a natural disaster, disruption to the supply of construction materials and components, as well as damage suffered by a large number of employees, could delay contract execution, construction commencement, and construction progress, thereby affecting performance. Large-scale damage to social infrastructure in affected regions could halt production and distribution activities for a considerable period, creating a risk of simultaneous impact on multiple projects.