TOKYU CONSTRUCTION CO., LTD.

Due to the strengthening of policies and regulations both in Japan and overseas aimed at the transition to a decarbonized society, there is a possibility that requirements for energy-saving buildings will be tightened and that mandatory calculation and disclosure of greenhouse gas emissions will progress further. If the Company's response is delayed, there is a risk of a decrease in net sales and deterioration in construction profitability. The Company addresses this through promotion of ZEB (net Zero Energy Building), use of renewable energy electricity, and BCM initiatives such as training based on its BCP (Business Continuity Plan).

In procuring funds from financial institutions necessary for business activities, rising interest rates may push up fund procurement costs and adversely affect business performance. The Company strives for low-cost, stable fund procurement by diversifying its funding methods, including the issuance of short-term corporate bonds and green loan borrowings.

If the domestic construction market contracts due to economic fluctuations, or if there are sharp fluctuations in material and labor prices caused by instability in the procurement environment stemming from international circumstances, this may lead to a decrease in net sales and deterioration in construction profitability. The Company addresses market contraction through the expansion of new business areas via innovation, and addresses fluctuations in material and labor prices through advance procurement and proposals for alternative construction methods.

If the Company's response to structural changes in the construction industry is delayed—such as a decline in supply capacity due to a decrease in skilled workers, or accelerated industry restructuring accompanying a worsening shortage of workers—this may affect business performance, including a decrease in net sales. The Company addresses this through strengthened collaboration with partner companies, as well as transformation of the construction production system and productivity improvement through DX, including the use of ICT at construction sites.

Amid a declining working population and intensifying competition for talent across industries, if efforts to improve the employment environment—such as respect for human rights, promotion of DE&I, and improvement of treatment and working conditions—are insufficient, this may make it difficult to secure human resources, hindering the establishment of a construction workforce and leading to a decrease in net sales and deterioration in construction profitability. The Company is working to create an environment in which employees can maximize their capabilities through reform of the personnel system, promotion of work-style reforms, and strengthening of human resource development.

If serious defects or quality deficiencies occur due to deficiencies in design or construction, this may lead to deteriorated construction profitability due to repair costs and reduced order opportunities due to loss of customer trust. The Company is addressing this through organizational collaboration between the Civil Engineering and Building Construction Divisions, strengthened quality control activities, implementation of the PDCA cycle, establishment of a system for prompt information sharing with management, expansion of the internal reporting system, and restructuring of quality control in the construction division.

If a serious accident or disaster occurs involving third parties or a large number of casualties, or if an accident occurs on a project with major social impact, this may affect business performance through reduced order opportunities due to loss of public trust. The Company addresses this based on its established safety policy, including a safety management system with greater involvement of top management.

If confidential information is leaked or in-house systems malfunction due to cyberattacks or other causes, this may lead to a loss of trust from customers and society and a slowdown in business activities, affecting business performance. Based on its Basic Policy on Information Security, the Company implements information security measures from physical, human, and IT perspectives, while also promoting employee education using e-learning.

In conducting international business, if significant changes occur in the business environment—such as changes in the political and economic conditions of foreign countries, exchange rate fluctuations, or changes in legal regulations—this may affect business performance, including a decrease in net sales. The Company addresses this by enhancing governance, including head office functions, and strengthening risk management.