OHMOTO GUMI CO., LTD.

In the construction business, which is heavily dependent on trends in private-sector capital investment and public investment, if the domestic construction market contracts more than expected, this could have a material impact on performance, including a decline in orders and sales. As countermeasures, the Company is working to mitigate risk through enhanced marketing to follow up with existing customers and develop high-quality new customers, as well as through flexible personnel planning.

In the construction business, since the contract amount for a single transaction is large and the contract form often involves collecting the contract payment upon delivery of the completed construction work, there is a risk that bad debt losses could arise due to the unexpected bankruptcy of a business partner. The Company works to prevent bad debt losses through thorough credit management and information management coordinated across each business division and branch, based on internal sales management regulations.

There is a risk that a serious accident during construction could result in lost order opportunities and damage to the Company's image, and that business activities could be suspended due to a large-scale disaster such as an earthquake or storm/flood damage, or the spread of infectious disease. The Company seeks to reduce this risk through enhanced safety education, on-site safety management supplemented by a dedicated specialist department, maintaining two locations (the Tokyo head office and the Okayama head office), and formulating a BCP, conducting regular drills, and reviewing plans.

If increases in the prices of key construction materials such as steel or in labor costs are not reflected in contract amounts, or if the delivery of construction materials is significantly delayed, there is a risk of a decline in gross profit on sales or losses arising from construction delays. The Company is pursuing price negotiations based on early identification of market conditions and regional characteristics, strengthening its supply chain, and considering alternative materials, while also working to strengthen risk management at the contract negotiation stage and internal management of the order-taking process.

The Company has adopted a defined benefit retirement benefit plan, and if the fair value of pension assets fluctuates significantly, or if assumptions such as the discount rate or expected rate of return on plan assets are changed, this could affect performance through an increase in retirement benefit expenses, among other factors. The Company has established a system to promptly collect information on changes in the fair value of pension assets and underlying assumptions, and to identify the impact on operating results and financial condition at an early stage.

If unexpected damages arise from liability for non-conformity with contract terms in construction work, or if the Company's social credibility is significantly damaged, there is a risk that this could affect performance through the occurrence of losses or the loss of order opportunities. The Company strives to prevent quality-related incidents through the operation and continuous improvement of its quality management system (ISO 9001) and the establishment and operation of an internal quality inspection system.

The Company is subject to numerous legal regulations, including the Construction Business Act, the Building Standards Act, and the Antimonopoly Act, and if there are amendments, abolitions, or new enactments of laws, changes in applicable standards, or litigation outcomes that differ from the Company's position, this could affect performance through the occurrence of losses or damage to the Company's image. The Company has established an independent legal department to gather information on legal compliance and revision trends and to confirm conformity, and has built a response framework for litigation in cooperation with external specialist organizations such as retained attorneys.

If interest rate levels or the stock market fluctuate significantly, this could affect performance through the recording of valuation losses on shares held, among other factors. The Company strives for stable and economical fund procurement through regular monitoring of interest rate trends and financial institutions' lending stance, as well as by setting up loan commitment lines to enable flexible fund procurement.