MATSUI CONSTRUCTION CO., LTD.

Because construction work is structured around individual orders received from clients, there is a risk of intensified price competition due to excessive competition with rivals. Intensified price competition may adversely affect operating results through a decline in profit margins. The securities report does not describe specific countermeasures.

The construction business is characterized by large contract amounts per project and long periods before payment collection. If a counterparty becomes insolvent before construction payment is received, a substantial amount of uncollected receivables could arise, potentially having a material impact on operating results. The securities report does not describe specific credit management countermeasures.

Given the characteristic of the construction business whereby a long period is required from order receipt to completion and handover, if construction material prices surge after contract conclusion, it may be difficult to pass on the increase to the contract price, resulting in deteriorating project profitability. Rising material prices directly increase construction costs and may affect operating results. The securities report does not describe specific hedging measures.

Although the Company strives for thorough quality control, if damages arise based on liability for non-conformity with contract terms or product liability, operating results may be affected. Defects in constructed buildings could lead to costly repair or compensation expenses. Thorough quality control is cited as a countermeasure, but no specific details of the system are described.

If an unforeseen accident occurs during construction work, it could result in personal injury and property damage, as well as construction delays and compensation claims, potentially affecting operating results. Although the Company states that it strives for thorough safety management, the inherently high-risk environment specific to construction sites cannot be eliminated. No specific details of the safety management system are described.

The Company is subject to a wide range of laws and regulations, including the Construction Business Act, the Building Standards Act, the Building Lots and Buildings Transaction Business Act, the Industrial Safety and Health Act, and the Antimonopoly Act. If these laws are revised or abolished, new regulations are introduced, or violations occur, it could have a material impact on business continuity and operating results. This includes risks such as revocation of construction business licenses or business suspension orders. The securities report does not describe a specific compliance system.

In the event of natural disasters such as earthquakes, tsunamis, or wind and flood damage, or the outbreak of an infectious disease pandemic, damage may occur to properties under construction or owned assets, as well as harm to officers and employees. There is a risk that business continuity interruptions and recovery costs could affect operating results. The securities report does not describe a specific business continuity plan (BCP).

If the value of real estate and marketable securities held by the Group declines significantly, impairment losses or valuation losses may occur, potentially affecting operating results. Losses could particularly materialize during a sharp stock market decline or deterioration in the real estate market. The securities report does not describe specific risk hedging measures.

The syndicated commitment line agreement includes financial covenants requiring that consolidated and non-consolidated shareholders' equity be maintained at 80% or more of the level at the end of the base fiscal year, and that consolidated and non-consolidated ordinary profit/loss not record losses for two consecutive periods. Breaching these covenants could result in a demand for lump-sum repayment of borrowings, increasing liquidity risk.

If pension asset fair values decline, investment returns decrease, or assumptions such as the discount rate change, retirement benefit expenses and obligations may increase, potentially affecting the financial condition in future periods. In addition, if significant changes occur in estimates of future taxable income, deferred tax assets may need to be written down, which could affect operating results.