ICHIKEN Co., Ltd.

In general private-sector construction work, particularly for commercial facilities, order-taking competition with other companies is intensifying, creating a risk that construction profitability may deteriorate. In addition, a sharp surge in construction material prices or labor costs could worsen construction profitability and affect business performance. The Company is working to improve profitability by acquiring new customers and strengthening cost control, but the risk continues under an uncertain economic environment.

If clients, subcontractors, or other business partners fall into credit distress due to an economic slowdown or a shrinking construction market, business performance may be affected. The Company seeks to minimize credit risk through strict screening of partners' creditworthiness and payment terms and early collection of information on credit concerns, but complete avoidance is difficult when the external environment deteriorates.

If the Company receives orders for large-scale construction projects that require a longer-than-usual period to fully collect contract payments, this may affect its cash flow. The Company addresses this by concentrating management resources on commercial facilities and strengthening selective order-taking for housing-related construction, but given the nature of large-scale projects, the risk of prolonged fund collection remains inherent.

If liability for non-conformity with contract terms is pursued through litigation or other means due to construction defects and damages arise, this may affect the Company's financial position and business performance. The Company treats strengthening its construction system as a key management priority and takes thorough care in quality control, but given the nature of the construction industry, the risk of problems surfacing after construction cannot be eliminated.

The Company holds assets such as securities, real estate, and membership rights, and changes in market conditions affecting their fair value or changes in usage status may affect its financial position and business performance. In particular, fluctuations in the real estate market and stock market directly affect the valuation of held assets, resulting in risk dependent on the external environment.

Although the Company strives to comply with laws and regulations in the course of its business activities, it may be exposed to risks such as litigation, and depending on the outcome, business performance may be affected. The construction industry is prone to construction-related disputes and contract conflicts, and depending on the outcome of litigation, there is a risk of incurring substantial costs.

In the event of a natural disaster such as an earthquake or tsunami, damage to construction sites under work or held assets, and delays in construction periods, may affect the Company's financial position and business performance. The construction industry involves a large amount of outdoor work and is therefore susceptible to direct impact from natural disasters, though the securities report provides only limited description of specific countermeasures.