ASANUMA CORPORATION

The Group conducts construction operations in Japan, Guam, and Southeast Asia, and construction demand may decline significantly due to political developments, economic trends, natural disasters, terrorism, epidemics, and similar events in each country. In addition, because contract amounts per transaction are large and construction periods are long, if a client's creditworthiness deteriorates before receipt of construction payments, business operations may be affected. The securities report does not describe specific countermeasures.

Domestically, competition is intensifying not only with existing construction companies but also with equipment companies and plant companies, while overseas, competition with local construction companies and Japanese overseas subsidiaries is intensifying. The Group faces intense competition in both construction quality and contract price, and if the competitive or business environment changes substantially, management may be affected. The securities report does not describe specific countermeasures.

The construction business relies on services provided by numerous subcontractors, and if prices of key materials or labor surge due to the expansion of armed conflicts or geopolitical tensions, business operations may be affected. Rising material procurement costs directly lead to an increase in construction costs, resulting in a decrease in gross profit on completed construction contracts. The securities report does not describe specific hedging measures.

In overseas operations, a portion of revenue is received and a portion of expenses is paid in foreign currencies, and the basic policy is to allocate foreign currency income to foreign currency-denominated expenditures; however, since the consolidated financial statements are translated into yen, they are affected by exchange rate fluctuations. Exchange rate movements may affect the Group's financial position and business results.

Since construction work requires large amounts of advance funding, the Group may raise funds from financial institutions or the markets. Trends in the funding and financial markets, as well as changes in the Group's creditworthiness, may constrain fund procurement or raise procurement costs. The securities report does not describe specific countermeasures.

Although the Group works daily to ensure safety during construction, if an accident occurs, it could damage customer trust and social reputation, and require compensation for injured or deceased workers or third parties, potentially having an extremely severe impact on business performance. The Group currently mitigates this risk by maintaining liability insurance with coverage amounts and scope comparable to industry standards.

The Group works to ensure the quality of completed construction projects, but if non-conformity with contract terms occurs after completion, it could damage customer trust and social reputation, and require compensation to customers or third parties under liability for non-conformity, potentially having an extremely severe impact on business performance. The securities report does not describe specific countermeasures such as insurance enrollment.

The Group conducts business based on numerous domestic and international laws and regulations, including the Construction Business Act, the Building Standards Act, and the Antimonopoly Act, and changes to these regulations may result in additional cost increases or business constraints. If a legal violation occurs, administrative sanctions or other measures could affect business performance and operations, and the Group is working to strengthen its compliance framework.

Much of the Group's operations depend on information systems, and if a cyberattack such as a computer virus or a large-scale failure of power or communications infrastructure occurs, it could result in the loss of important data and disruption to construction work, affecting management. In addition, if held personal information is leaked, it could lead to a decline in social reputation and loss of trust among customers and the market. The securities report does not describe specific countermeasures.

Operating the construction business requires securing personnel with various qualifications and skills, including national certifications, and since acquiring the necessary qualifications and skills takes considerable time, business operations may be affected if the necessary staffing cannot be secured at the required time. In addition, if collective labor disputes such as strikes by employees occur, business performance may also be affected.