Mori-Gumi Co.,Ltd.

If significant environmental changes occur, such as reductions in public works, decreases in private-sector construction demand, or sharp price fluctuations, this may affect business performance. The Company's main business areas are the Kansai region and the Tokyo metropolitan area, making it directly susceptible to market environment changes in these regions. As a countermeasure, the Company focuses on sales activities centered on customers with whom it has built relationships of trust, and on securing a stable volume of business by receiving orders for construction work across various fields.

In the construction industry, contract amounts per project and per counterparty are large, and substantial payments are made upon handover of completed construction work. Therefore, if a counterparty falls into credit difficulty before payment is received, this may have a material impact on business performance. There is particular concern about the risk of impairment to net assets due to bad debts. As a countermeasure, the Company's basic policy is to conduct business centered on high-quality customers, and it has incorporated prior credit investigations into its business process for accepting private-sector construction orders.

There is a risk that securing and developing personnel with national qualifications and skills may become difficult due to the declining birthrate, diversification of work styles and the spread of telework, chronic shortages in new graduate recruitment stemming from the image of the construction industry, and intensifying competition for recruitment with other companies in the same industry. If appropriate personnel cannot be assigned at the necessary times, this may affect business performance. As a countermeasure, the Company is actively pursuing new graduate and mid-career recruitment, promoting work-style reforms such as implementing a full two-day weekend system and reducing overtime work, and developing human resources through support for obtaining national qualifications and the transmission of technical skills.

If it is difficult to reflect surges in labor costs or raw material prices in contract amounts, this may affect business performance. There is a risk that rising construction costs will directly squeeze profitability. As a countermeasure, the Company conducts thorough surveys of price trends and hedges risk through early purchasing when a surge in material prices is anticipated.

Fluctuations in land prices and other factors may affect the sale, purchase, and valuation of real estate holdings, which may in turn affect business performance. There is a risk that a decline in the market value of real estate could lead to impairment of asset value. As a countermeasure, the Company's basic policy is not to hold unnecessary real estate, and it strives to hedge against the risk of declining market value.

Although the Company takes thorough care with quality control, if damages arise from liability for non-conformance with contracts, this may affect business performance. Defects in constructed buildings can lead to substantial liability for damages. As a countermeasure, in addition to strengthening quality patrols, the Company has obtained certification under the international quality management system standard "ISO9001" and is working to improve quality.

If there are amendments, abolitions, or tightening of regulations under laws such as the Construction Business Act, the Building Standards Act, the Antimonopoly Act, the Construction Recycling Act, the Industrial Safety and Health Act, and the Act on the Protection of Personal Information, this may affect business performance. The Company is subject to a wide range of laws and regulations, creating a risk of costs arising from responding to changes in the regulatory environment. As a countermeasure, the Company has established a system to obtain information on legal amendments at an early stage from the Japan Federation of Construction Contractors and industry associations, and has built a mechanism to consider early responses.

Although the Company thoroughly implements safety management, if a serious industrial accident or other accident involving personal injury or damage to constructed structures occurs, this may affect business performance. Serious accidents can lead to construction suspension, liability for damages, and damage to corporate trust. As a countermeasure, the Company conducts safety patrols at multiple levels, including construction, safety, and management, has obtained "ISO45001" certification, and maintains insurance coverage including civil engineering work insurance, construction work insurance, product liability insurance, and contractor liability insurance.

Because the Company concentrates its business areas in the Kansai region and the Tokyo metropolitan area, if a large-scale natural disaster such as an earthquake, tsunami, or wind or flood damage occurs in these regions, this could result in construction suspension, significant delays, damage to properties under construction, harm to employees, and impairment of held assets. Furthermore, there is a risk that changes in order trends after a disaster, surges in material prices, and reduced power supply capacity could also affect business performance. As a countermeasure, the Company has formulated a business continuity plan, established a safety confirmation system, and conducts regular drills assuming the occurrence of large-scale disasters.