UEKI CORPORATION

If reductions in public works spending or institutional reforms such as changes to bidding procedures are implemented on a scale exceeding expectations, order volumes may decline and affect business performance. For the company, which as a construction firm is highly dependent on public works, policy trends represent a risk directly linked to its business foundation. The Group states that it strives to avoid the occurrence of this risk and to respond appropriately if it materializes.

Since construction projects require a considerable period from order receipt to completion, there is a risk that if the client's business condition deteriorates during that period, delays in the collection of construction payments or bad debts may occur. Given the nature of long-term projects, credit management is highly important, and if amounts become uncollectible, this would have a direct adverse impact on business performance and financial condition. The Group states that it strives to avoid the occurrence of this risk and to respond appropriately if it materializes.

When raw material prices surge, if it is difficult to pass on the increase to contract amounts, the resulting cost increase may squeeze profits and affect business performance. In the construction industry, material procurement costs account for a large proportion of construction costs, making the response to price volatility risk a key factor in maintaining profitability. The Group states that it strives to avoid the occurrence of this risk and to respond appropriately if it materializes.

The Company holds real estate and securities, and if the market value of these assets declines, it may become necessary to recognize valuation losses, which could adversely affect business performance and financial condition. The risk of impairment in the value of held assets due to market fluctuations tends to materialize particularly during sudden changes in the stock market or real estate market. The Group states that it strives to avoid the occurrence of this risk and to respond appropriately if it materializes.

If pension assets decline in market value, or if assumptions used in calculating retirement benefit obligations, such as the discount rate or expected rate of return, are changed, retirement benefit expenses and obligations may increase, affecting business performance. This is a risk in which fluctuations in the interest rate environment or capital markets directly translate into financial burden, and it is an important factor in managing long-term personnel cost expenses. The Group states that it strives to avoid the occurrence of this risk and to respond appropriately if it materializes.

The deferred tax assets recorded at the end of the current consolidated fiscal year are expected to be fully recoverable through future taxable income; however, if there are changes to the tax system or other institutional changes, a partial write-down may become necessary. Should a write-down occur, it would adversely affect net income for the period through an increase in corporate income taxes and other taxes. The Group states that it strives to avoid the occurrence of this risk and to respond appropriately if it materializes.

The Group is subject to a wide range of legal regulations, including the Construction Business Act, the Building Standards Act, the Building Lots and Buildings Transaction Business Act, the Antimonopoly Act, and the Act on the Protection of Personal Information, and business activities may be constrained by the establishment, revision, or abolition of these regulations or changes in applicable standards, potentially affecting business performance. Furthermore, should the Group violate any of these laws and regulations, there is a risk that administrative sanctions could restrict business operations and damage social credibility, seriously affecting order-taking activities. The Group states that it strives to avoid the occurrence of this risk and to respond appropriately if it materializes.