The Kaneshita Construction Co.,Ltd.

If the construction market contracts significantly due to changes in the environment surrounding the construction business, competition for orders with rival companies may intensify, potentially affecting business results. The Group operates across all markets, both public and private, and addresses this risk by making efforts to gather information to detect changes in market trends.

If increases in raw material and materials prices and labor unit costs cannot be passed on to contract amounts, or if shortages of materials or workers occur, profitability may deteriorate and affect business results. The Group monitors the latest trends in materials and labor through price surveys and information exchange with various contractors, while also working to improve productivity.

If bad debts exceeding expectations occur at business partners or debtors for whom bad debt concerns exist, business results may be affected. The Group manages this risk by tracking business partners' bankruptcy prediction values and the financial condition of new business partners, and by minimizing losses through the recording of allowances for doubtful accounts based on historical bad debt rates and individual assessments.

If violations of laws and regulations or occupational accidents or accidents involving injury to persons or damage to structures occur in connection with construction work, this could have a significant impact not only on business results but also on the company's reputation. In addition to complying with the Construction Business Act and labor-related laws and regulations, the Group works to eliminate occupational accidents and accidents through safety education, hazard prediction activities, inspection patrols, and other activities.

If the market value of held securities declines significantly, business results may be affected due to the recording of valuation losses and other factors. The Group manages this risk by periodically reviewing the rationale for holding securities with market value and making decisions to continue holding or reduce such holdings.

If construction work is interrupted or significantly delayed, or equipment is damaged, due to the occurrence of natural disasters or the spread of infectious diseases, business results may be affected. The Group strives to minimize the impact on business activities by establishing business continuity plans (BCP) and a disaster response headquarters structure for natural disasters, and by continuing basic preventive measures such as web conferencing, telework, and hygiene management for infectious diseases.

If information leakage or system failure occurs due to cyberattacks, business results may be affected through business suspension or loss of trust. The Group strengthens information security through technical measures such as the introduction of antivirus software, as well as regular security education for employees.

There is a risk that construction sites will be damaged due to an increase in natural disasters associated with climate change, and that deterioration of working conditions due to rising average temperatures will lead to increased construction costs, potentially affecting business results. The Group's approach to and initiatives regarding this risk are described in its sustainability policy and initiatives, and it is positioned as a medium- to long-term management issue.