TAISEI ONCHO CO., LTD.

Domestic and international economic conditions may cause fluctuations in public investment and private-sector investment trends, which could affect order volumes and business performance. As countermeasures, the Group is advancing function-, region-, and DX-based strategies under the medium-term management plan 'LIVZON DREAM2030,' expanding overall Group capabilities to become a comprehensive building services company, and expanding its customer base by strengthening sales capabilities.

Fluctuations in construction costs on long-duration projects, surging materials and equipment costs due to rising prices of raw materials and energy, increased labor costs from overlapping peak periods, and design changes or schedule delays during construction may result in unexpected unprofitable projects, affecting business performance. The Group addresses this through cost monitoring via the 'Key Construction Project Management Table,' timely revision of execution budgets, and negotiation of price revision clauses.

If procurement of materials and equipment is delayed due to supply-demand conditions, the overall construction schedule may be delayed, affecting business performance. The Group works to reduce procurement risk by strengthening its purchasing structure, diversifying suppliers, and devising early-ordering measures.

The aging of construction workers and shortages of skilled engineers and technicians may reduce the construction execution capability of the Group and its partner companies, affecting business performance. The Group addresses this through continuous recruitment and training of young workers, securing a diverse workforce leveraging diversity, providing training opportunities including to partner companies, and actively investing in improving operational productivity.

If confidential information is leaked due to cyberattacks or if unexpected unauthorized access or information system failures occur, business performance may be affected through operational suspension or loss of trust. The Group has implemented security enhancement measures such as targeted phishing email training, third-party vulnerability assessments, and migration of the communication environment from VPN to zero trust.

Investment in new businesses or execution of M&A may result in the emergence of various risks such as subsequently discovered contingent liabilities, failure to realize synergies, failure to meet business plans, goodwill impairment, and valuation losses on shares, which could affect business performance. The Group addresses this through financial and legal due diligence, careful review of business plans, and prompt execution of post-merger integration (PMI).

Economic fluctuations, exchange rate movements, changes in political conditions, and regulatory amendments in overseas markets may affect business performance. The Group executes overseas business investment with an emphasis on future potential, diversity, and balance, and has established a management and risk control framework for overseas subsidiaries through the Group Company Management Division.

If it becomes necessary to record impairment losses due to fluctuations in the fair value of held assets such as operating and rental real estate or securities, business performance may be affected. The Group conducts periodic evaluations from the perspective of the significance of holding such assets and asset soundness, and makes timely and appropriate decisions such as disposals based on the evaluation results.

The enactment or amendment of various domestic and international laws and regulations, such as the Construction Business Act, the Companies Act, the Financial Instruments and Exchange Act, the Industrial Safety and Health Act, environmental standards, and accounting standards, may increase compliance costs or restrict business activities, affecting business performance. The Group addresses this through proactive compliance with laws and internal regulations, implementation of internal control training, and thorough dissemination of the internal whistleblowing system.

If major disasters or quality-related accidents occur during the design or construction stages, resulting in business interruption, corrective construction work, or contract nonconformity, business performance may be affected. The Group addresses this by establishing verification and validation systems at the design stage, and conducting regular disaster and quality accident prevention training, inspections, and patrols in cooperation with partner companies.