TAKADA CORPORATION

In the plant industry, which is susceptible to domestic economic fluctuations and international conditions, an economic downturn may lead to restrained capital investment and intensified order competition. This could result in a decline in order prices, potentially adversely affecting the Group's business performance. There is no description of specific countermeasures in the annual securities report.

The Group is highly dependent on customers in the steel and chemical industries, with these customers accounting for a significant proportion of orders received and completed construction revenue. The structure is such that changes in industry trends, such as customer facility rationalization or business restructuring, directly affect performance, inherently posing a customer base concentration risk.

If material prices etc. rise significantly, there may be cases where the increase cannot be passed on to construction contract amounts. Increased costs could squeeze profits and adversely affect the Group's business performance. There is no description of specific hedging measures or countermeasures in the annual securities report.

Although the Group makes every effort to ensure thorough quality control, if damages are claimed based on non-conformity liability or product liability, it may affect the Group's business performance and credibility. As the Group is engaged in the manufacture of plant equipment and various devices, there is a risk that the scale of damages could be large in the event of a defect.

Although the Group makes every effort to ensure thorough safety measures, if an industrial accident occurs at a construction or maintenance site, it may affect business performance and also lead to a decline in social credibility or administrative sanctions. This is set against the backdrop of the high-risk work environment inherent in plant construction work.

If an accident or disaster occurs during the course of work in the construction and maintenance of plant equipment and the manufacture of various devices, it may affect the Group's business performance through construction interruptions or damages claims. Given the nature of the work environment, the impact of a major accident could be far-reaching.

If a customer falls into credit distress before payment for construction work is received, uncollected receivables may arise, adversely affecting the Group's business performance and financial position. Given the characteristics of plant construction work, in which the period from order receipt to payment collection is long, exposure to changes in customers' financial conditions is significant.

As the Group has multiple locations both domestically and internationally, if a natural disaster such as an earthquake or typhoon, or an unforeseen accident occurs, normal business activities may be disrupted, affecting performance. While the geographic dispersion of locations also contributes to risk diversification, there is a risk that multiple locations could be affected simultaneously in the event of a wide-area disaster.

The Group holds confidential information belonging to customers and business partners, as well as its own confidential management, sales, and technical information. If unauthorized access or a cyber attack results in an information leak, in addition to affecting performance, there is a risk of loss of customer trust and damages claims. The threat of cyber attacks is increasing with the advancement of digitalization.

Although the Group strives to continuously strengthen its compliance and internal control systems, if such systems are found to be insufficient, it may become subject to administrative sanctions such as surcharges, criminal penalties, or damages claims. As a result, there is a risk of a significant impact on both business performance and financial position.