SANKO METAL INDUSTRIAL CO., LTD.

The roofing business is in a state of competition with other companies, and if the contraction of the construction market continues, intensified competition for orders may lead to a decline in order prices, potentially affecting business performance. The Company strives to maintain competitiveness through the development of differentiated products and the strengthening of its construction system and construction management capabilities.

Trade receivables such as notes receivable, electronically recorded monetary claims, and accounts receivable from completed construction contracts are exposed to the credit risk of business partners. The Company seeks to mitigate this risk through strict credit screening at the time of order receipt based on its credit management regulations and the implementation of appropriate receivables protection measures.

In the roofing business, if prices of major materials rise sharply, it may become difficult to pass on such increases to order prices, potentially affecting business performance. The Company works to minimize the impact on construction profit and loss through cost reduction efforts such as price negotiations with suppliers, diversification of suppliers, and early ordering of materials.

The roofing business often involves hazards related to the working environment and work methods, and if a serious accident involving personal injury or damage to the structure being built occurs, it may affect business performance. In addition to formulating construction plans in advance, providing thorough safety education, and promoting hazard prediction activities and safety patrols, the Company conducts on-site patrols and training through its Safety, Health and Environment Department, which is independent of the business divisions.

If litigation related to repairs after handover of completed construction, non-conformity with contracts, product liability, etc., or litigation filed by business partners occurs, it may affect business performance. The Company strives to prevent such occurrences through legal checks by retained attorneys and the establishment and appropriate operation of its compliance system, while also maintaining a response framework in preparation for the filing of litigation.

If significant repair costs arise due to non-conformity with contracts or defects, this may affect business performance and corporate reputation. The Company seeks to improve construction quality through thorough pre-contract and pre-construction review as well as enhanced training for construction supervisors and construction teams, while also reducing risk by maintaining certain insurance coverage.

For the Company, which is responsible for construction management, securing, developing, and newly recruiting excellent partner companies is essential, and if an unforeseen event occurs at a major partner company, it may result in lost order opportunities or delivery delays, thereby affecting business performance. The Company seeks to mitigate this risk through the strengthening of the partner company organization "Sanyukai", led mainly by the Construction General Affairs Department, by promoting the enrollment of continuously contracted partner companies into Sanyukai, and by providing support for staff increases.

If profitability declines due to changes in the business environment and the recovery of invested amounts becomes unlikely, the Company may record an impairment loss on its held fixed assets. The Company addresses this through careful deliberation of investment projects by the Capital Expenditure Budget Committee, chaired by the officer in charge of finance, regular monitoring after acquisition, and quarterly assessment of indicators of impairment.