MEISEI INDUSTRIAL Co.,Ltd.

If domestic demand, which forms the Group's revenue base, remains stagnant or declines over the long term due to deteriorating economic conditions in domestic demand sectors, industry consolidation, or the relocation of manufacturing bases overseas, this could adversely affect business performance. The Group operates across a wide range of demand sectors, but where dependence on a specific segment is high, the impact could be more significant.

In overseas construction and large-scale projects, if significant warranty-related costs arise after handover completion, this could adversely affect business performance and financial condition. Particularly for large-scale or overseas projects, the scope and cost of defects are difficult to predict, creating a risk of unexpected compensation costs.

In overseas business operations centered on the Asia region, terrorism, political instability, unexpected changes in laws and regulations, deteriorating market conditions, or deterioration in the financial condition of joint venture and other partner companies could adversely affect business performance. Geopolitical risks and the financial soundness of partner companies can directly impact business continuity.

Sharp fluctuations in foreign exchange rates or rising interest rates could affect the translation of overseas business earnings and financing costs, adversely impacting business performance. There are concerns that foreign exchange risk exposure will expand as the proportion of overseas business increases.

If a customer with large outstanding receivables faces financial difficulties, the resulting bad debt losses could adversely affect business performance and financial condition. Due to the nature of the construction and contracting business, accounts receivable and other receivables tend to be concentrated among major customers, meaning the credit condition of individual customers directly impacts the Group's finances.

If estimates of total construction costs and progress in recognizing construction revenue diverge from actual results, this could affect the amount of revenue recognized. In addition, multiple accounting estimate risks—including impairment of tangible fixed assets, write-down of deferred tax assets, declines in the fair value of investment real estate and securities, and increases in retirement benefit obligations—could adversely affect business performance.

If unprofitable construction projects arise due to unforeseen additional costs during the construction phase, this could adversely affect business performance and financial condition. Delays in construction schedules, changes in construction conditions, and surges in material and labor costs are the main anticipated factors, with the impact potentially larger for large-scale projects.

If an unforeseen natural disaster or infectious disease outbreak disrupts the business activities of the Group or its major business partners, this could affect business performance. Suspension of work at construction sites and delays in material procurement could be direct factors contributing to a deterioration in business performance.

Although the Group has established a Compliance Committee and provides training to officers and employees, should a violation of laws or regulations occur, this could affect business performance through a significant loss of social trust or administrative penalties from relevant authorities. Compliance with regulations such as the Construction Business Act and the Antimonopoly Act is a particularly important issue.

The Group has established an information security framework and works to manage servers and networks and protect customers' confidential information; however, should an information leak occur, this could affect business performance through loss of trust from customers and society and payment of damages. As cyberattacks become increasingly sophisticated, continuous strengthening of the security framework is required.