NJS Co.,Ltd.

The majority of domestic net sales are generated from orders placed by the Ministry of Land, Infrastructure, Transport and Tourism, other ministries and agencies, public corporations, prefectures, and municipalities, and most private-sector orders also originate from public-sector projects. As a result, changes in public investment trends stemming from national and local government development plans and fiscal policies may directly affect business performance. The concentration risk to a specific customer segment is high, and there is a risk that net sales could decline substantially during periods of reduced public investment.

Because sales recognition is concentrated in the second quarter cumulative period (January to June), which includes the fiscal year-end for public sector clients, a significant divergence in net sales arises between the first half and second half of the fiscal year. This seasonal fluctuation may create imbalances in cash flow and personnel allocation during the year, potentially increasing the complexity of business management. Investors should also note that this makes simple comparisons of quarterly results difficult.

A large proportion of orders from public sector clients, which account for the majority of net sales, are obtained through competitive bidding. If unexpected changes occur in bidding conditions or the bidding system itself, order opportunities and order unit prices may be affected. If the Group is slow to respond to such system changes, it may be placed at a competitive disadvantage relative to other companies, resulting in a risk of deteriorating business performance.

The Group's core business is the provision of deliverables and services that satisfy contract specifications, and if unexpected costs arise or the Group incurs liability for damages arising from deliverables or services, business performance may be adversely affected. The Group upholds a customer-first philosophy and strives to ensure and improve quality through close communication with customers; however, in the event of a large-scale defect, the financial impact may not necessarily remain minor.

As the Group operates globally with bases established overseas, fluctuations in foreign exchange rates may affect business performance and financial condition through the yen conversion of foreign-currency-denominated transactions and the yen conversion of foreign-currency-denominated assets and liabilities. During periods of yen appreciation, the yen-converted amount of overseas net sales may decrease, which could be a factor depressing consolidated business performance.

As the Group conducts business activities in countries around the world, significant changes in the business environment—such as political instability arising from war, terrorism, or civil unrest, or unexpected changes in legal systems in the countries or regions where the Group has business locations—may affect business performance and financial condition. In particular, where the proportion of business conducted in emerging or developing countries is high, the impact when country risk materializes could be substantial.