TOBISHIMA HOLDINGS Inc.

The Group implements business acquisitions and capital alliances as part of its growth strategy; however, if the initially expected synergies or benefits cannot be obtained due to changes in the business environment or other factors, this may adversely affect operating results and financial condition. Similar risks may arise when undertaking business reorganizations such as withdrawal from unprofitable businesses or the reorganization of affiliated companies. As a countermeasure, the Group seeks to minimize such risks through periodic review of its business portfolio.

The Group is subject to various legal regulations in connection with its corporate activities, and if it becomes subject to administrative sanctions or if new laws are enacted, existing laws revised or abolished, or applicable standards changed, this may affect business performance and corporate reputation. As a countermeasure, the Group closely monitors legal amendments and revises internal regulations as appropriate, while conducting compliance training for officers and employees to strengthen its compliance framework.

Leakage of confidential information due to cyberattacks, or information leaks resulting from mis-transmission, operational errors, or internal misconduct, could damage the Group's social credibility and cause harm to customers and business partners, thereby affecting business performance. As a countermeasure, the Group implements information security measures from physical, human, and IT perspectives, and conducts security training for officers and employees.

Unexpected changes in economic conditions or sudden market fluctuations may result in interest rate volatility or the need to recognize impairment on equity holdings, which could affect business performance. As a countermeasure, the Group closely monitors market trends and strives to secure stable financing.

The occurrence of large-scale natural disasters such as earthquakes, tsunamis, and wind and flood damage, or a global pandemic, could cause damage to employees and owned assets as well as deterioration of the business environment, thereby affecting business performance. As a countermeasure, the Group has established a Business Continuity Plan (BCP) and is working to build a framework for continuing business activities or achieving prompt recovery.

A sharp contraction in the domestic construction market or intensifying competition could become a concern for the performance of the construction business, the Group's core business. As a countermeasure, the Group formulates medium- to long-term management strategies and medium-term management plans to respond to changes in the business environment while conducting its business activities.

A sharp rise in the prices of construction materials and equipment or labor costs, or delays in the delivery of materials and equipment, could worsen construction profitability and affect business performance. As a countermeasure, the Group continuously monitors trends in materials, equipment prices, and labor costs, and works to mitigate the impact of cost increases through the introduction of price escalation clauses, use of centralized procurement, and thorough cost management.

In the construction industry, contract amounts per transaction are large, and the collection of construction payments can take a long time; therefore, if a counterparty's credit risk materializes, additional losses or provisions may need to be recognized, affecting business performance. As a countermeasure, the Group thoroughly manages credit and receivables to reduce credit risk as much as possible.

The occurrence of quality defects or construction accidents in the construction business could have a significant social impact and give rise to liability for non-conformity with contracts and damages, thereby affecting business performance. As a countermeasure, the Group works to improve quality in all aspects, including temporary works, through ISO activities and safety management activities.

Due to the declining birthrate and aging population, the number of workers engaged in the construction industry has been notably decreasing, and depending on construction market conditions, it may become difficult to secure skilled workers. As a countermeasure, the Group strives to secure skilled workers in a planned manner while promoting labor-saving construction methods utilizing digital technology to improve efficiency.