ORIGINAL ENGINEERING CONSULTANTS CO.,LTD.

The Group's orders are highly dependent on public works commissioned by local governments, and since target order budgets fluctuate according to local governments' tax revenues and fiscal expenditures as well as government budget formulation trends such as national treasury subsidies and local allocation tax grants, this may affect order volume, completed work volume, and profit. As a countermeasure, the Group aims to secure a stable order volume by leveraging its domestic sales network deployed across all prefectures along with its extensive track record and proposal capabilities to deepen relationships with existing customers and develop new customers. The Group is also considering creating business opportunities in areas outside water supply and sewerage.

With respect to orders in the overseas division, the target countries for water infrastructure-related projects have higher country risk than Japan in nearly all respects, including political, social, economic, fiscal, and foreign exchange factors, which may affect the stability and profitability of the business. As a countermeasure, the Group strives to reduce risk by basing its order-taking activities primarily on orders from Japanese government-affiliated institutions such as the Japan International Cooperation Agency (JICA).

The Group handles several hundred orders annually in the public works field, and since some projects are complex, involving overlapping items that require specialized knowledge, deficiencies in the quality of deliverable documents may require corrective action, which could affect business performance. As a countermeasure, in addition to establishing a review system based on ISO9001, senior engineers with extensive business experience hold regular review meetings starting from the kickoff of high-risk projects to prevent design defects.

As the Group operates business nationwide, business activities may be restricted by natural disasters such as earthquakes, tsunamis, and floods, or by unpredictable accidents, which may affect operating results. As a countermeasure, the Group formulates and regularly updates its business continuity plan (BCP) and has installed data servers at two locations, Tokyo and Osaka, to perform mutual backups. In addition, over 90% of all employees have a telework environment enabled by smartphones and laptop computers, strengthening the Group's business continuity framework in the event of a disaster.

The Group's business model relies on the expertise of highly specialized engineers, but securing personnel is becoming increasingly difficult year by year due to the decline in the working-age population resulting from the falling birthrate and aging population. If the securing and development of human resources continue to fall short of plans, the production framework could become weakened, affecting business performance. As a countermeasure, the Group promotes the enhancement of the working environment and employee benefits, the use of internships, and the recruitment of immediately effective personnel through competitive compensation, while also establishing diverse training programs including new employee training, specialized technical training, DX promotion training, and management training.