Kawasaki Geological Engineering Co.,Ltd.

The Group has a high proportion of business transactions with the public sector, including government agencies and public corporations, and its operating results may be affected by trends in public investment. If the government reduces or scales back its fiscal policy or public investment budget, this poses a risk that directly leads to a decrease in order volume and a decline in net sales. The annual securities report does not describe specific countermeasures.

Due to the practice of public works delivery deadlines being concentrated at the end of the fiscal year, the Company's net sales tend to be skewed toward the second and fourth quarters, resulting in seasonal fluctuations. Combined with the fact that the fiscal year-end is in November, this causes variability in quarterly performance, which may affect the stability of cash flow and earnings management. The annual securities report does not describe specific countermeasures.

If fluctuations in market interest rates, such as government bond yields, force changes to the discount rate or expected rate of return on plan assets used in calculating retirement benefit obligations, this may affect operating results and financial condition. In particular, during periods of declining interest rates, a lower discount rate would increase retirement benefit obligations, posing a risk of increased expense burden. The annual securities report does not describe specific hedging measures or countermeasures.

If abnormal weather or natural disasters caused by climate change significantly disrupt the progress of operations such as field surveys and geological surveys, this may affect the Group's performance, including a decrease in net sales and deterioration of profitability. Due to the nature of the geological survey business, which is highly dependent on on-site work, deterioration in weather and climatic conditions directly leads to construction period delays and additional costs. The annual securities report does not describe specific countermeasures.