NICHIREKI GROUP CO., LTD.

In the Asphalt Applied Processed Products Business, straight asphalt, the main raw material, and auxiliary materials are derived from crude oil, and a surge in crude oil prices directly impacts business performance. There is a risk that profitability may deteriorate if the increase in costs cannot be passed on to product sales prices or if stable supply of raw materials becomes difficult. As a countermeasure, the Production Planning Department continuously monitors procurement risk, and policies are determined at the monthly management strategy meeting.

The Road Paving Business has a high proportion of public works, and reductions in public works budgets or cost-cutting measures due to the fiscal condition of national and local governments may affect business performance. There is a risk that deterioration in fiscal conditions could directly lead to a decrease in order volume. As a countermeasure, the Company is promoting the development of products and construction methods that contribute to "life extension and enhanced performance" and "reduction of environmental impact," while expanding into markets beyond roads, such as airports, ports, railways, and parks.

If price competition in the market intensifies further, there is a risk that business performance may deteriorate due to declines in product sales prices and construction order prices. Downward pressure on prices tends to be particularly strong for general-purpose products and construction methods. As a countermeasure, the Company seeks differentiation through the development of high-value-added products and construction methods, while also working to reduce manufacturing and construction costs.

If business partners experience credit concerns due to sudden changes in the business environment or other factors, uncollectible accounts receivable and other issues may arise, potentially affecting business performance. The Company strives to reduce credit risk by thoroughly managing credit and receivables through the use of specialized credit research firms and the holding of credit monitoring meetings.

As the Company conducts overseas business, there is a risk that changes in the political and economic conditions of the countries in which it operates, or unforeseen changes in laws and regulations, may affect business performance. The Overseas Planning Department and the Legal & Compliance Department consult on each individual case to devise risk avoidance measures, while sharing information on social conditions and legal and regulatory revisions in the countries of operation and taking necessary countermeasures.

If a large-scale loss of data, information leakage, system failure, or similar incident occurs due to virus infection or other causes, business performance may be affected due to the suspension of business activities or loss of trust. The Company thoroughly implements access restrictions on confidential data, restrictions on the use of removable media, and information security education for employees, while also building a rapid recovery system centered on the Business Risk Management Committee and taking out cyber insurance covering the entire Group.

If a large-scale natural disaster or infectious disease outbreak occurs, the business activities of the Group may be scaled back, potentially affecting business performance. The Company has established BCP management regulations and disaster prevention regulations, introduced an employee safety confirmation system, and built a response system in which information is consolidated at the Business Risk Management Committee and a disaster response headquarters headed by the Representative Director and President is established in the event of a disaster.

The Company is subject to legal regulations under related laws such as the Construction Business Act, the Antimonopoly Act, and the Industrial Safety and Health Act, and if administrative sanctions or similar actions occur, they may have a significant impact on business performance and corporate trust. The Legal & Compliance Department and the Safety, Quality & Environment Department work together to provide education opportunities related to compliance and occupational health and safety, striving to reduce the risk of occurrence by thoroughly disseminating this information among Group officers and employees.