NIPPON CONCRETE INDUSTRIES CO., LTD.

Prices of key raw materials such as steel, cement, and crude oil fluctuate regardless of domestic economic trends due to international supply oligopolization and expanding demand from emerging economies. Price increases push up manufacturing costs for poles, piles, etc. and logistics costs, and if delays occur in revising product prices, this may put pressure on earnings. As countermeasures, the Group as a whole is promoting cost reductions and requesting appropriate product price revisions from customers.

Sales of piles, precast products, and construction work are highly dependent on demand trends in the domestic construction market. If demand falls more than expected due to a sharp economic downturn causing restraint in private capital investment, etc., this may put pressure on earnings. As countermeasures, in addition to promoting cost reductions and carefully considering capital investment, the Group is working to expand into fields less susceptible to economic trends.

The balance of interest-bearing debt at the end of the consolidated fiscal year was ¥13,343 million, and funds required for technology development and building the product supply system are procured mainly through borrowings from financial institutions. If interest rates rise in the future, this may affect business performance and financial condition; however, the majority of borrowings are at fixed interest rates, and the Company is working to strengthen profitability and improve cash flow to reduce interest-bearing debt while diversifying its funding methods.

The syndicated term loan agreement and commitment line agreement include financial covenants related to net assets and profit/loss. If these covenants are breached, an obligation to repay the borrowings may arise, which could affect the financial condition. The Company is working to improve profitability in order to avoid breaching these covenants.

Offices, factories, and construction sites operated domestically and in Myanmar may suffer direct damage to buildings, equipment, and personnel from large-scale natural disasters such as wind and flood damage, earthquakes, and tsunamis, as well as indirect damage from communication system disruptions or supply chain stagnation. Since recovery costs and losses from business interruption may affect business performance and financial condition, the Company implements prompt establishment of a response headquarters and priority countermeasures based on a Group-wide risk map.

If business interruption or postponement occurs due to the spread of infectious diseases, losses may arise, affecting business performance and financial condition. As a countermeasure, the Company has a policy of promptly establishing a response headquarters in the event of an outbreak and building a company-wide response system to prevent disruptions to production, supply, construction, and other operations.

As dependence on information systems increases, if an information security incident occurs due to cyber attacks or computer virus infections, this could result in destruction of information systems, data tampering, and economic losses due to damage to social credibility, thereby affecting business performance and financial condition. Based on the "Information Security Policy," the Company maintains and enhances its security management system to prevent unauthorized external intrusion and virus infection.