ASIA PILE HOLDINGS CORPORATION

The Group has pursued active group expansion measures aimed at strengthening competitiveness in the ASEAN region, including making Phan Vu Investment Corporation of Vietnam a subsidiary and establishing VJP Co., Ltd. in Myanmar (dissolved in June 2025). Following the transition to a holding company structure (October 2015), the Group continues to consider alliances and capital participation, but there is no guarantee that the expected effects will be realized. If the group expansion measures do not function as anticipated, this could materially affect the Group's financial position and business results.

Development of concrete pile products and construction methods and obtaining certification from the Ministry of Land, Infrastructure, Transport and Tourism require substantial time and cost, but there is no guarantee that these investments will be recovered quickly. In addition, because there is a time lag between the filing and publication of third parties' intellectual property rights (patents, trademarks, design rights, etc.), the risk that developed products or construction methods may infringe on third-party rights cannot be eliminated. If infringement is determined, this could affect business results through damage claims and other consequences.

In the concrete pile industry, reorganization and oligopolization by major companies are progressing against the backdrop of increasing development cost burdens, and the Group has set a policy of playing a leading role as a major industry player. However, if price competition intensifies beyond expectations as oligopolization progresses, profitability could decline and affect business results. Changes in industry practices, such as the licensing of certified construction methods and mutual supply of concrete piles, could also become factors in business fluctuations.

The manufacture of the Group's core product, prestressed high-strength concrete piles, uses cement, PC steel bars, and other materials, creating a risk that price increases from suppliers could raise manufacturing costs and construction costs. The Group monitors market prices while negotiating prices and works to pass on cost increases to customers, but depending on price trends, this could affect business results. Sharp fluctuations in raw material market conditions directly pressure profit margins.

Because the manufacturing and construction of concrete piles is related to foundation work for buildings, trends in construction investment directly affect order intake. While the Group recognizes that its dependence on public investment is relatively low, in periods of declining private housing investment or capital investment, orders could decline and affect business results. Trends in the domestic and overseas economy and changes in the interest rate environment are the main factors behind demand fluctuations.

The major subsidiary Japan Pile Corporation holds a specific construction business license under the Construction Business Act (civil engineering work and scaffolding/earthwork, Minister's License No. 25777, valid until May 2030). If the license were revoked due to a legal violation or other reason, this would significantly hinder business operations. In addition, as occurred with the change in the building confirmation system in June 2007, the abolition or revision of regulations or the introduction of new systems could affect business results. Compliance violations occurring domestically or overseas could also damage social credibility and brand image.

In foundation work conducted domestically and in the ASEAN region, diverse soil compositions and unexpected obstacles may give rise to unforeseeable defects, leading to deterioration in construction quality or extended construction periods. If claims for damages arise in connection with such defects, this could affect the Group's business results. Although the Group conducts thorough advance ground surveys, foundation design, and examination of construction methods, this risk cannot be completely eliminated.

Foundation work sites, which mainly involve outdoor work using heavy machinery, carry a higher risk of serious industrial accidents compared to other industries. If a serious accident such as a fatality occurs, this could result in human loss, damage to social credibility, disaster response costs including compensation, and deterioration in earnings due to construction delays. The Group addresses this through thorough safety education, regular patrols, and various insurance policies, but the risk cannot be completely eliminated.

In the foundation work-related business conducted through affiliated companies in the ASEAN region, changes in each country's political and economic situation, revisions to laws and tax systems, and fluctuations in foreign currency exchange rates could affect business results and financial position. In particular, the business environment in Vietnam (Phan Vu Investment Corporation) and other locations involves regulatory and risk factors that differ from those in Japan, and the materialization of country risk could directly pressure earnings. The Group manages its business through local affiliated companies, but there is no guarantee that it can fully control these risks.

If offices, factories, and construction sites operated domestically and in the ASEAN region are struck by large-scale natural disasters such as storms, floods, earthquakes, or tsunamis, direct damage to buildings, equipment, and employees, as well as indirect damage from disruption of communication systems and raw material supply chains, could occur. In addition, if business is interrupted or postponed due to the spread of infectious diseases such as COVID-19, recovery costs and losses could affect business results. Operating across a wide area with multiple sites can serve to disperse risk while also potentially expanding the scope of damage.