KOMAIHALTEC Inc.

In the Bridge Business and Steel Frame Business, there are cases where costs are incurred in advance of revenue recognition in response to clients' requests for additional changes. As projects have grown larger in scale, the amount of upfront cost incurred has become substantial, and if additional revenue cannot be recognized in a timely manner, this could have a significant impact on business performance. As countermeasures, the Company is working to strengthen relationships with clients and to carry out detailed settlement of additional change orders.

A substantial portion of the Bridge Business depends on orders from national and local governments and expressway companies, but order volumes have recently been on a restraining trend due to policy and fiscal conditions. If order volumes decline further, this could have a significant impact on business performance through reduced order intake. As countermeasures, the Company is pursuing responses to private-sector demand and expanding into steel structures other than bridges.

If steel and other material prices surge and the price increase is not promptly reflected in product prices, this could have a significant impact on business performance. Due to the order structure of the construction industry, it can be difficult to immediately pass on raw material price increases that occur after contract execution. As a countermeasure, the Company conducts detailed price pass-through negotiations with clients.

The Company is currently implementing large-scale capital investment utilizing subsidies to enter the Offshore Wind Turbine Tower Manufacturing (Under Development) business, planning to obtain supplier certification in 2026 and to conclude manufacturing contracts from 2027 onward. Since offshore wind power projects require a long period from planning to implementation, the business environment has changed significantly due to factors such as soaring material costs, and if there are process delays or demand shortfalls, the Company may be unable to recover its investment, which could have a significant impact on business performance. As a countermeasure, the Company is also considering using its offshore wind turbine tower manufacturing facilities to fabricate large steel structures and to convert them for manufacturing onshore wind turbine components.

Due to the acceleration of research and testing activities aimed at expanding the product lineup of Onshore Wind Power Equipment (Medium-Sized Turbines), the Infrastructure & Environment Business has continued to record segment losses. If growth in the renewable energy market does not materialize as expected, the Company may be unable to recover its upfront costs, which could have a significant impact on business performance. As a countermeasure, the Company is working to strengthen its sales organization for onshore wind turbines.

If continued deterioration in profitability is observed in any business segment, or if expected revenue cannot be recognized in the Offshore Wind Turbine Tower Manufacturing (Under Development) business, it may become necessary to recognize impairment losses on the related fixed assets, which could have a significant impact on business performance. As countermeasures, the Company works to maintain and improve profitability across its businesses, and follows a policy of strict execution of capital investment based on verification of future market conditions and investment effectiveness.

If labor costs surge due to labor shortages and other factors, and the increase is not promptly reflected in product prices, this could have a significant impact on business performance. The labor shortage in the construction and manufacturing industries is a structural problem and poses a risk that is likely to continue over the medium term. As countermeasures, the Company is optimizing its workforce, strengthening relationships with subcontractors to build a stable supply chain, and introducing labor-saving equipment.

Steel structural products are extremely heavy, and factory fabrication and on-site installation work involves hazardous operations. In the event of a major disaster or serious accident, in addition to direct damages, loss of social trust and administrative sanctions such as suspension of designation could reduce order volumes, which could have a significant impact on business performance. As countermeasures, the Company is strengthening safety patrols by a dedicated department, developing and thoroughly enforcing work procedure manuals, and conducting various safety awareness activities.

The Company Group is subject to various legal regulations, including the Construction Business Act, the Antimonopoly Act, and the Industrial Safety and Health Act, and if a violation of laws or regulations occurs, this could have a significant impact on business performance through administrative sanctions and other measures. The renewal of the Company's special construction business license (Minister of Land, Infrastructure, Transport and Tourism License No. 000142, valid until September 18, 2026) is approaching, and revocation of the license or suspension of business operations would directly threaten business continuity. As a countermeasure, the Company's compliance department works to instill legal compliance through training and internal audits.

The Company Group carries a substantial amount of interest-bearing debt, and if it encounters difficulty in raising funds or if interest rate levels rise sharply, this could have a significant impact on business performance. In particular, the Company is in a phase of increasing financial burden due to the ongoing large-scale capital investment for offshore wind turbine towers. As countermeasures, the Company is implementing planned fundraising activities and strengthening relationships with financial institutions to facilitate smooth fundraising.