TAKADAKIKO(Steel Construction)CO.,LTD.

Steel bridges account for over 70% of the order backlog, and the majority of these are public works projects. Consequently, deterioration in national and local government finances leading to a decline in order volume poses a risk that directly impacts business performance. If actual order volume and value fall significantly below expectations, the impact on performance would be substantial. As a countermeasure, the Company is diversifying its revenue sources by prioritizing management resources toward the maintenance business and the Seiken Truss business.

Steel is a key raw material in the core Steel Structures business, and recent price volatility has been significant. If price increases cannot be passed on to order prices, this would have a major impact on business performance. There is also a risk of difficulty securing quantities and delivery delays due to tightness in steel supply and demand. As a countermeasure, the Company is working to maintain and strengthen relationships with steelmakers and others, including through the strengthening of relationships involving strategic shareholdings.

Since production facilities are concentrated at the Wakayama Plant, if the plant's functions were to be halted due to a natural disaster or similar event, the impact on business performance would be severe. In addition, accidents occurring during hazardous work involved in the fabrication, transportation, and installation of large-scale products would lead to damages as well as loss of customer trust. As a countermeasure, the Company has formulated a company-wide BCP and reorganized its safety management system through the establishment of the Safety and Quality Division.

The Company is subject to legal regulations such as the Construction Business Act, and in the event of a legal violation, administrative sanctions and other measures could have a major impact on business performance. The Company is working to raise employees' awareness of legal compliance through the introduction of an internal whistleblowing system and regular information dissemination from the Compliance Office.

If a serious product liability issue for defects arises in fabricated or constructed products, the resulting repair costs and loss of customer trust could have a major impact on business performance. As a countermeasure, the Company newly established the Safety and Quality Division, consolidating quality control departments previously dispersed across various divisions into this division to build a unified, company-wide quality control system.

As of the end of FY2026 (ending March 2026), the outstanding balance of borrowings was ¥3.9 billion, and the Company adjusts its cash flow using short-term borrowings, meaning that a rise in domestic interest rates or rapid inflation could have a major impact on business performance. As a countermeasure, the Company raised ¥3.0 billion in fixed long-term funds during FY2025 (ended March 2025) to prepare for interest rate increase risk and stabilize cash flow.

Fixed assets related to the Bridge Business and Steel Structure Business are held mainly at the Wakayama Plant, and a significant deterioration in the business environment or similar factors could result in the recognition of impairment losses, which would have a major impact on business performance. As a countermeasure, the Company is promoting the restructuring of its production system in light of medium- to long-term market trends and business reform based on

Fluctuations in the fair value of held assets could have a major impact on business performance, with a particular risk of price declines in strategic shareholdings. The administrative department regularly confirms fair values and reports to and reviews them with the Board of Directors, and the Company is progressively selling shares whose holding rationale has diminished in order to reduce risk by lowering the amount held.

Securing engineers and skilled workers with specialized expertise is essential for business continuity, and if the Company is unable to secure the necessary human resources amid the progression of the declining birthrate and aging population, this could affect business performance. As a countermeasure, the Company is strengthening new graduate and mid-career hiring, reinforcing recruitment in the Kanto region through the expansion of the Tokyo Head Office, continuing employment of former employees and employees past retirement age, and reviewing its personnel and human resource development systems.

Unauthorized external access or computer viruses leading to the leakage of confidential information or personal information, or the failure of information systems, could have a major impact on business performance. As a countermeasure, the Company is strengthening the personnel of its information systems department, implementing the latest security measures, and conducting regular information security training for all employees.