EBARA JITSUGYO CO.,LTD.

The public sector share of orders received in FY2025 (ending December 2025) was high at 67.3% (¥29,344 million), and the customer share was 66.3% (¥27,314 million). If public investment budgets are curtailed or public works cost-reduction measures are implemented, this will directly affect order conditions and profit and loss. In addition, seasonal fluctuations occur, with public works sales concentrated from December to March. As a countermeasure, the Company is promoting expansion into private-sector demand by strengthening technology and new product development capabilities in the Manufacturing Business fields such as ozone, energy conservation, and water treatment.

The Company has concluded sales agency agreements with Ebara Corporation and its affiliated companies (the Ebara Group). In FY2025 (ending December 2025), the Ebara Group accounted for 67.0% (¥2,728 million) of merchandise purchases and 19.3% (¥4,247 million) of cost of sales for products and construction. If the basic agency agreement is not renewed or if the business relationship is significantly reduced, this could have a material impact on business performance. While the Company currently judges that the relationship will remain stable, since the counterparty is an independent business partner with no capital relationship, the risk of a change in the relationship cannot be eliminated.

The Group is a fabless company that does not own its own production facilities and outsources all manufacturing of environmental products to external parties. If there is a shortage of manufacturing contractors, product quality issues, or difficulty in procuring raw materials, product supply could be disrupted, potentially affecting business performance. The Company has secured multiple manufacturing contractors and manages in-house the technology and data necessary for product manufacturing, thereby reducing the risk of dependence on any specific contractor and establishing a system that allows for short-term switching to alternative contractors.

Rapid changes in the market environment, such as shifts in private-sector capital investment trends, intensified price competition due to an increase in new market entrants, and fluctuations in raw material prices, could affect the Group's business performance. In particular, intensified price competition poses a risk of directly squeezing profitability. As a countermeasure, the Company aims to adapt to changes in the market environment by strengthening its product development capabilities.

The Group positions the strengthening of environmental regulations as one of its growth drivers, but if it is unable to develop attractive products and services in response to tightening regulations, or if such development takes a long time, future growth potential could decline and affect business performance. Although management resources are concentrated on developing products responsive to environmental regulations, the uncertainty inherent in technological development is a risk factor.

If defects or delivery delays occur in products sold or in plants designed and constructed by the Group, this could result in large-scale additional construction costs, compensation costs to customers, and even substantial damages claims and litigation or disputes. If such risks materialize, they will have a direct impact on business performance. Although the Company maintains a policy of ensuring thorough quality, functionality, safety, and adherence to delivery schedules, it is difficult to completely eliminate this risk.

The Group holds customer information, personal information, and confidential business and technical information. If a significant information leak occurs due to unauthorized external access or human error, this could have a material impact on business performance and financial condition. While appropriate measures such as technical countermeasures and employee education and training are being implemented, there are limits to responding to unforeseen cyberattacks and similar threats.

The Company actively engages in research and development activities to achieve continuous growth and strengthen competitiveness. However, R&D outcomes are inherently uncertain, and despite progress management through departmental meetings and an R&D committee, results may not necessarily translate into business performance as planned. Delays or failures in developing new technologies and products pose a risk of diminished competitive advantage.

The Company is actively pursuing new businesses and new product development in order to expand its business and enhance corporate value in the future. However, there are many uncertain factors, and if a business does not progress as initially expected or if investment recovery takes a long time, this could affect business performance and financial condition. Market penetration risks specific to new businesses and changes in the competitive environment may make investment recovery difficult.

The Company holds cross-shareholdings for the purpose of maintaining stable relationships with business partners, as well as securities for fund management purposes, and a sharp deterioration in stock market conditions could affect operating results and financial position. While efforts are being made to reduce cross-shareholdings, the risk of valuation losses remains in the event of a sudden change in market conditions.