MEIDENSHA CORPORATION

There is a risk that uncertainty in the social and economic conditions of countries and regions where order-taking activities are conducted, as well as changes in laws and regulations, could lead to a decline in demand or delays in the progress of ordered projects. This could affect the business performance and financial position of the Group. The Group addresses this through information gathering using external specialized organizations, risk assessment via pre-screening meetings, and monitoring through project management.

There is a risk that if the Group is unable to secure the necessary personnel due to stagnation in human resource acquisition and development or personnel attrition, the transfer of technology and skills could be delayed, reducing competitive advantage. This risk can materialize quickly and its impact can last for a long period. The Group is working on human resource acquisition and development, creating an environment that encourages autonomous learning and challenge, and building an organizational foundation and corporate culture in which diverse personnel can demonstrate their abilities.

There is a risk that insufficient investment and maintenance in buildings and production facilities could lead to serious accidents such as equipment failures and fires, resulting in production suspension, delivery delays, additional costs, decreased customer trust, and lost order opportunities. The Group addresses this through the continuous implementation of planned renewal investments, the development and standardization of equipment maintenance standards, and the training and on-the-job training of maintenance personnel.

There is a risk that quality deterioration due to tangible factors related to procured items and production equipment, or intangible factors such as declining technical capabilities and insufficient technology transfer, could lead to recalls of mass-produced products such as EV motors or product liability issues, resulting in worsened manufacturing costs and damages not covered by insurance. The Group addresses this through thorough quality control based on the

Major production sites are located in areas expected to be affected by a Nankai Trough earthquake or in coastal areas, creating a risk that large-scale earthquakes, tsunamis, liquefaction, etc. could make it difficult to operate production equipment. This could have a significant impact on the Group's business performance and financial position. The Group is working on this through BCP formulation, maintenance, and updates by the BCM Committee, disaster prevention drills at each site, and the development of effective BCPs including the supply chain.

There is a risk that the sophistication of cyberattacks and new risks associated with the use of generative AI could cause core system outages, leakage of confidential information, copyright infringement, etc., leading to substantial damages and loss of social trust. The Group addresses this by establishing four specialized teams—PSIRT, CSIRT, FSIRT, and PrSIRT—and building a company-wide framework through the Information Security Committee.

There is a risk that if changes in the market environment and customer trends are not appropriately captured, the medium-term management plan may not function as expected, leading to continuation of unprofitable businesses, excessive dependence on specific customers, failure to recover investments, impairment, and additional cost incurrence. The Group addresses this through regular reviews by the Board of Directors and the Managing Committee, as well as prior profitability verification and post-investment monitoring of important investment projects.

Given the use of numerous parts and materials that are difficult to substitute, there is a risk that parts shortages or increased procurement costs due to social conditions or unforeseen circumstances could affect business performance and financial position through production and shipment delays or increased product costs. The Group addresses this by securing appropriate inventory levels, standardizing parts specifications, securing multiple procurement sources, and strengthening cooperative relationships with suppliers based on the "Meiden Group Sustainable Procurement Guidelines."

There is a risk that compliance violations such as violations of the Construction Business Act, violations of the Antimonopoly Act, bribery, environmental regulation violations, and quality misrepresentation could affect business performance and financial position through legal sanctions, loss of social trust, and reduced order opportunities. Including measures to prevent recurrence of past Antimonopoly Act violations, the Group has established frameworks such as the Compliance Committee, an internal whistleblowing system, a harassment consultation desk, a quality misconduct consultation desk, and a SOS risk prevention consultation desk newly established in September 2025, and continues to conduct compliance training for the entire Group.

There is a risk that changes in the international situation, such as the Russia-Ukraine situation, the Middle East situation, and US-China tensions, could disrupt business activities at production and sales sites in ASEAN, China, India, Europe, and the United States. This could affect business performance and financial position due to disruptions and price increases in raw material procurement, export restrictions, restrictions on the dispatch of engineers, etc. The Group has established a dedicated economic security department and is working on information gathering and analysis from external specialized organizations, as well as BCP development at each site.