Meiho Holdings,Inc.

In the Construction-Related Services Business and Construction Business, the proportion of orders received from national and local governments is high, and business performance is significantly affected by trends in public investment budgets. If public investment budgets are reduced beyond expectations, this would directly lead to a decrease in order volume and could have a material impact on business performance and financial condition. Budget cuts could also intensify price competition with other companies in the same industry, creating a concurrent risk of declining order unit prices.

Due to the nature of public-sector orders, the Construction-Related Services Business tends to have deliveries and sales concentrated at the end of March, resulting in sales and profit being weighted toward the third quarter (January to March). In the results for the fiscal year under review (July 2024 to June 2025), third-quarter sales were ¥1,438,487 million, compared with only ¥797,849 million in the first quarter and ¥844,869 million in the fourth quarter, with the first and fourth quarters recording segment losses. There is a structural risk that quarterly performance outside the third quarter will land at a weak level.

The Group has positioned active corporate acquisitions as a pillar of its growth strategy, but there is a risk that deals cannot be acquired as planned due to a decrease in the number of prospective sellers or an increase in competing acquirers. If contingent liabilities or other unexpected costs are discovered after an acquisition, or if corporate cultures fail to integrate and expected synergies are not realized, recovery of invested capital may become difficult, potentially having a material impact on business performance and financial condition. For M&A in new business areas, understanding industry trends, laws and regulations, and the target company's situation is more difficult, further heightening this risk.

Representative Director Hidetaka Omatsu plays a central role in the Group's development, from determining management policy to formulating and executing business strategy. If he becomes unable to continue his duties for any reason, there is a possibility of significant disruption to the continuity and stability of management. Although the Group is working to build a management structure to reduce this dependence, at present the degree of dependence on him remains high.

The combined shareholding of Representative Director Hidetaka Omatsu and his spouse, Keiko Omatsu, accounts for a majority of the issued shares (excluding treasury shares). This structure means that the intentions of the major shareholders are strongly reflected in important matters such as the appointment and dismissal of directors and business combination transactions, creating a risk that decisions may be made that conflict with the interests of minority shareholders. Although the major shareholders have expressed a policy of pursuing the common interests of shareholders and giving consideration to minority shareholders, the possibility of a conflict of interest cannot be ruled out.

The Human Resources-Related Services Business is subject to regulation under labor-related laws such as the Worker Dispatching Act, and legal revisions or tightening of regulations accompanying changes in the social environment directly affect business operations. If regulatory tightening restricts forms of dispatch or increases procedural burdens, the Group may be forced to change its business model, potentially having a material impact on business performance and financial condition. There is also a risk that increases in labor and social insurance premium rates will raise the Group's insurance premium burden.

The Nursing Care Business is subject to regulation under related laws such as the Long-Term Care Insurance Act, and long-term care remuneration is structured to be revised every three years. If the content of a long-term care remuneration revision is negative for the Group, this would directly impair its revenue sources and could have a material impact on business performance and financial condition. Since the content and timing of system revisions depend on administrative decisions, this is a risk that is difficult for the Group to control.

In the Nursing Care Business, the Long-Term Care Insurance Act requires that services be provided by qualified personnel, making it a precondition for business continuity to secure the necessary number of qualified staff. If the Group is unable to secure qualified personnel as planned or if the turnover rate rises more than expected, there is a risk that it may be forced to abandon plans for new facilities or suspend existing services. In the Construction Business as well, rising labor costs due to a declining working population and other factors are occurring, and if these costs cannot be passed on to contract prices, profitability may deteriorate.

The Group holds large volumes of important information, including customer information, across its various businesses. If an information leak were to occur, in addition to direct costs such as liability for damages to customers, it could also result in a decline in creditworthiness and issues of social responsibility. While a material impact on business performance and financial condition is a concern, the annual securities report does not disclose specific details of information security measures. Since the scope of customer information handling spans multiple businesses, including staffing, nursing care, and construction consulting, managing and dispersing this risk is a challenge.

The Group has substantial borrowings from financial institutions, and if borrowing interest rates rise and increase the interest burden, this could adversely affect business performance. In addition, if the profitability of fixed assets declines to the point where recovery of the invested amount is no longer expected, an impairment loss would need to be recorded, potentially having a material impact on business performance and financial condition. Furthermore, the Group has not paid dividends since the establishment of the holding company in 2017, leaving the strengthening of internal reserves as an ongoing challenge.