MARUFUJI SHEET PILING CO.,LTD.

If a serious disaster or accident occurs at a construction site or in-house factory, operational shutdowns or construction delays could result in loss of credibility, damages compensation, loss compensation, re-construction costs, etc., potentially affecting business performance. Based on its basic health and safety policy, the Company promotes adherence to work procedures, thorough equipment inspections, and elimination of unsafe behavior, aiming for zero accidents and zero disasters.

Amid a declining working-age population due to the falling birthrate and aging society, if new hiring stagnates significantly, this could affect business performance and financial condition. In addition to planned recruitment of new graduates and mid-career hires, expansion of female career-track employees, hiring of foreign engineers, and introduction of a mentor system, the Company aims to secure and retain personnel through the launch of a new personnel system starting April 2026.

Since the Company's main customers are domestic construction companies and it is highly dependent on the domestic construction market, a sharp contraction in private and public construction investment due to rising construction costs or economic downturn could affect order volume and profitability. The Company conducts order-taking activities with an emphasis on profitability and careful sales activities responsive to customer needs, and aims to achieve its management targets by promoting various initiatives under its medium-term management plan.

The leasing market for heavy temporary materials such as steel sheet piles and H-shaped steel is affected by market prices at the time of steel procurement, and in addition to the risk of raw material price surges due to international conditions and exchange rates, there is also a risk of rising labor costs due to economic sentiment and supply-demand balance, which could worsen profitability. The Company is working on price improvements to mitigate the impact of rising construction costs.

If an act in violation of laws and regulations occurs, losses due to criminal or administrative penalties, restrictions on business activities, and loss of social credibility could arise, potentially affecting business performance. The Company conducts regular risk management through its Compliance Committee and works to raise compliance awareness by developing an education system utilizing e-learning and other tools.

Against a backdrop of rising construction costs, price increases, successor shortages, and labor shortages, the risk of bankruptcy in the construction industry is increasing, and if a business partner falls into credit difficulty, bad debt losses such as the inability to collect sales proceeds could occur. The Company's screening department rigorously reviews business partners' credit information and credit management, and minimizes the risk of bad debt occurrence through thorough communication with relevant departments.

If the market value of factory equipment assets, investment real estate, investment securities, etc. declines significantly, valuation losses or impairment losses could be recorded, potentially affecting business performance and financial base. The Board of Directors and Management Committee deliberate on investment purposes and profitability while considering the balance with the financial base, and regularly ascertain and analyze profitability risks in each region and department.

Since a portion of working capital is funded by borrowings from financial institutions, a sharp rise in interest rates could affect business performance and financial condition. The Company conducts stable cash-flow management while closely monitoring financial market trends, and works to further improve its financial soundness.

If a system failure, information leakage, or data loss occurs due to a cyberattack, computer virus infection, employee negligence, or other cause, this could damage social trust and result in damages compensation and recovery costs, potentially affecting business performance and financial condition. Based on its information security policy, the Company conducts risk management to continuously and comprehensively maintain the confidentiality, safety, and availability of information assets.

If a major business site is damaged by a large-scale natural disaster such as an earthquake, typhoon, or tsunami, or by a pandemic, this could result in operational shutdowns, delays in the receipt and shipment of materials and equipment, losses from equipment restoration, or significant delays in construction work schedules. The Company has formulated a Business Continuity Plan (BCP) and ensures business continuity through the use of a safety confirmation system, development of infrastructure for satellite offices and remote work, and establishment of systems to maintain core operations.