MITANI CORPORATION

The Group's business is concentrated in Japan and is directly affected by population decline and stagnant GDP. Demand for the Group's core products, ready-mixed concrete, cement, and petroleum products, has already been declining, and if demand falls faster than expected, this could have a material impact on business results. Because many of the Group's existing domestic businesses depend on Japan's economic environment, this is recognized as a structural risk.

Amid the global trend toward a decarbonized society, the spread of fuel-efficient and electric vehicles poses a risk of declining demand for the Gas Station Business. Depending on the pace of adoption, the impact on business results could become significant, potentially forcing a mid- to long-term change in business structure. This business area is also intertwined with soil contamination risk.

The Group holds a large amount of trade receivables related to the construction industry, and if a downturn in the construction industry occurs, there is a risk that significant bad debt expenses could arise due to deteriorating creditworthiness or bankruptcy of business partners. Although the Group manages credit risk by recording allowances for doubtful accounts and setting transaction limits, it may be difficult to respond to a sudden deterioration in a business partner's financial condition.

The Group is pursuing M&A to expand and strengthen existing businesses and to enter new and overseas businesses, but even with thorough due diligence, there is a risk that an acquired company's performance could deteriorate sharply or expected benefits may not be realized. In such cases, impairment losses on fixed assets or goodwill may occur, affecting business results. Goodwill is amortized over the period in which its effects are estimated to be realized.

Because ready-mixed concrete is a semi-finished product requiring four weeks after placement to confirm strength, if defects arise from human error or unforeseen factors, this could cause insufficient structural strength or cracking in buildings, leading to significant liability for damages. In the food business as well, accidental product defects could unavoidably impact business results. While preventive measures are taken through JIS standard compliance and quality control systems in both cases, complete elimination of these risks is difficult.

For operating fixed assets such as ready-mixed concrete plants and gas stations, impairment processing becomes necessary if declining profitability makes investment recovery unlikely. Impairment losses may also arise from declines in the value of shares or goodwill acquired through M&A, and if substantial, this could have a material impact on business results. Given that the Group holds many core businesses facing continued demand decline, the potential risk of impairment persists on an ongoing basis.

If petroleum products leak at gas stations or oil depots, costs for soil decontamination, containment of the spread of contamination, and compensation for damages to residents may arise, potentially affecting business results. Although regular equipment inspections and repairs are conducted, the risk of leakage due to unforeseeable factors cannot be completely eliminated.

The wind power generation business faces the risk of generator shutdowns due to natural disasters such as earthquakes and lightning strikes, or sudden mechanical or electrical failures. Although the Group has taken measures through casualty insurance, losses not covered by insurance may occur. In addition, if power generation output falls short of projections due to changes in wind direction or volume caused by abnormal weather or global warming, this could also affect business results.

The Information Systems Business and Cable TV Business face extremely rapid technological innovation, and delayed responses could result in decreased orders from customers or obsolescence of products and equipment. Continuous investment in technology and swift responses are required, but delays in response directly lead to reduced competitiveness and could affect business results.

The Group's ODA Business operates in multiple countries and regions, including Myanmar, and faces risks such as project suspension or delay, and inability to collect receivables due to sudden changes in political, economic, or social conditions. If such risks materialize, losses may occur, affecting business results, and continuing operations in politically unstable regions such as Myanmar entails a particularly high degree of uncertainty.