People, Dreams & Technologies Group Co., Ltd.

In the fiscal year under review, public sector clients accounted for 63.1% of net sales, comprising 33.1% from the Ministry of Land, Infrastructure, Transport and Tourism and 30.0% from other government agencies. If public investment in public works continues to decline or order unit prices continue to fall, this may affect business performance. As a countermeasure, under the "Sustainable Growth Plan 2028 (October 2025 to September 2028)," the Group is promoting the development of the private-sector market and expansion of overseas business, and working to diversify revenue sources.

Because delivery deadlines from major customers such as central government ministries and local governments are concentrated at the end of the fiscal year, there is a structural risk that net sales are skewed toward the second and fourth quarters of the consolidated fiscal year. This may cause inefficiencies in cash flow and personnel allocation. The Group is addressing this through the development of the private-sector market, expansion of overseas business, and cooperation with public agencies to level order placements.

The Group is subject to a wide range of laws and regulations, including the Antimonopoly Act, the Subcontract Act, the Building Standards Act, and the Construction Business Act. If a violation occurs, there is a possibility of a loss of social credibility and a significant impact on business performance. As countermeasures, the Internal Control Center attends Board of Directors meetings (21 times per year) and Group Collaboration Promotion Committee meetings (12 times per year) to conduct internal audits, in addition to formulating an Antimonopoly Act compliance manual and continuing compliance training by hierarchical level.

If serious defects arising from errors in deliverables or administrative dispositions such as suspension of designation occur, this may affect business performance. Major subsidiaries Chodai Co., Ltd. and Kiso-Jiban Consultants Co., Ltd. have introduced ISO9001, and in the fiscal year under review, on-site audits were conducted covering 36 domestic locations and 165 departments as well as 13 locations in 8 overseas countries, in addition to enrolling in liability insurance.

If information systems are shut down due to virus infection or unauthorized intrusion caused by cyberattacks, this may affect business performance. Security management based on the "Information Security Management Regulations" is deployed across Group companies, and continuous countermeasures are implemented through a PDCA cycle, including information security training and simulated virus email drills six times per year and IT Strategy Promotion Committee meetings seven times per year.

If changes in economic conditions, international conflicts, terrorist acts, or similar events occur in countries where overseas business is conducted, this may affect business performance through suspension or discontinuation of operations, closure of offices, and other impacts. The Group gathers information from sources such as the Ministry of Foreign Affairs website and shares monthly information at Group Collaboration Promotion Committee meetings, providing information to local resident staff to maintain employee safety and ensure business continuity.

With the expansion of overseas business, foreign-currency-denominated transactions occur on a regular basis, and fluctuations in exchange rates may affect business performance and financial position. In the fiscal year under review, the overseas ratio of consolidated net sales was only 4.3% (¥1.99 billion), and the current impact is judged to be extremely limited; however, the Group plans to consider measures such as hedging through forward exchange contracts as overseas business increases going forward.

If business alliances or corporate acquisitions with other companies fail to produce the expected effects, this may affect financial position and business results. When making execution decisions, the Board of Directors and the Group Collaboration Promotion Committee evaluate the effects and risks, and a monitoring framework is established under the "Affiliated Companies Management Regulations" to report to the Board of Directors on a quarterly basis even after the acquisition is completed.

New business areas require a certain amount of time before generating stable earnings, and if risks such as delays in investment recovery or political instability and foreign exchange losses in overseas business materialize, this may affect business performance. Based on the "Business Evaluation Committee Regulations," new businesses are launched after feasibility evaluation by the Business Evaluation Committee and formal decision by the Board of Directors, and after launch, the responsible department reports progress on a quarterly basis. As of the fiscal year under review, 16 new businesses are ongoing.

The spread of infectious diseases causing infections among employees and business partners may lead to interruption or delay of business operations, affecting business performance. In particular, if lockdowns occur overseas, the risk of delays in completing operations increases. The Group promotes infection prevention measures such as telework, shortened working hours, and the use of satellite offices, aiming to continue business activities while ensuring employee safety.