OHBA CO., LTD.

Under the "Standard Terms and Conditions for Outsourced Contracts for Public Civil Engineering Design Services and Others" applicable to the construction consulting industry, no cap is set on damages, and if defect liability arises from mistakes or errors in deliverables, business performance could be significantly affected. The company strives to prevent defects through the establishment of a checking system, but because there is no upper limit on compensation, the financial risk remains structurally present.

National and local governments are major customers, and if public works budgets are reduced, this could directly affect the business performance of the Company's group. Because the order structure is heavily dependent on the public sector, sensitivity to changes in government fiscal policy and budget allocation is high.

Transactions with private companies account for approximately 30-40% of order value, and if economic deterioration leads to the bankruptcy of client companies, this could affect business performance through uncollectible trade receivables or a decrease in orders. Since the proportion of private-sector business has reached a certain scale, the credit risk during economic downturns is at a level that cannot be ignored.

The Company holds real estate and other assets primarily in the Kanto region, and depending on future real estate market trends, the value of held assets could decline, potentially affecting business performance. Deterioration in real estate market conditions carries the risk of leading to asset valuation losses or impairment losses.

Approximately half of all employees are concentrated in Tokyo, and if a natural disaster such as an earthquake occurs, this could result in business being unable to continue or a significant decline in operational capacity. There is also a risk that operational suspension due to natural disasters at branches and sales offices outside Tokyo could affect the performance of the group as a whole.

The competitiveness of the Company's group depends on skilled engineers and experienced technical staff in the technical departments, and if it becomes difficult to secure such personnel amid intensifying competition for talent among companies, this could affect growth. In addition to technical personnel, securing management personnel to support growth is also becoming increasingly important, presenting risk in both recruitment and retention.

In the land readjustment project agency business, positioned as a profit-expansion measure in the medium-term management plan, the Company has entered into joint agency contracts with housing manufacturers and is pursuing a risk-taking type business model in which the Company itself assumes real estate risk. Depending on real estate market trends, this could affect business performance, creating a structure in which risk exposure extends beyond conventional consulting operations.

Since new businesses require a certain amount of time before generating stable earnings, they could lower the profit margin of the group as a whole. Regarding the solar power generation and electricity sales business in Kitahiroshima City, Hokkaido, Tagajo City, Miyagi Prefecture, and elsewhere, if the business environment deteriorates significantly and results do not progress as planned, there is a risk that impairment losses on solar power generation facilities could occur.

The Company's group conducts business under various laws and regulations, including the Antimonopoly Act, the Subcontract Act, and the Personal Information Protection Act, as well as licenses and registrations such as construction consultant registration and surveying business registration. If any of these are revoked or become unrenewable, this could have a material impact on business operations and financial results. The Company has established a compliance framework through compliance regulations, manuals, and training of officers and employees, but if grounds such as criminal sanctions against officers arise, the risk of registration revocation could materialize. As of the current time, it has been reported that there are no violations of grounds for revocation.