Business and Other Risks

1. High Dependence on Specific Customers

The Group’s core business is building and maintaining information and communication networks, so a high proportion of the Group’s transactions are with telecommunications companies. This trend is expected to continue. Changes in the way telecommunications companies carry out and structure their capital investment as a result of market trends in the telecommunications industry, technological innovation, or other factors could impact the business performance of the Group.

2. Management of Important Information

In the course of our business operations, the Group handles important data for customers, such as technical or personal data held by customers or other parties. We have therefore put into place a system giving full recognition to the importance of information management, with initiatives that include the construction and operation of an information security management system, the appointment of a chief information security officer, and the establishment of the Information Security Committee. The Group has obtained Information Security Management Systems and Privacy Mark certification.

Although we are taking such rigorous measures, there is still the chance of a leak of important information from the Group as a result of some unforeseen contingency. This could result in loss of customer trust, as well as which we may be obliged to pay compensation or take other actions, which could impact Group performance.

3. Major Accident Resulting in Death, Injury, or Equipment Damage

The KYOWA EXEO Group makes every effort to prevent accidents resulting in death, injury, or equipment damage at construction sites by ensuring safety and quality and by strengthening site management, thus ensuring that accident prevention is part of the everyday pattern of work.

Nonetheless, a major accident resulting in death, injury, or equipment damage could occur as a result of circumstances not foreseen by the Group. This could result in loss of customer trust and could lead to compensation payouts, reduced chances for orders, or other consequences, thus impacting Group performance.

4. Uncollectible Loans from Bankrupt Business Partners

To avoid or minimize the risk of bad loans, the KYOWA EXEO Group has established a system to manage credit and to manage and collect payments from companies with which we do business, and we collect construction and other payments promptly.

Nonetheless, as we expand our business activities it is possible that a company with which we do business defaults on a debt due to business failure resulting from unforeseen circumstances, which could impact Group performance.

5. Natural and Other Disasters

The KYOWA EXEO Group has worked to minimize risk from natural disasters, epidemics of new viruses or other such contingencies by installing facilities, carrying out drills, putting rules in place, and creating manuals in order to ensure continuity of business while placing top priority on avoiding harm to personnel.

Nonetheless, there is the possibility of a major natural or other disaster, as well as unforeseen circumstances accompanying the disaster such as infrastructure outages or shortages in fuel, materials, or personnel. These could lead to projects being halted or postponed, or damage to office buildings and equipment, which would impact Group performance.

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