Risks Related to Changes in Estimates and the Timing of Revenue Recognition for Large-Scale Construction Projects under the Percentage-of-Completion Method

「The Company engages in appropriate cost management, including continuously reviewing total estimated costs and scheduled construction periods for each project. However, if, due to unforeseen circumstances, the actual costs of a large-scale construction project substantially exceed the initial estimate, the project may become unprofitable, potentially affecting the Company's business development, financial condition and operating results.」

「The Company engages in appropriate cost management, including continuously reviewing total estimated costs and scheduled construction periods for each project. However, if, due to unforeseen circumstances, the actual costs of a large-scale construction project substantially exceed the initial estimate, the project may become unprofitable, potentially affecting the Company's business development, financial condition and operating results.」

「During the interim accounting period, there were no significant changes in the occurrence of the major risks that management recognizes could materially affect the company’s financial position, financial performance, and cash flows, or in the matters described as “Business Risks” in the annual securities report for the previous fiscal year.」

「During the cumulative period of the third quarter, there were no occurrences of the major risks that management recognizes as potentially having a material impact on the company's financial position, operating results or cash flows, among matters concerning the business and accounting conditions described in this quarterly report, nor were there any material changes to the section entitled "Business and Other Risks" in the annual securities report for the previous fiscal year.」

「During the cumulative period of the second quarter, there were no occurrences of the major risks that management recognizes as potentially having a material impact on the company's financial position, operating results or cash flows, among matters concerning the business and accounting conditions described in this quarterly report, nor were there any material changes to the section entitled "Business and Other Risks" in the annual securities report for the previous fiscal year.」

「During the cumulative period of the third quarter, there were no occurrences of the major risks that management recognizes as potentially having a material impact on the company's financial position, operating results or cash flows, among matters concerning the business and accounting conditions described in this quarterly report, nor were there any material changes to the section entitled "Business and Other Risks" in the annual securities report for the previous fiscal year.」

「During the cumulative period of the first quarter, there were no occurrences of the major risks that management recognizes as potentially having a material impact on the company's financial position, operating results or cash flows, among matters concerning the business and accounting conditions described in this quarterly report, nor were there any material changes to the section entitled "Business and Other Risks" in the annual securities report for the previous fiscal year.」

「The Company recognizes revenue and profit under the Accounting Standard for Revenue Recognition, which has applied since FY2021. Essentially, the standard expands the scope of construction projects subject to the former percentage-of-completion method. The Company uses the input method to calculate the percentage of completion, recognizing completed construction revenue based on the ratio of costs incurred to total estimated costs. However, if, due to unforeseen circumstances, the actual costs of a large-scale construction project substantially exceed the initial estimate, the project may become unprofitable, potentially affecting the Company's business development, financial condition and operating results.」

「During the cumulative period of the second quarter, there were no occurrences of the major risks that management recognizes as potentially having a material impact on the company's financial position, operating results or cash flows, among matters concerning the business and accounting conditions described in this quarterly report, nor were there any material changes to the section entitled "Business and Other Risks" in the annual securities report for the previous fiscal year.」

「During the cumulative third quarter, there were no material changes in the occurrence of the principal risks that management recognizes as potentially having a material impact on the company's financial position, results of operations or cash flows, among the matters relating to the business and accounting conditions described in the quarterly report, nor were there any material changes to the "Business and Other Risks" described in the securities report for the previous fiscal year.」

「During the cumulative first quarter, there were no material changes in the matters described in the quarterly report concerning the status of the business, financial matters, and other matters that could materially affect investors' decisions, nor in the material changes to the business and other risks described in the securities report for the previous fiscal year.」

「The Company applies the percentage-of-completion method to construction projects that meet certain requirements. This method recognizes revenue according to the percentage of completion, specifically by recognizing completed construction revenue based on the ratio of costs incurred to total estimated costs.」

「During the cumulative third quarter, there were no material changes in the matters described in the quarterly report concerning the status of the business, financial matters, and other matters that could materially affect investors' decisions, nor in the material changes to the business and other risks described in the securities report for the previous fiscal year.」

「During the cumulative second quarter, there were no material changes in the matters described in the quarterly report concerning the status of the business, financial matters, and other matters that could materially affect investors' decisions, nor in the material changes to the business and other risks described in the securities report for the previous fiscal year.」

「During the cumulative first quarter, there were no material changes in the matters described in the quarterly report concerning the status of the business, financial matters, and other matters that could materially affect investors' decisions, nor in the material changes to the business and other risks described in the securities report for the previous fiscal year.」

「The Company applies the percentage-of-completion method to construction projects that meet certain requirements. This method recognizes revenue according to the percentage of completion, specifically by recognizing completed construction revenue based on the ratio of costs incurred to total estimated costs.」