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Business Risks

With regard to matters relating to the status of businesses, accounting, etc., that are described in the securities report, the Taikisha Group assumes the following risks that may have a significant impact on investors' decisions. Please note that descriptions of risks include forward-looking statements that are based on decisions made at the end of the fiscal year ended March 31, 2013.

Fluctuations in private-sector capital spending

Global economic changes may have an impact on the business results of the Taikisha Group as our customers may cancel, postpone, or revise the contents of their capital plans due to the influence of such changes.

Risks related to business development overseas

With regard to businesses being developed in various countries, unexpected revisions of lawsand regulations, political uncertainty, economic fluctuations, etc., might have an impact on our business results. In addition, foreign exchange movements might also pose a risk, although we avoid such risk by all possible means such as hedging through forward exchange contacts for receipts and payments of contract fees relating to foreign currency construction contracts. Furthermore, as we convert foreign currency denominated amounts in the financial statements of our overseas consolidated subsidiaries into Japanese yen during preparation of consolidated financial statements, currency fluctuations may affect our business results.

Liability for defect warranty related to contracted construction

With regard to contracted construction, we assume liability under a defect warranty for a certain period after completion in accordance with construction contract agreements with our customers. For expenses incurred under this liability, we report reserves for after-care warrantees of construction based on past results. However, actual expenses may exceed the reserve amounts.

Risks related to the collection of accounts receivable

Although we ensure that credit for customers is properly managed, our inability to collect accounts receivable for construction fees due to their bankruptcy, etc. could have an adverse effect on our business results.

Risks related to escalating price competition

There is strong competition to win contracts in the contract construction industry in the current environment. Posting a provision for loss on construction contracts may have an impact on our business results.

Fluctuations in prices of materials

The procurement cost of construction materials and others may have an impact on our business results if it is difficult for us to reflect such cost in our contract fee after material prices soar.

Risks related to holding assets

Market value fluctuations of the properties and securities that the Taikisha Group owns may have an impact on our business results.

Risks related to our retirement benefit plan

Decreases in the market values of pension assets or retirement benefit trusts, deterioration of investment returns, or changes in assumptions for use in actuarial calculations such as discount rate may have an impact on our business results.

Natural disasters and accidents

Losses from unexpected natural disasters or accidents may have an impact on our business results. The corporate group has its own risk management scheme that it does its utmost to maintain. However, large-scale natural disasters can cause physical damage or human suffering directly related to us as well as the business activities of our customers and eventually affect economic conditions. When the impact remains for a long time, it may have an impact on our business results.

Risks related to violations of law

The corporate group ensures, as a whole, that management is conducted in strict compliance with laws and regulations. However, if any of an employee of the group commits an illegal act, it may affect our business results as it may restrict the group's operations, increase costs, decrease revenues, etc.

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