LA Holdings Co.,Ltd.

As of the end of the current consolidated fiscal year (FY2025, ending December 2025), total interest-bearing debt stood at ¥65,595,914 million (a ratio of 64.3%) against total assets of ¥101,949,907 million, representing a high level that leaves the Group's financial structure susceptible to interest rate fluctuations. Should interest rates rise significantly, increased borrowing costs could have a material impact on business performance. As a countermeasure, the Group is working to diversify its funding sources and strengthen its equity capital.

The core real estate sales business is highly susceptible to economic conditions, interest rates, land prices, housing tax systems, and similar factors. A deterioration in income outlook or a rise in interest rates could reduce buyers' willingness to purchase housing, leading to longer sales periods and increased sales inventory. The Group strives to grasp market fluctuations through regular market monitoring and the gathering of demand-trend information via sales activities.

If it becomes difficult to acquire quality properties due to changes in real estate market conditions or intensifying competition for property acquisition, this could have a material impact on business performance since it directly affects the foundation of the sales business. The Group is strengthening its information-gathering capabilities through personnel reinforcement and expansion of partner companies for property sourcing, striving to secure profitable properties.

If the value of held fixed assets or inventory assets declines due to deteriorating economic conditions or real estate market conditions, impairment processing or the recording of valuation losses may become necessary, potentially affecting business performance. Based on the "Accounting Standard for Impairment of Fixed Assets" (applied from FY2006, ending March 2006) and the "Accounting Standard for Measurement of Inventories" (applied from FY2009, ending March 2009), the Group strives to identify signs of impairment through property sourcing focused primarily on high-value areas and regular valuation assessments.

The real estate industry is subject to a wide range of laws and regulations, including the National Land Use Planning Act, the Building Lots and Buildings Transaction Business Act, the Building Standards Act, the Financial Instruments and Exchange Act, and the Act on Specified Joint Real Estate Ventures. Should regulations be tightened or a legal violation occur, there is a risk of license revocation or business suspension orders. The subsidiary La Attrait holds multiple licenses and registrations, including a Building Lots and Buildings Transaction Business license (valid from April 5, 2023 to April 4, 2028), Type II Financial Instruments Business registration, and a Specified Joint Real Estate Venture license, and strives for legal compliance and information gathering through participation in various industry associations and training programs.

Even for land and buildings deemed problem-free in prior surveys, if defects or deficiencies such as soil contamination issues are discovered after purchase or after sale, unexpected remediation costs may arise, potentially affecting business performance. For newly built homes, the Group bears liability for nonconformity with contracts for a 10-year period regarding structurally critical portions and similar elements, in accordance with the "Act on Promotion of Quality Assurance in Housing." The Group works to mitigate risk through asbestos and soil contamination surveys at the time of property purchase/sourcing, after-sales service warranty burden-sharing with suppliers and contractors, and its own property inspection system.

Since construction and renovation work is outsourced to external contractors, unexpected events such as accidents at construction sites, bankruptcy or breach of contract by external contractors, or false reporting could delay or halt construction work, potentially affecting business performance. In addition to outsourcing to external contractors that meet the Group's standards, employees participate in meetings as needed to confirm quality and progress management.

If personal information of customers or of officers and employees obtained through business activities were to leak, this could result in loss of credibility and losses from damages, potentially affecting business performance. The Group pays close attention to information management by publishing its "Personal Information Protection Policy" on its website and by thoroughly instructing Group employees on personal information protection.

Since the core real estate sales business requires specialized skills such as complex rights coordination and neighborhood relations management, if the development and securing of human resources does not proceed as planned, this could affect business performance and future business operations. The Group strives to achieve efficient business operations by enhancing the capabilities of existing employees through systematically accumulated know-how and by securing excellent personnel from outside the company.

In the income-gain type real estate business, if changes in the economic environment or consumer trends cause a decline in rental market rates or a deterioration in tenants' financial condition, the resulting decrease in rental income due to rent reductions or lower occupancy rates could affect business performance. In addition to forming a portfolio that takes into account rental market conditions, for some business-use rental properties, the Group works to reduce the risk of declining rent levels by concluding long-term fixed-term lease agreements on a per-property basis with operating companies with which it has business cooperation relationships.