WILL,Co.,Ltd.

The Group holds a real estate brokerage license (license from the Minister of Land, Infrastructure, Transport and Tourism) and a general construction business license, and each company including subsidiaries operates its business under licenses and permits granted by regulatory authorities. If a disqualification clause violation or misconduct occurs involving officers, there is a risk that business activities could be suspended due to revocation of licenses or permits. While no grounds for revocation have arisen at present, revocation under Article 66 of the Real Estate Brokerage Act or Article 29 of the Construction Business Act would have a material impact on business continuity.

The Group is subject to numerous laws and regulations, including the Real Estate Brokerage Act, the Construction Business Act, the Act for Promotion of Quality Assurance in Housing, and the Act on Special Measures for Securing the Performance of Liability for Defects in New Housing. Amendment or abolition of these laws, or the introduction of new regulations, may affect business operations. In particular, stricter regulation related to quality and defect liability could lead to increased costs and business constraints. The Group addresses this through enrollment in housing defect liability insurance and other measures, but the cost of responding to regulatory changes remains uncertain.

The real estate industry is highly susceptible to economic trends, interest rate trends, land price trends, and housing tax policy. A significant rise in interest rates or a deterioration in the economy could dampen homebuyers' purchasing intent. Changes in economic conditions may also raise the cost of acquiring business land, materials, construction, and sales promotion, thereby squeezing business profits. Changes in financial institutions' lending stance could also make it more difficult to acquire new business land.

In the three major metropolitan areas where the Group operates (Kansai, Chubu, and Tokyo), there are extremely many industry peers, and competition with large companies possessing superior capital strength and brand power is intense. In the development and subdivision sales business, competition from nearby properties offered by other companies may lead to prolonged sales periods or deteriorated profitability due to discount sales. The Group is pursuing differentiation through community-based store development and one-stop services, but there is no guarantee that business expansion will proceed as anticipated.

In FY2025 (ending December 2025), the development and subdivision sales business accounted for 52.6% of total net sales, and inventory assets related to this business represented 46.1% of total assets, both at high levels. As this business is highly susceptible to economic trends, any suspension or delay of projects, or prolongation of the sales period, would have a material impact on operating results and financial condition. Although the Group is working to improve the balance of its business structure, dependence on the development and subdivision sales business remains high.

Funds for acquiring and developing land for the development and subdivision sales business, as well as funds for acquiring rental properties, are mainly procured through borrowings from financial institutions. The ratio of interest-bearing debt to total assets remained high, at 56.3% in FY2024 (ending December 2024) and 53.9% in FY2025 (ending December 2025). In a rising market interest rate environment, an increase in interest expenses could worsen operating results and financial condition. If fundraising proves insufficient or unsuccessful, this could also lead to the suspension or delay of projects.

Because sales from the development and subdivision sales business are recognized upon delivery, performance tends to be concentrated in the fourth quarter; in FY2025 (ending December 2025), the fourth quarter accounted for 31.8% of net sales and 30.4% of operating income. If construction delays due to natural disasters or accidents, or a prolonged sales period due to deteriorating market conditions, extend beyond a quarter-end or fiscal year-end, operating results could fluctuate significantly. This structural concentration of performance is also a factor that makes it difficult for investors to forecast results.

Under the Act for Promotion of Quality Assurance in Housing, the Group bears liability for non-conformity with contracts for the primary structural components of newly built houses for ten years from the date of delivery, and if serious defects come to light, there is a risk of claims for damages and a decline in trust. The Group addresses this through cooperative arrangements with outsourced contractors and enrollment in housing defect liability insurance, but even when the direct cause is not attributable to the Group, it may still bear seller liability. While the Group currently believes there are no problematic properties, future tightening of laws and regulations could also affect business operations.

The Group has adopted a human resource development policy centered on new graduate hiring, and operates its business with a workforce of 272 employees (as of December 31, 2025). Since developing human resources requires a certain amount of time, if development cannot keep pace with the speed of business expansion, this could become a constraint on business growth. In addition, the internal management system is sized to match the current scale of the organization, and there is a risk that system development could lag behind during periods of rapid expansion.

The Group holds a large amount of personal information through its sales activities, and if an unforeseen incident results in an information leak, this could affect operating results through claims for damages and a decline in trust. Similarly, there is a risk that complaints or disputes arising from discrepancies in understanding with customers could develop into major litigation. At present, no material litigation has arisen, and the Group has established a response framework involving legal counsel, but there is no guarantee that such risks can be completely eliminated.