Hoosiers Holdings Co., Ltd.

There are concerns about deteriorating profitability of individual projects due to increased fundraising costs for business operations, declining potential customer demand for home purchases due to rising mortgage interest rates, and declines in the value of held assets due to rising cap rates. The company's financial structure has a high ratio of interest-bearing debt to total assets, making it susceptible to interest rate fluctuations. In response, the company monitors market interest rates, mortgage interest rate trends, and cap rate trends, diversifies loan repayment dates, and strengthens relationships with financial institutions.

There is a risk that disruptions in the global procurement network for housing equipment and major construction materials could delay property completion and handover, and that rising costs for building material manufacturing and transportation due to soaring resource prices and electricity rates could persistently push up construction costs. In regional cities, which are the company's main areas for condominium sales, it is difficult to fully pass on cost increases to sales prices, raising concerns about profitability pressure. The company addresses this through stricter progress management of individual projects and differentiation through product development and value-added offerings suited to regional characteristics.

Property handovers tend to be concentrated in the fourth quarter (around February to March), and if the handover timing extends beyond the fiscal year-end due to cancellations of sales contracts or delays in construction work or building confirmation procedures, this could have a material impact on business results and financial condition. Because revenue is heavily skewed among quarters, the progress status immediately before the fiscal year-end significantly affects full-year results. The company addresses this through thorough progress management of sales contract execution and thorough risk management of construction progress delays and other issues.

Intensifying competition in the real estate market may reduce opportunities to acquire quality development land, resulting in the loss of revenue opportunities. A decline in land acquisition capability directly affects the future pipeline of condominiums for sale and may hinder medium- to long-term business growth. The company addresses this by formulating a strategy-based land acquisition policy and enhancing its ability to gather land information and secure acquisition routes.

If unforeseen events occur, such as extended construction periods or increased costs due to labor shortages at subcontractors (partner companies), or bankruptcy of subcontractors, breach of contract, or accidents during construction, this could lead to suspension or delay of construction and increased construction costs. These factors can adversely affect business results through deteriorating profitability of individual projects and handover delays. The company addresses this through regular site management, building good business relationships via regular meetings with subcontractors, and a policy of not increasing dependence on specific subcontractors.

Deterioration of held assets could adversely affect financial soundness, leading to the tying up of funds, and could also lead to a deterioration in fundraising capability and a decline in the company's creditworthiness. Holding onto non-performing assets pressures available liquidity and can also lead to the loss of new investment opportunities. The company has established a system for regularly monitoring held assets to detect early signs of deterioration, and for assets showing signs of deterioration, the Compliance & Risk Management Committee determines a response policy and monitors progress.

There is a risk that difficulty in securing human resources due to the declining birthrate, aging population, and population decline could lead to a decline in the company's ability to provide products and services. There are also concerns about the loss of personnel due to issues with personnel systems or the workplace environment, which could hinder the maintenance of business competitiveness. The company addresses this by strengthening recruitment capabilities, improving employee capabilities and productivity through training, and improving retention rates through reviews of personnel systems and workplace environment improvements in line with changing social values.

Receiving administrative sanctions could lead to business suspension or unexpected cost increases that adversely affect business results, as well as a decline in fundraising capability and the loss of potential customers due to reputational damage. The real estate business is subject to a wide range of laws and regulations, including the Building Lots and Buildings Transaction Business Act, and the impact of violations can extend to business continuity. The company addresses this by preparing and updating a list of laws and regulations to be observed, conducting self-inspections in each department, and fostering awareness of legal compliance through audits by the Internal Audit Office.

There is a risk that disputes and compensation claims may arise due to quality defects in real estate sold, and that contract cancellations and compensation claims may arise due to quality defects in real estate-related services. Quality issues can also lead to a deterioration in fundraising capability and the loss of potential customers due to reputational damage, adversely affecting both business results and financial condition. The company addresses this through thorough construction supervision by the quality control department and the establishment of business flows and manuals to ensure performance of duties in accordance with contracts.

Large-scale natural disasters pose a risk of adversely affecting business results through changes in the timing of completion and revenue recognition due to suspension or extension of construction work on projects in progress, suspension of operations and unexpected costs due to loss or damage to held, operated, or managed facilities, and business suspension due to harm to employees. The deferral of revenue opportunities and asset losses can also affect the financial condition. The company addresses this through regular inspection and repair of held, operated, and managed facilities, and by achieving early business resumption through appropriate responses in accordance with its established BCP.