e'grand Co.,Ltd

The Residential Property Renovation & Resale (Used Home Renovation Business) is directly affected by economic conditions, interest rate trends, and real estate market conditions. When market conditions deteriorate, it may become difficult to sell properties as planned, necessitating price reductions, while during periods of market strength, there is a risk that acquisition prices will rise sharply. Changes in the consumption tax rate and interest rate fluctuations also affect customers' purchasing motivation, which spills over into property sales. It is noted as a point of caution for investment decisions that past performance trends may not serve as an appropriate indicator of future performance.

If real estate market deterioration or instability in the distribution of renovation materials causes construction delays, the holding period of properties may lengthen, potentially necessitating price revisions for disposal sales or valuation losses on inventory. An increase in stagnant inventory also directly leads to an expansion of interest-bearing debt, adversely affecting both business performance and financial position. The Company seeks to mitigate this risk by carefully analyzing demand forecasts, surrounding environments, and customer needs before conducting acquisition, renovation, and sales activities.

Since the Company primarily procures funds for property acquisition through borrowings from financial institutions, its dependence on interest-bearing debt is relatively high, creating a risk that rising market interest rates will directly pressure business performance. If creditworthiness declines due to a significant deterioration in financial condition or other factors, the Company may face constraints on fundraising, potentially impeding business continuity. The Company addresses this by limiting excessive leveraged investment and striving to maintain its equity capital.

Because the Company relies on outsourcing for renovation work, insufficient securing of subcontractors, deteriorating management conditions among subcontractors, or a shortage of carpenters causing construction delays could delay the commercialization of properties and affect business performance. In addition, delays in commercialization may also occur if rising prices of raw materials and supplies due to domestic and international trends cannot be passed on to sales prices, or if supply delays or shortages of materials occur due to logistics disruptions. Inherent in the business model of controlling labor costs through the use of outsourcing is a vulnerability in the supply chain.

Aside from obtaining a real estate brokerage license, there are no particular restrictions on new entry into the used real estate sales and purchase business, and no special permits or licenses are required to bid at auctions, making it a business environment where competitors can enter easily. If increased competition leads to a decrease in the number of acquisitions and sales, a rise in acquisition prices, and a decline in sales prices, profit margins will decrease, affecting business performance. A decrease in the number of successful auction bids or a rise in successful bid prices could also become a factor increasing acquisition costs.

If an occupant is present in a property acquired through a successful auction bid, eviction procedures become necessary, and in some cases, after a certain period has elapsed, an eviction lawsuit must be filed. If the eviction period becomes prolonged due to lengthy litigation procedures or delays or postponements in court proceedings, commercialization and sales will be delayed, adversely affecting business performance. The Company addresses this by utilizing delivery order procedures under the Civil Execution Act, but the risk of procedural delays cannot be eliminated.

If nonconformity with contract terms is discovered in an acquired property, it may not always be possible to hold the seller liable, and the Company may bear the additional costs of repair. If a significant nonconformity with contract terms is found in a sold property, this could lead to contract cancellation, claims for damages, and repair costs, in addition to damaging the Company's credibility. This is positioned as a risk affecting both business performance and financial position.

The Company's business is subject to regulation under various laws, including the Real Estate Brokerage Act, and business activities may be restricted by revisions or abolitions of relevant laws and regulations or the introduction of new legal regulations. The real estate brokerage license is essential to the Company's main business, and if the license were revoked for any reason or lapsed due to disqualification from renewal, this would seriously impede business activities and have a material impact on business performance. At present, no grounds for revocation or disqualification from renewal have arisen, but the Company addresses this through thorough legal compliance and the collection and internal dissemination of information on legal and regulatory revisions.

Because real estate registration in Japan lacks conclusive legal effect (public confidence), there are cases where a party is not protected even if a transaction was conducted in reliance on the registration, and it may subsequently be discovered that acquired rights are restricted by third-party rights or administrative laws and regulations. The Company strives to confirm registration details and obtain information on rights relationships to the extent possible at the time of acquisition, but it is difficult to completely eliminate this risk. Should such circumstances materialize, they would affect the Company's financial position and business performance.

In the event of a severe natural disaster, fire, riot, or similar event, held properties could be lost, deteriorated, or damaged, resulting in losses not covered by insurance, and sales activities could also be hindered by a significant decline in consumer purchasing sentiment. In the event of an unforeseen large-scale disease outbreak, voluntary restraint on business operations or the closure of business locations may become necessary in accordance with instructions or requests from administrative authorities, affecting business performance. The Company addresses this through risk diversification via broad geographic expansion and by taking out fire insurance and other coverage, but in the event of a severe occurrence, risks not covered by insurance would remain.