WILLPLUS Holdings Corporation

As the Company procures new vehicles under authorized dealer agreements with Stellantis Japan, Jaguar Land Rover Japan, BMW, Volvo Car Japan, Porsche Japan, and BYD Auto JAPAN, its business performance is affected by importer policies such as new model launches and model changes. If a manufacturer experiences a production stoppage due to significant misconduct or a serious impairment of brand image occurs, this may affect the Group's business performance. By handling multiple brands, the Company has built a management structure that is less susceptible to the trends of any single brand, and continues to work to expand the range of brands it handles.

Consolidated subsidiary ENG Corporation exports used cars purchased in Japan primarily to Malaysia, and losses arising from unpredictable factors such as exchange rate fluctuations, changes in legal regulations in the export destination country, availability of shipping vessels, and accidents during transport may affect the Group's overall business performance. On the other hand, when the yen continues to depreciate, price competitiveness in the local currency of the export destination increases, which is expected to boost sales volume, thereby also having an effect of leveling out exchange rate impacts together with the Imported Car Dealer Business. The Group seeks to determine the optimal balance in scale between the two businesses in order to improve overall Group profitability.

The Group has positioned M&A as a pillar of its growth strategy and carries out corporate acquisitions and business transfers; however, if a business does not progress as planned following an M&A transaction, this may adversely affect business performance. The Company conducts thorough due diligence on target transactions and deliberates fully at the Management Executive Committee and the Board of Directors, while also implementing appropriate structures and monitoring during post-M&A PMI. For acquired stores and businesses, the Board of Directors periodically verifies the achievement status of the profit plans set at the time of investment.

If the fair value of fixed assets such as store facilities declines significantly, or if it is determined that the profitability of a store's performance has deteriorated with no expectation of improvement, the Company may record an impairment loss on fixed assets. In addition, if goodwill or shares acquired through M&A fail to generate the planned profits and it is determined that recovery of the investment amount is difficult, an impairment loss may be recognized, which may affect business performance and financial condition. The Board of Directors verifies the performance of all stores on a semi-annual basis, and for stores showing a significant deviation from prior-year results or profit plans, considers countermeasures including strategic withdrawal.

An increase in working capital needs accompanying business expansion or the implementation of large-scale M&A transactions may necessitate fundraising through bank borrowings and other means. A rise in interest rates leading to increased interest burden, or a decline in the Group's creditworthiness making fundraising difficult, may affect business performance and financial condition. The Company strives to secure bank borrowings on the most favorable terms possible, aims for early recovery of investment in strategically invested stores, and has the responsible director verify the financial situation on a monthly basis.

The automobile sales market is significantly affected by economic conditions such as business cycles and consumer sentiment, and market contraction is expected to progress due to factors such as population decline, longer vehicle ownership periods, and the trend away from vehicle ownership in urban areas. This may intensify industry consolidation among sales companies, and if changes in the market environment prevent the Company from executing its business development as planned, this may affect business performance. The Company is pursuing flexible responses to industry consolidation through M&A and market expansion through the Used Car Export-related Business via ENG Corporation as part of its growth strategy.

The Company is subject to a wide range of laws and regulations, including the Automobile Recycling Law, the Antique Dealers Act, the Road Transport Vehicle Act, the Insurance Business Act, and the Fair Competition Code for Automobiles, and if these are not complied with, or if new legal regulations that significantly affect the business are enacted, amended, or abolished, this may affect business performance. The Internal Audit Office conducts internal audits of all departments, confirming compliance with laws and regulations in the process, thereby striving to maintain the compliance structure.

As many of the Company's customers are general consumers, the Company obtains a large amount of personal information, and if issues such as system failures or personal information leaks occur, this may affect business performance through a decline in social trust and effects on business operations. The Company strictly stores and manages personal information based on its Personal Information Handling Regulations and Information Security Policy, while also implementing a system management structure and security measures. The status of these operations is confirmed through regular internal audits, and the Company strives to strengthen its information management structure.

If stores are damaged by large-scale natural disasters such as earthquakes, floods, or typhoons, continuing business operations may become difficult, particularly in the event of a major earthquake in the Kanto region where the Company's stores are concentrated. In addition, delays in the supply of new vehicles from importers due to natural disasters or conflicts at manufacturers' production sites, as well as restrictions on the movement of people and goods due to the spread of infectious diseases, may also affect business performance. Based on the Risk Management Regulations, the Company establishes an emergency response headquarters in times of crisis and has set up a Risk Management and Compliance Committee to build a structure that minimizes loss of corporate value.

In this once-in-a-century period of transformation, competition for talent is expected to intensify further, creating a risk of rising costs associated with preventing employee attrition. If the securing and development of human resources does not proceed as planned, this may lead to reduced productivity and deteriorating management efficiency. The Company is promoting human capital management and working to retain employees by creating a work environment that is comfortable and fulfilling to work in, thereby advancing efforts to improve productivity and achieve efficient management.