GOLDCREST Co.,Ltd.

In the new condominium sales business, revenue is recognized at the time of property handover, so concentration of handover timing causes quarterly imbalances in financial position and operating results. If sales plan changes or construction delays due to natural disasters occur, the handover timing may shift, potentially affecting performance. This concentration in specific quarters is a factor that makes it difficult for investors to forecast performance.

Since sales of condominiums for sale are heavily influenced by buyer demand trends, a downturn in personal consumption or a substantial rise in interest rates could reduce the purchasing intent of prospective condominium buyers, potentially affecting performance. In addition, further increases in land prices and construction material prices raise land acquisition costs and construction costs, and if these cannot be passed on to sales prices, there is a risk of a decline in the gross profit margin.

In the new condominium sales business, the Company utilizes interest-bearing debt such as bank borrowings and bond issuance to finance business funds including land acquisition payments. If interest rates rise, increased funding costs could adversely affect performance. The Group states that it strives to secure appropriate financing while taking into account economic conditions and interest rate trends.

Since construction work is outsourced, if construction material prices or labor costs rise more than expected, construction costs, a major component of cost of sales, would increase, potentially affecting performance and financial position. In addition, similar risks could arise from unforeseen events such as accidents during construction or bankruptcy of subcontractors. The reliance on outsourcing structurally limits the degree of freedom in cost management, which is a challenge.

The real estate industry is subject to regulation under numerous laws such as the Building Standards Act, the National Land Use Planning Act, the City Planning Act, and the Real Estate Brokerage Act, as well as ordinances of local governments, and the condominium management business is also subject to regulation under the Act on Promotion of Proper Administration of Condominiums. If these laws and regulations are significantly amended or abolished in the future, or if new laws are enacted, business plans may need to be revised, potentially affecting performance.

Since its establishment, the Company has specialized its business area in the Greater Tokyo area for planning and developing condominiums, which is beneficial for efficient use of management resources; however, if natural disasters such as earthquakes, storms, or floods, or man-made disasters such as terrorism or war occur in the Greater Tokyo area, construction delays, reduced consumer purchasing intent, and damage to owned assets could adversely affect the business and financial position. Due to the lack of geographic diversification, risks specific to the Greater Tokyo area are structurally linked directly to overall performance.

Over the medium to long term, rising demands for improved environmental performance of buildings and tax reforms such as the introduction of a carbon tax may push up business costs. Changes in customer preferences regarding environmental performance and disaster prevention, as well as an increase in the frequency and severity of natural disasters, are also recognized as factors affecting the business. The Group positions climate change as an important global issue, but specific details of countermeasures are not disclosed.

Hidetoshi Yasukawa, the founder and Representative Director, plays an important role in determining management policies and strategies and in promoting business, leveraging his planning and sales capabilities, knowledge, expertise, and management judgment. If for any reason he becomes unable to perform his duties, this could affect the Group's performance and future business development. Specific measures regarding successor development or diversification of the management structure are not explicitly disclosed in the securities report.

The Group holds personal information of numerous customers as well as various management information, and strives to thoroughly manage information through strengthening information management systems and providing education and training to employees. However, if important information is leaked externally despite these measures, it could lead to a decline in social credibility and affect performance. Given the increasing sophistication of cyberattacks, this is an area requiring continuous strengthening of countermeasures.