First Juken Co., Ltd.

The Detached Housing Business is the core business, accounting for 95.6% of net sales, and if consumer demand declines due to economic downturn, decreased consumer income, rising interest rates, fluctuations in prices or land values, or housing tax reform, there is a possibility of a material impact on business performance. In particular, since the business focuses on low-priced condominium and housing sales targeting primarily first-time home buyers, sensitivity to changes in the macroeconomic environment is high. As a countermeasure, the Company aims to reduce risk through thorough market research and shortening of the business cycle.

Intensified competition in the low-priced housing supply market may lead to declines in selling prices and price-discounting competition, which could adversely affect business performance. In addition, if the Group's price competitiveness declines due to competition with rival companies, there is also a risk of holding completed properties for which sales contracts have not been concluded. As a countermeasure, the Group is working to improve product competitiveness through reviews of housing design, equipment, and specifications.

In the Detached Housing Business and the Condominium Business, the success or failure of land acquisition directly affects business performance, but there is a possibility that land acquisition may not proceed as planned due to competition with other companies or delays or deficiencies in information gathering. There is also a risk that land may be purchased at prices higher than the surrounding market rate, or that sales may not be achieved at the expected price. The Company addresses this through information sharing at company-wide meetings and branch manager meetings, an area manager support system, and strengthening of the intermediary agent network, but risks related to securing and retaining specialized personnel also coexist.

The Company relies on borrowings from financial institutions to fund the acquisition of land for condominium and detached housing sales, and the balance of interest-bearing debt at the end of the fiscal period ended October 2025 (Reiwa 7) reached ¥14,279,599 million (23.1% of total assets). Amid an expected further increase in the interest-bearing debt balance as the business expands, if interest rates rise or remain elevated, or if financial institutions change their lending stance, the Company may be forced to face increased interest payments or to revise its procurement plans. As a countermeasure, the Company aims to improve capital efficiency by shortening the business cycle and to build smooth relationships with its financial institution partners.

With the exception of construction management operations in the Detached Housing Business, all construction work is outsourced to subcontractors under separate orders, and there is a possibility that the Company may not be able to secure sufficient subcontractors meeting its selection criteria when the number of sales increases. There is also a risk that the declining number and aging of construction workers in recent years will make it difficult for subcontractors themselves to secure labor, as well as a risk of construction delays due to financial difficulties faced by subcontractors. The Company addresses this through continued development of new subcontractors and careful selection of contracting partners, but the structural risk of relying on outsourcing for most construction work remains.

The Group does not have its own sales department and entrusts sales of detached housing and renovated housing entirely to local intermediary agents, and sales of newly built condominiums entirely to sales agency companies. If intermediary agents and others become less active in selling the Company's properties due to competition with other companies, this could affect business performance. As a risk reduction measure, the Company is gradually promoting its own direct sales efforts, such as flyer distribution and on-site staffing by sales personnel.

The Group's business areas are concentrated in regions where its sales offices are located, such as the Kinki region, the greater Tokyo metropolitan area, and Aichi Prefecture, making the Group susceptible to economic trends, housing demand, and land value fluctuations in these regions. In the Detached Housing Sales business for the fiscal period ended October 2025 (Reiwa 7), Hyogo Prefecture accounted for 22.2%, Aichi Prefecture for 15.5%, and Kanagawa Prefecture for 11.6%, indicating that regional concentration risk has become apparent. The Company plans to diversify this risk by expanding its sales offices going forward, but there is also a possibility that establishing a sales foundation in new areas may not proceed smoothly.

Continuation of the Company's main businesses requires a real estate brokerage license, a construction business permit, and registration as a first-class architectural firm, and if any of these were to be revoked, it could disrupt the Company's main business activities and have a material impact on business performance. The Company is subject to a wide range of legal regulations, including the Real Estate Brokerage Act, the Construction Business Act, the Architects Act, the Building Standards Act, and the City Planning Act, and the risk of compliance violations is ever-present. As a countermeasure, the Company focuses on compliance education through legal seminars held by retained attorneys and various training sessions and internal notices.

Based on the "Act on the Promotion of Housing Quality Assurance," the Company bears a 10-year defect liability for the structural main parts, etc. of newly built homes, and if deficiencies in quality control occur as the number of units sold increases, an increase in complaints and warranty repair work could affect business performance. In addition, if a serious defect is alleged, there is a risk of reputational damage regardless of whether a defect actually exists or whether the Company is at fault. The Company addresses this through enrollment in the "Mamori-Sumai Hoken" (housing defect liability insurance) and by undergoing site inspections conducted by third-party organizations.

The Company holds a large amount of customer personal information as well as internal information such as management information, and if this information were to leak externally, it could damage the Company's reputation and result in damages claims, among other effects on business performance. In addition, further tightening of laws and regulations related to the protection of personal information could increase information management costs. In addition to building a management structure, establishing internal regulations, and implementing system security measures, the Company strives to raise employees' awareness of information management through external seminars and training.