LAND Co., Ltd.

The Group conducts its business under a wide range of laws and regulations, including the National Land Use Planning Act, the Building Lots and Buildings Transaction Business Act, the Building Standards Act, the City Planning Act, the Forest Act, the Housing Quality Assurance Act, and the Financial Instruments and Exchange Act. Amendments to or abolition of various regulations in key areas, or the introduction of new legal regulations, may affect the Group's business performance. Although the Group's policy is to conduct business in compliance with current laws and regulations, responding to changes in the regulatory environment remains a challenge.

The Group conducts investment business utilizing the feed-in tariff (FIT) system for renewable energy. If related laws and regulations are amended in line with changes in national policy on renewable energy, the Group's business performance may be affected. Given the business structure's high dependence on the FIT system, the risk of system changes is directly linked to business continuity.

Under the Group's business model, revenue is recognized at the time of delivery rather than at the conclusion of a sales contract, and profit margins vary significantly by project, resulting in a structural tendency toward uneven performance. If delivery is delayed beyond the end of a quarter or fiscal year due to natural disasters or other unforeseeable circumstances that delay the business schedule, performance may fluctuate significantly. Investors need to take this seasonality and unevenness into account when evaluating performance.

The real estate industry, to which the Group belongs, is highly susceptible to trends in the economy, interest rates, new property supply, real estate sale prices, and housing taxation. If the economic outlook deteriorates, interest rates rise significantly, or oversupply causes sale prices to decline, buyers' purchasing motivation may weaken, potentially affecting the Group's business performance. Given the business characteristic of high dependence on the external environment, sensitivity to market fluctuations is high.

Since the Group enters into construction contracts with construction companies for building construction and other work, if a construction company experiences credit concerns, issues such as construction delays may arise. Construction delays directly lead to postponed delivery timing, which may affect the Group's business performance and financial condition. Monitoring the financial soundness of construction companies is an important risk management issue.

The Group procures funds for acquiring business-use real estate and for development-related expenses such as construction costs through borrowings from financial institutions, and depending on the scale of business, dependence on interest-bearing debt may increase. Fluctuations in the current interest rate level may affect business performance and financial condition, and interest-equivalent burdens under joint business contracts carry similar risks. The Group has adopted a policy of diversifying funding methods and strengthening shareholders' equity.

The Group relies on borrowings from financial institutions for part of its business funds, and if financing is insufficient or negotiations fail, business performance may be affected. Since real estate development business requires substantial upfront investment, the availability of financing is a precondition for business execution. Changes in the financial environment or fluctuations in the Group's creditworthiness directly affect its fundraising capability.

The Group holds a real estate transaction business license (Kanagawa Prefectural Governor (3) No. 28966, valid from October 16, 2024 to October 15, 2029) based on Article 3, Paragraph 1 of the Building Lots and Buildings Transaction Business Act, which forms the foundation of its main business. If grounds for revocation as stipulated in Articles 66 and 67 of the Building Lots and Buildings Transaction Business Act arise, license revocation may be ordered, which could have a material impact on the Group's business performance. It is reported that, at present, no grounds for license revocation have arisen.

The Group is actively working on developing new businesses and expanding existing ones, but delays in various progress or changes in legal regulations and market conditions beyond the Group's control may prevent development as planned. If plans are not achieved, the Group may fail to recover its investment, which could affect business performance and financial condition. Investment decisions regarding new businesses and progress management are key to maintaining financial soundness.

TTS Energy Co., Ltd., a consolidated subsidiary, had stock acquisition rights outstanding as of the end of the consolidated fiscal year under review. If the exercise conditions are met and the stock acquisition rights are exercised, the per-share value of the Group's stock may be diluted, or the scope of the Group's consolidation may be affected. Details are described in the Annual Securities Report, "Part 4 Status of the Filing Company, 1 Status of Shares, etc., (2) Status of Stock Acquisition Rights, etc., ③ Status of Other Stock Acquisition Rights, etc."