ANABUKI KOSAN INC.

The condominium sales, detached house sales, and custom-built housing businesses under the "Alpha" series face the risk that consumer purchasing sentiment may change due to government economic policy, revisions to housing promotion tax systems such as the mortgage tax deduction, and trends in mortgage interest rates at public and private financial institutions. In addition, if soaring resource prices due to domestic and international factors lead to increases in building materials and housing equipment costs or supply shortages, the profitability of the business may decline. These constitute structural risks that directly affect the Group's core businesses.

In the condominium sales business, a portion of land acquisition and construction funds is procured through borrowings from private financial institutions, and the ratio of dependence on interest-bearing debt has remained at a high level: 52.0% in FY2023 (ending June 2023), 52.1% in FY2024 (ending June 2024), and 50.9% in FY2025 (ending June 2025) (interest-bearing debt balance was ¥75,346 million against total assets of ¥148,139 million in FY2025 (ending June 2025)). If economic uncertainty or financial tightening leads to restrictions on lending or a rise in interest rates, fundraising may become difficult, potentially having a material impact on business results.

In the condominium sales business, revenue is recognized at the time of delivery to the customer rather than at the time of the sales contract, resulting in significant skewing of performance between the first half and second half of the fiscal year. In FY2025 (ending June 2025), non-consolidated net sales were ¥53,116 million (59.7%) in the first half and ¥35,886 million (40.3%) in the second half, differing substantially by period, and operating income also showed a pronounced imbalance, with ¥5,045 million in the first half versus ¥346 million in the second half. If delivery timing is delayed beyond the fiscal year-end due to construction delays caused by natural disasters or other factors, this could significantly affect business results for that period.

In the Company's business area, Anabuki Construction Co., Ltd., which belongs to the Daikyo Group, operates a condominium sales business, and a competitive relationship continues to this day. The Company sought to differentiate its brand by changing its trademark to "Anabuki" in October 2002 and renewing its CI mark, but competition within the same region remains an ongoing business challenge. Notably, even when Anabuki Construction Co., Ltd. filed for corporate reorganization proceedings (November 2009), there was no adverse reputational or management impact on the Company, and the two are currently operated as independent corporate groups.

The real estate-related business is subject to regulation under numerous laws, including the Building Lots and Buildings Transaction Business Act, the Act for Promotion of Proper Housing Quality Assurance, the National Land Use Planning Act, the City Planning Act, the Financial Instruments and Exchange Act, and the Act on Specified Joint Real Estate Ventures. In addition, the Group's various other business segments beyond the real estate-related business also operate under a range of legal regulations, and if these regulations are amended, abolished, or new regulations are introduced, the Group's businesses could be affected.

The Group acquires and manages large amounts of personal information across its various businesses, including the real estate-related business, and if an information leak were to occur, it could affect business results and financial position. As a countermeasure, the Company has obtained and maintained certification under the ISMS international standard "ISO/IEC 27001" since December 2006, and in December 2024 also obtained certification under the revised standard "ISO/IEC 27001:2022 (JIS Q 27001:2023)", thereby strengthening its information asset management system.

The Group conducts a wide range of business activities centered on the real estate-related business, including the condominium sales business, and enters into a wide variety of contracts with a diverse range of business partners, including individuals and corporations. Deficiencies in contract terms or disputes with business partners could develop into litigation, and if significant litigation is brought, it could result in losses due to litigation costs or payment of damages.

While the impact of the COVID-19 pandemic has subsided and a notable recovery in earnings has been observed in the Hotel Business, Facility Operation Contracting Business (Facility Operations Business), and the Travel Business (Tourism Business), if a resurgence of infections occurs due to new variants or unknown infectious diseases, it could affect the Group's business results, primarily in these business segments. This is recognized as a risk with particularly significant impact on face-to-face and customer-attracting businesses.