Matters related to the operations and financial statements of the Park24 Group that could have a significant impact on the decision-making of investors are described below. Forward-looking statements are based on the judgment of the Park24 Group as the end of this fiscal year, and business risks are not limited to those listed below.
1.Contract Cancellation Risk in the Parking Business
The Park24 Group’s mainstay Parking Business consists mainly in sublet parking facilities, which the Group rents from the land or parking facility owner under a lease contract without owning the land or the facility, and parking facility management services, where the Group provides management services based on a facility management agreement.
Although we take steps to solidify our business base by constructing an optimum business portfolio that combines the Standard Times (ST) Business with Times Partner Service (TPS) Business where, even in the case of sublet parking facilities, we rent parking facilities attached to commercial facilities under contracts that are unlikely to be cancelled, the performance of the Group could be significantly influenced by the cancellation of lease contracts or facility management agreements.
Risk of Rising Land Prices
A rise in land prices could have an impact on our strategy of adding to the parking spaces we manage, in the form of a stronger inclination among land owners to sell their land (and cancel their lease contracts) or higher rents on land in the phase of new development.
Although we have never experienced higher land prices leading to higher rents in the areas in which we operate, as we undertake development in areas where land prices are unlikely to rise, a rise in cancellation rates or in rents could have a significant impact on our business performance should it occur.
Risk Associated with the Operation of the Mobility Business
In the Mobility Business, we compete not only with industry peers but also auto leasing companies and taxi companies on quality, price, and service, in the personal mobility market.
Therefore, the performance of Park24 could be susceptible to the operations of other companies. In addition, as we sell used vehicles as part of our sales cycle, the performance of Park24 could be affected if the size of the used car market changes markedly.
Risk Associated with Changes in Economic Conditions
An economic recession could have an adverse effect on traffic volumes in the major cities on which we focus and, as a result, could reduce demand for parking.
In addition, if the future economic conditions have an impact on various factors such as fuel and energy prices, interest rates, and tax rates, the business performance of Park24 could be significantly influenced.
Risk Caused by System Failure
The parking management system could experience technical problems, while computer viruses could arise in IT system.
Although this will not interfere with the management of parking, it could have an adverse effect on the provision of value-added services essential for retaining customers, which is an expansion strategy of Park24, and could consequently have a profound influence on the business performance of Park24.
Risk of Natural Disasters and the Like
If the transportation infrastructure were to be paralyzed by natural disasters, such as damage from heavy snowfalls or earthquake, utilization of parking facilities could decline or the Park24 Group may be prevented from providing rent-a-car and car sharing services. Although we take steps to secure operating revenues by diversifying areas where we operate parking facilities and mobility services, the performance of the Group could be affected by reduced services to customers and restoration costs, if our facilities such as the management center and the information center suffer devastating damage.
Risk Associated with the Management of Personal Information
Personal information necessary for member registration in the Times Club membership point program and Times Car PLUS membership is processed and administered in the Group’s databases.
A leak of personal information due to unforeseen circumstances could compromise the credibility of the Park24 Group, and the Group’s results could subsequently be significantly affected.
Risk Associated with Overseas Business
In January 2017, Park24 incorporated into the Group parking facilities in the five countries of Australia, New Zealand, the United Kingdom, Singapore and Malaysia from Secure Parking, which operates parking facilities in 11 countries worldwide. Also, in the same year in August, Park24 incorporated into National Car Parks, which operates parking facilities in UK.
Although we are quickly taking steps to build a system of governance in each region to establish appropriate internal controls in areas such as compliance and risk management, the performance of the Group could be significantly influenced if the Group was stopped from developing the parking facilities or lost the confidence of its customers as a result of an incident that arose due to a delay in these efforts.