As Partners CO.,LTD.

Many of the company's senior care facilities are operated on leased land and buildings, currently treated off-balance-sheet as operating lease transactions. When the new lease accounting standard is applied in FY2028 (ending March 2028), these assets and liabilities will be recognized on-balance-sheet, potentially lowering the equity ratio from current levels. The securities report explicitly states that the likelihood of occurrence is high and the impact is significant.

The company's care-attached homes, day service, and short-stay businesses operate under designation as a "Designated In-Home Service Provider" pursuant to the Long-Term Care Insurance Act. If the company fails to meet the required staffing, facility, or operational standards, it risks administrative sanctions or revocation of designation. In particular, if the "rendan-sei" (joint liability) provision is applied, new designation and renewal for the relevant service category would become impossible, severely impacting revenue plans. The company currently satisfies all standards and conducts compliance audits through its Internal Audit Office.

The company's business is concentrated in the greater Tokyo metropolitan area, and if a natural disaster such as an earthquake or storm/flood damage occurs, business suspension at care-attached homes and day service centers or damage to buildings and equipment could result in substantial repair costs, affecting the company's financial position and operating results. In particular, risks such as a major earthquake directly beneath the Tokyo metropolitan area are assessed as having a significant impact. The company has established BCP (Business Continuity Plan) guidelines for each facility and conducts regular education and training.

Due to the nature of the long-term care business, the company handles large volumes of sensitive personal information concerning residents, users, and their families. If information leakage occurs from systems or due to inadequate document management, this could damage the company's credibility and result in legal liability, affecting its financial position and operating results. Countermeasures include firewalls, anti-virus software, password management, mobile device management, and storage in locked cabinets.

In the elderly care business, if abuse, inappropriate physical restraint, or serious accidents such as falls, medication errors, or infectious disease outbreaks occur, this could result in legal penalties, lawsuits and damage claims, and loss of social trust, causing substantial impact on performance and financial position. The company conducts training and manual development for officers and employees to prevent abuse, practical accident prevention education, and infection prevention measures (vaccination, thorough hand disinfection, etc.), but the risk of occurrence cannot be entirely eliminated.

The Long-Term Care Insurance Act is reviewed every three years, and long-term care fees are official prices revised every three years, creating a structural risk that makes it difficult to pass on rising labor costs and inflation. If the scope of benefits is restricted or fee unit prices are lowered, this could affect the company's financial position and operating results. The company seeks to mitigate this impact through policy advocacy via industry associations and rent/management fee increases, with a +2.03% revision scheduled for June 2026.

Against the backdrop of growing demand for long-term care services amid an aging population, business expansion by competitors and new entrants from other industries is accelerating, intensifying competition among care-attached homes and risking a decline in occupancy rates. Additionally, if total volume regulations on care-attached homes are eased, new facility openings could increase, potentially further intensifying competition. The company seeks to maintain high occupancy rates through a location strategy attuned to regional supply-demand trends and enhanced individualized care using "EGAO link".

While care-attached homes and day service facilities are subject to statutory staffing standards and qualification requirements, labor shortages are becoming more severe due to the declining working-age population from the falling birthrate and aging society, creating a risk that hiring, retention, and staffing of necessary personnel becomes difficult. If a labor shortage occurs, the company may fail to meet designation standards, affecting its financial position and operating results. The company is implementing measures such as reducing workload through IT equipment introduction, strengthening new graduate recruitment, clarifying career paths, and improving working conditions.

The real estate business is highly susceptible to economic conditions such as economic trends, interest rate trends, land price trends, and construction cost trends. If a sharp economic downturn or rise in interest rates prevents sales from proceeding as planned, this could result in stagnant land inventory and deteriorating cash flow. Additionally, since the company adopts a revenue recognition method based on the timing of property handover, there is also a risk of performance volatility due to uneven timing of handovers. The company addresses this through carefully selected property acquisitions, clear exit strategies, and progress management by the Board of Directors.

The company primarily procures capital expenditure funds for new care-attached home construction and real estate business investment through financial institution borrowings. As of the end of the fiscal year under review, interest-bearing debt outstanding reached ¥10,134,611 thousand, with an interest-bearing debt dependency ratio of 41.6%. If stable fundraising becomes difficult due to rising market interest rates or a decline in the company's creditworthiness, this could impede planned facility openings and real estate investments. Currently, the company maintains stable procurement by approaching multiple financial institutions for financing on a property-by-property basis.