RENAISSANCE,INCORPORATED

If facilities must be closed due to government closure requests associated with natural disasters or the spread of infectious diseases, this could directly impact business performance as the company operates a facility-based industry that presumes customer visits. As a countermeasure, the company conducts facility inspections and maintenance at least once per year and has established an early recovery system through strengthened collaboration with business partners.

If membership declines due to competitive store openings of small-format businesses such as 24-hour gyms or a slowdown in personal consumption, there is a risk that revenue in the sports club business could decrease. As countermeasures, the company is promoting the expansion of corporate and municipal-oriented business, the development of the home fitness business, and initiatives to enhance appeal such as converting comprehensive sports clubs to 24-hour operation and enhancing bathing facilities.

Opening a new comprehensive sports club generally requires funds of approximately ¥300 million or more per club (including deposits, security deposits, capital expenditures, and opening costs), and funding requirements may expand if the number of store openings exceeds plans or if urgent renovation work is required. As countermeasures, the company formulates funding plans based on medium-term store opening plans, implements capital expenditures within the scope of operating cash flow, and pursues efficient capital allocation by diversifying into lower-investment business formats.

If market interest rates rise significantly due to changes in the economic environment, this could affect business performance through increased borrowing costs. As a countermeasure, the company mainly relies on long-term, fixed-rate borrowing and reduces risk by incorporating interest rate mitigation methods as needed.

Significant foreign exchange fluctuations related to investments and loans to the Vietnamese subsidiary (RENAISSANCE VIETNAM, INC.) could affect operating results and financial condition. However, since the company does not make foreign currency-denominated investments or loans outside the group, the impact is recognized as limited.

If there are deficiencies in location selection or investment amount decisions when opening new stores, or if performance falls below the revenue and expenditure plan after opening, impairment losses may occur and affect business performance. As countermeasures, the company works to improve the accuracy of revenue and expenditure plans, sets capital recovery standards, and conducts course corrections through daily, monthly, and quarterly monitoring.

Comprehensive sports clubs generally lease their buildings, with lease terms mainly extending long-term from 10 to 30 years, and guarantees to lessors may arise if the company terminates a contract before its expiration for its own reasons. In addition, the balance of security deposits and guarantee deposits placed with lessors amounted to ¥11,938 million at the end of the consolidated fiscal year, and there is a risk that a bad debt loss could occur if these become unrecoverable due to deterioration in the lessors' financial condition.

Deferred tax assets are recorded based on estimates of future taxable income, but if future taxable income falls below business forecasts due to deteriorating business conditions or other factors, part or all of the deferred tax assets may be reduced, affecting financial condition and operating results. Business forecasts are based on various forecasts and assumptions and inherently involve uncertainty.

The company holds personal information of facility users, online lesson participants, e-commerce users, and others, and if leakage or unauthorized use occurs, this could lead to a decline in social reputation, resulting in mid-to-long-term demand decline or damage compensation claims. As countermeasures, the company continuously implements information system development, establishment of internal regulations and manuals, employee education through e-learning, and monitoring by the internal control audit office.

The company operates sports clubs in Vietnam, and if club operations become difficult due to the effects of political and economic conditions in that country, this could affect the group's operating results. As countermeasures, the company works to avoid risk through gathering information both domestically and internationally and collaborating with local attorneys and other professionals.