BANNERS CO.,LTD.

The Group operates real estate leasing, automobile purchase and sales, and musical instrument import and sales businesses in Japan. Fluctuations in the domestic economy may affect the Group's financial position and operating results through the market environment of its customers and suppliers. In particular, automobile sales and musical instrument sales, which are directly linked to consumer demand, are highly sensitive to economic conditions. The annual securities report does not disclose specific countermeasures.

Since the Group imports and sells musical instruments, fluctuations in foreign exchange rates directly affect procurement costs and may impact the Group's financial position and operating results. In a yen depreciation phase, rising import costs pose a risk of pressuring profitability. The annual securities report does not disclose specific hedging measures or other countermeasures.

The Group is constantly exposed to price competition with competitors in each of its business areas, including real estate leasing, automobile sales, and musical instrument import and sales. Intensifying price competition may lead to declining profit margins and adversely affect the Group's financial position and operating results. The annual securities report does not disclose specific measures to maintain competitive advantage.

The automobile sales business depends on the production status of manufacturers, and production halts or supply shortages could lead to lost sales opportunities. In the real estate utilization business, deterioration in the business performance of tenant companies directly leads to a risk of declining rental income. If dependence on specific business partners is high, the impact could materially affect the Group's financial position and operating results.

In the real estate utilization business, the Group is subject to regulation under the "Large-Scale Retail Store Location Law" when attracting or replacing tenants at its own properties. Compliance with this regulation may limit flexibility in tenant attraction, potentially leading to prolonged vacancy periods and reduced rental income. The annual securities report does not disclose specific countermeasures.

The automobiles sold by the Group are subject to public regulations such as exhaust gas standards, and future tightening of regulations or the introduction of new regulations may restrict the vehicle models handled or increase procurement costs. Delayed response to regulatory changes could result in lost sales opportunities and adverse effects on the Group's financial position. The annual securities report does not disclose specific countermeasures.

If real estate (buildings) owned by the Group is damaged by large-scale disasters such as earthquakes or floods, or by fire, this could impair asset value and result in the loss of rental income, potentially having a material impact on the Group's financial position and operating results. As real estate assets form the core of the Group's business foundation, the impact of such damage could be extensive. The annual securities report does not disclose specific countermeasures such as insurance coverage.

The spread of infectious diseases may lead to reduced customer traffic, employee absences due to infection, and disruptions to the supply chain, potentially affecting business operations, financial position, and operating results. Based on the experience of the infectious disease outbreak in early 2020, the Group continues to implement measures such as thorough hygiene management and staggered work hours or telework, but the risk of a resurgence of infectious diseases remains.