Mie Kotsu Group Holdings, Inc.

In the Transportation segment and other Group segments, accidents caused by unavoidable factors, natural disasters such as earthquakes and typhoons, and the spread of infectious diseases may affect business performance. International instability and economic downturns are similar risk factors. As countermeasures, the Group has formulated a BCP and works to strengthen its response to emergencies by conducting disaster prevention drills and safety confirmation drills.

Large typhoons and torrential rains caused by abnormal weather may damage held assets, potentially resulting in the suspension of facility operations and bus services. There is also a risk that large-scale investments and expenses will be incurred in response to greenhouse gas emission reduction requirements. The Group is promoting decarbonization initiatives, such as introducing EV buses and utilizing non-fossil certificates to achieve substantial renewable energy use.

The declining birthrate, aging population, and migration of population to urban centers have reduced the working and commuting-to-school population in the Group's business areas, which may affect performance through a decrease in bus users, among other factors. This trend is expected to continue going forward. The Group strives for sustainable growth by promoting business expansion in Tokyo, Nagoya, and the Kansai region and by improving productivity and operational efficiency.

Competition for talent is intensifying due to the declining working-age population, and a shortage of bus drivers has become a particular challenge in the Transportation segment. If the Group is unable to secure personnel, it may become unable to provide services in line with demand, which could affect performance. The Group is working to improve the workplace environment through better treatment, including raising starting salaries and extending the retirement age, as well as by establishing childcare leave systems and a job-return program.

The Group's main business locations are concentrated in the northern-central area of Mie Prefecture (centered on Tsu City and Yokkaichi City), and in the event of a large-scale earthquake, tsunami, or wind/flood damage, business continuity could be disrupted. In addition, a decline in the number of tourists visiting the Ise-Shima region due to natural disasters or other factors would affect the performance of the Transportation, Leisure, and Service segments. The Group has formulated a BCP and established a backup system for the prompt recovery and continuation of business.

Rising crude oil prices directly increase fuel costs for buses and taxis, which may affect performance. In the petroleum products sales business, fluctuations in crude oil prices directly affect market selling prices, and if price pass-through is difficult due to competitive conditions or other factors, profitability may be squeezed. The securities report does not describe specific hedging measures, and the ability to pass on price increases is key to performance fluctuations.

If debt costs increase due to a sharp rise in interest rates, performance may be affected. The Group is fixing interest rates through long-term borrowings to prepare for short-term interest rate rise risk, while also working to improve and maintain favorable financing terms.

If a computer virus infection or unauthorized external access causes a serious system malfunction or leakage of personal information, performance may be affected through recovery costs, loss of trust, and damage claims. The Group works to prevent such incidents through various system inspections, information security measures, and employee training, and manages information assets appropriately in accordance with the Group's personal information protection policy.

If the subsidy system used to maintain operation of unprofitable routes is revised or abolished, performance may be affected. In the fixed-route bus business, which fulfills a social role as regional public transportation, routes with high dependence on subsidies would see their profitability directly squeezed by changes to the system. The Group continues to share information and hold discussions with relevant regions and local governments to maintain its role as regional public transportation.

In the condominium sales, leasing, construction, and other businesses, if the prices of construction materials and labor costs rise sharply beyond expectations, the time lag between the estimate stage and the order placement stage may prevent timely price pass-through, potentially affecting performance. The Group seeks to control costs through planned inventory procurement in line with order levels and through efficiency improvements.