DEAR LIFE CO.,LTD.

The core Real Estate business is highly susceptible to macroeconomic factors such as economic trends, interest rate movements, and land price fluctuations. If a deterioration in economic conditions leads to reduced appetite for real estate investment, higher vacancy rates, or falling rents, there is a risk of valuation losses or losses on sale of held properties. This may also spill over into the Sales Promotion business through reduced human capital investment across various industries. The Group states its policy is to avoid the occurrence of such risks and to respond appropriately when they arise, but no specific quantitative countermeasures are disclosed.

Funds for land acquisition and construction costs in the Real Estate business are mainly raised through borrowings from financial institutions on a project-by-project basis, and as of the end of September 2025, interest-bearing debt accounted for 32.0% of total assets. As business scale expands, the ratio of interest-bearing debt may rise further, and in a future period of rising interest rates, increased fundraising costs would directly affect operating results and financial position. As countermeasures, the Group is building relationships with numerous financial institutions and diversifying funding through direct financing methods such as corporate bonds and capital increases, but the risk remains that sufficient financing may not be obtainable in the event of sudden changes in financial conditions.

The Real Estate business is concentrated in the Tokyo metropolitan area, where there are many competitors, and there is a risk that intensified competition may prevent property acquisition and sales from proceeding as planned, or that price fluctuations may cause a sharp decline in demand. In addition, if a large-scale earthquake, other disaster, or deterioration of the regional economy occurs in the Tokyo metropolitan area, this geographic concentration means that a large portion of the business could be affected simultaneously. No measures such as diversification of business areas are explicitly disclosed in the securities report.

Since revenue in the Real Estate business is mainly generated from the sale amounts of real estate properties, it tends to be large in scale compared to other businesses, and quarterly revenue and profit tend to be skewed depending on whether property sales occur in a given period. If the timing of property handover is delayed beyond the end of the fiscal period due to natural disasters, accidents, or other unforeseeable factors, or if properties planned for completion and handover near the end of the fiscal year are pushed into the following period, this could have a material impact on that period's results. No smoothing measures for this structural earnings volatility risk are explicitly disclosed in the securities report.

Most of the design, construction work, leasing management, and building management in the Real Estate business is outsourced to external specialist companies and construction firms, creating a risk that construction may be delayed or halted due to insufficient availability of subcontractors or breach of contract/bankruptcy on their part. If an external contractor goes bankrupt after completing construction, the defect repair liability that should normally be borne by the contractor may not be fulfilled, potentially resulting in unexpected cost burdens for the Group. Although contractors are selected following prescribed screening procedures, the high degree of dependence on outsourcing constitutes a structural risk factor.

The Group is subject to numerous laws and regulations, including the Building Lots and Buildings Transaction Business Act, the Building Standards Act, the City Planning Act, the Financial Instruments and Exchange Act, and the Worker Dispatching Act, and each Group company holds licenses and registrations such as real estate brokerage licenses, financial instruments business registration, and general worker dispatching business licenses. If, for any reason, a license or permit is revoked or lapses upon renewal, this could have a material impact on business results and financial condition. In addition, if regulations such as studio apartment (one-room mansion) restriction ordinances are further tightened, this could affect the development of the Real Estate business; the Group addresses this by planning and developing properties in line with current ordinances.

The Sales Promotion business handles a large amount of personal information of registered temporary staff and others. If an unforeseen incident results in an information leak, this could damage the Group's reputation, reduce revenue, and incur damages compensation costs, thereby affecting operating results and financial position. As a countermeasure, the Group has established Personal Information Protection Management Regulations and thoroughly conducts education and awareness activities for Group employees and registered temporary staff, but this does not guarantee complete prevention.

The Group faces the risk that cyberattacks or unauthorized access could disrupt normal operation of its information and business systems. Should this lead to a suspension or stoppage of corporate activities, or a leak of corporate or personal information, it could result in lost business opportunities, reputational damage, reduced revenue, and the incurrence of damages compensation and recovery costs. The Group is working to continuously strengthen its cybersecurity functions, develop its BCP, and raise security awareness centered on its Risk Management and Compliance Committee, but these measures may not be fully effective against unknown cyberattacks.

The Group's policy is to utilize M&A and business alliances to grow existing businesses and diversify revenue sources, and it conducts detailed due diligence in advance. However, if contingent liabilities arise or previously unrecognized liabilities are discovered after a transaction that could not be identified through prior investigation, this could have a material impact on financial position and operating results. It should also be noted that when a new business is added, risk factors specific to that business are also added, changing the overall risk profile of the Group.

Sustained recruitment of personnel is essential to promoting and expanding the Sales Promotion business. However, due to the declining working population resulting from the falling birthrate and aging population, diversifying values, and concentration of talent in specific industries, there is a risk that the Group may be unable to secure sufficient personnel, which could adversely affect operating results and financial position. Amid ongoing structural labor shortages, intensifying competition for recruitment may become a constraint on business expansion; specific details of measures to secure personnel are not disclosed in the securities report.