RESORTTRUST,INC.

If a pandemic such as COVID-19 or a large-scale natural disaster occurs on a scale exceeding the Company's assumptions, it may become difficult for the Group to operate its business, which involves person-to-person services across multiple locations such as hotels, nursing care facilities, and medical service facilities. This could lead to declines in revenue and profit and the incurrence of countermeasure costs, potentially having a significant impact on the financial position and operating results. While the Company pays close attention to infectious disease countermeasures and safety management, closures of facilities and customer avoidance are concerns during outbreaks of infectious diseases for which no cure has been established.

The Group's services are heavily dependent on demand from wealthy individuals and corporate customers in Japan, and the Group has a network of approximately 210,000 wealthy customers. Against the backdrop of population decline and aging, it may become necessary in the future to expand services targeting the mass affluent, younger generations, and foreign tourists. If the Group falls behind current trends and fails to provide new services that match customer needs, it could adversely affect the Group's business, operating results, and financial position.

A slowdown or stagnation in the Japanese economy, fluctuations in foreign exchange rates and interest rates, rising fuel prices, stock price fluctuations, tax rate increases, a global economic downturn, and similar factors may lead to a decline in demand for memberships and sales proceeds. In particular, if customers significantly curtail spending, this could adversely affect the Group's business, financial position, and operating results. Long-term aging of the population and population decline are also risk factors that could undermine demand for products and services.

As of the end of FY2026 (ending March 2026), the Group held property, plant and equipment of ¥213,581 million, including land of ¥51,396 million. If it is determined that a significant impairment charge is necessary due to changes in economic conditions such as fluctuations in land prices or a downturn in business performance, this could have a material impact on the financial position and operating results. In addition, there is a risk that the Group may not be able to realize the intended profits from future development projects due to deteriorating market conditions, rising construction costs, or difficulties in obtaining regulatory approvals.

In the Membership Business, hotel membership sales are classified into registration fees and ownership portions, and the revenue recognition structure is such that the ownership portion for unopened properties is recognized as revenue when the hotel opens. As a result, in addition to the status of membership sales, revenue may fluctuate significantly depending on the timing of new hotel openings, which poses a risk of reducing the predictability of period performance.

As of the end of FY2026 (ending March 2026), the Group held securities (including investment securities) of ¥55,988 million, and fluctuations in market value and foreign exchange rates may affect business performance. In addition, in connection with overseas business operations, including The Kahala Hotel & Resort in Hawaii, the Group holds foreign currency-denominated assets and liabilities, and is exposed to overseas business risks such as fluctuations in foreign exchange rates, changes in local laws and regulations, and political and economic instability.

Brand value, including XIV, Bay Court Club, Kahala, Hi-Medic, and Trust Garden, is key to the success of the business, and if negative publicity or product liability claims arise regarding the quality or safety of products and services, this could lead to a sharp decline in sales and significant damage to brand value. Even if a claim is settled for a minor amount or determined to be without merit, adverse effects may still occur, and the occurrence of unforeseen quality or safety issues cannot be completely ruled out.

The Group's business centers on the provision of services and is heavily dependent on the performance and quality of its employees. The decline in the working-age population due to the declining birthrate and aging population poses a risk to securing personnel capable of providing high-sense, high-quality hospitality, which could affect business performance and financial condition.

The Group, whose core business is membership-based operations, holds a large volume of customer (member) information and personal data, and pays close attention to thorough training of employees, part-time workers, and outsourcing partners. However, in the event of an unforeseen incident such as unauthorized external access resulting in the leakage of information, this could adversely affect business performance through damage claims and loss of public trust.

The Group provides high-quality checkup facilities, senior residences, home care services, cosmetics, food supplements, and other offerings, and may become subject to litigation or complaints arising from unforeseen employee errors or effects on the human body such as allergic reactions. Regardless of whether such claims have merit, litigation and complaints could adversely affect the Group's reputation, potentially having an adverse effect on its business, operating results, and financial position.