SUN LIFE HOLDING CO.,LTD.

The Mutual Aid Society Business (Members System) constitutes a "prepaid specified transaction" under the Installment Sales Act, and operates under a license from the Minister of Economy, Trade and Industry, requiring compliance with obligations such as securing an amount equivalent to one-half of the outstanding prepaid balance, and maintaining standards for the current income/expenditure ratio, current ratio, and net assets ratio. If revisions or tightening of laws and regulations, or changes in their operation, result in suspension or revocation of the license or the incurrence of new costs, this may affect the Group's business development, business results, and financial position. At present, the Group has not been subject to any legal disposition such as an improvement order, and it continues to monitor regulatory developments and take necessary measures.

The Group, which operates food and beverage businesses, is subject to regulation under the Food Sanitation Act, and if a sanitation management issue such as food poisoning occurs, the Group may be ordered to have its business license revoked or business suspended. Should a serious accident occur, this would affect business results and financial position. The Group works to prevent such occurrences through daily sanitation management checks, bacteriological testing, and confirmation of sanitation management status through internal audits.

In 2025, births numbered approximately 700,000 against approximately 1.60 million deaths, continuing the natural population decline, and the total population is projected to fall to approximately 87 million by 2070, resulting in a significant contraction of the target customer base. The advancing decline in birthrate and aging of the population, along with the transformation of traditional values and major changes in social structure, directly affect demand in the Ceremonial Business, Hotel Business, and Bridal Services businesses, and delays in restructuring the business model could result in missed growth opportunities. The Group aims to achieve sustainable growth and enhance corporate value through agile review of its overall business portfolio.

In addition to conventional competitors, new entrants from online businesses and adjacent industries have been observed, and intensifying competition may lead to a decline in market share and falling sales prices due to price competition, which could affect business results and financial position. The Group continues strategic and agile new openings of funeral halls while striving to improve customer satisfaction by providing differentiated, unique services.

The Hotel Business and Ceremonial Business are strongly affected by changes in customer lifestyles and needs, and failure to plan, propose, and execute services in a timely and appropriate manner could affect business results and financial position. In the Ceremonial Business, the Group is promoting brand strategies tailored to scale and price range, and in the Hotel (Bridal) Business, it is working to accommodate diverse wedding styles and strengthen its proposal capabilities. The Group is also working to improve service quality in the Nursing Care Business.

Given the nature of the Ceremonial Business and Mutual Aid Society Business, the Group handles a large amount of customer information, and if problems arise in information management, this may affect business development, business results, and financial position. Two subsidiaries have been certified under the Privacy Mark system, and the Group conducts security education such as e-learning and cyberattack response training.

If business facilities are damaged by natural disasters such as earthquakes, typhoons, or heavy rain, business activities may be suspended, affecting business results and financial position. The Group formulates and confirms the operation of its BCP (Business Continuity Plan) through regular meetings of the Risk Management Committee, and works to raise awareness among officers and employees.

The spread of infectious diseases such as COVID-19 is expected to result in shortened business hours or temporary closures, a decline in the number of customers, sluggish personal consumption, and delays in the supply of raw materials, which could affect business results and financial position. In the event of an outbreak, the Group plans to establish a task force under the direct control of the president and implement business continuity measures as needed, prioritizing the safety of customers, business partners, and employees.

If the profitability of business-use fixed assets declines due to changes in the business environment, or if the market value of land or other assets falls significantly, the Group may recognize impairment losses, which would affect business results and financial position. The Group strives to avoid impairment risk through careful examination of investment effectiveness and profitability at the time of capital expenditure, along with ongoing budget-versus-actual management after facilities become operational.

The Group regards the decline in the working population due to the falling birthrate as a major concern, and if changes in the recruitment environment make it difficult to secure and develop sufficient human resources, this could affect business development and thereby business results and financial position. In April 2022, the Group introduced a personnel system incorporating job-based elements, and under its sustainability policy of "supporting employee happiness and growth," it is focusing on securing and developing human resources through the enhancement of education and training systems.