TOKYU CORPORATION

Because the funds required for the Railway Business (Tokyu Corporation Railways) and other businesses depend on corporate bonds and financial institution borrowings, a rise in market interest rates, a downgrade by rating agencies, or a decline in ESG-related evaluations could lead to increased interest burden and deterioration in fundraising conditions. In response, the Group is working to diversify funding sources, extend fixed-rate borrowing terms and level repayment schedules, enhance flexible fundraising capability through the use of commercial paper, and achieve internal growth by promoting pricing policies.

If procurement costs such as construction costs rise due to increases in market prices for raw materials, labor costs, and other items, this could adversely affect the Group's business performance and financial condition. The Group is strengthening its ability to respond to market changes through value engineering, cost reduction, diversification of procurement channels, and continuous scrutiny of construction content.

Because management resources are concentrated in areas along the railway lines, there is a risk that declining demand due to the low birthrate, aging population, and population decline, decreased use of transportation and commercial facilities due to lifestyle changes, and reduced competitiveness due to the rise of new industries could adversely affect business performance. There is also a risk of delayed progress or failure to achieve projected earnings under the medium-term three-year management plan. The Group is addressing these risks by expanding sales channels and customer-attracting areas through enhanced product planning and digital initiatives.

As IT infrastructure becomes more complex, a major system failure could result in recovery costs, damages liability, and loss of customer trust, while insufficient funding and talent for DX could cause the business model to become obsolete, reducing competitiveness. Under the DX Committee chaired by the President, the Group is promoting a cross-group digital marketing strategy and working to raise awareness of risks related to the use of generative AI.

If a serious human-caused accident occurs, including one caused by an outsourced contractor, it could adversely affect business performance and financial condition through human casualties, business interruption, and damage to brand image. The Group has implemented safety measures such as installing platform doors and fixed platform gates with sensors at all Tokyu Line stations (excluding the Setagaya Line and Kodomonokuni Line), collecting and disseminating accident information to prevent recurrence, and thoroughly managing outsourced contractors' operations.

As the Group provides systems and services that support social infrastructure, a service outage caused by a cyberattack or unauthorized access, or the leakage or falsification of customer information or management information, could have a significant adverse impact on business performance, financial condition, and social credibility. The Group is implementing multilayered security measures, including strengthened access management based on zero trust, deployment of antivirus and intrusion detection monitoring tools, targeted phishing email training, and large-scale incident response drills.

If misconduct occurs at subsidiaries or sub-subsidiaries due to insufficient group governance, this could adversely affect business performance and financial condition through the loss of customers and business partners and a decline in social trust. Centered on the Compliance and Risk Management Committee, the Group continuously promotes messaging from top management, implementation of compliance self-checks at subsidiaries and sub-subsidiaries, and investigations into entertainment and gift-giving based on its anti-corruption policy.

Increased labor mobility due to the low birthrate, aging population, population decline, and changes in the working environment could lead to worsening talent outflow and recruitment difficulties, with resulting personnel shortages potentially causing service degradation and reputational damage that adversely affect business performance. The Group strives to secure and develop talent through workplace environment improvements centered on engagement, health management and DEI initiatives, diverse recruitment and flexible working arrangements, and the development of specialized personnel.

If facilities are damaged, casualties occur, or business is interrupted due to natural disasters such as earthquakes, storms, floods, or volcanic eruptions in business areas, long-term and widespread disruption of foot traffic could significantly reduce profitability. The Group continuously promotes strengthening of group-wide BCM systems, evaluation of operating losses and social impacts associated with climate change, seismic reinforcement works, formulation and training of initial response plans, and risk financing in preparation for large-scale earthquakes.

If long-term and widespread disruption of foot traffic or business restrictions occur due to external factors such as infectious diseases, this could lead to suspension of business activities and reduced profitability. Structural disruption of foot traffic due to declining residential population in business areas could also adversely affect business performance. The Group is advancing initiatives such as maintaining a continuous response framework for infectious diseases, securing residential population by enhancing the appeal of areas along the railway lines, and improving recognition of ridership services and marketing to generate travel demand.