Hankyu Hanshin Holdings, Inc.

Natural disasters such as earthquakes and typhoons, as well as increases in concentrated heavy rainfall and powerful typhoons due to climate change, may cause damage to customers and operating facilities and restrict business activities. A wide range of businesses, including Urban Transportation, Real Estate, and Entertainment, are at risk of being affected. As countermeasures, the Group is implementing maintenance and renewal investments in existing facilities and earthquake-resistance reinforcement work, working to minimize impacts from both hardware and software perspectives.

A widespread outbreak of infectious disease could have a major impact on all businesses across the Group, including a decrease in railway passenger numbers, closures of and reduced visitor numbers at leasing facilities, declines in inbound and domestic demand for hotels, cancellation of Takarazuka Revue and professional baseball performances, and cancellation of travel tours. The Group aims to continue business operations while taking preventive and containment measures according to the infection situation, and also aims to improve profitability and secure a stable financial structure.

Increasingly sophisticated and elaborate cyberattacks, fraud, or errors could cause information systems to stop functioning, malfunction, or leak information, which could disrupt business operations and affect operating results and financial position. Given that the Group operates railways, a critical infrastructure, it positions the assurance of cybersecurity as a key element of risk management. The Group has established a Group CSIRT to build a system for prompt response and containment of damage in the event of an incident, and continues to gather information in cooperation with government and other relevant organizations.

Each business manages personal information such as customer data, and if information is leaked due to an unforeseen incident, the Group could be significantly affected by damage claims and loss of social trust. To comply with laws and regulations related to personal information protection both in Japan and overseas, the Group has established regulations such as its Basic Policy on Personal Information Management, and has built a system to ensure appropriate use and protection of such information. The Group also continuously works on training for officers and employees.

The Group's consolidated interest-bearing debt balance at the end of the current consolidated fiscal year was ¥1,434,559 million, and a certain degree of increase is expected going forward due to growth investments including large-scale projects. If interest rates rise, financial markets change, or credit ratings are downgraded, this could increase interest expenses and make it difficult to raise the funds needed to refinance interest-bearing debt on favorable terms. The Group is working to diversify fundraising, secure liquidity, avoid risk through fixed interest rates, and restrain interest-bearing debt through cost reductions.

If the fair value of inventories, tangible and intangible fixed assets, investment securities, and other assets declines significantly due to a substantial deterioration in the political or economic environment, the Group may need to record impairment losses or valuation losses, which could affect operating results and financial position. Given the Group's characteristic of holding large-scale assets such as real estate and railway infrastructure, the impact of changes in asset value is significant.

Due to the declining birthrate in the Keihanshin area, the Group's core region, future population decline and changes in demographics may reduce demand for passenger transport in railways, buses, and taxis, as well as demand in other businesses. In addition, a tightening labor market may make it difficult to secure workers. The Group is working to increase the resident population along its rail lines, capture inbound demand, continue investing in human capital, and improve productivity through the use of DX.

Investments and costs are expected to arise in response to the transition to a decarbonized and circular society, and there is a possibility of increased costs due to the introduction of taxes related to greenhouse gas emissions and rising electricity retail unit prices. Failure to respond appropriately could also lead to decreased revenue due to credit deterioration and difficulty in raising funds smoothly. The Group has set GHG emission reduction targets (FY2035: -60% compared to FY2019; FY2050: net zero) and is promoting scenario analysis and ICP setting in line with the TCFD framework.

Rising stakeholder expectations regarding ESG, CSR, work style reform, and enhancement of shareholder value, as well as increases in various costs including construction costs due to accelerating inflation, could affect existing business models and operating results and financial position. In the Railway Business, regulations under the Railway Business Act may prevent flexible fare revisions. Based on the "Long-term Management Vision" formulated in March 2025, the Group aims to optimize the allocation of management resources and accelerate value creation as a unified Group.

In overseas businesses such as Real Estate, Travel, and International Transport, there are geopolitical risks including changes in political and economic conditions, laws and regulations, conflicts and terrorism, and infectious disease outbreaks in various countries. Increases in fuel and raw material costs and changes in trade policy stemming from international conditions may spread beyond overseas businesses to affect domestic businesses, including the Urban Transportation Business. The Group strives to respond by conducting risk analysis based on advice from experts such as lawyers and consultants.