Keihan Holdings Co.,Ltd.

If an infectious disease spreads on a large scale in the areas where the Group operates, facility usage may decline due to travel restrictions and lifestyle changes, potentially disrupting business operations including railway train services. Since a wide range of businesses—railway, bus, leisure, hotel, etc.—would be affected simultaneously, the impact on the Group's overall business results could be significant.

The Group owns numerous railway facilities, rental buildings, stores, and other assets concentrated in Osaka, Kyoto, and Shiga Prefectures, and business results could be affected if a natural disaster such as an earthquake or a terrorist attack occurs. There is also a risk that stricter decarbonization regulations could lead to the introduction of a carbon tax, increased investment in renewable energy, and higher electricity costs. The Group is advancing its response through BCP formulation and its endorsement of the TCFD recommendations.

A rise in the price of resources such as crude oil would have a significant impact on the Railway Business, Bus Business, and Leisure Business, and would also spill over into construction costs in the Real Estate Business and energy costs in the Hotel Business and restaurant business. If resource and material prices rise more than expected, the Group's overall cost structure could deteriorate, potentially affecting business results.

As the Group is a cluster of community-based companies with its business base in Osaka, Kyoto, and Shiga Prefectures, a declining population resulting from the falling birthrate and aging population could affect business results through a decrease in railway passenger numbers, among other factors. In response, the Group is promoting residency and visitor attraction in its business areas as a core strategy under its long-term management strategy.

If competition intensifies due to other companies entering the Group's operating areas in the Railway Business and Bus Business, or due to new entrants in surrounding areas in the Distribution Business and Hotel Business, this could affect business results. The Group aims to differentiate itself and become the Keihan Group of choice by promoting residency and visitor attraction in its business areas and proposing lifestyles.

Consolidated interest-bearing debt (total of borrowings and bonds) reached ¥382,786 million at the end of the fiscal year under review. Future fluctuations in market interest rates or changes in the Company's credit rating could raise funding costs and affect business results. The high level of interest-bearing debt may also constrain financial flexibility.

If the fair value of held assets such as inventories, tangible and intangible fixed assets, and investment securities declines significantly, impairment losses or valuation losses could be recorded, affecting business results. A deterioration in the real estate market (due to changes in the economy, interest rates, land prices, or tax systems) is also recognized as a risk that could similarly erode asset value.

In corporate acquisitions aimed at growth and strengthening competitiveness, if the acquired company's performance falls short of expectations or if it is determined that expected results cannot be achieved due to changes in the business environment, impairment losses on goodwill and other assets may occur, affecting business results. While the Group strives to consider the target company's performance, financial condition, and risks when making acquisitions, it is difficult to eliminate all risks.

If a large-scale accident occurs in public transportation businesses such as the Railway Business or Bus Business, it could have a material impact on business results. The Group also holds a large amount of customer personal information, and if information leaks occur due to system trouble or criminal activity, there is a risk of damage to the Keihan brand's credibility and claims for damages. In the Distribution Business and Leisure & Service Business, there are also risks of credibility damage related to quality, hygiene management, and food labeling.

The Railway Business requires permits and approvals from the Minister of Land, Infrastructure, Transport and Tourism under the Railway Business Act, and setting or changing passenger fares also requires approval of upper limits. If a business suspension or revocation of permits occurs due to a legal violation, this could have a material impact on business results, and changes in legal regulations affecting businesses other than railways could also affect business results. The Company states that, as of now, no facts exist that would constitute a violation of this Act.