Keifuku Electric Railroad Co.,Ltd.

With the ongoing decline in the working and student-age population due to the falling birthrate and aging society, a decrease in the number of passengers transported in the Railway Business (Arashiyama Line, Cable Line, Aerial Ropeway) and the Bus Transportation Business is expected. In addition, employee shortages due to recruitment difficulties may impede business continuity. No specific countermeasures by the Company Group are described, and this is recognized as a structural challenge.

If large fluctuations in the economy cause drastic changes in personal consumption and private capital investment, this may lead to a decline in passengers transported by railway, bus, taxi and other services, a decline in demand for products, and intensified price competition. Under such conditions, this would have a direct impact on the Company Group's operating revenue and profitability.

Changes in economic and international conditions may cause material and supply prices to surge or become scarce, increasing the cost burden on the Company Group. The Company is implementing cost reductions through reviews of unit prices, content, and ordering methods, but if price increases cannot be fully absorbed, performance will be affected. In particular, in the Bus Transportation Business and Taxi Business, an increase in fuel costs is a concern due to instability in crude oil prices associated with geopolitical risk.

If the market value of inventories, tangible and intangible fixed assets, investment securities, and other assets held by the Company Group declines significantly, it may be necessary to record impairment losses or valuation losses. This may have a material impact on performance and financial condition.

A rise in interest rates amid economic conditions may increase the interest burden on interest-bearing debt. The Company Group aims to improve the efficiency of its held assets and reduce interest-bearing debt, but depending on sudden changes in economic conditions and the behavior of financial institutions, performance may be affected.

For the Company Group, which operates public transportation businesses such as railway, bus, and taxi services, the occurrence of a transportation accident would have a significant impact on performance and social trust. The Company implements safety measures on both the soft side, such as employee training and operational management, and the hard side, such as equipment improvements, but it is difficult to reduce the risk of accidents to zero.

If a pandemic occurs due to the spread of an infectious disease, economic activity and personal consumption may decline significantly, which could affect the Company Group's performance through a sharp decrease in transportation demand. The Company has established a "Crisis Management Regulation" and a "Business Continuity Plan (BCP Manual)" to build a system for rapid response, but it is difficult to fully prepare for unforeseen circumstances.

If a large-scale earthquake or wind and flood damage occurs, significant disruption to the operation of railway and bus services may occur, which could affect business results and financial condition. In addition, if unexpected changes occur in the natural environment along the railway lines, which is a tourism resource, due to climate change or other factors, operating activities may be affected through a decrease in tourism demand. The Company has established internal systems in preparation for emergency response, but it is difficult to fully respond to large-scale disasters.

If power generation capacity declines significantly due to the suspension of power plant operations or other reasons, and a large-scale power outage occurs, the Company Group, which uses electricity to operate its vehicles, would find it difficult to provide stable services. If the power supply becomes insufficient, it may cause significant disruption to business continuity, with a particularly large impact on the Railway Business (Arashiyama Line, Cable Line, Aerial Ropeway).

As the Company Group operates public transportation, if unforeseen events such as terrorism occur, it may become difficult to ensure passenger safety and continue operations, which could affect performance. The Company gathers information from relevant government ministries and agencies and strengthens its own security measures from time to time, but it is difficult to completely eliminate unforeseen events.