KYORITSU MAINTENANCE CO.,LTD.

In the Student Dormitory business, there is a risk of significant vacancies arising from the termination of designated dormitory arrangements with major schools, and in the Employee Dormitory business, from bulk cancellations associated with corporate restructuring. Since the majority of land and buildings for business use are developed under lease agreements with landowners, the vacancy risk structurally accrues to the Company, resulting in a significant impact on business performance. Although detailed countermeasures are being implemented, the Company faces a structural risk in which performance is affected by the trends of major contract counterparties.

The Dormy Inn (business hotel) business may be affected by weak corporate demand due to economic conditions. The resort hotel business faces a risk that performance during peak seasons may stagnate due to economic conditions as well as weather-related and natural disasters such as unfavorable weather, typhoons, and earthquakes. While the Company seeks to stabilize occupancy through the acceptance of long-term stay guests and differentiation in both service and facilities, its ability to respond to changes in the external environment is limited.

Restaurant Business outlets may be affected by weak individual consumer demand. For golf course restaurants and contract catering operations, there is a risk that revenue will directly decrease if contracts with client golf courses or companies are cancelled. Because the business model relies on contracted operations, the management conditions and policy changes of client companies have a direct impact on performance.

Continuous development is essential for the sustained growth of the Dormitory Business and Hotel Business; however, development may not proceed as planned due to stagnation in the real estate market, declines in asset values, extreme deterioration in the cash flow of existing development assets, or deterioration in financial conditions. While the Company addresses this by utilizing various financial methods while considering the overall financial balance of the group, deterioration in the external environment may affect both business performance and financial condition.

The Company operates its business under a variety of legal regulations, including the Food Sanitation Act, the Act on the Protection of Personal Information, the Hotel Business Act, and the Fire Service Act. In the event of unforeseen incidents such as food poisoning or personal information leaks, there is a risk of damage to social credibility and an adverse impact on business performance. While the Company conducts regular verification and checks on legal compliance and implementation status through its compliance framework, risk committee, and internal control systems, complete elimination of such risks is difficult.

With respect to tangible fixed assets, intangible fixed assets, investments and other assets, and leased assets held by the Group, if the profitability of the ongoing cash flows of a business significantly deteriorates due to sudden changes in economic conditions or a worsening of financial conditions, the application of impairment accounting treatment becomes necessary. The recognition of impairment losses may have a material impact on both business performance and financial condition.

The principal facilities of Dormitory Business and Hotel Business locations are leased in bulk under long-term lease agreements with terms of 10 to 20 years, some of which include provisions making mid-term cancellation mutually impossible. As of the end of March 2026, there were 75 properties subject to non-cancellable lease agreements, with total outstanding lease payments for the non-cancellable portion amounting to ¥121,349 million. Even if the occupancy and profitability of such properties deteriorate significantly, the lease payment burden will continue, which may affect business performance and financial condition.

As of the end of FY2026 (ending March 2026), the ratio of interest-bearing debt to total assets stood at 38.1%, reflecting a funding structure dependent on borrowings from financial institutions. While the Company limits the short-term impact of rising interest rates by maintaining a fixed-rate funding ratio of 58.9% and seeks to reduce its dependence on interest-bearing debt through means such as the sale of self-owned properties to investors, a future long-term rise in interest rates could increase funding costs and thereby affect business performance.