TOKYO THEATRES COMPANY,INCORPORATED

Box-office performance for film works is difficult to forecast, and there is a possibility that attendance may fall short of expectations or various rights income may fall below projections. In addition, if production delays, release postponements, or release cancellations occur, this may affect business performance and financial condition. As countermeasures, the Group engages in agile program scheduling and special screenings, improving investment recovery rates through in-house planned productions, and thorough management from the production stage.

If hygiene issues such as food poisoning or product incidents due to mislabeling occur, this may result in victim compensation, business suspension, decreased sales due to deteriorated corporate image, and loss of social trust. There is also a risk that food ingredient procurement may be disrupted by disease outbreaks such as avian influenza. The Group addresses this through thorough quality and hygiene management, securing multiple suppliers, and enrollment in product liability insurance.

Changes in real estate-related tax systems, interest rate increases, lending restrictions, or legal changes may lead to declines in asset value or increases in costs. In the Real Estate Leasing Business, there are risks of declining rent levels and rising vacancy rates due to tenant departures, while in the Used Condominium Renovation & Sales Business, there are risks of delays in property acquisition, inventory stagnation, and declines in market value. The Group addresses these risks through periodic risk assessment of market trends, monitoring of tenants' financial condition, and agile review of acquisition appraisal standards.

Many of the Company's owned real estate properties have been in use for a considerable number of years since completion, and if unexpected large-scale repairs become necessary, this may affect business performance and financial condition. The Group addresses this through planned repair implementation, but the risk of unexpected repair costs remains.

The occurrence of large-scale natural disasters, pandemics, fires, terrorism, and the like may disrupt business operations and affect business performance and financial condition. The Group considers it difficult to avoid all such risks entirely, and has prepared for economic losses through the development of disaster prevention manuals, introduction of safety confirmation systems, regular disaster prevention drills, and enrollment in fire insurance.

Soaring raw material and utility costs may raise running costs at movie theaters, restaurants, and food manufacturing plants, potentially worsening the profit structure. In the Real Estate-Related Business, there are also risks of rising running costs for leased properties, increased renovation costs due to higher construction material procurement costs, and increased costs due to extended construction periods. The Group addresses these through appropriate price pass-through and cost reduction via operational efficiency improvements.

Amid a rapidly worsening labor shortage, recruitment and development of personnel may not proceed as planned, disrupting business operations, and increased personnel costs incurred to secure human resources may also affect business performance and financial condition. The Group addresses this through ensuring diversity of personnel, developing a comfortable working environment, and improving operational efficiency.

For fixed assets such as movie theaters, restaurants, and leased real estate, if investment amounts become unrecoverable due to declining profitability or if market prices decline significantly, impairment losses may occur, affecting business performance and financial condition. The Group periodically verifies the recoverability of book values through future cash flows, and appropriately recognizes impairment for amounts expected to be unrecoverable.

If interest rates rise or fundraising conditions deteriorate, this may affect the business performance and financial condition of the Group. The Group strives to reduce interest rate fluctuation risk through fixed-rate financing and interest rate fixation using interest rate swaps.

If information leakage or IT system outages occur due to computer viruses, cyberattacks, or inappropriate information management, this may result in damages compensation costs, decreased sales due to deteriorated corporate image, and suspension of business activities. The Group addresses this through appointing information managers in a dedicated in-house department, establishing internal rules, improving employees' information literacy, and enrolling in cyber insurance.