Kin-Ei Corp.

Box office revenue varies significantly by film, and if a series of films fail to reach a certain level of performance, business results may deteriorate. There is also a risk of customer outflow due to the opening of movie theaters by competitors in the same area. As countermeasures, the company secures hit films through contracts with major distribution companies and implements flexible screening schedules.

Economic conditions may cause rent declines and rising vacancy rates in existing leased buildings, potentially reducing rental income. There is also a risk of tenants leaving due to competition with competing facilities in the tenant business area. As countermeasures, the company maintains and enhances building functions through appropriate investment planning, optimizes rents in line with market rates, and provides sales promotion support such as joint campaigns with tenants.

A decrease in box office or rental revenue, a significant decline in land prices, or a change in the purpose of use may result in impairment losses on held assets, affecting business performance. Since business operations are concentrated in a single location, Abeno, deterioration of the local environment could directly affect asset value. As a countermeasure, the company strives to avoid impairment losses by focusing on securing revenue and formulating careful business plans.

If sophisticated unauthorized access or similar incidents result in the destruction or leakage of important business or financial information, business disruption or loss of trust could lead to a decline in sales. As countermeasures, the company implements firewalls and antivirus software, IT controls, and employee training, while mitigating risk through data backups and the establishment of a rapid response system.

The company holds a large amount of personal information, including cinema membership information, customer information, and shareholder information. If a system failure, unauthorized access, or improper handling results in an information leak, this could lead to damages compensation or a decline in sales due to loss of trust. As countermeasures, the company works to prevent leaks through the establishment of a Personal Information Management Committee that monitors management status, the development of internal rules, and the regular holding of training sessions.

Various laws and regulations such as the Building Standards Act, Fire Service Act, Energy Conservation Act, and the Theater Business Act are subject to constant amendment in line with policy objectives, and new amendments in line with environmental policy are particularly expected. Depending on the content of such amendments, additional renovation work or increased building management costs may become necessary. As countermeasures, the company thoroughly ensures legal compliance through the collection of regulatory information and the implementation of internal training and internal audits.

In the event of a large-scale infectious disease outbreak, temporary theater closures, seating restrictions, postponement of film releases, and a sharp rise in the vacancy rate of leased buildings and decline in rental income could lead to a significant deterioration in business performance. The company strives to mitigate risk by leveraging experience gained from infection prevention measures during the COVID-19 pandemic, while also proceeding with a review of tenant composition at the Apollo Building and the Lucias Building to increase adaptability to changes in the business environment.

Risks are anticipated from the Nankai Trough and Tonankai earthquakes, as well as a direct-hit earthquake and tsunami from the Uemachi Fault. Since business operations are concentrated in a single location, Abeno, depending on the extent of damage, this could develop into a serious management crisis. There is also a possibility of significant damage from fire or terrorism. As countermeasures, the company has completed seismic reinforcement work on the Apollo Building (completed January 2019), developed earthquake countermeasure and risk management manuals, and conducts regular disaster prevention drills and lifesaving training.

Wind and flood damage from large typhoons or heavy rain could cause building damage or flooding, which is expected to disrupt operations. In addition, abnormal weather such as extreme heat may increase air conditioning energy costs, and stricter regulatory requirements may necessitate large-scale capital investment in equipment. As countermeasures, the company carries out ongoing building maintenance and countermeasure work, operates equipment efficiently, and promotes CO2 reduction and energy conservation through planned capital investment such as air conditioning equipment renewal.

Rising energy costs, such as electricity charges, resulting from changes in domestic and international conditions, are a direct factor in reducing the company's profits. Energy consumption is unavoidable in the operation of movie theaters and leased buildings, creating a risk that increased costs will squeeze profitability. As countermeasures, the company negotiates prices with supply companies, carries out planned renewal of building air conditioning equipment, and works to curb costs by promoting energy conservation, such as converting lighting fixtures to LED.