TOKYOTOKEIBA CO.,LTD.

As the company leases Oi Racecourse to the Special Ward Race Course Association and collects rent at a fixed rate based on win-place betting ticket sales, earnings are heavily dependent on the racing schedule and operations of this key contract partner. Fluctuations in racecourse attendance and betting ticket sales could directly affect the Group's business results and financial position. Diversification of revenue sources is limited, and the high degree of dependence on a single contract partner constitutes a structural risk.

If a natural disaster such as an earthquake or storm/flood damage, or a man-made disaster such as terrorism or an accident occurs, there is a risk that owned assets could deteriorate or be destroyed, forcing suspension of operations. Damage to transportation infrastructure serving facilities such as the racecourse, auto race track, and Tokyo Summerland could also reduce visitor numbers, potentially affecting business results and financial position. Since the company holds multiple large-scale facilities, damage could extend over a wide area.

The company owns large-scale visitor facilities such as Oi Racecourse, Isesaki Auto Race Track, and Tokyo Summerland, and if a serious accident occurs, this is expected to result in a decline in social credibility as well as operational suspension and facility restoration costs. While the company positions thorough safety management as a top priority, the risk of an accident cannot be completely eliminated. In addition to the impact on business results and financial position, there are also concerns about a long-term decline in customer attraction due to brand damage.

The company operates important systems such as "SPAT4" in the Public Sports Racing Business and the admission management system in the Amusement Park Business, and if a system failure occurs due to computer virus infection or unauthorized external access, this could disrupt business operations and lead to a loss of social credibility. While the company takes thorough measures for maintenance and security and carries out renewals as appropriate, it is difficult to completely prevent unforeseen threats. Since a system outage directly results in the loss of betting opportunities in public sports racing, the immediate impact on earnings is significant.

The company owns large fixed assets such as the racecourse, auto race track, and amusement park, and if profitability declines due to significant changes in the business environment or operating conditions, there is a risk that an impairment loss will be recognized if it is judged that sufficient cash flow cannot be generated. While the company periodically calculates and evaluates future cash flows and other factors in accordance with accounting standards for impairment of fixed assets, unexpected impairment could occur in the event of a sudden change in the external environment. Recognition of an impairment loss directly affects business results and financial position.

Deteriorating weather conditions such as prolonged rain, typhoons, and snowfall directly affect whether Oi Racecourse and Isesaki Auto Race Track can hold events, and can lead to the suspension of Tokyo Summerland's operations, affecting earnings through a decline in visitor numbers. In particular, since Tokyo Summerland's operations are centered on its pool facilities, summer weather conditions are a critical factor significantly affecting annual business performance. Weather is an uncontrollable external factor, and multiple businesses could be affected simultaneously.

The Group holds marketable equity securities, and if a significant decline in share prices continues in the future, there is a possibility of impairment or valuation losses on the securities held. Since stock market trends are influenced by external conditions, it is difficult for the Group to control this risk through its own decision-making alone. Recognition of valuation losses directly affects business results and financial position.

Oi Racecourse is leased to the Special Ward Race Course Association under the Racing Law, and Isesaki Auto Race Track is leased to Isesaki City under the Small Motor Vehicle Racing Law; if there are significant amendments to laws and regulations concerning public sports racing, this could affect business continuity and lease terms. Since public sports racing operates within a legal and regulatory framework, changes in regulation could pose a risk affecting the fundamental basis of the business. The impact on the Group's business results and financial position could be extensive.

If new laws, regulations, or social responsibilities arise due to climate change or the transition to a decarbonized society, an increase in costs for compliance and other measures could affect business results and financial position. There is also recognized risk that an increase in extreme weather events caused by climate change could adversely affect overall business activities. The company positions sustainability as an important management issue and is working to formulate management strategies to anticipate and respond to climate change.