IMPERIAL HOTEL, LTD.

For the rebuilding plan of the Imperial Hotel Tokyo's Main Building, Tower Building, and parking building, the total project scale is expected to be approximately ¥200,000 million to approximately ¥250,000 million. There is a risk that rising material and labor costs due to inflation may result in expenses exceeding the estimated amounts, and that the plan may be delayed or cancelled if the sale and purchase agreement concerning the transfer of jointly-held land interests with Mitsui Fudosan Co., Ltd. is not concluded as planned, or if necessary permits and approvals are not obtained. A temporary decline in earning power due to a partial reduction in business scale during the rebuilding period is also anticipated. Details of the financial plan are to be formulated following future discussions with relevant institutions, and procurement costs (including interest rate fluctuations, etc.) may affect operating results.

Mitsui Fudosan Co., Ltd., an other affiliated company, holds 33.2% of the Company's total number of issued shares, and its intentions may affect the business development, operating results, and financial condition of the Group. If changes occur in the relationship with Mitsui Fudosan or in its investment/transaction policies, the capital relationship, personnel relationship, and business relationship may be reconsidered. There are also plans to proceed with the rebuilding of the Tower Building as a joint project, and any change in the cooperative relationship with the company poses a risk that could spill over to the entire rebuilding plan.

Large-scale natural disasters such as earthquakes and typhoons, as well as accidents such as fires, may damage the Group's buildings and facilities, leading to decreased sales due to business suspension and the burden of restoration costs. Even when there is no direct damage, the typhoons and torrential rains that have become more frequent in recent years may reduce the number of guests through a decline in consumer sentiment and effects on domestic transportation, affecting the securing of earnings. Based on the Business Continuity Plan (BCP) and various disaster response manuals, the Group conducts approximately 80 comprehensive and partial drills per year at all business sites to strengthen response capabilities.

The outbreak and spread of infectious diseases such as novel influenza and COVID-19 may cause a decrease in inbound foreign visitors due to entry restrictions and travel avoidance, and a slowdown in economic activity due to requests to refrain from going out, resulting in decreased sales due to lower accommodation demand across all business sites. Combined with a slump in demand for dining and banquet use, this significantly affects the Group's ability to secure earnings. The Group has established infection prevention systems, including stockpiling masks and disinfectants, keeping thermal cameras on hand, and establishing remote work arrangements.

The outbreak of terrorism, war, or conflict may lead to a decrease in foreign guests and a decline in consumer sentiment, directly leading to a delay in the recovery of sales at the Tokyo Head Office and Osaka business site, where foreign guests normally account for approximately 60% of accommodation guests. In addition, prolonged increases in procurement costs for raw materials and construction materials may also affect profitability. In addition to developing anti-terrorism manuals and conducting drills, the Group is working to minimize the impact on business performance by conducting balanced sales activities both domestically and internationally.

If a cyberattack or other incident results in the leakage of customers' personal information or confidential business information, or causes a system outage, it may affect earnings due to loss of credibility, brand deterioration, and the burden of costs such as damages across the Group. The Group has implemented multi-layered measures, including establishing a response system for when incidents occur, regularly checking the status of personal information protection, human-based measures such as SNS monitoring, and enrolling in cyber insurance.

For the Group, whose main business is customer service, responding to changes in the labor environment, including relevant laws and regulations, social insurance, and working conditions, results in increased personnel expenses and outsourcing costs, and if a worsening labor shortage disrupts the provision of products and services, it may affect the ability to secure earnings. The Group is thoroughly implementing measures against harassment, prevention of mental illness, and management of overtime work, developing systems that accommodate diverse working styles, and striving to secure appropriate staffing through planned recruitment of regular employees and year-round mid-career hiring.

The Group holds fixed assets such as hotel buildings, and if real estate values decline beyond a certain level or business results deteriorate, an impairment loss may occur on some of the fixed assets. In making decisions on capital expenditure plans, the Group carefully examines the sufficiency of future cash flows and the recoverability of investments, and manages this risk by regularly evaluating progress and achievement levels.

As of March 31, 2026, the tradable share ratio was 26.11%, close to the 25% or higher listing maintenance criterion of the Standard Market of the Tokyo Stock Exchange. If liquidity declines for any reason, the Company could fail to meet the listing maintenance criterion. The Company continues efforts such as enhancing IR activities and dialogue with shareholders to maintain compliance with the criterion.

The Group records deferred tax assets based on estimates of future taxable income; however, if actual profits fall below initial estimates due to changes in the business environment requiring revisions to the mid- to long-term management plan, heightened geopolitical risks, the outbreak of infectious diseases, or other factors, a reversal of deferred tax assets may become necessary, which could affect the Group's financial condition and operating results. The Group regularly reviews the recoverability of deferred tax assets based on the scheduling of the fiscal years in which deductible temporary differences are expected to be resolved, among other factors.