(1) Risk of difficulty in securing profits and continuing business due to delays in responding to the new normal and accelerated digital transformation triggered by the COVID-19 pandemic, as well as misjudgements of demand and business potential forecasts

The Group's management resources are concentrated in areas along railway lines, and if demand for existing businesses declines due to the declining birthrate and shrinking population, or if existing transportation, office, and commercial facilities are used less due to lifestyle changes, or if existing businesses lose competitiveness due to the emergence of new industries or business models, the Group's performance and financial position may be adversely affected.
In addition, the Group has formulated a "Three-year Medium-term Management Plan" and is implementing various measures. However, due to deviations from the projected demand in the post COVID-19 era, changes in economic conditions, and other factors, these plans may not progress as planned or may not produce the anticipated earnings or expected effects, which may adversely affect the Group's performance and financial position. Thus, the management team is working on prompt and appropriate responses, such as the early identification of performance trends and signs of performance changes in each business, discussion of countermeasures, decision-making, and monitoring.

(2) Risk of deterioration in financial conditions due to financial markets, deterioration in the interest rate environment, downgrades, credit concerns, etc.

The Group has financed much of the necessary funds for each of its businesses, including the railway operations, through bonds and borrowings from financial institutions. Therefore, if market interest rates rise, if rating agencies downgrade the Company's credit rating, or if ESG-related evaluation agencies lower their ratings, the Group's performance and financial position may be adversely affected due to a relatively heavier interest burden or worsening conditions for fund procurement. In response to the above, the Company is working to reduce the repayment risk by fixing interest rates for a long period and smoothing repayment deadlines, while improving its ability to flexibly raise funds through the short-term financing market, including the use of commercial paper.

(3) Risk of a sharp rise in procurement costs due to a deterioration in various market conditions and an increase in the burden of CO₂ reduction costs, resulting in a decline in profitability

The Group reduces costs based on the market price trends for raw materials, labor, and other items. However, the Group's performance and financial position could be adversely affected if raw material costs soar due to stagnant logistics caused by geopolitical issues, changes in market conditions caused by semiconductor supply shortages, or an increase in the burden of CO₂ reduction costs. Therefore, we are working on value engineering, cost reduction, diversification of procurement channels, and continuous scrutiny of construction details.

(4) Risk of drastic changes in market conditions due to changes in government administration, taxation, or other administrative policies in areas in which we do business.

The Group's performance and financial position may be adversely affected by the decrease in annual household income due to the prolonged economic downturn, continued sluggish personal consumption due to tax hikes and other factors, and changes in the legal system in each business. For this reason, we have established medium- to long-term operating policies that take into account market conditions and changes in the political, economic, and legal systems, and are working on various measures, including the formulation of appropriate business plans such as repair and capital investment, improvement of convenience, ensuring an attractive tenant mix, and maintenance and improvement of facilities' ability to attract customers by providing topics.

Risk of significant contraction of economic activities due to voluntarily restricted movements following the reemergence of COVID-19 and the spread of new infectious diseases

In the event of a significant reduction in economic activity due to restrictions on leaving the office as a result of the renewed spread of COVID-19 or the spread of new infectious diseases, changes in the movement of people due to telecommuting and other forms of telework, a decrease in inbound travel, or other factors, or in the event of temporary difficulties in continuing operations due to factors including outbreaks of an infectious disease cluster at business sites in which we operate and restrictions on attendance, our Group's performance and financial position may be negatively affected.
The Group has been developing its management foundation with an eye on the future, and has announced and promoted its "Long-term management initiative," which aims for sustainable growth from a long-term perspective. In order to adapt quickly to future changes in society, we are developing new concepts and reforms in each of our businesses and working to further deepen our business strategies. Specifically, we are monitoring and updating measures in response to social conditions through the Structural Reform Committee formed for each business, including hotels, department stores, and railways.
In addition, in accordance with requests from the Ministry of Land, Infrastructure, Transport and Tourism and the Ministry of Health, Labour and Welfare, as well as the "Guideline for Railway Operators to Prevent the Spread of COVID-19," we are implementing various measures to prevent the spread of infection, such as partially opening windows in multiple locations on all trains when leaving the depot to ventilate the trains' interior. Furthermore, the Tokyu Hospital provides vaccines to Group employees in their workplaces, promotes a variety of work styles such as telecommuting, implements measures to prevent infection at workplaces such as taking body temperatures, and uses web conferencing to avoid group meetings in order to ensure health management and safety and prevent the spread of infection.

(1) Risk of being unable to provide services due to damage to facilities and the interruption of business and services due to climate change, earthquakes, and other natural disasters

The occurrence of a large-scale natural disaster or similar event that results in human casualties or business interruption could have a negative impact on the Group's business performance and financial position. We are strengthening our response capabilities, such as building a cooperative system among consolidated companies, in the event of natural disasters or the spread of infectious diseases, etc., are conducting an assessment of the operating loss and social impact of climate change, and are taking measures (both in terms of prevention and damage minimization) based on the assessment results. In addition, we are promoting ongoing reviews and other measures to improve the effectiveness of risk financing, including earthquake insurance and commitment lines.

(2) Risk of loss of trust in services and facilities as well as compensation for damages due to accidents caused by human error

The occurrence of a serious human-caused accident or other incident that results in human casualties or business interruption could have a negative impact on the Group's performance and financial position. For this reason, the Group has taken various measures to prepare for the occurrence of trouble due to accidents, equipment or information system failures, quality problems with food, construction work, or other reasons. These include the installation of platform screen doors and fixed platform barriers equipped with sensors at all Tokyu Line stations* and the formulation of recurrence prevention measures through the collection and deployment of information on the occurrence of accidents and other incidents. In recent years, we have been promoting safety initiatives such as the installation of high-precision 3D obstacle detection systems covering the entire level crossing.

*Excluding Tokyu Setagaya Line and Tokyu Kodomonokuni Line

(3) Risk of being unable to provide services due to damage to facilities, death or injury of customers, etc. caused by external factors such as terrorism, etc., as well as the risk of loss of public trust in the service.

The occurrence of a serious accident or other incident caused by terrorism or other external factors that results in human casualties or business interruption could have a negative impact on the Group's business performance and financial position. For this reason, the Group has taken various measures to prepare for the occurrence of disasters caused by terrorism and other illegal acts, as well as other troubles due to other reasons: For example, safety initiatives such as the installation of in-train security cameras in all carriages* owned by Tokyu Railways, the effective deployment of security guards at station facilities, commercial facilities, etc., conducting response training in anticipation of cyber attacks, and promoting the purchase of cyber insurance.

*Excluding the Kodomonokuni Line

(1) Risk of loss and damage to public trust in the company due to the discovery of compliance violations, serious errors or irregularities in accounting or other processing, or deficiencies in information management, including IT security

In its various businesses, including the railway operations and real estate businesses, the Group complies with all relevant laws and regulations and conducts its business in accordance with corporate ethics. However, if any violation of these laws occurs and social trust is damaged, the Group's business performance and financial position may be adversely affected due to the defection of customers and business partners. To this end, we have established and are operating an appropriate legal compliance system by familiarizing and thoroughly enforcing the "Tokyu Group Compliance Guidelines" and our "Code of Conduct.” In addition, we are working to collect information on fraud and misconduct, deploy information for prevention and recurrence prevention, and enhance awareness and training systems for compliance in general and legal amendments in particular.

(2) Weakness of the accounting control system may cause serious errors or irregularities in accounting procedures, resulting in the publication of inappropriate financial statements or other events that may lower the company's social credibility.

The Group is taking various measures to optimize its consolidated accounting system and strengthen its governance in compliance with relevant laws and regulations and in accordance with the accounting standards of each country. In the event of any violation of these laws and regulations, which could undermine public trust in the Group, the Group's performance and financial position could be adversely affected by the defection of customers and business partners. To this end, we are working to optimize the consolidated accounting system and standardize operations by standardizing the accounting systems of all domestic consolidated companies.

(3) Risk of leakage or loss of confidential or personal information due to inadequacies in information management, including IT security, which, together with the handling of such information, may damage public trust.

Our group provides systems and services that serve as social infrastructure. In the event of an operational failure that interferes with the provision of services, or a large-scale leak or loss of confidential information, including personal information, the Group's social credibility and brand image may be damaged, and the Group may be required to pay compensation for the damage incurred. This could have a negative impact on the Group's performance and financial position. For this reason, the Group takes various measures to prepare for the occurrence of problems due to malfunctioning equipment or information systems or other reasons. As an example, we are taking various measures, such as conducting security assessments by external parties and formulating improvement plans at each of our consolidated companies that are responsible for critical infrastructure such as transportation, payment, and telecommunications.

On the back of a decrease in the working-age population, the risk of not being able to secure adequate human resources could lead to deterioration in service quality, business contraction, and illegal employment

In the long term, the outflow of employees and difficulties in hiring in an environment characterized by a declining birthrate, aging population, and shrinking population may become more serious in the future, leading to a decline in services and rumors, etc., caused by personnel shortages. Subsequently, customers and business partners may leave, which would have a negative impact on the Group's performance and financial position. For this reason, the Group is strengthening the recruitment and training of human resources on a consolidated basis as a whole, and is promoting the use of human resources within the consolidated group to secure the necessary number of employees. In addition, the Group is taking various measures, such as reviewing its personnel and benefit systems to provide diverse and flexible work styles that do not depend on regular, full-time employees.