Natural Disaster and Infectious Disease Risks Associated with Concentration in the Tokyo Metropolitan Area

「During the cumulative second quarter of the fiscal year, the Japanese economy continued to normalize economic activity, partly because COVID-19 was reclassified under the Infectious Diseases Act and various policies took effect. However, the outlook for the economy remained uncertain due to factors including fluctuations in foreign exchange rates and soaring energy prices.」

「In the nursing-care business, the ramp-up of establishments opened in the previous fiscal year progressed smoothly, but existing establishments experienced an increase in cancellations by users due to COVID-19 and other factors.」

「From mid-July, the seventh wave of COVID-19 caused human mobility and personal consumption in the food-service industry to stagnate again. In addition, the industry environment remains unpredictable due to soaring raw-material prices and a decline in various subsidies resulting from the absence of government-issued activity restrictions, and we have still been unable to identify a path to recovery in operating performance.」

「Although activity restrictions in the food-service industry have gradually been eased as the number of COVID-19 cases has declined, this has not led to a fundamental recovery in business activity, and the industry remains in an extremely challenging environment.」

「In the business environment surrounding the Group, the number of people with disabilities in the welfare sector has been trending upward. As of November 2021, the number of users of disability welfare services and services for children with disabilities had also increased 6.2% year on year to 1.383 million (Source: Ministry of Health, Labour and Welfare, “Usage of Disability Welfare Services, etc.”), and we expect this increase to continue. In the nursing-care sector, the population aged 65 and over is projected to reach 36.77 million in 2025, when the baby-boomer generation will be aged 75 and over, and 39.35 million in 2042, when all members of the baby-boomer junior generation will be aged 65 and over (Source: Cabinet Office, “White Paper on the Ageing Society 2021”). Demand is expected to continue increasing and expanding as the elderly population grows. At the same time, the sector faces a shortage of nursing-care personnel. In the food-service industry, the operating environment became challenging as the government and local authorities imposed significant restrictions, including requests to refrain from going out and to shorten operating hours, to prevent the spread of COVID-19.」

「In the food-service business, we continued operating while complying with significant restrictions, including requests to refrain from serving alcoholic beverages and to shorten operating hours, in response to the ongoing issuance of quasi-emergency measures and state-of-emergency declarations, mainly in urban areas. As a result, revenue was ¥354.770 million, a decrease of ¥294.102 million, or 45.3%, from the previous fiscal year, and the business reported an operating loss of ¥187.260 million, compared with an operating loss of ¥56.405 million in the previous fiscal year.」

「In the food-service business, we closed izakaya stores in response to the quasi-emergency measures and the state-of-emergency declaration. In these circumstances, as a response designed with the COVID-19 environment in mind, we opened takeout-only stores specializing in yakitori and karaage. As a result, revenue was ¥197.535 million, down ¥278.181 million, or 58.5%, from the same period of the previous year, and the business reported an operating loss of ¥157.546 million, compared with an operating loss of ¥49.694 million in the same period of the previous year.」

「In the food-service business, the state-of-emergency declaration was lifted temporarily in late March, but the spread of new variants led to the reissuance of the quasi-emergency measures and the state-of-emergency declaration from early April onward. In response to requests from the government and local authorities, izakaya stores were closed during the state of emergency. As a result, revenue was ¥149.556 million, down ¥204.006 million, or 57.7%, from the same period of the previous year, and the business reported an operating loss of ¥91.939 million, compared with an operating loss of ¥20.555 million in the same period of the previous year.」

「In the food-service business, in response to requests to refrain from operating due to the spread of COVID-19, we shortened operating hours to 20:00. Following the reissuance of the state-of-emergency declaration on 7 January 2021, izakaya stores were closed from 10 January. As a result, revenue was ¥75.016 million, a decrease of ¥196.654 million, or 72.4%, from the same period of the previous year, and the business reported an operating loss of ¥46.079 million, compared with operating income of ¥26.845 million in the same period of the previous year.」

「Although the spread of COVID-19 was beginning to subside, with developments including the lifting of the government's state-of-emergency declaration, the situation remained unpredictable. Depending on the future infection situation, the Company's results may be affected by requests from government authorities to suspend or scale back services, temporary closures of establishments due to infections among employees, users or customers, an increase in service cancellations, and the timing of a recovery in consumer trends.」

「Depending on the future infection situation, the Company's results may be affected by requests from government authorities to suspend or scale back services, temporary closures of establishments due to infections among employees, users or customers, an increase in service cancellations, and the timing of a recovery in consumer spending. However, we believe that it is difficult to reasonably estimate the impact at this time.」

「In response to the declaration of a state of emergency issued by the government on 7 April 2020 following the spread of COVID-19 from late February 2020, we decided to temporarily close our food-service operations for approximately one month. As of the filing date, however, it was difficult to reasonably calculate the amount of the impact on the Group's financial condition, operating results and cash flows.」

「Because many of the establishments and stores operated by the Group's businesses are concentrated in the Tokyo metropolitan area, a large-scale natural disaster such as an earthquake or typhoon in these regions, or an outbreak of an infectious disease such as influenza or measles, could prevent users from visiting and employees from reporting to work. Operations at establishments and stores could also be suspended if infrastructure such as electricity, gas, water or the internet were disrupted.」