Impact of COVID-19-Related Closures on Earnings

「During the interim consolidated accounting period, there were no new business or other risks, nor any material changes to the business and other risks described in the annual securities report for the previous fiscal year.」

「Although Japan's economy during the current consolidated fiscal year was on a gradual recovery trend in the post-COVID environment,」

「During the cumulative third quarter of the current consolidated fiscal year, the classification of COVID-19 (hereinafter, the "infection") under the Infectious Diseases Control Law was changed from Category II to Category V on 8 May, and personal consumption showed a gradual recovery trend. However, consumer trends and other aspects of the outlook remained uncertain due to rising prices, including for energy resources, resulting from the tense international situation, foreign exchange movements and other factors.」

「The classification of COVID-19 (hereinafter, the "infection") under the Infectious Diseases Control Law was changed from Category II to Category V on 8 May, and personal consumption has shown a gradual recovery trend, although」

「During the cumulative first quarter of the current consolidated fiscal year, the classification of COVID-19 (hereinafter, the "infection") under the Infectious Diseases Control Law was changed from Category II to Category V on 8 May, shifting from a system in which the government made various requests and interventions under the law to a response that respects individual choice and is based on voluntary individual efforts. These measures have led to a gradual recovery in personal consumption, although」

「The impact of COVID-19 was finally moving toward containment, and economic conditions also entered a gradual recovery trend.」

「During the cumulative third quarter of the current consolidated fiscal year, the spread of COVID-19 (hereinafter, the "infection") described in the annual securities report for the previous fiscal year under "Part I Corporate Information, II Business Overview, 2 Risks Related to Business, etc., (4) Risks from Natural Disasters and Infectious Diseases" continued to have a negative impact on the Group's business. However, the impact remained within the expected range, with no material changes.」

「During the cumulative second quarter of the current consolidated fiscal year, the spread of COVID-19 (hereinafter, the "infection") described in the annual securities report for the previous fiscal year under "Part I Corporate Information, II Business Overview, 2 Risks Related to Business, etc., (4) Risks from Natural Disasters and Infectious Diseases" continued to have a negative impact on the Group's business. However, the impact remained within the expected range, with no material changes.」

「As of the date of submission of this quarterly report, there were no requests to suspend operations or to refrain from going out, but the number of infections was increasing rapidly. We recognize that the risk of an impact from the spread of COVID-19 will continue to a certain extent during the current consolidated fiscal year.」

「However, we recognize that COVID-19 (hereinafter, the "infection") will have a certain impact during the current consolidated fiscal year due to the effects of new, highly transmissible variants and other factors.」

「During the cumulative second quarter of the consolidated fiscal year, the effects of the spread of the infection described in the previous fiscal year’s annual securities report under “Part I Corporate Information, II Business Overview, 2 Business and Other Risks, (4) Risks from Natural Disasters and Infectious Diseases” continued to have a negative impact on the Group’s business. However, the effects remained within the anticipated range, with no material changes.」

「The spread of COVID-19 described in the annual securities report for the previous fiscal year under "Part I Corporate Information, II Business Overview, 2 Risks Related to Business, etc., (4) Risks from Natural Disasters and Infectious Diseases" continues to have a negative impact on the Group's business. However, the impact has remained within the expected range, with no material changes. As of the date of submission of this quarterly report, requests to suspend operations and to refrain from going out had been lifted, but we recognize that a certain level of impact will continue during the current consolidated fiscal year.」

「Due to the spread of the novel coronavirus infection, all 97 sports club locations were temporarily closed from 18 April 2020, with some locations closing before 18 April. All locations resumed operations on 6 June, although some resumed operations before 6 June. A state of emergency was declared again in April 2021, and operations were subject to restrictions including reduced hours. The hotel business was also expected to be affected to some extent in the fiscal year ending March 2022 if requests to refrain from going out and other travel restrictions were imposed.」

「As of the date of submission of this quarterly report, a state of emergency had been declared again in some regions, among other developments, and we recognize that the impact of COVID-19 will continue through the end of the current consolidated fiscal year. In addition, after positive COVID-19 cases were confirmed among several users of Holiday Sports Club Miyakonojo, the club was temporarily closed from 6 January 2021 for the time being following discussions with the Miyakonojo Public Health Center of Miyazaki Prefecture and other administrative authorities.」

「During the second quarter of the current consolidated fiscal year, revenue in the sports club business decreased 48.8% year on year due to temporary closures in response to requests to suspend operations. Revenue in the hotel business also decreased 37.5% year on year, affected by requests to refrain from going out and a decline in occupancy rates and room rates at nearby accommodation facilities due to the decrease in visitors to Japan. As of the date of submission of this quarterly report, requests to suspend operations and to refrain from going out had been lifted. However, we recognize that the impact of COVID-19 will continue to a certain extent during the current consolidated fiscal year.」

「Under these economic conditions, in our core sports club business, 26 clubs were temporarily closed from 8 April in response to requests to suspend operations, and all 97 clubs were temporarily closed from 18 April. All 97 clubs resumed operations on 6 June, when the requests to suspend operations were lifted, but revenue decreased substantially from the same period of the previous year due to the impact of the temporary closures and other factors.」

「Due to the spread of COVID-19, all 97 sports clubs were temporarily closed from 18 April 2020, with some clubs having closed temporarily before 18 April. All clubs resumed operations on 6 June, although some had resumed operations before that date. However, shortened operating hours and reduced programs, among other factors, are expected to have a certain impact on performance for the fiscal year ending March 2021. In the hotel business, occupancy rates and average room rates have been trending below the previous year since April, and the impact is expected to continue, including on operations from July onward.」