In this fiscal year, we recorded a net loss of 2.106 billion yen as a result of booking extraordinary losses aimed at strengthening our future business foundation and mitigating risks. We deeply apologize for any concern this may cause our shareholders and investors, and we would like to thoroughly explain the background and our perspective on this matter.

These extraordinary losses were primarily incurred to optimize our asset holdings and reform our business structure, and they do not involve significant immediate cash outflows. Key performance indicators of our actual business activities in the sports club business, such as membership numbers and net sales, remained positive year-on-year, allowing us to secure profitability up to the ordinary profit level. Furthermore, operating cash flow generated by our business activities was 4.1 billion yen, an increase of 0.6 billion yen from the previous fiscal year, demonstrating our highly sound cash-generating capability. Although our equity ratio will temporarily decline, I would like to emphasize first and foremost that our financial security remains uncompromised by these extraordinary losses.

Current Management Environment and Growth Opportunities

The management environment remains highly uncertain. Globally, unpredictable conditions persist, driven by prolonged geopolitical risks and volatile resource prices. Domestically, Japan has reached a turning point from its long-standing deflationary trend, with rapid inflation now underway. While the Bank of Japan's shift back to a "world with interest rates" potentially impacts funding costs, the persistently weak yen and elevated prices translate into higher raw material and energy costs, continuing to pressure corporate earnings. Moreover, structural labor shortages and intensifying competition for talent are driving upward pressure on wages, making the optimization of our cost structure a more critical priority than ever.
Conversely, the rapid aging of the domestic population has driven social demand for extending healthy life expectancies and enhancing the quality of nursing care services to unprecedented levels. We view this as a significant growth opportunity for our Group. The government is also actively promoting "preventive medicine" and "community-based integrated care," leading to clear expansion in the health maintenance and nursing care support markets. Furthermore, consumer values are increasingly shifting toward "health" and "well-being," with growing expectations for services that incorporate regular exercise and rehabilitation.

Overview of Financial Results for FY2025

Consolidated net sales for FY2025 reached 64.9 billion yen, representing 101.9% of the previous year's figure. We secured a consolidated operating profit of 1.565 billion yen and an ordinary profit of 0.795 billion yen. Please note that this operating profit includes 0.27 billion yen in temporary expenses, such as M&A-related costs and losses associated with accounting changes following the Oasis merger.
Net income attributable to owners of the parent resulted in a net loss of 2.106 billion yen due to the extraordinary losses detailed below.

In the sports club business, enrollments remained steady from the second quarter onwards. As of March 2026, the number of enrolled members at existing clubs stood at 101.7% year-on-year, and sales reached 103.9%, both exceeding the previous year's performance. For the two new facilities opened this fiscal year, we recorded an operating loss of 0.258 billion yen due to initial opening expenses; however, this is fully aligned with our initial investment plan, and we anticipate their positive contribution to earnings going forward.

Regarding the home fitness business, our "Stepper" series, which achieved stronger-than-expected sales last year, has been recovering from the temporary impact of the brand transition from Oasis to Renaissance implemented in the second half of the previous year, and we have been working to accelerate sales momentum. Additionally, our new product "Styly Face," launched in September to support both facial care and swallowing function improvement, has been well-received via TV shopping channels and contributed to full-year earnings.

In the nursing care rehabilitation business, we opened a total of six new facilities in FY2025: four directly managed and two franchise facilities. As part of our growth strategy, we also acquired 100% of the shares of Kaedenokaze Co., Ltd. on December 1st, making it a wholly owned subsidiary. This company operates 13 directly managed and 23 franchise day-care facilities nationwide, providing critical support to users with relatively high nursing care needs. This acquisition enables us to address the health challenges of a demographic we could not previously reach. We will continue to actively pursue M&A to further expand this business. Consequently, sales in the nursing care rehabilitation business for FY2025 reached 2.467 billion yen, or 122.1% of the previous year's figure. (Note: The contribution of Kaedenokaze Co., Ltd. to consolidated net sales is limited to the three months of the fourth quarter.)

Background and Purpose of Extraordinary and Impairment Losses

The primary factor behind the net loss for this fiscal year is the recording of the following extraordinary losses.
The recent surge in various costs has significantly impacted the operations of our sports club business. In particular, the continuous rise in real estate rents for clubs located in urban centers has severely squeezed operational profitability.

Store closing costs associated with business structure reform: Approx. 1.6 billion yen
We have decided to close six clubs (including the Ebisu Club, which closed at the end of March 2026) that were deemed unlikely to return to profitability, primarily due to escalating fixed costs. Accordingly, we recorded 1.6 billion yen as an extraordinary loss. By swiftly divesting from unprofitable operations and reallocating management resources to highly profitable areas, we aim to fortify our future financial structure and enhance overall profitability. The specific closing dates for the remaining five clubs will be determined based on our future business plans to ensure optimal timing.

Impairment loss: Approx. 2.0 billion yen
Profitability among existing sports clubs is increasingly polarizing due to shifts in the market environment and regional characteristics. While some clubs are performing exceptionally well and significantly outperforming the previous year, others have struggled to absorb rising inflationary costs.
Given these circumstances, we recorded an impairment loss of 2.0 billion yen (including asset retirement obligations) across 32 clubs (excluding those slated for closure) where we determined that recovering our investments is currently unfeasible. This measure allows us to objectively reassess future asset values and recognize risks at an early stage. Although former Sports Oasis clubs account for more than half of these facilities, this represents a strategic decision to accelerate business structure reforms—including system integration—during the current PMI (Post-Merger Integration) phase. By completing system integration and driving operational efficiencies, we will aggressively promote profitability improvements at these locations.

While realizing these extraordinary losses inevitably impacts our short-term results, we ask for your understanding that these are proactive management decisions. They are essential for fundamentally restructuring our Group's revenue base and ensuring sustainable growth through the optimization of our business portfolio, withdrawal from unprofitable ventures, and enhancement of asset efficiency.

2026-2030Medium-Term Management Plan

Today, our Group announced a new Medium-Term Management Plan covering the period from 2026 to 2030, along with a long-term vision looking ahead to 2035.

During our previous Medium-Term Management Plan, we confronted the harsh reality of increasing revenues coupled with declining profits. We experienced delays in adapting our business structure to environmental changes and saw an increase in unprofitable facilities unable to sustain a high-cost structure. We now acutely recognize that our previous assumptions—namely, "maintaining the number of sports club facilities through sales efforts" and relying on a "revenue structure dependent on sports clubs"—are no longer viable in the current socio-economic landscape.

Under our new Medium-Term Management Plan, we will execute fundamental business structure reforms and growth strategies under the guiding principle of "breaking away from dependence on sports clubs."

<Revenue and Expenditure Structure Reform in the Sports Club Business>
We will elevate our value proposition from merely a "place to exercise" to a "place to enrich life." We will strive to diversify our revenue streams, broaden our target demographics, and rigorously reduce costs (e.g., eliminating unprofitable facilities and services, and driving efficiency through digital transformation [DX]) to ensure profitability across all facilities.

<Peripheral Areas of Sports Clubs>
Leveraging our extensive know-how and assets, we will expand our Public-Private Partnership (PPP) business, regional health promotion initiatives, and BtoB solutions business.

<Restraining and Optimizing Headquarters Costs>
We will transform our business processes through the aggressive adoption of digital technology and AI, ensuring that headquarters costs are restrained and optimized even as our business scale expands.

Rather than merely pursuing top-line growth, we are shifting to a management approach that maximizes capital efficiency by generating returns that exceed our cost of capital. Concurrently, we will strictly confine investments within our generated operating cash flow, embedding a management culture thoroughly focused on profitability and cash flow.

Regarding cash allocation, of the 26.0 billion yen in operating cash flow projected over the next five years, we will allocate 14.0 billion yen to reduce interest-bearing debt, 10.0 billion yen to business investments, and 2.0 billion yen to shareholder returns (targeting a dividend payout ratio of 40%). Furthermore, should operating cash flow exceed our projections, our policy is to prioritize additional shareholder returns.

Long-Term Vision (~2035): Evolution into a Well-being Co-creation Company

Guided by our corporate philosophy, "A company creating purpose in life," we are evolving our long-term vision from a "Health Solutions Company that enriches the 100-year life era" to a "Well-being Co-creation Company for the 100-year life era." By connecting people through sports and healthcare and co-creating a sense of purpose, we will contribute to solving critical social issues, including health across all generations, vitality for seniors, comprehensive nursing and medical care support, and the fostering of local communities.

By FY2035, we target net sales of 100.0 billion yen and an operating profit of 5.0 billion yen. We aim to realize a radical transformation of our business portfolio, where businesses outside of traditional sports clubs account for 50% of total sales. Through this transformation, we will establish a highly lean and resilient revenue structure, solidifying our path to sustainable growth.

To achieve this sweeping transformation into the "New Renaissance" and secure our sustainable growth, we will press forward with relentless determination as a unified company. We sincerely ask for your continued understanding and unwavering support.