In accordance with our Medium-term Management Plan 2028, we have focused on enhancing value-added services to strengthen our product offerings and combining targeted promotions with pricing strategies that reflect supply and demand, thereby successfully increasing occupancy rates, the number of guests, and average revenue per guest. Through proactive investments aimed at improving the functionality and convenience of guest rooms and lounges, we believe that we are beginning to realize a cycle in which the value-added benefits generated contribute to improved profitability.

In the accommodations segment, ADR (average daily rate) exceeded the previous year’s level due to strengthened overseas sales and expanded sales channels. In the banquet segment, both the number of attendees and the per-person revenue increased as a result of securing large-scale banquet bookings. In the wedding division, the number of weddings and the average revenue per wedding rose following efforts to enhance product appeal, primarily through the renovation of banquet halls.

As a result, the Group’s net sales increased by 5.7 billion yen year-on-year to 82.0 billion yen, operating income rose by 1.4 billion yen year-on-year to 13.7 billion yen, ordinary income increased by 1.0 billion yen year-on-year to 13.7 billion yen, and net income attributable to owners of the parent company rose by 0.1 billion yen year-on-year to 9.2 billion yen. Operating income and ordinary income both reached record highs, and net income attributable to owners of the parent also reached a record high.

Following the redemption of Class A preferred stock, net assets reached 36.8 billion yen, exceeding the level recorded in 2019 prior to the COVID-19 pandemic. While actively pursuing investments, we also reduced interest-bearing debt, resulting in an increase in the equity ratio to 37.3%.

Regarding the year-end dividend for the current fiscal year, in light of the recovery in our business performance and financial condition, we have decided to increase the dividend per share of common stock to 70 yen in order to further enhance the return of profits to our shareholders.

We view 2026 as a year for laying the groundwork for sustainable growth, and will further expand our growth investments, aiming to increase profits by strengthening our product and brand appeal. For 2026, we project revenue of 83 billion yen, operating income of 12 billion yen, and ordinary income of 11.6 billion yen.

Although we anticipate a temporary decline in profits due to sales suspensions resulting from renovations at multiple locations, we will continue to steadily implement initiatives aimed at enhancing the competitiveness of our products and brands through proactive investment, thereby contributing to improved profitability over the medium to long term.

In our WHG business, we are promoting large-scale renovations to meet diversifying needs, such as those related to inbound tourism and the broader tourism sector, while also strengthening employee training programs to enhance value-added services. Additionally, we are focusing on expanding our network of locations and have signed a basic agreement for a WHG franchise with a hotel scheduled to open in Izumi City, Osaka Prefecture, in the fall of 2026.

In our luxury & banquet business, we plan to open a new banquet hall at Hotel Chinzanso Tokyo in October, offering spectacular views of the garden and the sky above. In the accommodations section, we will enhance the Japanese cultural experiences offered in the Executive Lounge, aiming to increase average revenue per guest and occupancy rates by adding value. In the wedding segment, we will strive to create new revenue streams, including by attracting inbound weddings.

In our resort business, we are advancing the Hakone Kowakien Tourism Development Strategy in collaboration with the Hakone DMO, local governments, and related organizations. To solidify our position as Hakone’s premier resort facility, we are working to promote Japanese culture to international visitors and organize experiential events that foster interaction among guests, local residents, and our employees. To meet the demand for guests who wish to enjoy hot springs in a private setting, the Hakone Kowakien Hotel plans to add 40 guest rooms featuring semi-open-air hot spring baths. Additionally, we are proceeding with renovations at the Hakone Kowakien Mikawaya Ryokan, and will continue to enhance the appeal of our existing facilities.

Furthermore, on February 10, 2026, we entered into a capital and business alliance agreement with the Japan Industrial Promotion Organization Group. By leveraging the group’s extensive expertise in M&A and its broad network of industry experts both in Japan and overseas, we will further enhance the effectiveness of our Medium-term Management Plan 2028 and strive to achieve sustainable growth for our company.

As stated in our management guidelines, we believe that people are the foundation of our company and that it is through them that value is created. With our business performance stable and on track, in 2025 we focused on creating a more employee-friendly workplace by improving compensation and benefits and increasing the number of annual holidays. In addition, as part of the 70th Anniversary Project launched through an internal call for proposals to mark our 70th anniversary, we implemented a bottom-up initiative planned primarily by our employees. These efforts were reflected in our employee motivation survey and contributed to higher satisfaction levels. Moving forward, we will continue to actively promote the creation of a workplace where every individual can take pride in their work, and we remain committed to further improving the quality of our services.

We have implemented a stock split effective January 1, 2026. Regarding our shareholder benefits program, we plan to make changes, including the introduction of new benefits for long-term and large-scale shareholders, based on feedback from our shareholders and usage patterns (please refer to pages 3–4 for details). We hope that guests will take advantage of our new benefits program for special occasions in life, such as celebrating a special day, creating memories with family and friends, or conducting business.

As we mark our 70th anniversary, we are renewing our commitment to driving further growth. We sincerely request your continued support.