TSUKADA GLOBAL HOLDINGS Inc.

Interest-bearing debt increased from ¥59,637 million at the end of FY2024 (ending December 2024) to ¥77,920 million at the end of FY2025 (ending December 2025), with the ratio to total assets remaining high at 55.6%. The ratio of interest expense to net sales also rose from 1.3% in FY2024 (ending December 2024) to 2.1% in FY2025 (ending December 2025), raising concerns about the impact on business performance if interest rate levels rise further. The company hedges interest rate rise risk by raising most of its funds at fixed rates, and continues to pursue risk reduction measures including diversification of fund-raising methods.

According to the Ministry of Health, Labour and Welfare's vital statistics survey, the population of marriageable age is on a gradual downward trend, and a shrinking overall bridal market could affect business performance. Competition is also expected to intensify due to entry into the guesthouse wedding market by existing hotels and specialized wedding venues, as well as new entrants from other industries. As countermeasures, the company is promoting the expansion and development of small-scale wedding products and expanding sales channels for wedding services outside its own venues.

The company operates wedding facilities and hotel businesses in the U.S. states of Hawaii, Washington, and Texas, as well as in Indonesia (Bali), and its business performance may be affected through booking cancellations and other impacts if political changes, wars, terrorism, or large-scale natural disasters occur. The company strives to understand local risks through regular and close communication with overseas subsidiaries, and has established a system for obtaining advice from local experts.

The company holds foreign currency-denominated receivables, including loans to foreign currency-denominated subsidiaries, as well as foreign currency-denominated borrowings, and significant fluctuations in exchange rates may affect its financial position and business performance. While the company implements hedging measures such as forward exchange contracts, it is explicitly stated that complete avoidance of this risk is difficult.

The company operates 19 domestic locations (71 banquet halls) and continues to pursue a policy of opening new stores primarily in the Greater Tokyo, Kansai, and Chukyo areas; however, business performance may be affected if suitable properties or personnel cannot be secured, or if customer support is not obtained. In addition, if the real value of held fixed assets declines significantly due to changes in the business environment, impairment losses may occur, potentially affecting business results and financial position. While land acquisition and securitization are considered as options, the company prioritizes avoiding the deterioration of its financial condition.

The land for directly operated facilities is basically held under lease contracts, requiring the payment of security deposits as well as initial interior/exterior costs and ongoing personnel and rent expenses. If a store is forced to close earlier than expected, penalty fees may arise, and there is a risk that all or part of the security deposit may become uncollectible due to the lessor's bankruptcy or other reasons. To improve the certainty of store opening plans, the company is considering land acquisition and securitization as options in addition to leasing.

If the company is unable to secure the personnel needed to respond to business scale expansion and diversification of operations as planned, this could weaken competitiveness and constrain business expansion, thereby affecting business performance. The company is working on human resource development through strengthened recruitment activities utilizing internships and video conferencing systems, as well as the implementation of training programs tailored by level and purpose.

Business performance may be affected if social and economic activities are restricted due to a large-scale natural disaster or infectious disease pandemic, or if a large number of employees or customers become infected. The company has implemented safety measures such as daily temperature checks, mask-wearing, hand sanitization, online meetings, remote work environment setup, and the establishment of a wedding reception system that ensures social distancing.

The construction and renovation of guesthouses and hotels are subject to regulations such as the Building Standards Act, the Fire Service Act, and the Sewerage Act, and non-compliance could result in delays to construction plans or disruptions to operations. The company is also subject to regulations under the Travel Agency Act (Type 1 registered business), the Hotel Business Act, and the Act on Specified Commercial Transactions, among others, and business performance could be affected if registration is revoked or similar measures occur. The company continues to gather information on and monitor the enactment and amendment of relevant laws and regulations, and strives to reduce risk through employee training.

Through its wedding order-taking activities, the company handles a large amount of customers' personal information, and if an information leak occurs due to an unforeseen event, this could affect business performance through a decline in social trust. In addition to locked storage of customer files and password management of electronic information, the company conducts digital crisis response training for managers and supervisors, and is working to strengthen its overall response capability to digital risks, including those related to social media.