Brass Corporation

According to the Population Census by the Ministry of Internal Affairs and Communications, the population in the marriageable age bracket is on a declining trend, and the increasing number of couples who forgo wedding ceremonies and receptions as well as later marriage ages could lead to a structural contraction of the wedding market as a whole. Should the market contraction proceed rapidly, it could have a direct impact on the Group's business performance. Although the Group has adopted a policy of grasping the needs and trends of the times and responding to change, this is recognized as a medium- to long-term risk given that it stems from structural demographic change.

The Group's main business format is guesthouse weddings, and there is a risk that if a new wedding style that supersedes this becomes mainstream, a delayed response to such change could result in a decline in competitiveness. Although the Group has adopted a policy of grasping and responding to the needs and trends of the times, converting business formats requires a corresponding amount of time and cost. A delayed response could lead to lost opportunities to acquire customers, potentially affecting business performance.

If multiple competitors enter the trade areas of the venues operated by the Group, or if the competitive environment intensifies due to new entrants from other industries, this could adversely affect business performance. While the Group seeks differentiation through store design, human resource development, and enhanced services, an increase in competitors carries the risk of price competition and rising customer acquisition costs. The Group operates 24 venues centered on the Tokai area, and this regional concentration also entails competitive risk.

As of the end of FY2025 (ended July 2025), the balance of interest-bearing debt stood at ¥4,122,287 thousand (interest-bearing debt dependency ratio of 36.1%), representing a reduction from ¥4,563,032 thousand (42.2%) at the end of the previous fiscal year, but remaining at a high level. Interest expenses on bonds and other borrowings increased significantly, from ¥18,892 thousand in FY2024 (ended July 2024) to ¥32,029 thousand in FY2025 (ended July 2025), and if interest rates rise substantially going forward, the financial burden could increase further, potentially affecting business performance and financial condition. The Group has adopted a policy of reducing its interest-bearing debt balance and strengthening its financial structure.

The Group's basic policy is to open venues through leasing, and as of July 31, 2025, the balance of leasehold and guarantee deposits stood at ¥717,377 thousand (6.3% of total assets). If part or all of such deposits are not returned due to deterioration in the lessor's financial condition or other factors, this could affect business performance and financial condition. In addition, when a lease is terminated at the Group's own initiative, payment of penalties or forfeiture of deposits may be required, presenting a risk that store-closing costs could affect the Group's finances.

The Group holds fixed assets such as buildings, and if the profitability of a venue deteriorates significantly due to changes in the market environment or other factors such that recovery of the investment amount is no longer expected, an impairment loss may arise, potentially affecting business performance and financial condition. The Group works to improve management efficiency by periodically assessing indications of impairment for each venue, but the risk of impairment across multiple venues increases if the wedding market contracts or competition intensifies. In particular, because venues are concentrated in the Tokai area, a deterioration in the regional economy could affect multiple venues simultaneously.

Against the backdrop of a declining working-age population due to the falling birthrate, there is a risk that securing and developing the human resources needed for continued store expansion will become difficult. If sufficient personnel cannot be secured, it may become difficult to open new stores as planned or to maintain service levels, potentially affecting business performance. While the Group actively secures personnel through measures such as expanding new graduate recruitment and works to educate personnel, maintaining the high service quality characteristic of the wedding industry requires continuous investment in training.

The Group serves food and beverages at wedding ceremonies and receptions and is thus subject to regulation under the Food Sanitation Act; if an incident such as food poisoning occurs, or if problematic food ingredients are unintentionally used, this could lead to business suspension and loss of public trust, potentially having a material impact on business performance. The Group assigns a food sanitation manager to each venue and conducts regular hygiene inspections by external specialized organizations to ensure safety and quality, but thorough risk management is required as the number of venues expands.

The Group holds a large amount of personal information of customers related to weddings and other events, and if an unforeseen incident results in an information leak, this could lead to a decline in public trust and affect business performance. While the Group has established regulations on personal information management and enforces strict management of the locking of documents and data as well as password management, risks such as cyberattacks and internal misconduct cannot be completely eliminated. Because sensitive personal information related to weddings is handled, brand damage in the event of a leak could be particularly severe.

The Group operates 24 venues centered on the Tokai area, and if a large-scale natural disaster occurs in that area, multiple facilities could be damaged simultaneously, potentially forcing a suspension of business. Depending on the extent of the damage, substantial repair costs and other expenses could arise, potentially affecting business performance and financial condition. The Tokai area has been identified as being at risk of large-scale disasters such as the Nankai Trough earthquake, and the Group's regional concentration inherently carries business continuity risk.