KURAUDIA HOLDINGS CO.,LTD.

The Group is actively promoting business alliances with wedding venues and hotels, but if a contract is terminated, cancelled, or its terms changed due to intensified competition, changes in business policy, or deteriorating performance at partner companies, this could affect business results. As a countermeasure, the Group continues to strengthen relationships with major partners and actively pursue new alliances.

In connection with the outsourced operation of rental costume shops at wedding venues and hotels, the Group has paid business guarantee deposits and lease deposits, and the balance of deposits paid at the end of the consolidated fiscal year under review reached ¥2,533 million (20.1% of total assets). If all or part of such deposits become unrecoverable due to the bankruptcy or other business failure of a partner, this could have a material impact on business results. As a countermeasure, the Group conducts credit investigations prior to entering into alliances and performs periodic monitoring thereafter.

In recent years, the forms of wedding ceremonies and receptions have diversified, including house weddings, restaurant weddings, overseas ceremonies, Japanese-style weddings, small-scale weddings, and photo weddings. If the Group is unable to respond to these changes in preferences, or if it takes time to supply corresponding products to the market, this could affect business results. As a countermeasure, the Group strives to conduct thorough marketing of various trend changes and to develop products that accommodate diverse wedding styles.

If facility damage or business interruption occurs due to large-scale earthquakes, storm and flood damage, or other natural disasters, or the outbreak of infectious diseases, or if weddings and receptions are cancelled or postponed due to restrictions on social activities such as requests to refrain from going out, this could affect business results. As a countermeasure, the Group has taken measures to ensure employee safety, strengthen facility countermeasures, and obtain coverage through casualty insurance, but recognizes that it would be difficult to completely avoid risk in the event of an unexpectedly large-scale disaster or infectious disease outbreak.

The Group procures most of the funds for business expansion through borrowings from financial institutions, and the balance of interest-bearing debt at the end of the consolidated fiscal year under review stood at ¥5,752 million (45.6% of total liabilities and net assets), indicating a high level of dependence. If interest rate levels or the financial environment change due to future fluctuations in financial or economic conditions, this could affect operating results. As a countermeasure, the Group is working to increase cash flow by improving profitability.

The wedding venues operated by the Company are subject to regulation under the Food Sanitation Act, and if a food poisoning incident occurs, this could result in revocation of business permits, business suspension orders, loss of social credibility, and claims for damages, thereby affecting business results. As a countermeasure, each wedding venue thoroughly conducts hygiene management training for employees, and no food poisoning incidents have occurred to date.

According to the Ministry of Health, Labour and Welfare's "2024 Vital Statistics," the number of marriages in 2024 was 485,000 couples (an increase of 10,000 from the previous year), showing a slight recovery, but the trends of declining birthrate, aging population, non-marriage, and delayed marriage continue, and the situation cannot be described as being on a recovery trajectory. In addition, the number of divorces was 185,000 couples (an increase of 2,000 from the previous year), only a temporary increase, and the declining trend continues. Trends in the number of marriages, demographics, and the unmarried rate could affect business results. As a countermeasure, the Group is focusing on expanding its share of the bridal market by leveraging its wedding dress product development and product supply capabilities.

The Group's net sales tend to be concentrated in the first quarter (September to November) and third quarter (March to May), which are the wedding seasons; in FY2025 (ended August 2025), the first quarter accounted for 30.1% of net sales and the third quarter for 27.2%. If orders cannot be secured during the wedding season for any reason, this could have a significant impact on business results.