KeyHolder,Inc.

The Group's business is founded on exclusive contracts with artists and talent. If a contract renewal is not achieved, or if trouble arises from a breach of contract with a business partner, performance may be affected. There is also a risk that, after a long-term and substantial investment, the individual may retire or suspend activities due to injury or scandal, or that a business partner may terminate the contract. While the Group has built a system premised on long-term management, complete avoidance of these risks is difficult.

The Group applies IFRS, under which amortization of goodwill on a straight-line basis is not required; however, if the recoverable amount falls below the carrying amount due to deterioration in the operating performance of the subject company or other factors, an impairment loss must be recognized. Unlike under Japanese GAAP, since goodwill is not amortized, the impairment risk persists into the future, and the impact on profit or loss when an impairment occurs could be significant. It is explicitly stated that this could have a material impact on the Group's business performance and financial position.

The Group's digital content business is entirely dependent on communication networks, and if a system failure occurs due to a natural disaster, accident, unauthorized access, computer virus, or other cause, it could have a serious impact on the business and performance. Service outages due to traffic overload or hardware failure, as well as information leakage due to hacker intrusion, could also affect performance and social trust. Although appropriate security measures are in place, complete protection is not guaranteed.

Under the Work Style Reform Related Act that came into effect in April 2024, a cap has been placed on overtime work for truck drivers, and combined with the labor shortage caused by the declining birthrate and aging population, the operating environment of the logistics business has deteriorated significantly. The Group is working to secure new personnel and improve transport efficiency through measures such as a "9-day rest system," expansion of various allowances, and thorough implementation of the 5S methodology; however, if the labor shortage worsens further or personnel attrition occurs, performance may be affected.

The revenue source of the video production business is mainly program production fees from Tokyo-based key stations, and advertising revenue, which accounts for the majority of key stations' sales, is highly susceptible to the performance of advertisers and the domestic economy. In addition, TV viewing time is on a declining trend, particularly among younger generations, and as the media value of TV broadcasting continues to decline, the Group's performance may be affected. The Group is working to build a system for supplying video content to internet media platforms, but approximately half of the platform providers are foreign-affiliated companies, which also carries risks related to changes in domestic and international conditions.

The Group's digital content business depends on the Android and iOS platforms provided by Google Inc. and Apple Inc., and there is a risk that a service outage caused by an incident on the platform, or a significant change in terms and conditions or rules, could make it difficult to continue providing services as before. It is also anticipated that substantial expenditure may be required to respond to changes in terms and conditions, which could affect business operations and performance. The Group's own countermeasures are limited, and it faces a structural risk of being at the mercy of the platform operators' policies.

As internet advertising has grown to exceed the scale of the four mass media, issues such as ad fraud, brand safety, and viewability have become apparent, requiring a response to structural changes driven by rapid technological innovation. The Group operates various internet advertising businesses, and if it is unable to respond appropriately, or if additional expenditure is required to respond to new technologies, performance may be affected. Intensifying competition with major and overseas advertising agencies is also making the business environment more challenging.

Truck accidents account for approximately 60% of all accidents involving commercial vehicles, and factors such as long driving hours, aging drivers, and nighttime driving make accidents more likely to occur. When an accident occurs, in addition to physical damage to vehicles, it may result in life-threatening issues, damage to goods being transported, liability for damages, and secondary or tertiary effects from loss of trust. The Group has implemented measures such as transport plan inspections, health checks, installation of drive recorders, and safety education, but accidents involving other parties cannot be completely prevented.

The spread of infectious diseases or the occurrence of a large-scale disaster could lead to temporary closure of stores and facilities or difficulty in continuing business operations, which could have a significant impact on the Group's business activities, financial position, and operating results. The Group has implemented measures based on its BCP, including establishing a disaster response headquarters, conducting emergency contact drills, and promoting telework (through work-from-home regulations and a super flex-time system); however, if an event far exceeding expectations occurs, business operations may be disrupted. It is explicitly stated that ripple effects such as fluctuations in the financial and capital markets could also have a material impact on performance and financial position.

The Group's borrowings from banks and other institutions include loans with variable interest rates, and depending on future financial conditions, a rise in interest rates could increase the burden of interest payments, affecting performance and financial position. Specific outstanding loan balances and interest rate sensitivity are not disclosed, but the existence of variable-rate borrowings is explicitly cited as a financial risk factor. No specific hedging measures are described by the Group, leaving vulnerability to changes in financial conditions.