QB Net Holdings Co.,Ltd.

There is a risk that intensifying competition from lower prices at full-service salons, in addition to the lengthening of haircut cycles and diversification of consumer needs, will put pressure on earnings. The Company addresses this through risk diversification via multiple brands beyond "QB HOUSE" and overseas expansion, differentiation through openings in favorable locations and improved service quality, and enhanced convenience through the introduction of new ticket vending machines and an app.

There is a risk that recruiting and retaining the barbers and hairdressers necessary for store operations will become difficult due to a decline in the number of qualified personnel and changes in the working environment. Since a shortage of personnel directly leads to a decline in the quality of store operations and delays in store opening plans, the Company addresses this by expanding and strengthening its education and training facilities, improving retention rates through better treatment and working conditions, and expanding new recruitment channels.

The termination, cancellation, or modification of outsourcing agreements for stores operated by contracted business partners directly affects the Company's store opening policy, and there is a risk that changes in administrative interpretation due to legal or regulatory amendments will complicate dealings with contracted business partners and their employees. The Company addresses this through regular interviews and surveys to grasp management conditions and working environments, internal audits conducted several times a year, and contract renewal reviews conducted at least once a year.

There is a risk that impairment losses on store fixed assets and goodwill arising from M&A and other transactions could materially affect business performance. The Company addresses this by improving the accuracy of revenue and expenditure plans based on past customer traffic results and performance trends, deliberation at the store opening review committee and management meetings, monitoring of store profit and loss after opening, and detailed business planning, execution, and monitoring of consolidated performance.

If IT and DX initiatives fail to progress, there is a risk that a gap will arise with customer needs, leading to a decline in competitiveness. Delays in securing and developing DX personnel could be a major cause of this, so the Company addresses this by strengthening internal resources through securing and developing DX personnel and accumulating knowledge and expertise through collaboration with external vendors.

There is a risk that overseas business plans will be delayed due to differences in culture and lifestyle, political instability, economic fluctuations, and differences in laws and regulations, tax systems, and business customs. There are also concerns about intensifying competition due to the emergence of imitation services. The Company addresses this by gathering information and identifying risks in each country, examining and implementing countermeasures within the Group, registering trademarks in each country, and identifying competitors at an early stage.

There is a risk that rising labor costs and rents due to fluctuations in the economic environment will increase expenses, and that amendments to laws and regulations such as the Barbers Act and the Beauticians Act will generate new or increased expenses such as capital investment. The Company seeks to avoid these risks through continuous information gathering, risk identification, and examination and implementation of countermeasures.

There is a risk that business performance could deteriorate due to temporary business suspensions or a decline in the number of customers caused by abnormal weather, natural disasters, or the spread of infectious diseases such as novel coronavirus infections or influenza. The Company addresses this by thoroughly implementing store operations that prioritize the safety of customers and employees, and by examining and implementing countermeasures against disasters and infectious diseases.

There is a risk that the Company's financial condition could deteriorate due to loss of the benefit of time as a result of breaching financial covenants, changes to loan repayment plans due to failure to achieve business plans, difficulty in refinancing due to changes in financial institutions' lending stance, and increased interest burden due to rising interest rates. The Company seeks to reduce these risks by maintaining sound earnings and financial condition, optimizing fundraising costs, maintaining cooperative relationships with correspondent banks, and modifying financial covenants and converting some loans to fixed interest rates.

There is a risk that leakage of personal information could lead to a decline in credibility, and that system failures could impede efficient store operations and the timely provision of information to customers. The Company addresses this by strengthening information system security, thoroughly managing and operating in accordance with its privacy policy, conducting training for officers and employees, migrating data to the cloud and backing up important data, and enhancing and adding redundancy to systems and networks.