〔Delayed〕The original disclosure in Japanese was released on February 14, 2017 at 15:00 (GMT+9)

February 14, 2017

Tsukada Global Holdings Inc.
Consolidated Earnings Report for the Fiscal Year ended December 31, 2016
(Japanese GAAP)
Stock listing: Tokyo Stock Exchange (First Section)
Securities code: 2418
URL: http://www.tsukada-global.holdings/en/
Representative: Masayuki Tsukada, President and CEO
Information contact: Keiji Ishihara, Manager, Finance &Tel: +81-3-5464-0081
Accounting Department
Scheduled dates:
Annual general meeting of shareholders:March 30, 2017
Filing of statutory year-end financial report:
March 30, 2017
Dividend payout:
March 31, 2017
Supplementary materials to year-end financial results available: Yes
Year-end earnings presentation held: Yes (targeted at institutional investors and analysts)(Amounts rounded down to the nearest million yen)

1. Consolidated Performance for the Fiscal Year ended December 31, 2016
(January 1, 2016 – December 31, 2016)(1) Consolidated Operating Results
Net sales(Percentages indicate year-on-year changes)
Operating income

Ordinary income

Profit attributable toowners of the parent
million yen%

million yen%
million yen%
million yen%
Year ended
55,3652.9
3,515(34.8)
3,598(33.7)
December 31, 2016
Year ended
53,8044.1
5,392(15.8)
5,431(19.0)
December 31, 2015
Note: Comprehensive income: Year ended December 31, 2016:
2,194 million yen (38.8%)
Year ended December 31, 2015:
3,585 million yen (21.1%)
Diluted profit
Ordinary income
ProfitReturn on equity
per shareper share
to total assets
yen
yen
%
%
Year ended
40.37
36.00
6.1
4.4
December 31, 2016
Year ended
79.48
70.95
12.8
7.4
December 31, 2015
Reference: Equity in (earnings) losses of affiliates:
Year ended December 31, 2016: - million yen
Year ended December 31, 2015: - million yen

1,951(49.7)

3,880

(9.6)

Operating income
to net sales
%
6.3
10.0

(2) Consolidated Financial Position

December 31, 2016

Total assets
million yen
84,752

34,22838.5

Net assets per shareyen
683.8131,80739.6

651.42

Net assets
million yen

80,327
December 31, 2015
Reference: Total equity: December 31, 2016: 32,618 million yen
December 31, 2015: 31,807 million yen

Equity ratio%

Total equity=Shareholders’ equity plus total accumulated other comprehensive income.

(3) Consolidated Cash Flows
Cash flows fromoperating activities
million yen

million yen

Year ended
December 31, 2016
Year ended
December 31, 2015

Cash and cash
equivalents at end of
periodmillion yen

Cash flows fromfinancing activities

Cash flows frominvesting activities

million yen

6,559(12,352)

3,131

15,3805,686(12,887)

7,712

17,863

2. Dividends
Dividend per share
Total
dividends

Year ended
December 31, 2015
Year ended
December 31, 2016
Year ending
December 31, 2017
(Forecast)Rate of total
Dividend
dividend to
payout ratio
net assets(consolidated)(consolidated)%%

End-Q1yen

End-Q2yen

End-Q3yen

Year-endyen

Annual total
yen

-

5.00

-

5.00

10.00

488

12.6

1.6

-

5.00

-

5.00

10.00

486

24.8

1.5

-

5.00

-

5.00

10.00

million yen

17.3

3. Earnings Forecast for the Fiscal Year ending December 31, 2017
(January 1, 2017 – December 31, 2017)(Percentages indicate year-on-year changes)
Net sales
million yen%

Operating income

Ordinary income

million yen

million yen%%

Profit attributable toProfitowners of the parent
million yen%

per shareyen

Six months ending
June 30, 2017

26,300

1.5

350

(1.4)

400

-

150

-

3.10

Year ending
December 31, 201760,600

9.5

4,300

22.3

4,500

25.0

2,800

43.4

57.91

*Notes(1) Changes affecting the consolidation status of significant subsidiaries during the period: Yes
Newly Consolidated: 2 Subsidiaries (Best Resort LLC and BT KALAKAUA, LLC)
Newly Deconsolidated: None
Note: For details, please refer to "(5) Notes to the Financial Statements (Basis for Preparation ofConsolidated Financial Statements)" in section "4. Consolidated Financial Statements" on page 22 in
the accompanying materials.
(2) Changes in accounting policy, changes in accounting estimates, and retrospective restatement
1) Changes in accordance with amendments to accounting standards, etc.: Yes
2) Changes other than noted in 1) above: None
3) Changes in accounting estimates: None

4) Retrospective restatement: None
Note: For details, please refer to "(5) Notes to the Financial Statements (Changes in Accounting
Policy)” in section “4. Consolidated Financial Statements” on page 25 in the accompanying
materials.
(3) Shares issued (common stock)1) Number of shares issued at end of period(including treasury stock)2) Number of shares held in treasury at end of period

3) Average number of shares outstanding during the period

December 31, 2016

December 31, 2015

48,960,000

48,960,000

1,259,834

131,534

Year ended

Year ended

December 31, 2016

December 31, 2015

48,347,959

48,828,466* Audit Status
As of this report publication, an audit of the consolidated financial statements in accordance with Japan’s Financial
Instruments and Exchange Act is underway.
*Appropriate Use of Earnings Forecast and Other Important Information(Cautionary note on forward-looking statements)
The above forecasts are based on information available as of this report’s publication. Actual results may
differ from forecasts due to changes in the business environment. For the assumptions underlying theforecasts herein and other notice on the use of earnings forecasts, please refer to “(1) Operating Results”
in “1. Review of Consolidated Financial Results” on page 2 in the accompanying materials.
(Presentation handout materials)
The Company has scheduled an earnings presentation targeted at institutional investors and analysts on
February 21, 2017.
The presentation handout materials will be posted on the Company's website immediately after the event.

Accompanying Material – Contents
1. Review of Consolidated Financial Results(1) Operating Results(2) Analysis of Financial Condition(3) Basic Policy on Profit Distribution, Dividends for Fiscal 2016, and Dividend
Forecast for Fiscal 2017(4) Business and Other Risks
2. Management Policy(1) Basic Management Policy(2) Target Management Indicators(3) Medium-to Long-term Management Strategy(4) Issues to Address
3. Basic Views on Adoption of Accounting Standards
4. Consolidated Financial Statements(1) Consolidated Balance Sheets(2) Consolidated Statements of Income and Comprehensive Income
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income(3) Consolidated Statements of Changes in Net Assets(4) Consolidated Statements of Cash flows(5) Notes to the Financial Statements(Note on the Going-concern Assumption)(Basis for Preparation of Consolidated Financial Statements)(Changes in Accounting Policy)(Segment and Other Information)(Per Share Information)(Significant Subsequent Events)
5. Other Information(1) Changes in Officers(2) Weddings Held, Orders Received, and Sales Volume

1

2
2
3
4
4
9
9
9
9
10
12
13
13
15
15
17
18
20
22
22
22
25
27
30
30
31
31
31

1. Review of Consolidated Financial Results(1) Operating Results
1) Results for Fiscal 2016
In the fiscal year ended December 31, 2016, the Japanese economy followed a moderate recovery path, owing
to the government’s and Bank of Japan’s economic and monetary policies. Furthermore, the outcome of the
U.S. presidential election, which led to a sharp depreciation of the yen, is raising hopes of an improvement in
the earnings of primarily exporting companies. Nevertheless, the future outlook remains unclear given theeconomic slowdown in China and other emerging countries and concerns over the political situation in Europe
stemming from the impact of such factors as the United Kingdom’s exit from the European Union.
In this economic environment, in the bridal market, in which the Tsukada Global Holdings Group operates,
the number of weddings in Japan in 2016 was estimated at 621,000, compared with 635,156 in 2015 (source:
Outline of Vital Statistics in Japan, Ministry of Health, Labour and Welfare). Although the declining birthrate is
gradually having a discernible impact, the size of Japan’s wedding market remains generally stable, due in partto a moderate rise in wedding expenditures.
The number of foreign visitors to Japan is estimated to have reached a record 24.03 million in 2016 (source:
Japan National Tourism Organization), and the hotel market, another market in which the Group operates, isexpanding steadily thanks to the recovery in the Japanese economy, coupled with a boost from foreign visitors.
Furthermore, the relaxation-related market is expected to experience substantial development andexpansion in the coming years as the burgeoning interest in health and beauty in recent years adds to themarket’s previous underlying strength.
In this market environment, the Group endeavored to increase sales and profitability by accurately
responding to customers’ increasingly individualized and diversifying needs in the bridal, hotel, and relaxation
markets while constantly and actively working to create new value, develop high-quality, appealing outlets, andprovide high value-added services.
As a result of these efforts, in the fiscal year ended December 31, 2016, Tsukada Global Holdings Inc. (“theCompany) posted consolidated net sales of ¥55,365 million (up 2.9% year on year). This positive result largely
reflects the contribution of a newly opened hotel, which eclipsed the impact of lower sales in the wedding
business, where changes in the market environment depressed the number of weddings held and the average
unit prices for such events. However, the lower sales of the wedding business and increase in costs related tostarting up new businesses resulted in operating income of ¥3,515 million (down 34.8%), ordinary income of¥3,598 million (down 33.7%), and profit attributable to owners of the parent of ¥1,951 million (down 49.7%).
The results for each business segment were as follows. The Company changed its reportable businesssegments starting from the first quarter of fiscal 2016. In the year-on-year comparisons presented below thefigures for fiscal 2015 have been adjusted to reflect the change in segments.
a. Wedding businessIn fiscal 2016, sales in the wedding business fell year on year amid declines in the number of weddings held
and the average unit price for such events both in Japan and overseas. However, orders received for guest
house weddings in Japan were brisk.
Net sales in the wedding business were ¥34,783 million (down 6.2% year on year), and segment operating
income was ¥5,259 million (down 17.1%).
b. Hotel businessIn fiscal 2016, the hotel business was bolstered by the contribution from The Strings Hotel Nagoya, which
opened in November 2015 and continued to enjoy steady increases in the number of weddings held andorders received. Sales at previously existing hotels were also up year on year, with overnight guest
occupancy numbers buttressed by a steady flow of foreign visitors to Japan.
As a result, net sales in the hotel business were ¥17,568 million (up 27.5% year on year), while segment
operating income was ¥762 million (up 56.1%).
c. W&R business (Wellness & Relaxation business)
In the W&R business, sales rose owing to the opening of a new spa complex - Beauty & Relax SPA-HERBS
in May 2016, which offset the negative impact of the temporary closing of certain existing salons.

2

As a result, net sales in the W&R business were ¥3,013 million (up 2.0% year on year), and segment
operating loss was ¥473 million (compared with an operating income of ¥110 million in FY2015).
2) Earnings Forecast for Fiscal Year Ending December 31, 2017
Regarding the economic environment in which the Tsukada Global Holdings Group operates, although benefits
are expected from economic stimulus measures and a moderate improvement in corporate earnings in Japan,
the economic outlook is likely to remain uncertain.
The Group intends to actively develop competitive products and constantly strive to create new value andwill also aim to improve cost-competitiveness and enhance profitability through efficient outlet development anddevelopment of human resources.
The order backlog at the end of the fiscal year under review (December 31, 2016 was 7,435 orders (up 2.4%
year on year). For the fiscal year ending December 31, 2017, the Company forecasts consolidated net salesof ¥60,600 million, operating income of ¥4,300 million, ordinary income of ¥4,500 million, and profit attributableto owners of the parent of ¥2,800 million.
(2) Analysis of Financial Condition
1) Assets, Liabilities, and Net Assets
Total assets at the end of the fiscal year (December 31, 2016) amounted to ¥84,752 million, an increase of¥4,425 million from the end of the previous fiscal year (December 31, 2015). The change resulted mainly fromincreases of ¥8,184 million in tangible fixed assets, and decreases of ¥2,120 million in cash and deposits and¥1,227 million in investment securities.
Liabilities at the end of the fiscal year totaled ¥50,524 million, an increase of ¥2,004 million compared withthe end of the previous fiscal year. The change is chiefly attributable to a net increase of ¥2,951 million in debt
and corporate bonds and a decrease of ¥1,126 million in other current liabilities.
Net assets at the end of the fiscal year totaled ¥34,228 million, an increase of ¥2,420 million from the end of
the previous fiscal year. The change is mainly due to increases of ¥1,610 million in non-controlling interests,¥804 million in treasury stock and ¥1,460 million in retained earnings.
2) Cash Flow
Cash and cash equivalents (“cash”) at the end of the fiscal year decreased by ¥2,483 million from the end of
the previous fiscal year to ¥15,380 million. Cash flows and factors behind changes in the cash flows are
explained below.
(Operating cash flow)
Cash provided by operating activities during the fiscal year totaled ¥6,559 million, an increase of 15.4% fromthe previous fiscal year. The change is mainly attributable to ¥3,386 million in profit before income taxes and¥3,349 million in depreciation and amortization, partially offset by ¥1,885 million in income taxes paid.
(Investing cash flow)
Cash used in investing activities totaled ¥12,352 million, a decrease of 4.2% from the previous fiscal year. Thechange is mainly the result of ¥12,619 million for the purchase of tangible assets, ¥635 million in lease andguarantee deposits, and ¥793 million for sales of investment securities.
(Financing cash flow)
Cash provided by financing activities in the fiscal year totaled ¥3,131 million, a decrease of 59.4% from theprevious fiscal year. The change is mainly attributable to net proceeds of ¥2,954 million from debt and theissuance of bonds, ¥1,505 million of proceeds from stock issuance to non-controlling interests, ¥807 million ofpurchase of treasury stock and ¥486 million in dividends paid to shareholders.
Changes in the Tsukada Global Holdings Group’s cash flow-related indicators are as follows.

3

Return on equity (%)
Return on equity based on market
value (%)
Cash flow to interest-bearing debt
(years)Interest coverage ratio (times)

FY2013

FY2014FY2015FY2016

45.7

42.7

39.6

38.5

60.2

60.1

47.7

39.3

3.2

3.9

6.2

5.8

23.4

32.6

24.8

27.2

Notes:
Return on equity: Total equity/Total assets
Return on equity based on market value: Market valuation/Total assets
Cash flow to interest-bearing debt: Interest-bearing debt/Operating cash flow
Interest coverage ratio: Operating cash flow/Interest expenses
1. All indicators are calculated based on consolidated figures.
2. Cash flows from operating activities in the Consolidated Statements of Cash Flows are used for operating
cash flow. Interest-bearing debt includes all liabilities recorded on the Consolidated Balance Sheets on
which interest is paid. Interest paid in the Consolidated Statements of Cash Flows is used for Interest
expenses.
(3) Basic Policy on Profit Distribution, Dividends for Fiscal 2016, and Dividend Forecast for Fiscal 2017
The Company considers the return of profits to shareholders to be an important management priority. The
Company’s policy is to give comprehensive consideration to the financial situation, profit level, and other factors
while strengthening the business infrastructure and to return profits to shareholders in a flexible manner inaccordance with the operating results each year while taking into consideration enhancement of internal
reserves.
With regard to dividends, the Company decided to pay a year-end dividend of ¥5 per share for the year
ended December 31, 2016. As the Company paid an interim dividend of ¥5 per share in August 2016, theannual dividend for fiscal 2016 is ¥10 per share.
The Company also plans to pay an annual dividend of ¥10 per share (including an interim dividend of ¥5 pershare) for the year ending December 31, 2017.
(4) Business and Other Risks
The following is a description of matters considered to be potential risks to the Tsukada Global Holdings Group’sbusiness operations. In the interest of proactive disclosure of information to investors, matters that the Company
does not necessarily consider business risks but that may be important for investor decisions or understandingof the Group’s business activities have been included.
Forward-looking statements contained herein are based on the Company’s best judgment as of the end of
fiscal 2016. The Company strives to avoid the occurrence of risks and respond when a risk occurs.
1) Characteristics of the businessa. Services
The Tsukada Global Holdings Group aims to provide the latest wedding styles as well as hotel life andrelaxation services that are highly responsive to the interests and preferences of its customers by constantly
and meticulously analyzing contemporary needs and fashion trends, combining experience and expertise
accumulated within the Group with high-level services provided by partner companies, and assigningprofessional chefs and service staff to each facility especially to provide dining and other services.
Nevertheless, if the Group’s services fail to respond to current needs and fashion trends or if the Group isunable to secure partner companies, chefs, or staff that meet the desired level of excellence and be unable
to provide satisfactory services to customers, the Group’s operating results may be affected.
b. Human resources
To cope with further expansion of operations and diversification of business activities, the Group will further
bolster its sales and administrative department personnel by actively recruiting recent university graduates

4and establishing education and training systems. Nevertheless, if the Group is unable to secure internal
personnel in line with expansion of operations as planned, competitiveness may decline, further expansionof operations may be constrained, and the Group’s operating results may be affected.
2) Markets in which the Group operates
According to the Ministry of Health, Labour and Welfare’s Outline of Vital Statistics in Japan, Japan’s
population of people reaching marrying age is gradually declining. If the overall size of the bridal market
contracts in the future, the Group’s operating results may be affected.
In the bridal market, the Group’s core business, it is expected that existing hotels and ceremony halloperators will enter and provide unprecedented new services to the guesthouse and wedding services
market and that companies from other industries will enter the market. If competition with other companies
intensifies as a result, the Group’s operating results may be affected.
3) Operating results and financial situationa. Seasonal changes in operating results
The Group’s net sales increases at the time of the opening of new facilities tend to concentrate during theApril–June and October–December peak wedding seasons in Japan (the second and fourth quarters of theCompany’s fiscal year).
Quarterly operating results for the fiscal year ended December 31, 2016
First Quarter
Second Quarter Third Quarter
Fourth Quarter(percentage of (percentage of (percentage of (percentage offull-year results) full-year results) full-year results) full-year results)
million yen
million yen
million yen
million yen
Net sales
11,571
14,33912,918
16,536
20.9%
25.9%
23.3%
29.9%
Operating income or loss (loss
(588)
943
487
2,673
shown in parentheses)-16.7%
26.8%
13.9%
76.0%
b. Heavy reliance on debt
Since heretofore the Group has raised investment capital for construction costs, lease and guarantee
deposits, and other expenses incurred when building new facilities primarily by means of loans from financial
institutions, the ratio of interest-bearing debt to total assets is high. The balance of interest-bearing debt was¥35,409 million as of December 31, 2015 and ¥38,351 million as of December 31, 2016. The ratio of interestbearing debt to total assets stood at 44.1% as of December 31, 2015 and 45.3% as of December 31, 2016,reflecting the Group’s heavy reliance on debt. The ratio of interest expenses to net sales was 0.4% in theyears ended December 31, 2015 and December 31, 2016.
If the financial situation changes significantly and interest rates rise, the Group’s operating results may beaffected.
In addition, some of the Company’s loans have financial covenants attached. If the Company violates
these covenants and a lender demands settlement, the loan may become immediately due and payable andthe Company may repay the loan in full.
c. Overseas conditions
The Group operates an overseas wedding and restaurant services business that caters mainly to Japanesecustomers in Hawaii, the United States, Bali, Indonesia and Singapore. As of December 31, 2016, the Group
operated five wedding chapels in Hawaii, two wedding facilities in Bali and one wedding and restaurant facility
in Singapore. For this reason, changes in the political situation or economic trends in these overseas regions
or the occurrence of events such as war, terrorism, or major natural disaster may result in cancellations andaffect the Group’s operating results.
Local companies Best Bridal Hawaii, Inc. and PT. Tirtha Bridal provide wedding services on a contract
basis for overseas wedding orders received by the Company and also arrange weddings for local customers.
Best Resort LLC, BT KALAKAUA, LLC and BEST HOSPITALITY LLC are engaged in the hotel real estatedevelopment business in Hawaii. Ecpark Pte. Ltd. operates a restaurant business that caters to local

5

customers. Best Bridal Korea Inc. is constructing guest houses and has signed lease contracts with Marizin
Inc. in preparation for entry into the Korean bridal market. If these business activities fail to progress in linewith the Company’s expectations, the Group’s operating results may be affected.
d. Impact of foreign exchange fluctuations
Since the Company has receivables denominated in foreign currencies including outstanding loans to
subsidiaries and has debts denominated in foreign currencies, the Group’s operating results and financial
situation may be affected by significant foreign exchange fluctuations.
e. Food safety
Since the Group operates restaurants in its ceremony halls and hotels, it is subject to regulation under foodsanitation laws. To ensure that situations such as a suspension of business due to food poisoning or otherhygiene-related issues occurs, the Group appoints a sanitary manager at each outlet and restaurant andconstantly takes all possible precautionary measures to ensure safety and quality. Nevertheless, if a major
quality problem that goes beyond the scope of the Group’s measures occurs, the Group’s operating results
may be affected.
4) Continuity of management personnel
Masayuki Tsukada is the president and CEO of Tsukada Global Holdings Inc. He performs an important rolein business activities, such as deciding management policies and strategy. To avoid over-reliance on
Masayuki Tsukada in business management and execution, the Company mitigates management risk bymeans such as enhancement of the Management Committee and delegation of authority and is also
strengthening human resources development in each business sector. However, if Masayuki Tsukada
becomes unable to perform his duties due to unforeseen circumstances, business development andbusiness results may be affected.
5) Laws and regulations
The construction and renovation of guest houses are subject to various regulations under the BuildingStandards Act, Fire Service Act, Sewerage Act, and other laws as well as, depending on the building structure
and construction location, regulations under local ordinances on wastewater control, noise control, and othermatters. When the Group constructs or renovates facilities, it hires a licensed architect or a construction
company to perform structural checks, and the Company’s marketing department and local fire departments
also perform checks. Nevertheless, if the Group violates any of the above legal regulations, guest house
construction plans may be delayed or operations impeded, and the Group’s operating results may be affected.
The Group has registered its overseas salons (type one business activities) pursuant to the Travel Agency
Act. If the Group violates the act and becomes unable to renew its registration or has its registration revoked,
the Group’s operating results may be affected.
Furthermore, the Group operates its hotels in accordance with the Inns and Hotels Act, and the provision of
beauty services offered prior to wedding ceremonies is subject to regulation under the Act on Specified
Commercial Transactions.
6) Capital investment and new construction riska. Current guest houses
Facility name
No. of guest houses

Facility name
No. of guest houses

Nihonbashi

Shirogane

Yokohama

Osaka

Sendai Hoshigaoka

1

2

4

5

Shinsaibashi

Marunouchi

YagotoKamogawa

Chiba

2

1

4

3

2

3

6

Shinurayasu Omiya Aoyama Ichigaya

2

5

Akasaka Odaiba
1

1

8

3

1

Nagoya Minato

Iseyama

Meieki3

77As of December 31, 2016, the Group operates the aforementioned 20 outlets (65 guest houses) inside
Japan. The construction and renovation of all these guest houses are planned internally by the Company’sbusiness development department.
The Group’s policy is to continue to efficiently open new guest houses, mainly in the Tokyo Metropolitan,
Kansai, and Chukyo regions, after meticulous market analysis, facility planning, and site selection.
The Group seeks to sustain a stable customer acquisition rate by renovating existing guest houses andhotels on a three-year renewal cycle and maintaining newness and excellent design characteristics at all
times.
Nevertheless, if the Group is unable to acquire real estate (primarily land) suitable for facilities construction
or employ necessary operations staff, or if new or existing guest houses and hotels fail to meet with customer
acceptance, the Group’s operating results may be affected.
Additionally, if the real value of fixed assets held by the Group declines significantly due to factors such as
the industry trend or change in the business environment, the Group’s operating results and financial situation
may be affected due to recognition of impairment loss.
b. Outlet development risks
The Group typically signs lease contracts to secure sites needed for its directly operated facilities and pays
guarantee money as well as upfront interior and exterior design expenses when opening outlets. After outlet
opening as well, labor costs, rent, and other running costs are incurred. For this reason, the amount ofdeposits and guarantees and related expenses increase with the opening of new outlets. If the Company isforced to close an outlet after a shorter period than the expected period of operation, it may incur penalties
for breach of contract. In addition, if a lessor goes bankrupt, the Company may be unable to recover all orpart of its guarantee money.
The Company’s policy on future site procurement is to proceed with guest house construction using landacquisition and securitization as an option in addition to leasing for the purpose of putting the outlet
development plan on a firmer footing. Although the Company’s policy when considering outlet development
is to place priority on management efficiency and avoidance of deterioration of the financial position,acquisition of land may affect the financial position. As this necessitates securing large sites, if the Group isunable to secure properties suitable for construction and the outlet development plan does not progress as
expected, business development may be constrained, and the Group’s operating results may be affected.
c. Special purpose company
The Group utilizes the Shirogane office (Shirogane SPC Co., Ltd.) as a special purpose company (SPC).
The Company invests in an anonymous partnership in connection with the SPC and, with respect to thescope of consolidation of this anonymous partnership investment, determines individually whether or not theCompany has control and influence over the SPC in accordance with the Practical Solution on Application ofControl Criteria and Influence Criteria to Investment Associations (ASBJ Practical Issues Task Force No. 20,
March 25, 2011). The executive authority for the anonymous partnership is the SPC, the partnership operator,
and the Company does not have any direct voting rights or other authority that would give it control over the
SPC. Since it is clear that the Company cannot make decisions over financial, operating, or business policies,
the anonymous partnership operated by Shirogane SPC Co., Ltd. does not qualify as a subsidiary and is
excluded from the scope of consolidation.
With regard to decisions on the scope of consolidation, in recent years transactions involving the use of
special purpose companies have rapidly increased and become more complex and diversified, it has been
pointed out that stakeholders may be misled in their judgments concerning the status of business groups,
and the Company recognizes that special purpose companies are the subject of international debate. If achange occurs in the Company’s policy on deciding the scope of consolidation due to the institution of new
accounting standards or the publication of practical guidelines on accounting standards, the Group’s
operating results and financial condition may be affected.
The anonymous partnership operated by Shirogane SPC Co., Ltd. had trust beneficiary rights of ¥2,682
million and loans from financial institutions totaling ¥1,900 million as of December 31, 2016.
7) Management of customer information
The Group handles the personal information of many customers through its wedding services sales activities.
The Group has prepared against the risk of information leakage by taking security measures to maintain the7confidentiality of this personal information, including storing information in locked cabinets and using
passwords to secure electronic information. Nevertheless, if leakage of personal information occurs due tounforeseen circumstances, the Group’s operating results may be affected by loss of public trust in the Group.

82. Management Policy(1) Basic Management Policy
The corporate philosophy of the Tsukada Global Holdings Group is “Tsukada Global Holdings strives to create
gathering places which leave an everlasting memory on guests by offering the finest professional hospitality
services.” In accordance with this philosophy, the Group has accurately identified constantly changing customer
needs and provided high-quality services and high value-added facilities. The Group will pursue sustained
development and enhancement of corporate value by continuing to create new value in the markets in which
it operates.
The Group has set forth five basic strategies to accomplish the basic management policy.
1. Outlet development strategy:
Develop guest houses, hotels, and wellness & relaxation facilities, primarily in the Tokyo Metropolitan,
Kansai, and Chukyo regions, that are adapted to the unique characteristics of each market.
2. Product development capabilities:
Realize competitive products with high added value, aiming to provide customers with highly satisfying
products and services.
3. Proposal and sales capabilities:
Accurately identify customer needs (customers’ dreams) and enhance product proposal and sales
capabilities to make these dreams come true.
4. Profitability enhancement:
Streamline management and improve operating efficiency to continuously achieve high profitability.
5. Financial strategy:
Procure funds by means suited to the characteristics of the business, placing priority on capital costs, while
carefully considering factors such as maintenance of a sound financial position, capital efficiency
improvement, and dilution of share value.
(2) Target Management Indicators
To remain a corporate entity capable of stable and continuous growth, the Group has made return on equity(ROE) an important management indicator in order to increase overall profitability while strengthening thefinancial position. The Group will work to enhance corporate value by increasing ROE.
(3) Medium- to Long-term Management Strategy
1) Product strategy
While meticulously analyzing contemporary needs and fashion trends, the Group continuously provides highvalue-added products to customers in its mainstay bridal business as well as in the hotel and wellness andrelaxation businesses.
In the Company’s guest house and wedding services, bride and groom become lady and lord of the manor,
welcoming many guests as party hosts. For customers who seek to fulfill their own dreams and aspirations,the Company has developed a system that is highly responsive to customers’ preferences and plans by
combining the Group’s accumulated expertise with high-level services provided by many partner companies.
As for eating and drinking and services, the Company assigns a professional chef and service staff to eachoutlet to always provide high-quality dining and services.
At the Hotel InterContinental Tokyo Bay, The Strings by InterContinental Tokyo, the Sir Winston Hotel, andThe Strings Hotel Nagoya which the Group operates, the Company is defying the conventional wisdom of
profitability improvement through cost cutting by implementing transformational management reform throughnew investment. As a result, the Company is achieving a significant improvement in profitability.
The Group also operates the British-style Queensway reflexology salons, which boast an extraordinary
repeat rate as the first casual healing salons in Japan that provide reflexology services. The secrets to theirsuccess are their stylish pub-like British green exterior and reflexology techniques thoroughly researchedand developed for the Japanese market.
2) Outlet development strategy
The Group aims to create high-quality, authentic facilities. The domestic network comprises 20 guest houses,
the Hotel InterContinental Tokyo Bay, The Strings by InterContinental Tokyo, the Sir Winston Hotel, The

9Strings Hotel Nagoya, and 48 Queensway reflexology salons. The sustained growth of the Company
requires efficient outlet development based on facility planning, site selection, and property selection basedon meticulous marketing analysis, and the Company plans to develop outlets mainly in the Tokyo
Metropolitan, Kansai, and Chukyo regions, which offer strong future growth potential. The Group seeks tosustain a stable customer acquisition rate by renovating existing facilities on a three-year renewal cycle andmaintaining newness and excellent design characteristics at all times.
3) Sales strategy
The Group does not conduct door-to-door selling. The principal sales method is face-to-face sales tocustomers visiting facilities by sales staff.
In the domestic wedding business division, the product announcement and advertising strategy relies
heavily on paid advertising via TV commercials, wedding magazines, and other media, and creating more
appealing advertisements is critical for prevailing against competitors. The Company creates appealing print
advertising with an emphasis photographic content to call maximum attention to the design and service
content of facilities. The Company also actively solicits customers via the Internet by combining use ofInternet advertising with introduction of facilities and services on websites.
Trend in sales results such as sales success rates for each facility are compiled and analyzed weekly, andsupervisors from domestic business divisions discuss improvement measures with managers and staff ofguest houses showing signs of declining customer acquisition and provide guidance and recommendations
on how to improve success rates.
With regard to the overseas business division, the Company is strengthening the overseas wedding salonsin Japan (five outlets) and sales channels in order to improve the ability to attract customers and increase
success rates.
The Group will further emphasize the development of high-caliber personnel by establishing educationand training systems to enhance the service proposal capabilities of individual employees.
(4) Issues to Address
The economic environment in which the Tsukada Global Holdings Group operates is likely to remain generally
unpredictable and adverse. Although the about-face in monetary policy and economic stimulus measures inJapan is expected to lead to revival of the stagnant economy, worldwide fluctuation in crude oil prices, interest
rates, exchange rate trends, and corporate business performance is expected to continue for some time.
In these circumstances, the Group must continue to operate highly competitive and attractive guest houses
and hotels while providing meticulous products and services responsive to customer needs, which are
expected to become increasingly individualized and diverse, and constantly create and provide new, highvalue-added services in the wellness and relaxation business.
The Company will seek to grow into a comprehensive hospitality company by reinforcing and improving anadvertising strategy that helps boost brand power in order to further enhance competitive advantage in themarket and corporate value, further promote Group synergies with a view to expansion into overseas markets,
strengthen the financial position by means including cost cutting, and focus on securing and developing talented
human resources.
1) Guest house development
The Company operates 20 outlets in Japan. Since development of highly competitive guest houses is acornerstone of the business, the Company plans to promote more efficient development while diversifying
the outlet development strategy.
2) Hotel development
The Group operates the Hotel InterContinental Tokyo Bay, The Strings by InterContinental Tokyo, the Sir
Winston Hotel, and the Strings Hotel Nagoya. The Group plans to actively develop new properties in Japanand overseas while further enhancing earning power.
3) Development of wellness and relaxation facilities
The Group operates British-style reflexology salons (Queensway) and spa complex - Beauty & Relax SPAHERBS and plans to expand the scale of this business by proactively developing these salons and byaccelerating development of a spa complex.

104) Securing and developing human resources
The Company believes that strengthening of its wedding presentation capabilities to enhance customer
service contributes to differentiation from competitors and will continue to actively create mechanisms to raise
employee motivation and develop systems to make possible medium- to long-term employee development.

11

3. Basic Views on Adoption of Accounting Standards
The Company’s financial statements are prepared in accordance with the accounting principles generally
accepted in Japan (Japanese GAAP), in order to ensure comparability with other companies in the peer. As
to the possible future adoption of the International Financial Reporting Standards (IFRS), the Company shallcontinue its study going forward, taking into account the future developments of the Company’s business andof the global and Japanese business environments.

124. Consolidated Financial Statements(1) Consolidated Balance Sheets
December 31, 2015
AmountAssetsCurrent assets
Cash and deposits
Accounts receivable - tradeMarketable securities
Merchandise
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful receivables
Total current assets
Fixed assets
Tangible assets
Buildings and structures
Accumulated depreciation
Buildings and structures, net
LandConstruction in progress
Other
Accumulated depreciation
Other, net
Total tangible assets
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Lease and guarantee deposits
Deferred tax assets
Other
Total investments and other assets
Total fixed assets
Deferred assets
Bond issuance costs
Total deferred assets
Total assets

13(millions of yen)
December 31, 2016
Amount17,589
879
362
33
569
615
1,876
(55)
21,87015,468
966
114
506
459
1,549
(64)
19,00039,274(17,426)
21,847
14,854632
6,080(4,260)1,819
39,154

43,102(19,505)
23,597
21,156781
6,839(5,036)
1,803
47,338

2,538
181
2,719

2,271
272
2,543

4,285
8,362
2,770
1,066
16,48558,358

3,058
8,649
3,110
952
15,77165,65397
97
80,32798
98
84,752

December 31, 2015
AmountLiabilities
Current liabilities
Accounts payable - trade
Current portion of long-term debt
Current portion of bonds
Income taxes payable
Advances received
Other
Total current liabilities(millions of yen)
December 31, 2016
Amount

2,258
2,857
724
1,369
1,131
4,492
12,834

2,362
13,062
824
1,112
1,336
3,366
22,0653,558
5,000
23,227
331
691
2,139
736
35,68548,5193,684
5,000
15,747
332
702
2,339
652
28,45950,524

Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity

472
634
30,630(88)
31,648472
634
32,090(892)
32,304

Accumulated other comprehensive income
Net unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-Controlling Interests
Total net assets
Total liabilities and net assets

(28)
190
(2)
158
31,80780,327

(58)
376
(3)
313
1,610
34,22884,752

Fixed liabilities
Bonds
Convertible bonds with stock acquisition rights
Long-term debt
Net defined benefit liability
Provision for directors’ retirement benefits
Asset retirement obligations
Other
Total fixed liabilities
Total liabilities

14(2) Consolidated Statements of Income and Comprehensive Income
Consolidated Statements of Income(millions of yen)
Year ended
Year ended
December 31, 2015 December 31, 2016
AmountAmount
53,80455,365Net sales
Cost of sales
35,75638,12518,047
17,240Gross profit
12,655
13,724
Selling, general and administrative expenses
5,392
3,515
Operating income
Non-operating income
Interest income
81
46
Dividend income
5929
Gain on sales of marketable securities
43
Gain on investments in silent partnership
130
158
Gain on redemption of investment securities
122
Real estate rental income
21
152
Other
81
102
Total non-operating income
418
611
Non-operating expenses
Interest expenses
228
240
Loss on valuation of derivatives
56
58
Foreign exchange loss
51
143
Other
42
86
Total non-operating expenses
379
527
5,431
3,598
Ordinary income
Extraordinary income
Gain on sales of fixed assets
1
1
Reversal gains of provisions for directors’ retirement benefits
14
Reversal gains of provisions for shop closing expenses
4
Total extraordinary income
1
20
Extraordinary loss
Loss on sales of fixed assets
30
0Loss on disposal of fixed assets
47
60
Loss on sales of investment securities
130
Shop closing expenses
27
3
Impairment loss
37
Loss on liquidation of subsidiaries/affiliates
18
Provision of allowance for loss on shop closing
13
Others5
Total extraordinary loss
141
232
5,291
3,386
Profit before income taxes
1,874
1,585
Income taxes - current
(463)
(146)
Income taxes - deferred

15

Total income taxes
Profit for the period
Profit (loss) attributable to non-controlling interests
Profit (loss) attributable to owners of the parent

16

1,411
3,880
3,880

1,439
1,946
(5)
1,951

Consolidated Statements of Comprehensive Income

Profit for the period
Other comprehensive income
Net unrealized gain on available-for-sale securities
Deferred gain (loss) on derivatives under hedge
accounting
Foreign currency translation adjustments
Remeasurements of defined benefit plan
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners of theparentComprehensive income attributable to non-controllinginterests

17

Year ended
December 31, 2015
Amount3,880(millions of yen)
Year ended
December 31, 2016
Amount
1,946

(196)

(30)

(7)

-

(92)
0
(295)
3,585

278
(0)
247
2,194

3,585

2,106

-

87

(3) Consolidated Statements of Changes in Net Assets
Year ended December 31, 2015 (January 1 to December 31, 2015)(millions of yen)
Shareholders’ equity

Balance at beginning of term

Capital stock

Capital surplus

472

634

Retainedearnings

Treasury stock

27,238Changes during term
Cash dividends
Profit attributable to owners of
the parent
Purchase of treasury stock

(88)

Total
shareholders’equity28,256

(488)

(488)

3,880

3,880

Change in scope of
consolidation
Net changes in items otherthan shareholder's equity
Total changes during term

-

-

3,392

-

3,392

Balance at end of term

472

634

30,630(88)

31,648Net unrealized
gain onavailable-for-salesecurities
Balance at beginning of
term

167

Accumulated other comprehensive income
Deferred gain
(loss) on
Foreign currency Remeasurements
derivatives
translationof defined benefit
under hedge
adjustments
plans
accounting
7

282

(3)

Total
accumulated
othercomprehensive
income454

Total net
assets

28,710Changes during term
(488)

Cash dividends
Profit attributable toowners of the parent
Purchase of treasury

3,880
-

stock
Change in scope of-

consolidation
Net changes in items
other than

(196)

(7)

(92)

0

(295)

(295)

Total changes during term

(196)

(7)

(92)

0

(295)

3,097

Balance at end of term

(28)

-

190

(2)

158

31,807

shareholder's equity

18

Year ended December 31, 2016 (January 1 to December 31, 2016)(millions of yen)
Shareholders’ equity

Balance at beginning of term

Capital stock

Capital surplus

472

634

Retainedearnings

Treasury stock

30,630Changes during term
Cash dividends
Profit attributable to owners of
the parent
Purchase of treasury stock

(88)

Total
shareholders’equity31,648

(486)

(486)

1,951

1,951
(804)

Change in scope of

(804)

(5)

consolidation(5)

Net changes in items otherthan shareholder's equity
Total changes during term

-

-

1,460

(804)

655

Balance at end of term

472

634

32,090(892)

32,304

Accumulated other comprehensive income

Balance at beginning ofterm

Net unrealized
gain onavailable-for-salesecurities

Foreign currencytranslation
adjustments

Remeasurementsof defined
benefit plans

Total
accumulated
othercomprehensive
incomeNon-controllinginterests

(28)

190

(2)

158

-

Total net
assets31,807

Changes during term
(486)

Cash dividends
Profit attributable toowners of the parent
Purchase of treasury

1,951
(804)

stock
Change in scope of(5)

consolidation
Net changes in items
other than

(30)

185

(0)

154

1,610

1,765

Total changes during term

(30)

185

(0)

154

1,610

2,420

Balance at end of term

(58)

376

(3)

313

1,610

34,228shareholder's equity

19(4) Consolidated Statements of Cash flows(millions of yen)
Year ended
Year ended
December 31, 2015 December 31, 2016
AmountCash flows from operating activities
Profit before income taxes
Depreciation and amortization
Amortization of goodwill
Amortization of bond issuance costs
Loss on disposal of tangible assets(Gain) loss on sales of fixed assets(Gain) loss on valuation of derivatives(Gain) loss on redemption of investment securities(Gain) loss on sales of investment securities(Gain) loss on investments in silent partnership
Foreign exchange (gain) loss
Impairment loss

Amount

5,291
2,763
291
20
47
28
56
(130)
(22)
-

3,386
3,349
266
21
60
(1)
58
(122)
130
(158)
136
37

Increase (decrease) in allowance for doubtful receivables

89

Increase (decrease) in net defined benefit liability
Increase (decrease) in provision for directors’ retirement
benefits
Increase (decrease) in provision for point card certificates
Loss on liquidation of subsidiaries and affiliates
Shop closing expenses
Interest and dividend income
Interest expenses(Gain) loss on sales of marketable securities(Increase) decrease in notes and accounts receivable trade(Increase) decrease in inventories
Increase (decrease) in notes and accounts payable - trade(Increase) decrease in other assets
Increase (decrease) in advances received
Increase (decrease) in accrued consumption taxes
Increase (decrease) in other liabilities
Other- net
Sub totalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities

25

(0)

9

11

(18)
18
27
(141)
228
(43)

3
(75)
240
-

(11)

(96)

(82)
(68)
(8)
(53)
(582)
43
239
7,940
129
(229)
(2,153)
5,686

(18)
107
40
206
592
176
255
8,618
67
(240)
(1,885)
6,559

20

Year ended
Year ended
December 31, 2015 December 31, 2016
AmountCash flows from investing activities
Proceeds from sales of marketable securities
Purchase of tangible assets
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Proceeds from redemption of investment securities
Repayment of contributions from the silent partnership
Payments for asset retirement obligations
Additional purchase of subsidiaries’ shares
Loans receivableCollection of loans receivable
Lease and guarantee deposits
Collection of lease and guarantee deposits
Payments of construction assistance fund receivables
Other- net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from long-term debt
Repayments of long-term debt
Proceeds from issuance of bonds
Payments for redemption of bonds
Purchase of treasury stock
Proceeds from stock issuance to non-controlling interests
Purchase of subsidiaries’ shares without change in thescope of consolidation
Dividends paid to shareholders
Other – net
Net cash provided by (used in) financing activities
Foreign currency translation adjustments on cash andcash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Increase in cash and cash equivalents fromnewly consolidated subsidiary
Cash and cash equivalents, end of period

21

Amount209(11,645)
(66)
(702)
177
(21)
(24)
(7)
9
(991)
230
(53)
(12,887)(12,619)
(169)
(300)
793
436
430
(159)
52
(635)
271
(50)
(402)
(12,352)

10,700(2,654)
990
(824)
-

5,733
(2,982)
977
(774)
(807)
1,505

-

(24)

(487)
(11)
7,712

(486)
(9)
3,131

(2)

(71)

509
17,354(2,733)
17,863-249

17,863

15,380(5) Notes to the Financial Statements(Note on the Going-concern Assumption)
Not applicable(Basis for Preparation of Consolidated Financial Statements)
1. Scope of consolidation(1) Number of consolidated subsidiaries: 14
Name of consolidated subsidiaries:
Best Bridal Inc.
Best Planning Inc.
Best Bridal Hawaii, Inc.
Acqua Grazie, Inc.
Best Bridal Korea Inc.
PT. Tirtha Bridal
Best Hospitality Network Corporation
Best Global, Inc.
Ecpark Pte. Ltd.
BEST HERBS, Inc.
RAJA Co., Ltd.
BEST HOSPITALITY LLC
Best Resort LLC
BT KALAKAUA, LLC
Among the above-listed subsidiaries, Best Resort LLC and BT KAKAKAUA, LLC have increased theirimportance in the group in the fiscal year under review, and have consequently been added to thescope of consolidation.
FAJA Co., Ltd. has been renamed to BEST HERBS, Inc. during the fiscal year under review.
(2) Name of principal non-consolidated subsidiaries:
Non-consolidated subsidiaries
Life Create Bank, Inc.
West Foods Co., Ltd.
(Reason for excluding these subsidiaries from consolidation)
These subsidiaries have been excluded from consolidation, because they are all small in size with their
total assets, net sales, net income/loss for the year ended December 31, 2016 (amounts proportionate
to the Company’s equity interest),and retained earnings (amount proportionate to the Company’s
equity interest) bearing no significant impact on the Company’s consolidated financial statements.
2. Application of equity method(1) Number of equity method affiliates:
Not applicable22(2) The equity method is not applied to some non-consolidated subsidiaries (Life Create Bank, Inc. andWest Foods Co., Ltd.) and an affiliate (Marizin Inc.), because they are of minor importance in terms of
the bearing of net income/loss (amounts proportionate to the Company’s equity interest) and retained
earnings (amount proportionate to the Company’s equity interest) on the consolidated financial
statements for the fiscal year ended December 31, 2016, and in terms of their position within the whole
Tsukada Global Holdings Group.
3. Accounting period of consolidated subsidiaries
Consolidated subsidiaries have the same accounting period as the parent company.
4. Accounting standards(1) Valuation standards and methodologies of principal assets
1) Securities
Available-for-sale securities:
For which market quotations are available:
These securities are recorded at fair value based on market quotations, etc. on the consolidatedbalance sheet date. (Unrealized holding gains and losses are recorded as a net amount in net assets
accordingly. The cost of securities sold is calculated with the moving average method.)
For which market quotations are not readily available:
Calculated using the moving average cost method.
With respect to investments in silent partnership, the Company uses a method whereby it records the
net amount of the percentage interest held based on the most recent statement of accounts that theCompany is able to obtain as of the day stipulated in the partnership agreement on which the latest
statement of accounts is reported.
2) Derivatives
Recorded at fair value.
3) Inventory
Merchandise:
Cost determined by identified cost method (The balance sheet amounts are calculated by way of writedown of book value to reflect reduced profitability).
Raw materials and supplies:
Cost determined by last purchase cost method (The balance sheet amounts are calculated by way ofwrite-down of book value to reflect reduced profitability).
(2) Depreciation/amortization of material depreciable/amortizable assets
1) Tangible assets (excluding lease assets)
Declining balance method
However, some consolidated subsidiaries employ the straight-line method, and those buildings(excluding leasehold improvements) acquired on or after April 1, 1998, are depreciated with thestraight-line method.
Buildings and structures held by the Company on leased land based on fixed term land leaseagreements are depreciated by the straight-line method over the period equal to the remaining periodof the fixed term land lease right with a residual value of nil.
2) Intangible assets (excluding lease assets)
Straight-line method

23

Software obtained for internal use is amortized over its estimated useful life (five years).
3) Lease assets
The straight-line method is used with the lease period as the useful life and a residual value of nil.
Leased assets under finance leases other than those that transfer the ownership of the leased assets
to the lessee and which constitute lease transactions entered into on or before December 31, 2008,
are accounted for in the same manner as operating leases.
(3) Accounting standards for principal reserves and allowances
1) Allowance for doubtful receivables
To cover possible losses from bad debts, the Company records an allowance for doubtful receivables in
the uncollectible amount estimated based on historical default rates for general receivables and basedon analysis of debtors’ financial positions for specific doubtful receivables.
2) Provision for directors’ retirement benefits
To prepare for the payment of directors’ retirement benefits, the necessary amount is charged based on
year-end provision calculated using the in-house regulations.
(4) Accounting method for employees’ retirement benefits
1) Method for attributing projected retirement benefits
In calculating retirement benefit obligations, the benefit formula basis has been used for attributing
projected retirement benefits to the period till the end of the fiscal year ended December 31, 2016.
2) Use of simplified valuation method
In preparation for the future disbursement of the retirement benefit obligations for the employees, theCompany and some of its consolidated subsidiaries use the simplified valuation method based on the
projected benefit obligations at the end of the fiscal year ended December 31, 2016.
(5) Standards for translating significant assets or liabilities denominated in foreign currencies into JapaneseyenForeign currency denominated claims and obligations are translated into Japanese yen at the spot rate
prevailing on the consolidated balance sheet dates. Currency translation losses or gains are recordedon the income statement as such. The assets and liabilities of foreign subsidiaries are also translated
into Japanese yen at the spot rate prevailing on the consolidated balance sheet date, and revenues
and expenses are translated into Japanese yen at the average rate over the period. Any translation
losses or gains are recorded in the net assets under the account “Foreign currency translation
adjustments.”(6) Accounting for significant hedges
1) Hedge accounting
Deferred hedge accounting is applied. The company applies special treatment to interest-rate swap
agreements that meet the criteria for such special treatment.
2) Hedging instruments and hedged transactions
Hedging instruments:
Interest rate swap, currency swap
Hedged transactions:
Foreign currency-denominated claims and obligations, debts
3) Hedging policy

24

The Company uses derivative transactions for the purpose of hedging foreign exchange risks andinterest rate risks to meet the Company’s actual needs. It is the Company's policy not to engage inderivative transactions for speculative purposes.
4) Method for evaluating effectiveness of hedges
The effectiveness of hedges is assessed by measuring the high correlation between changes in market
values or cash flows of hedge instruments and changes in market values or cash flows of the hedged
items.
(7) Amortization method and period for goodwill
Goodwill is equally amortized over the period of the future economic benefits for each investment.
(8) Scope of cash and cash equivalents in the consolidated statements of cash flows
Cash on hand, bank deposits able to be withdrawn on demand, and short-term investments withmaturities of three months or less at the date of acquisition and that are readily convertible to cash andrepresent a minor risk of fluctuation in value.
(9) Other important matters for preparation of consolidated financial statements
Consumption taxes:
Transactions are recorded exclusive of consumption taxes.
(Changes in Accounting Policy)(Application of Accounting Standard for Business Combinations, etc.)
Effective from the consolidated financial year ended December 31, 2016, “Accounting Standard forBusiness Combinations” (ASBJ Statement No. 21 of September 13, 2013), “Accounting Standard forConsolidated Financial Statements” (ASBJ Statement No. 22 of September 13, 2013), and “AccountingStandard for Business Divestiture” (ASBJ Statement No.7 of September 13, 2013), etc. have been applied.
As a result, differences caused by change in the Company’s equity in the subsidiaries and affiliates with
controlling interests shall now be adjusted in its capital surplus, and acquisition-related expenses shall now
be changed to be reported as expenses incurred during the consolidated financial year in which said
acquisition takes place. Furthermore, as to business combinations taking place since the beginning of
the financial year ended December 31, 2016 and onwards, finalization and restatement of the provisional
accounting treatment of the amount of the acquisition cost allocation shall now be changed to be reflectedin the relevant consolidated financial year, where the date of said business combination actually falls.
Additionally, the presentation has been changed in the net profit for the period, etc. and also from minority
interests to non-controlling interests. For the sake of reflecting these changes in the said presentation,
restatement has been made in the consolidated financial statements for the preceding financial year ended
December 31, 2015.
In the consolidated statements of cash flows for the financial year ended December 31, 2016, the cash
flow related to purchase or sales of subsidiaries’ shares without change in the scope of consolidation, isstated in the section of “cash flows from financing activities,” while the expenses incurred from the purchaseor sales of subsidiaries’ shares without change in the scope of consolidation, is reported in the section of“cash flows from operating activities.”
The implementation of Accounting Standard for Business Combinations and its related standards is subject
to the transitional treatments stipulated in the provisions of Article 58-2 (4) of Accounting Standard for25

Business Combinations, Article 44-5 (4) of Accounting Standard for Consolidated Financial Statements
and of Article 57-4 (4) of Accounting Standard for Business Divestitures, and has been and will be under
way since the beginning of the financial year ended December 31, 2016, and going forward.
The effect of these changes on the consolidated financial statements for the financial year ended
December 31, 2016, is immaterial.
(Application of Practical Solution on a Change in Depreciation Method due to Tax Reform 2016)
In accordance with the revision to the Corporation Tax Act, the Company and its domestic consolidated
subsidiaries have applied the “Practical Solution on a Change in Depreciation Method due to Tax Reform
2016” (ASBJ Practical Issues Task Force No.32 of June 17, 2016), effective from the financial year ended
December 31, 2016, and have changed the depreciation method for facilities attached to buildings andstructures acquired on and after April 1, 2016, from the declining balance method to the straight line method.
The effect of this change on the consolidated financial statements for the financial year ended December
31, 2016, is immaterial.

26

(Segment and Other Information)
Segment Information
1. Overview of reportable segment
The Company Group’s reportable segments are components of the Group about which separate financial
information is available. These segments are subject to periodic examinations to enable the Company’sboard of directors to decide how to allocate resources and assess performance.
The Group’s operations are classified into three reportable segments: the “Wedding business” thatprovides services such as planning and operation related to wedding ceremonies and banquets in Japanand overseas, the “Hotel business” that offers the management of hotel weddings and provision of hotel
accommodation services, and the “W&R business” segment that provides reflexology services andmanagement of spa complex.
“Wedding business” comprises outlet management in Japan and sales to customers, provision of foodand drinks at wedding banquets, dress rental and beauty care services, as well as management of venues
and operations for weddings and banquet in Hawaii and Bali Indonesia, mainly for customers who bookthrough the Group’s sales salons in Japan. The segment also subleases wedding facilities to an affiliate inSouth Korea. “Hotel business” offers the management of hotel weddings and provision of hotel
accommodation services at Hotel InterContinental Tokyo Bay, The Strings by InterContinental Tokyo, Sir
Winston Hotel, and The Strings Hotel Nagoya. “W&R business” operates, at 48 outlets across Japan, aBritish-style reflexology salon, “Queensway” with a high level of skills and sophisticated know-how ofattending to customers.
The Group’s classification of reportable segments used to consist of 4 reportable segments, i.e.
“Domestic wedding business,” “Hotel business,” “Overseas business,” and “W&R business.” Effective fromthe financial year ended December 31, 2016, however, these 4 segments have been reclassified into the 3
segments of “Wedding business,” “Hotel business,” and “W&R business,” having combined the “Domestic
wedding business” with the “Overseas business” into the segment of “Wedding business.” This is in linewith the change in the Group’s organizational structure, aiming at a further growth of wedding business in
the global markets.
The segment information for the preceding consolidated financial year has been restated accordingly,
reflecting this segment change.
2. Calculation of net sales, income/loss, assets, liabilities, and other items by reportable segment
Accounting methods applied in the reportable business segments largely correspond to those presented
under “Basis for Preparation of Consolidated Financial Statements.”
Reportable segment income is based on operating income.
Intersegment sales or transfers are based on market price.

27

3. Net sales, income/loss, assets, liabilities, and other items by reportable segment
Year ended December 31, 2015 (January 1 to December 31, 2015)(millions of yen)

Reportable segment
Amountrecorded on

WeddingbusinessHotelbusiness

W&R
business

Total

Adjustments

consolidated(note 1)

financialstatements(note 2)

Net sales
Sales to outside
customers
Inter-segment sales
and transfers

37,071

13,7782,954

53,804-53,804

931

321

-

1,252

(1,252)-

Total

38,002

14,0992,954

55,056(1,252)53,804

Segment income

6,342

488

110

6,941

(1,549)5,392

Segment assets

32,54625,005

4,003

61,555

18,77280,327

2,092
24

542
128

79
138

2,714
291

49
-

2,763
291

1,271

12,256637

14,16578

14,243

Other items
Depreciation/amortization
Amortization of goodwill
Increase(decrease) intangible and intangible
assets
Notes: 1. Details of adjustments are as follows:(1) The minus 1,549 million yen adjustment for segment income includes 20 million yen elimination of inter-segment
sales and minus 1,569 million yen of unallocated corporate expenses. The main component of these unallocatedcorporate expenses is SG&A expenses that are not attributable to reportable segments.
(2) The 18,772 million yen adjustment for segment assets comprises unallocated corporate assets. Unallocatedcorporate assets consist mainly of cash and deposits held by the Company which are not attributable to reportablesegments.
(3) The 49 million yen adjustment for depreciation/amortization comprises depreciation/amortization for unallocatedcorporate assets.
(4) The 78 million yen adjustment for increase in tangible and intangible assets comprises investments in unallocatedcorporate assets.
2. Segment income is adjusted to correspond with operating income reported on the consolidated statements of income
for the corresponding period.

28

Year ended December 31, 2016 (January 1 to December 31, 2016)(millions of yen)

Reportable segment
Amountrecorded on

WeddingbusinessHotelbusiness

W&R
business

Total

Adjustments

consolidated(note 1)

financialstatements(note 2)

Net sales
Sales to outside
customers
Inter-segment sales
and transfers

34,783

17,5683,013

55,365-55,365

1,254

431

0

1,686

(1,686)-

Total

36,03817,9993,014

57,052(1,686)55,365

Segment income (loss)

5,259

762

(473)

5,548

(2,033)

3,515

Segment assets

32,774

24,816

5,993

63,584

21,16884,752

1,734
-

1,290
128

278
138

3,303
266

45
-

3,349
266

2,360

1,489

2,539

6,389

5,440

11,830

Other items
Depreciation/amortization
Amortization of goodwill
Increase(decrease) intangible and intangible
assets
Notes: 1. Details of adjustments are as follows:(1) The minus 2,033 million yen adjustment for segment income or loss includes 5 million yen elimination of intersegment sales and minus 2,038 million yen of unallocated corporate expenses. The main component of these
unallocated corporate expenses is SG&A expenses that are not attributable to reportable segments.
(2) The 21,168 million yen adjustment for segment assets comprises unallocated corporate assets. Unallocatedcorporate assets consist mainly of cash and deposits held by the Company which are not attributable to reportablesegments.
(3) The 45 million yen adjustment for depreciation/amortization comprises depreciation/amortization for unallocatedcorporate assets.
(4) The 5,440 million yen adjustment for increase in tangible and intangible assets comprises investments in unallocatedcorporate assets.
2. Segment income or segment loss is adjusted to correspond with operating income reported on the consolidated
statements of income for the corresponding period.

29

(Per Share Information)
Year ended December 31, 2015
Year ended December 31, 2016
Net assets per share
651.42 yen Net assets per share
683.81 yen
Profit for the period per share
79.48 yen Profit for the period per share
40.37 yen
Diluted profit per share
70.95 yen Diluted profit per share
36.00 yen
Note: Calculation base for profit for the period per share and for diluted profit per share is as follows:Year ended
December 31, 2015

Year ended
December 31, 2016

3,880

1,951

-

-

3,880

1,951

48,828,466

48,347,959--

5,868,544

5,868,544[5,868,544][5,868,544]--

Profit for the period per share
Profit attributable to owners of the parent(millions of yen)Amount not attributable to common
stockholders (millions of yen)
Profit attributable to common stocks ofowners of the parent (millions of yen)
Average number of shares outstanding
during the term (shares)
Diluted profit per share
Adjustment to profit attributable to owners of
the parent (millions of yen)
Increase in the number of common stock(shares)[Of which convertible bond with stockacquisition rights (shares)]
Residual securities that are not dilutive and notincluded in the calculation for diluted profit per
share(Significant Subsequent Events)
Not applicable30

5. Other Information(1) Changes in Officers
Not applicable(2) Weddings Held, Orders Received, and Sales volume
1) Number of weddings held
Year ended December 31, 2015

Year ended December 31, 2016

Number of weddings held (cases)
12,253

Number of weddings held (cases)
11,401

Hotel business

1,271

1,799

Total

13,524

13,200

Segment
Wedding businessNote: Classification of reportable segments has been changed effective from the fiscal year ended
December 31, 2016. The figures for the previous fiscal year ended December 31, 2015, have been readjusted
to the new reportable segments.

2) Wedding orders received
Year ended December 31, 2015
Segment

Orders received

Order backlog

Year ended December 31, 2016
Orders received

Order backlog

Wedding business(cases)
11,587(cases)6,016(cases)
11,532(cases)6,147

Hotel business

1,688

1,242

1,845

1,288

Total

13,275

7,258

13,377

7,435

Note: Classification of reportable segments has been changed effective from the fiscal year ended
December 31, 2016. The figures for the previous fiscal year ended December 31, 2015, have been readjusted
to the new reportable segments.

3) Sales volume
Year ended December 31, 2015

Year ended December 31, 2016

million yen

million yen

Segment
Wedding business

37,071

34,783

Hotel business

13,77817,568

W&R business

2,954

3,013

Total

53,80455,365

Notes: 1. Classification of reportable segments has been changed effective from the fiscal year ended December 31,
2016. The figures for the previous fiscal year ended December 31, 2015, have been readjusted to the
new reportable segments.
2. Inter-segment transactions have been eliminated from the amounts shown above.
3. The above amounts do not include consumption tax.

31