Rigaku Holdings Corporation

Securing capable personnel to support technology development and business growth is a critical issue for business continuity, assessed as "high" in likelihood of occurrence and "high" in impact. If personnel attrition or delays in training plans occur, this could hinder new technology development and the succession of existing skills, adversely affecting business results. While the Group is actively pursuing new graduate and mid-career hiring and has established tiered training programs, this is recognized as a risk that may materialize within the next one to three years.

As of the end of December 2025, Atom Investment, L.P., under Carlyle, held 42.08% of issued shares, giving rise to potential conflicts of interest between the major shareholder and minority shareholders. In addition, if the major shareholder sells its shares, this could affect share price formation and business operations. The Group addresses this through a governance structure with four independent outside directors, three outside auditors, and a majority of independent outside directors on the Nomination and Compensation Committee, but the risk is assessed as "high" in likelihood of occurrence and "high" in impact.

If customer information, personal information, or confidential information is leaked due to cyberattacks or unauthorized access, this could result in substantial response costs and damage to the Group's social credibility, adversely affecting business results (impact: "high"). The Group addresses this through governance by the Information Security Committee, security education for all employees, and regular phishing email tests, and aims to obtain ISO27001 certification in the future. However, the Group recognizes that complete defense against cyberattacks exceeding expectations is difficult.

If quality defects or safety concerns arise in X-ray equipment, which are sophisticated analytical and inspection devices, this could lead to a decline in brand strength and damage to customer trust, as well as substantial costs from damages claims, litigation expenses, and customer compensation (impact: "high"). The Quality Assurance Department and Production Division have established KPIs and a system for weekly reporting to management on initial defects at customer sites and internal defects, but ensuring safety, including prevention of X-ray leakage, remains an extremely important issue requiring continuous management.

As of December 31, 2025, total borrowings were ¥55,556 million (62.8% of total equity of ¥88,396 million), the majority of which relates to the LBO loan agreement with Carlyle. This agreement includes financial covenants prohibiting two consecutive years of consolidated ordinary loss and requiring consolidated net assets to be maintained at 75% or more of the prior fiscal year's actual results; breach of these covenants could trigger a demand for lump-sum repayment. Additionally, all interest-bearing debt carries a floating interest rate, exposing the Group to interest rate risk, part of which is hedged using interest rate swaps.

As of the end of December 2025, goodwill stood at ¥51,876 million (28.0% of total assets), a substantial amount, and an impairment loss would be recognized if the future cash flows of the underlying business fall below the valuation at the time of acquisition. No impairment loss was recognized in FY2025, but if the business outlook deteriorates, a significant impairment loss or additional amortization expense could arise, materially affecting the financial condition. The Group conducts impairment testing every period and has a policy of taking immediate turnaround measures for businesses whose profitability deteriorates.

Tightened U.S.-China export controls (related to AI and semiconductors) and the major tariff review by the new U.S. administration inaugurated in January 2025 are affecting the Group's procurement, sales, and logistics operations. Compounded by China's tightened export controls on dual-use items to Japan, the risk of supply chain disruption is increasing. Currently, the Group is seeking to mitigate the impact through pass-through to export sales prices and coordination with local subsidiaries and distributors, but given the high uncertainty of policy trends, adverse effects on business results and financial condition may continue.

Following the October 2025 revision of Japan's export control system, which strengthened supplementary export controls (catch-all controls), and given the risk of regulatory changes in various countries related to national security, competition policy, anti-corruption, and taxation (likelihood of occurrence: "high"), no material business impact has occurred to date, including with respect to export controls on China, but unexpected new regulations or changes could restrict part of the Group's business operations. The Trade Control Department addresses this through due diligence, regular internal training, and audits by specialized departments.

Key raw materials, including rare metals, can only be procured from a limited number of suppliers, and if supply shortages occur, the Group cannot avoid incurring costs from purchasing higher-priced market goods or making design changes (likelihood of occurrence: "high"). The Group has established a policy of prioritizing component allocation to profitable businesses and products, but if long-term supply shortages or sharp price increases exceeding expectations occur, this could adversely affect business results and financial condition. While the Group diversifies risk through multi-vendor procurement, some items remain dependent on specific suppliers.

Under China's radiation safety permit system, there is a risk that customers and distributors could be subject to fines and sanctions, as well as a risk of restrictions on sales activities in China, regarding model-changed equipment determined not to be covered by exemption certifications obtained under distributor names (likelihood of occurrence: "high"). The Group recorded a provision of ¥218 million in FY2024 (fiscal year ended December 2024), but reduced this to ¥40 million in FY2025 (fiscal year ended December 2025) reflecting progress on countermeasures such as replacement of already-delivered products. Going forward, the Group plans to transition to obtaining exemption certifications under the name of its China local subsidiary, thereby reducing reliance on distributors.