No.1 Co.,Ltd

The medium-term management plan "Evolution2027" announced in April 2024 sets forth four key strategies: "Reinforcement of Management and Business Foundations," "Aggressive Investment in Business Domain Expansion," "Stabilization of Revenue Structure," and "Promotion of Sustainability Management and Human Capital Management." However, if risk events are not identified or significant delays occur in progress, this may affect business results and financial condition. As countermeasures, the Company dispatches officers from the parent company to subsidiaries, conducts quarterly reporting of risk status, and continuously monitors performance and KPI progress at group strategy meetings.

Securing, developing, and retaining human resources capable of responding to rapid technological innovation and new product development is considered the most critical issue. Amid intensifying competition for talent due to the declining domestic working population, if outflow of current employees, decline in employee engagement, or labor disputes occur, this may affect the business, business results, and financial condition. As countermeasures, the Company is improving treatment levels, including reviewing salaries for younger employees, introducing an allowance for employees on unaccompanied relocation, and a scholarship repayment support program, as well as promoting female managers, conducting workplace environment surveys, and establishing a dedicated human resource development department.

When making capital investments, system investments, M&A, and other investments aimed at business expansion, it is difficult to accurately forecast the future business of investment targets. If the profitability of an investment target deteriorates or its corporate value is significantly impaired, this may affect business results and financial condition through impairment of goodwill recorded through M&A, among other effects. In September 2024, the Company established an Investment Committee as an advisory body to the Representative Director, and continuously reviews the business portfolio, assesses risks related to the recovery of invested capital, and verifies synergy effects.

Lease sales, which accounted for 42.5% of consolidated net sales in the fiscal year ended February 2025, represent a major sales format. If leasing companies change their management policies or judgment criteria, this may affect the Group's business, business results, and financial condition. As countermeasures, the Company is working to reduce this risk through diversification of sales methods via web marketing, enhancement of the product lineup, and diversification of the revenue structure through No.1 Business Support.

MFPs, the Company's mainstay product accounting for approximately 30% of sales share, face a shrinking market due to office consolidation resulting from increased telework, lengthening replacement cycles, and paperless initiatives. If sales do not proceed as planned, this may affect business results and financial condition. Under the medium-term management plan "Evolution2027," the Company aims to reduce its dependence on MFPs by expanding new products and services and broadening its customer base.

If the supply of parts and components is halted due to deterioration in the business condition of suppliers or disasters, or if the prices of purchased parts rise sharply, this may affect business results and financial condition. In addition, inadequate response to ESG-related issues may adversely affect the Company's social reputation. As countermeasures, the Company maintains stable procurement through close cooperation with suppliers, continuously monitors the production status of components at the design stage, increases inventory levels of parts in preparation for emergencies, and considers securing alternative products.

The Company holds a large amount of corporate information in the course of its business operations. If information is leaked due to human or technical error, unauthorized access, cyberattacks, or other causes, this may affect the business, business results, and financial condition through claims for damages or loss of social credibility. The Company has obtained ISO27001 (ISMS certification), established an Information Security Committee, developed internal regulations, and continuously strengthens employee training, management of outsourcing partners, and technical countermeasures.

The Company conducts order-receiving and order-placing operations via internet lines and provides and maintains websites and email services for customers. If systems are disrupted due to natural disasters, system failures, cyberattacks, or other causes, this may affect the business, business results, and financial condition through opportunity losses, refunds, damages claims, or loss of social credibility. The Company has installed nearly all servers in data centers and has established a centralized management system through security verification by external specialized organizations and the Information Security Committee.

As the Group's business rapidly expands with the increasing number of subsidiaries, appropriately developing, building, and operating group internal controls is considered a management issue. If the development of internal controls fails to keep pace, this may hinder appropriate business operations and affect the business, business results, and financial condition. As countermeasures, the Company has parent company officers concurrently serve as officers of subsidiaries, conducts regular monitoring of the entire Group through the Risk Compliance Committee, and performs quarterly risk assessments at subsidiaries' boards of directors.

Litigation or other claims may be brought against the Company due to illegal acts or disputes involving business partners or customers, infringement of third-party rights, or damages arising from system failures, and depending on the content and amount claimed, this may affect the business, business results, and financial condition. The Company complies with legal regulations such as the Act against Unjustifiable Premiums and Misleading Representations, the Act on the Prevention of Delay in Payment of Subcontract Proceeds to Subcontractors, and the Telecommunications Business Act, and has strengthened its legal department and cooperation with law firms, establishing a centralized management system through the Risk Compliance Committee.