Power Solutions, Ltd.

The main customers of DX Promotion & DX Consulting Services are concentrated among financial institutions engaged in the asset management business, and if a financial crisis on the scale of the Lehman Shock or large-scale mergers and consolidations among financial institutions were to occur, business performance could be significantly affected. The Company is advancing the rollout of SaaS-based DX services to a broad range of industries outside financial institutions, but there is no guarantee that customer development will proceed as planned.

In FY2025 (ending December 2025), sales dependence on the Nomura Group stood at a high level of 37.8% (led by Nomura Asset Management at 22.0%, among several group companies). If orders from the group decrease significantly or order terms deteriorate, this could have a material impact on business performance and financial position. As a countermeasure, the Company is promoting sales expansion to financial institutions outside the Nomura Group as well as to industries other than financial institutions.

Given the nature of the business, which involves handling confidential information and personal data of financial institution clients, an information leakage caused by unforeseen circumstances could lead to a loss of social trust and suspension of transactions with business partners, potentially having a material impact on business performance. The Company addresses this through strict operation of information security rules and standards, and continuous education, training, and awareness activities for all officers and employees.

Director Narinobu Sato, the founder (22.30% including holdings through an asset management company), and Executive Officer Hiroyuki Kaneko (20.76%), constitute stable shareholders holding approximately 43% of total shares issued. If the ownership ratio of these two individuals declines in the future, this could affect the stock's market price and the exercise of voting rights.

Customer companies have existing relationships with SI vendors, which may result in competition with the Company's group. In addition, in-house system development by customers themselves is a factor reducing business opportunities. If order decreases or deterioration of order terms occur due to improved service capabilities of competitors or customers, this could affect business performance; the Company addresses this through differentiation via expanded SaaS-based customer success and value-added proposals.

Computer hardware and software functionality is improving daily, and there is a possibility that the Company's group may not be able to immediately adapt to newly introduced systems at customers. Insufficient acquisition of relevant technology could lead to lost orders for new projects or deterioration in project profitability. The Company addresses this through training provided by its in-house university and by strengthening technology acquisition in priority areas such as RPA, SaaS solutions, and low-code.

If the recruitment, retention, and development of excellent personnel do not proceed as planned, or if outflow of personnel to outside the company occurs, this could constrain business expansion and lead to a decline in the quality and competitiveness of services provided. In addition, difficulty in securing personnel at outsourced business partners carries the risk of rising outsourcing unit costs and incurring upfront expenses. The Company addresses this through use of recruitment media, improvement of the working environment, and establishment of evaluation and compensation systems to reduce turnover, along with enhanced in-house education.

IT investment by domestic financial institutions, the Company's main customers, remains solid, supported by the government's "from savings to asset formation" policy; however, if IT investment is significantly suppressed due to worsening domestic and overseas economic conditions, this could affect business performance. The Company addresses this through diversified service development, including the promotion of SaaS integration.

The Company operates its business in compliance with relevant laws and regulations such as the Worker Dispatching Act, but if a violation of legal obligations occurs due to deficiencies in operations or other causes, this could affect business performance through a loss of social trust, among other effects. The Company addresses this through education for all officers and employees, holding of the Risk and Compliance Committee, and thorough internal management and operation based on compliance regulations.

Goodwill and intangible assets arising from business combinations are recorded on the consolidated balance sheet, and if expected cash flows fail to materialize due to divergence from future business plans or other factors, this could affect financial position and business results. The Company addresses this through detailed due diligence conducted in advance, deliberation on the appropriateness of acquisition prices at the Board of Directors, and regular monitoring after acquisitions.