Y.A.C. HOLDINGS CO., LTD.

In November 2025, a ransomware infection resulting from unauthorized external access occurred at consolidated subsidiary YAC Gurter Co., Ltd., temporarily rendering data within key production management systems and related file servers unusable. In particular, in the Carrier Tape for Electronic Component Transport business, related data and supporting documents were encrypted, resulting in a situation where manual aggregation had to be incorporated into the manufacturing cost calculation process. As recurrence prevention measures, the company is reviewing access management and backup management and strengthening cybersecurity monitoring systems across the group.

In the Environment & Social Infrastructure-Related Business, equipment is sold mainly to LCD panel manufacturers in China, under a structure in which 70% to 90% of the contract amount is collected after delivery, with the remaining balance collected after completion of on-site installation adjustments. There is a risk that collection of the remaining balance may be delayed due to business customs of business partners or delays in equipment acceptance inspection, which could affect business results and financial condition. As countermeasures, the company monitors collection status at monthly meetings and conducts direct on-site negotiations by sales personnel.

Sales to China and the Asia region account for approximately 22% of total sales, and changes in the political, economic, and social conditions of these regions, changes in various regulations, and exchange rate fluctuations directly affect business results. Given the large-scale transactions with LCD panel manufacturers in China, the company's structure is susceptible to geopolitical risks and the impact of tightened export regulations. Specific disclosure of risk diversification measures is limited, and this remains a risk requiring continued monitoring.

Additional costs may arise due to order cancellations resulting from changes in customers' capital expenditure plans, or due to defects occurring in the manufacturing process of new development projects or specially specified equipment, potentially leading to an increase in the provision for losses on orders received. Because manufacturing is commenced based on preliminary notifications or purchase orders, the risk of loss upon cancellation is significant. The company periodically reviews total estimated costs, but responding to customer-driven changes can be difficult.

Takefumi Momose, Representative Director, Chairman and President, has played a central role in determining management policy and business strategy and in driving business operations since the company's founding in 1973. If he becomes unable to perform his duties, this could have a significant impact on business results and operations. Although the company is working to reduce this dependence through measures such as adopting an executive officer system, the transition is still in progress. Progress on succession planning is an important point of attention for investors.

In the equipment manufacturing fields in which the group operates, technological progress is rapid, and delays in product development or insufficient responsiveness to changing customer needs could lead to a decline in competitiveness. Although the company continually strives to develop cutting-edge products, there is a risk that if the results of development investment fail to meet market introduction timing, business results could be adversely affected. This is also linked to new business risk, as technological failures could lead to additional costs.

The company utilizes M&A to accelerate business growth, but if previously unrecognized issues come to light after execution, or if the expected business synergies are not achieved, this could adversely affect business results. Although the company considers market trends, the target's financial condition, technological advantages, and risk analysis before conducting M&A, post-acquisition integration risk (PMI) cannot be completely eliminated. There is also a latent risk of goodwill impairment.

If raw material and component prices rise, requests from suppliers for price increases may intensify, and the resulting increase in manufacturing costs could put pressure on business results. The Procurement Division, among others, negotiates prices with suppliers to reduce procurement costs, but there are limits to this response amid global supply chain disruptions or sharp increases in resource prices. Given the nature of the equipment manufacturing business, delays in component procurement can also affect production schedules.

If it becomes difficult to continuously secure excellent personnel, this could affect business results over the medium to long term, and in particular, a shortage of technical personnel would directly lead to a decline in product development capability. The company implements training measures such as training by hierarchical level and job type, assignment of OJT leaders, and encouragement of qualification acquisition, but intensifying competition in the labor market may continue to make hiring difficult. Since human resource development requires a certain amount of time, this is a risk that is difficult to address in the short term.

If decarbonization policies are strengthened or laws and regulations related to carbon dioxide emissions are revised or newly enacted at an unexpectedly rapid pace, response-related expenditures may increase. In addition, if the quantity or quality of the company's climate change response or human capital disclosure is judged to be insufficient, the company may be exposed to the risk of reduced investment by institutional investors or reduced transactions from customers. Delays in ESG response could also lead to an increase in the cost of capital.