TOSHIBA TEC CORPORATION

Among major distribution and retail companies, the weighting of investment toward contactless checkout equipment such as self-checkout systems and toward software and services is increasing, while the priority given to investment in conventional hardware POS is trending lower. Intensifying competition with independent software makers and major solution vendors may affect sales of the Company's products. As a countermeasure, the Company aims to improve profitability through, among other things, expanding sales of the global retail platform "ELERA".

There is a risk that the downward trend in demand in the office domain, which is a core business area, will continue due to changes in working styles since the COVID-19 pandemic. If a decline in demand materializes, profitability in this business could deteriorate due to a decrease in unit sales of MFPs (Multi-Function Printers) and a decline in maintenance service revenue, among other factors. Specific countermeasures are described in the Management Policy and Issues to be Addressed section.

The Company is actively pursuing new business and new product development utilizing advanced electronics technology and systems/software technology, but new technology development, including compliance with environmental protection regulations in each country, involves many uncertain factors. Should unforeseen matters arise, this may affect the business results of the Group.

As the Company conducts business globally, changes in the political and economic situation in each region, various regulations, and sharp fluctuations in exchange rates may affect business results. In particular, in FY2026 (ending March 2026), cost increases are expected due to rising crude oil and petroleum-derived raw material prices stemming from heightened tensions in the Middle East, as well as rising semiconductor prices driven by the expansion of AI-related investment. The Company is working to mitigate these effects through measures such as optimizing selling prices and reviewing its supply chain structure.

As the Company has sales and service, and production and procurement bases globally, the occurrence of large-scale disasters, terrorism, infectious diseases, and the like in each region may affect business results. The Company strives to minimize the impact of such risks when they occur by establishing business continuity plans (BCPs) and other measures.

To ensure a stable supply of products and secure cost competitiveness, the Company has built a regionally diversified production structure across Japan, Singapore, Indonesia, and other locations; however, exchange rate impacts and geopolitical issues such as conflicts may affect business results. The Company prepares for such risks by continuously reviewing its global production structure from every perspective.

Although the Company has established verification systems for quality and safety across all departments, including design, parts procurement, manufacturing, testing, and inspection, unforeseen quality issues may arise in the series of processes of development, manufacturing, and maintenance services due to the growing scope of system/software support and the increasing sophistication of product functions. If a quality issue occurs, it may affect the business results of the Group.

The Company is working to thoroughly enforce compliance through measures such as establishing the "Group Code of Conduct" and setting up a "Risk and Compliance Committee"; however, internal control systems have certain inherent limitations and do not completely guarantee the achievement of their objectives. Should a violation of laws or regulations occur in the future, it may have a significant impact on the business results of the Group.

Cyberattacks are becoming more sophisticated and elaborate, including ransomware attacks, unauthorized use of IDs and passwords, and attacks originating from business partners or outsourcing contractors. While the Company is working to strengthen monitoring of information systems and address vulnerabilities, there remains a risk of information leakage due to unknown vulnerabilities or new attack methods. Should an information leak occur, in addition to the impact on business results from substantial costs and a decline in corporate trust, business activities could also be disrupted due to the suspension of information system functions.

Retirement benefit obligations are calculated with reference to the yield on high-quality corporate bonds, and if bond yields fall below the current level, this may affect business results. In addition, if the investment performance of pension assets deteriorates, this may affect business results and financial condition. Since October 2015, the Company has been progressively enrolling domestic Group companies in the Toshiba Group Defined Contribution Pension Plan to diversify risk.