TAKANO CO.,Ltd.

The Housing & Living-related Equipment business accounted for 54.0% of consolidated net sales in FY2026 (ending March 2026), of which sales to KOKUYO Co., Ltd. alone accounted for 43.3%. Contract termination by the customer, changes in procurement policy, price reduction demands, and other such actions could have a material adverse effect on the Group's financial position and operating results. The business structure is significantly affected by customer-side factors that the Group cannot control.

Semiconductor inspection and measurement systems, the core products of the Inspection & Measurement Equipment business (25.5% of net sales in FY2026, ending March 2026), account for approximately 40% of that business's sales to semiconductor manufacturers in Japan, Taiwan, and the United States, and performance is significantly affected by capital expenditure trends in the industry. Capital expenditure in the semiconductor manufacturing industry is subject to market conditions and prone to large fluctuations in demand; a sharper-than-expected decline could have a material adverse effect on the Group's financial position and operating results. The Group strives to forecast demand fluctuations through information gathering and analysis and to build a production structure that reduces reliance on fixed costs, but there are limits to such measures.

The Housing & Living-related Equipment business sources approximately 40% of its purchases overseas, mainly through transactions denominated in US dollars and other foreign currencies from Asian countries centered on China, and the proportion of foreign currency-denominated transactions and overseas procurement is expected to continue increasing. Exchange rate fluctuations beyond expectations could affect operating results; the Group seeks to mitigate this risk through forward exchange contracts and other means as necessary, but complete hedging is difficult. In addition, country risks such as changes in laws and regulations, political turmoil, terrorism, and war in the countries of supply sources could also adversely affect the Group's financial position and operating results.

The Inspection & Measurement Equipment business belongs to the advanced technology field, where superiority or inferiority in technology determines business activities. The Group seeks to incorporate advanced technologies through R&D activities, but there is no guarantee that R&D will necessarily translate into business results, and falling behind in technological innovation could have a material adverse effect on operating results. In addition, because the Inspection & Measurement Equipment business does not actively pursue patent applications, there is also a risk that other companies may acquire related patents or that third parties may bring lawsuits alleging infringement of intellectual property rights.

The Group operates a wide range of businesses, including Office Chairs, chairs for welfare and medical facilities, inspection and measurement systems, industrial equipment, and Exterior Products, which may hinder business growth through concentration of management resources. Furthermore, there is no guarantee that ongoing new business development efforts will necessarily lead to commercialization, and if the outcome of concentrated management resources fails to bear fruit, this could adversely affect the Group's financial position and operating results. While this policy is intended to avoid the risk of relying on a single business, it also inherently carries the drawback of resource dispersion.

Part of the Group's business depends on specific executives and capable engineers, and securing and developing capable engineers as well as experienced sales and administrative staff will be an important challenge for future business growth. If the Group is unable to secure and develop the necessary personnel, or if a large number of excellent personnel leave the company, business activities could be constrained, adversely affecting future growth, financial position, and operating results. The business structure's high degree of dependence on specific personnel constitutes a vulnerability.

As the importance of information systems increases, the Group strives to maintain its information systems, manage important data, and control security, but there is no guarantee that disruptions to communication networks, outages of core information systems, or leakage of internal information will not occur. If such events occur, they could result in damages from the inability to use information systems, loss of credibility, and claims for damages under contracts, potentially affecting operating results.

The Group's main business sites are concentrated mainly in southern Nagano Prefecture, an area designated as a region for promoting disaster prevention measures against a Nankai Trough earthquake, with a maximum expected seismic intensity of 6-upper. In the event of a major earthquake, production activities could be temporarily halted and production facilities could be significantly affected. The Group has taken measures such as formulating business continuity plans, but there are limits to such countermeasures. The geographic concentration of the Group's main business sites constitutes a vulnerability in terms of business continuity.

The Group holds securities for investment purposes and makes capital investments in companies as necessary for its business development, and may continue to do so going forward. If stock prices decline significantly or the performance of investee companies deteriorates significantly, valuation losses on investment securities could occur, adversely affecting the Group's financial position and operating results.

The Group outsources part of its product manufacturing to external parties. While the principle is to conduct important processes in-house and to distribute orders among multiple contractors, in some cases important processes are outsourced externally or orders are continuously placed with a single specific contractor. If a specific external contractor becomes unable to continue its business, this could disrupt the production and sale of products, and damages from supply delays, claims for compensation, and loss of credibility could adversely affect operating results.