Amendments to prior-period earnings releases and quarterly earnings releases, securities reports, semi-annual reports and internal control reports
Power Supply Technology Co., Ltd. (PST) and TKR Co., Ltd. (a consolidated subsidiary of the Company)
Products manufactured and sold by PST from 2015 to 2018 for specific customers, and inventory procured by TKR for the production of products for specific customers
At PST, the issues resulted from the combined effect of Mr. X's postponement of organizing and deciding the issues relating to the recognition of provisions, the concentration of authority and information in certain officers, insufficient capacity within the accounting and finance division to review accounting treatments, insufficient information transfer to the Board of Directors and insufficiently timely and appropriate provision of information to the audit firm. At TKR, matters concerning the recoverability of inventory and the recognition of valuation losses were not shared with the Company's accounting and finance division and Board of Directors in a timely and sufficient manner.
Company response
On 23 January 2026, the Company resolved to establish a special investigation committee comprising external experts. The chair is Matsubara Yuka (松原由佳), an attorney at ひふみ総合法律事務所, and the members are Wada Yoshiyuki (和田芳幸) and Takagi Akira (高木明), both certified public accountants at 株式会社KIC. The investigation period was from 23 January 2026 to 13 March 2026.
① Introduce a CxO structure, deliberate important management decisions at management meetings, and provide compliance training on accounting fraud. ② Have the Company's accounting and finance division review the minutes and materials of important meetings of subsidiaries, hold regular liaison meetings between the Company's accounting and finance division and the accounting personnel of major subsidiaries, establish an Accounting Issues Review Meeting (provisional name), and strengthen resources in the accounting and finance division. ③ Review the standards for submitting matters to and reporting matters to the boards of directors of subsidiaries, the standards for reporting from subsidiaries to the Company's Board of Directors, and the executive structures of subsidiaries. ④ Share with the audit firm the issues discussed at the Accounting Issues Review Meeting (provisional name), as well as matters involving difficult or uncertain judgments concerning accounting treatments. ⑤ Establish an external whistleblowing channel and re-publicize the whistleblowing channels.
Mr. X has already left his positions with the Company and the Company's group and is not subject to any new internal disciplinary action. Mr. Y voluntarily returned an amount equivalent to 20% of his monthly executive remuneration for 3 months, which the Company accepted. The Company will not seek damages from the parties involved at this time.
The cumulative impact of the amendments on prior-period profit was a reduction of ¥704.623 million, comprising a ¥688.668 million reduction for provisions and other items related to this matter and a ¥15.955 million reduction for the valuation of TKR's inventory for specific customers. By fiscal year, the impact was a reduction of ¥867.574 million in the 39th fiscal period (fiscal year ended March 2024), an increase of ¥148.724 million in the 40th fiscal period (fiscal year ended March 2025), and an increase of ¥14.226 million in the second quarter of the 41st fiscal period (fiscal year ending March 2026). The TKR item was recognized as an inventory valuation loss, while the item related to this matter was recognized as a provision.
The amounts should primarily have been recognized in the fourth quarter of the 39th fiscal period (fiscal year ended March 2024), and the amendments affected the 40th fiscal period (fiscal year ended March 2025) and the second quarter of the 41st fiscal period (fiscal year ending March 2026). TKR's inventory valuation loss should have been recognized in the fiscal year ended March 2024.
From June 2026, the Company will begin the Accounting Issues Review Meeting, regular liaison meetings with major subsidiaries, reviews of materials from important subsidiary meetings, and a review of the standards for reporting to the Board of Directors. It will continue compliance training and re-publicizing the internal whistleblowing channels. The Company will steadily implement the measures to prevent recurrence and ensure the appropriateness of financial reporting and timely disclosure.
| Item | Details |
|---|---|
| Event name | Amendments to prior-period earnings releases and quarterly earnings releases, securities reports, semi-annual reports and internal control reports |
| Date of occurrence | The Company received reports of product defects from January 2018 onward. From an accounting perspective, the requirements for recognizing a provision had been met as of the fourth quarter of the fiscal year ended March 2024. TKR's inventory valuation relates to the fiscal year ended March 2024. |
| Date recognized / date notice received | The date in December 2025 when the Company's representative director received a report from PST's officers and employees during a visit to PST |
| Subject Entity | Power Supply Technology Co., Ltd. (PST) and TKR Co., Ltd. (a consolidated subsidiary of the Company) |
| Target Locations / Products | Products manufactured and sold by PST from 2015 to 2018 for specific customers, and inventory procured by TKR for the production of products for specific customers |
| Cause | At PST, the issues resulted from the combined effect of Mr. X's postponement of organizing and deciding the issues relating to the recognition of provisions, the concentration of authority and information in certain officers, insufficient capacity within the accounting and finance division to review accounting treatments, insufficient information transfer to the Board of Directors and insufficiently timely and appropriate provision of information to the audit firm. At TKR, matters concerning the recoverability of inventory and the recognition of valuation losses were not shared with the Company's accounting and finance division and Board of Directors in a timely and sufficient manner. |
| Amount of Impact on Business Performance | The cumulative impact of the amendments on prior-period profit was a reduction of ¥704.623 million, comprising a ¥688.668 million reduction for provisions and other items related to this matter and a ¥15.955 million reduction for the valuation of TKR's inventory for specific customers. By fiscal year, the impact was a reduction of ¥867.574 million in the 39th fiscal period (fiscal year ended March 2024), an increase of ¥148.724 million in the 40th fiscal period (fiscal year ended March 2025), and an increase of ¥14.226 million in the second quarter of the 41st fiscal period (fiscal year ending March 2026). The TKR item was recognized as an inventory valuation loss, while the item related to this matter was recognized as a provision. |
| Accounting period in which recognized | The amounts should primarily have been recognized in the fourth quarter of the 39th fiscal period (fiscal year ended March 2024), and the amendments affected the 40th fiscal period (fiscal year ended March 2025) and the second quarter of the 41st fiscal period (fiscal year ending March 2026). TKR's inventory valuation loss should have been recognized in the fiscal year ended March 2024. |
| Investigation structure | On 23 January 2026, the Company resolved to establish a special investigation committee comprising external experts. The chair is Matsubara Yuka (松原由佳), an attorney at ひふみ総合法律事務所, and the members are Wada Yoshiyuki (和田芳幸) and Takagi Akira (高木明), both certified public accountants at 株式会社KIC. The investigation period was from 23 January 2026 to 13 March 2026. |
| Measures to prevent recurrence | ① Introduce a CxO structure, deliberate important management decisions at management meetings, and provide compliance training on accounting fraud. ② Have the Company's accounting and finance division review the minutes and materials of important meetings of subsidiaries, hold regular liaison meetings between the Company's accounting and finance division and the accounting personnel of major subsidiaries, establish an Accounting Issues Review Meeting (provisional name), and strengthen resources in the accounting and finance division. ③ Review the standards for submitting matters to and reporting matters to the boards of directors of subsidiaries, the standards for reporting from subsidiaries to the Company's Board of Directors, and the executive structures of subsidiaries. ④ Share with the audit firm the issues discussed at the Accounting Issues Review Meeting (provisional name), as well as matters involving difficult or uncertain judgments concerning accounting treatments. ⑤ Establish an external whistleblowing channel and re-publicize the whistleblowing channels. |
| Directors' and officers' liability | Mr. X has already left his positions with the Company and the Company's group and is not subject to any new internal disciplinary action. Mr. Y voluntarily returned an amount equivalent to 20% of his monthly executive remuneration for 3 months, which the Company accepted. The Company will not seek damages from the parties involved at this time. |
| Outlook | From June 2026, the Company will begin the Accounting Issues Review Meeting, regular liaison meetings with major subsidiaries, reviews of materials from important subsidiary meetings, and a review of the standards for reporting to the Board of Directors. It will continue compliance training and re-publicizing the internal whistleblowing channels. The Company will steadily implement the measures to prevent recurrence and ensure the appropriateness of financial reporting and timely disclosure. |
Items this document does not state (13)
These are items the company does not state in this document. We do not leave them blank, nor fill them in from other sources or by inference.
The reasons the company gives
The company's own explanation, not something inferred from the numbers.At PST, the issues resulted from Mr. X's postponement of decisions regarding the recognition of provisions, the concentration of authority and information in certain officers, insufficient review by the accounting and finance division, insufficient information transfer to the Board of Directors and insufficient provision of information to the audit firm. At TKR, the issues arose because matters concerning the recoverability of inventory and the recognition of valuation losses were not shared with the Company's accounting and finance division and Board of Directors in a timely and sufficient manner.