Message from an Outside Director

For many years, I worked as a securities analyst at foreign securities firms, engaging in corporate analysis, investment strategy, and other areas. I am now an independent finance and IR specialist and also serve as an outside director and auditor at several Japanese companies, giving me extensive involvement in corporate governance. One particularly valuable experience was serving as an outside corporate auditor at a restaurant company. Given the nature of its food-related business, I was involved not only in ensuring compliance with stringent safety standards but also in carefully examining its restaurant opening strategy based on rigorous risk-return analysis.
Although I have extensive business experience in Japan, I am originally from the United States and have built my career in an internationally diverse environment. I therefore make a conscious effort to offer different perspectives by drawing on my global outlook, experience as a securities analyst, and expertise in finance and IR. I also consistently emphasize discussions grounded in objective and rational market analysis and decision-making criteria, as well as transparent processes. I see my role as helping to further improve the quality of corporate governance from the perspectives of diversity, expertise, and objectivity.

I had long associated Sanwa with shutters and doors and had encountered Group products in many settings. I previously viewed it primarily as a leading company in Japan, but when I became Outside Director, I learned that overseas sales account for more than half of total sales and that foreign investors also hold a high proportion of its shares. This deepened my recognition of the Company as a global enterprise. It has placed particular emphasis on its overseas M&A strategy. On a personal level, I was surprised to discover that Genie,^* a brand familiar to me from my youth in the United States, was part of the Group, and this made me feel a closer connection to Sanwa.
In assessing the Company, I see its key strengths as its thorough commitment to quality and service and its successful globalization through overseas M&A. Its globally diversified risk profile is particularly valuable amid a highly uncertain business environment. The Company's high PBR can be attributed to its strong capital efficiency, as indicated by ROE and ROIC, and its ability to generate earnings globally. For overseas investors in particular, whether a Japanese company can address the maturation of its domestic market is an important consideration.
I also see considerable social value in the Company's strategy of developing products that help solve social issues, including disaster preparedness, safety, and environmental challenges. When I visited the Ota Door Plant in Gunma Prefecture, the main production site for lightweight doors, I toured the on-site testing center and witnessed rigorous safety assessments and quality tests covering fire resistance, wind pressure resistance, waterproofing, and other performance criteria. With the response to torrential rain, flooding, and other natural disasters intensified by climate change becoming an urgent social issue, the Company's development and provision of distinctive disaster-preparedness products have a major impact on society while enhancing the competitiveness and brand strength of its products. It is exciting simply to consider the solutions that the Company could create in the field of access systems by also leveraging AI and digital technologies.
Meanwhile, as uncertainty rises worldwide, current performance appears to have reached something of a plateau compared with the past three years, when the Company had repeatedly achieved record results. Nevertheless, the Global Vision is progressing smoothly overall, and solid performance in the domestic market continues to provide support. This can also be viewed as evidence that the benefits of diversification are taking effect.

• Genie is a brand of the door operator business of ODC in the United States.

I also view Sanwa's highly open corporate culture, which encourages candid communication, very positively. Having observed the management of many companies, I believe this is a common characteristic of growing companies.
I also believe that governance over management is functioning effectively. Outside Directors account for half of the Board of Directors, while the Audit & Supervisory Committee and the Nomination & Compensation Committee are both chaired by Outside Directors, ensuring sufficient independence and transparency. Meetings allow for open and lively discussion, and the support provided to Outside Directors is also comprehensive. What matters particularly to me is whether the environment facilitates communication and whether the information required for high-quality discussions is available. I am very satisfied on both counts.

As Japan faces population decline and labor shortages, I see addressing these issues as one of Sanwa's highest priorities. The Company must identify the challenges shared by nearly all Japanese companies in such areas as personnel systems, compensation structures, and productivity, and consider whether fundamental reforms are required. Given Japan's shrinking population, I also believe it is increasingly important for Sanwa to focus on new business opportunities in overseas markets. Developing and securing global and DX talent will be essential to achieving Sanwa's goal of becoming a global leader of smart entrance solutions.
The Company is also pursuing an aggressive growth investment strategy that includes M&A. Increasing the speed and precision of these investments and maximizing post-investment performance will be crucial to its future growth. At the same time, growing global uncertainty and expansion into emerging markets make it necessary to further strengthen global governance and risk management. The Company must pursue both growth and safeguards simultaneously. I believe that stronger communication with overseas subsidiaries that have joined the Group through M&A will benefit not only governance but also the business itself. In addition to pursuing synergies, the Company has much to learn from their knowledge and expertise, and such communication should also have a positive effect on identifying and developing talent.
I believe there remains considerable room to strengthen the Company's brand. Its brand strength does not yet fully reflect the quality and functionality of its products, suggesting that substantial potential could be unlocked through more compelling brand storytelling and stronger communications. In that regard, further expanding English-language communications, including IR communications for overseas investors, is another priority for strengthening engagement with overseas investors.
As the Company looks ahead to its 80th anniversary and then its 100th, I believe the direction of the Global Vision is highly rational and achievable. The key to future success will be to respond flexibly to rapidly changing market trends while preserving the values the Company has long upheld, including its commitment to quality and service and its determination to address social issues.

My first year in office involved the occasional bout of trial and error as I found my footing. As my understanding deepened, however, the areas requiring oversight and advice became clearer. Because proactive global expansion and growth investment are central to the Company's strategy, I recognize the importance of the role I must fulfill.
I will continue to promote discussions based on objective and rational market analysis and investment decisions while closely monitoring progress in the areas I have identified as priorities, including human capital and investment strategy, collaboration with overseas subsidiaries, and global governance. Drawing on my experience and expertise, I also intend to offer proposals from a range of perspectives to strengthen product and solution development, which will drive future value creation, and enhance the Company's brand. By continuing to leverage my individual strengths, I am committed to helping improve corporate value and meeting the expectations of stakeholders.