Dialogue with Outside Directors

Q1: How do you evaluate the progress of the Long-Term Vision 2028?

Miwa：
In fiscal 2023, the final year of the 2023 Medium-Term Management Plan, we achieved record-high figures for both net sales and operating income. This performance alone may suggest that we are well on our way to achieving our long-term vision, but we cannot afford to become complacent. Upon reviewing our initiatives under the 2023 Medium-Term Management Plan, several key issues have emerged.

The biggest issue of all is the profitability of our overseas business. Although the operating income finally recovered by the end of fiscal 2023, it previously experienced significant temporary declines due to COVID-19 and cyber incidents.

A closer examination of our overseas business reveals that intangible assets have significantly increased due to our aggressive M&A strategy. Along with this, amortization of goodwill has increased, highlighting the need to generate substantial returns from acquired assets moving forward. In other words, the key to increasing profitability is to maximize synergies with companies we have acquired and with which we have capital and business alliances.

Uchida：
As Mr. Miwa mentioned, with the transition from the 2023 Medium-Term Management Plan to the 2026 Medium-Term Management Plan, the issues that need to be addressed have become significantly clearer. The Company's strategic approach to M&As deserves commendation. However, further innovation is required to translate this strategy into tangible profits. We are still in the process of developing and nurturing new businesses, which have yet to reach their full growth potential.

When it comes to synergies, post-merger integration (PMI) is paramount. We need to leverage synergies as a truly global company, transcending the boundaries between overseas and domestic operations.

On the other hand, our core businesses are robust, as demonstrated by the record-high results achieved in fiscal 2023. Looking ahead, our key focus will be to drive innovation for the future while maintaining and building on our strong business foundation.

Iki：
Although there are still many issues to address, our achievement of the targets set forth in the 2023 Medium-Term Management Plan is highly praiseworthy. Despite challenging business conditions, including COVID-19 and the semiconductor shortage, we strategically pursued M&As and effectively addressed the issuance of new Japanese banknotes, a project of national significance.

Uchida：
On a positive note, the F&B market is emerging as a promising new sector, and the direction for Glory to take is giving shape. I get the impression that Glory has clearly embraced a Groupwide approach to doing business globally.

Iki：
I also appreciate that a new pillar is emerging to complement our established presence in the retail and financial markets. We have also started work on connecting these businesses cross-laterally under common software platforms. I am very excited to see our steady progress in building the capabilities necessary to achieve our long-term vision.

Miwa：
Under the Long-Term Vision 2028, we have set a target of ¥500 billion in annual net sales by fiscal 2028. Although it is a challenging goal, I believe it is achievable if we can effectively address the issues that have been discussed.

Q2: What kind of discussions did the Board of Directors have when formulating the 2026 Medium-Term Management Plan?

Miwa：
When formulating the new plan, the Board of Directors had various discussions. I think the biggest point of all was the need to initiate a change in mindset. Many people, particularly outside directors, have suggested that we need to reset our business approach, which has been predominantly Japan-centered. Instead, we should adopt a broader global perspective and focus on nurturing businesses with promising future potential. I believe we have made good progress with these efforts to date, but we are now aiming to accelerate them further. In our new medium-term management plan, centered on the concept of “transformation,” accelerating the globalization of both our business divisions and our corporate divisions is an urgent priority.

Uchida：
From a financial perspective, transformation will involve shifting from Glory's previous sales-oriented mindset, which focused on generating revenue through sales. Instead, we need to spend money in the right areas to ensure a solid return. In other words, we should focus on enhancing our earning power and making our business more ROIC-conscious.

Looking at our business from this perspective, the traditional distinction between overseas and domestic markets is no longer necessary. This is where a global perspective becomes important, as Mr. Miwa mentioned. In formulating the 2026 Medium-Term Management Plan, we engaged in discussions with several key questions in mind: How will each business generate returns? What technologies are most beneficial at present? And what kind of human resources should we develop?

Iki：
As I mentioned earlier, I was focused on how we can effectively integrate our DX and software platforms across the three markets of retail, financial, and F&B.

Miwa：
One key DX issue is the cash handling machine business, which is central to our business in the financial market. By making these machines IoT-compatible and connecting them to a common software platform, we can propose a variety of solutions.

We must promote these innovations globally, transcending lines between overseas and domestic markets. In the F&B market, for instance, we are establishing a global business with Acrelec as the foundational driver. We should take up the same challenge in the retail and financial markets. Thanks to our M&As and other activities, I believe the key pieces are now falling into place. As outlined in the 2026 Medium-Term Management Plan, we need to integrate these pieces effectively to maximize our profits.

Iki：
Another key aspect of the new medium-term management plan that I would like to emphasize is our human resource strategy. Whether in business or technology, the key to tackling new challenges in new areas is to attract and develop the talent responsible for driving these initiatives. In April 2024, we overhauled our personnel and educational systems to help young employees tackle challenges with enthusiasm. With an environment for fostering employee growth now in place, we have high expectations for their future success.

Q3: What role did the Nomination Advisory Committee play in the selection process of the new President?

Iki：
The three of us present today took part in the nomination of the new president as members of the Nomination Advisory Committee. I was the chair of the Committee, and we began discussions on candidates for the new president in the second half of fiscal 2021. We deliberated and narrowed down the list of candidates in two stages though a total of 11 interviews, a process that took about two years. Ultimately, the Committee endorsed the proposal to appoint Akihiro Harada as the new president in January 2024. He was officially selected by resolution of the Board of Directors in February.

Miwa：
Let me just add a little bit. The Committee had proposed that all candidates be subject to multifaceted and objective internal evaluations before being presented to the Committee for consultation. We agreed to the proposal and followed this process.

The timing of the presidential transition aligned with the commencement of the new 2026 Medium-Term Management Plan. In fiscal 2023, we saw a V-shaped recovery take gradual hold, driven by increased demand related to the issuance of new Japanese banknotes. However, business environment were changing dramatically, with F&B and other new markets emerging, together with an accelerated shift to a “less-cash society” and advances in digitalization. Therefore, we concluded that initiating the transition in fiscal 2024 would be optimal.

Uchida：
As Mr. Miwa said, I believe there was a shared understanding among the members of the Nomination Advisory Committee that Glory was at a significant turning point. To achieve further growth in the future, Glory must undertake a transformation on a global scale. It seems to me that the selection process was aimed at identifying people who could drive these changes and provide effective leadership.

Iki：
To add my own perspective to what you both have said, I also recognized the importance of having a sense of urgency regarding the current situation Glory is facing. I believed that instilling a sense of urgency would naturally foster strong leadership and accelerate the pace of change.

Q4: Could you discuss your expectations and the challenges you foresee for Glory's growth in relation to the Long-Term Vision 2028 and beyond?

Uchida：
To embrace the challenge of transformation in the future, it is crucial for Glory to drive change on the “front lines” of its business. The key is to shift the mindset of employees on the front lines so they are motivated about tackling new business and technology challenges. To achieve this, it is essential that executives and all levels of management not only advocate for change but also actively collaborate with employees to implement it.

The way our organization is structured will also naturally change. It seems to me that until now, Glory has operated with a hierarchical culture typical of manufacturers. However, we must now transition to a flatter organizational structure to keep pace with digitization and the expansion of software platforms. We need to evolve into an organization where diverse teams collaborate in a flat structure to stimulate each other's growth.

It is often said that three layers of competition are crucial within a company: competition among management, among teams, and among people on the front lines. Among these layers, I would like to see us build a strong and innovative organization capable of excelling in team competition on the global stage. I hope that every employee will adopt a positive mindset and recognize that “Glory is a good company” and help us evolve into a cohesive corporate group.

Iki：
As previously discussed, I believe that Glory's future vision of integrating its three business markets–retail, finance, and F&B–with a software platform has been broadly outlined. Going forward, it is crucial that we implement further changes and clearly define the outlines of those changes.

There are certainly many issues that remain to be addressed. These include human resource development and organizational reforms mentioned by Mr. Uchida and globalization of our corporate divisions as pointed out by Mr. Miwa. We also need to strengthen our software platforms and shift to solution-oriented maintenance services. However, if we implement effective transformation under the 2026 Medium-Term Management Plan, we can anticipate substantial growth in the future. I am very excited about Glory's future.

Uchida：
Looking at the past few years from the perspective of management transformation, I feel that the Board of Directors has become more diverse and balanced, with an increase in female directors and the appointment of a foreign (British) outside director. I anticipate that the effectiveness of the Board will be further enhanced through substantial discussions leveraging the expertise, knowledge, and experience of each director.

Miwa：
As the Chairman of the Board, I plan to leave business execution primarily to the president and other directors, while I concentrate on corporate governance and risk management. As part of our governance reforms, in fiscal 2024 we revamped the executive officer system and reduced the number of officers to create a flatter organization, as mentioned earlier. We are also changing our compensation system to one that is more performance-linked. To shift the mindset of employees, management must first lead by example and drive the change.

Another area I want to focus on is the mindset of our employees in Japan, who number approximately 5,000 people across the Glory Group. I am slightly concerned that as we advance with global transformation, we may tend to focus more on overseas operations, potentially leading to domestic employees feeling neglected. I aim to create an environment where all Glory Group employees can thrive and no one is left behind.