As we navigate an increasingly complex and competitive landscape, the imperative for PHC Group to persistently invest in both internal and external programs for fueling growth, as well as in our human capital, cannot be overstated.

Growth is the lifeblood of our organization. It is not merely about expanding our market footprint or enhancing profitability; it is about continually evolving to meet the ever-changing needs of the healthcare sector. By investing in internal programs, we continue to strengthen our core competencies, drive innovation, and maintain or strengthen our competitive edge. This includes enhancing our technological capabilities, improving our operational and structural efficiencies, and continually advancing our product offerings.

Simultaneously, external programs open doors to new opportunities for PHC Group. They allow us to forge strategic partnerships, expand into new markets, and gain valuable insights into emerging trends and consumer needs. Such investments ensure we are not just participants but leaders in the healthcare industry, shaping its future direction.

However, the cornerstone of our growth strategy is a focus on our people, who are our most valuable asset. Investing in human capital is investing in the future of PHC Group. This means not only attracting top talent but also nurturing and retaining it. Through continuous learning and development programs, we can empower our employees, fostering an environment of innovation, creativity, and excellence. By doing so, we ensure that our team is not only equipped to meet the challenges of today but is also prepared to seize the opportunities of tomorrow.

Our commitment to human capital also reflects our values as an organization. By supporting our employees' growth, we build a culture of trust and respect, enhancing our reputation as an employer of choice and positively impacting our overall organizational performance.

The dual strategy of investing in growth-driving programs and human capital is not just a business imperative; it's a commitment to our future. As we continue on this journey, we should embrace these investments with the conviction that they are pivotal to our enduring success and the betterment of the healthcare landscape.

I will use my expertise and experience in strategic insights, leadership, ESG, risk management and governance to help PHC’s efforts in improving its sustainability, governance, and overall success, ensuring its long-term viability and positive impact on society.

PHC Groupʻs revenue is well-balanced and diversified, with 55% of our revenue coming from markets outside of Japan and over 30% coming from each of our three business segments. This business composition is the result of a series of significant M&A activities both in Japan and globally over the past eight years.

PHC Group has a corporate culture of setting high goals and constantly embracing challenges. Under the Mid-Term Plan, or VCP, we are forecasting operating cash flow of 200 to 250 billion yen from FY2022 to FY2025. Of this cash flow, we plan to allocate 100 to 130 billion yen to business investments, including M&A. During the process of formulating the VCP, many independent external directors raised numerous points regarding changes in the business environment and future risks, and we incorporated these insights into the plan.

PHC Group carefully considers each investment. At board meetings, there are very lively discussions about investment projects. While the passion and aspirations of executives is conveyed at these meetings, there are also many incisive opinions from external directors to help ensure that plans are achievable. It is not uncommon for agenda items to be carried over to the next board meeting, whereupon the items are revisited by executives, the investment plan is reinforced, and then discussed again at the next board meeting. There is a high degree of uncertainty in today’s business environment. Even after extensive discussion and careful consideration, business results may fall short of business plans due to environmental changes which were impossible to predict at the time of making investment decisions. If we determine that recovery to the original plan cannot be expected even after analyzing causes and devising improvement measures, we maintain a high degree of discipline in writing off impairment losses.

PHC Group’s most important task is to steadily implement our VCP and use business investment to generate profits that exceed the cost of capital. We believe that steadily accumulating profits and creating a corporate structure that is capable of continuous profit increases will create confidence in our future growth.

I encourage all stakeholders to support PHC Groupʻs robust management efforts, centered on our corporate philosophy and medium- to long-term management strategy.

(Integrated Report 2023)