Fujitsu Stock

[Interpreted]

First of all, I'd like to extend my heartfelt sympathies to everyone affected by the 2026 Kumamoto earthquake that occurred on the 28th of July. The Fujitsu Group will also provide support for the affected areas towards the earliest possible recovery.

Now I'd like to explain the financial results for the first quarter fiscal 2026. This page shows an overview of our financial results for the first quarter fiscal '26. The top half of the slide shows Service Solutions. Revenue for the first quarter was JPY 548.9 billion, up 6.7% year-on-year. Out of this, revenue from Japan business was up 7.5%.

Service Solutions growth was mainly driven by Uvance and the modernization business. The segment got off to a strong start. Adjusted operating profit was JPY 62.8 billion, up JPY 14.9 billion year-on-year, an increase of 31%. In addition to benefit of higher revenue, we also were able to continue making steady progress in improving profitability. This led to adjusted operating profit margin of 11.4%, improvement of 2.1 percentage point. Bottom half shows the overview of the consolidated total results. Revenue JPY 779.3 billion, up 3.9% year-on-year.

Revenue increased in Service Solutions and Hardware Solutions. Ubiquitous Solutions, on the other hand, saw a decline in revenue because of the pullback from the demand for updating Windows software. Adjusted operating profit was JPY 54.9 billion, up JPY 19.7 billion year-on-year, increase of 56%.

In addition to the profit increase in Service Solutions, we also recorded a gain on the sale of assets related to Fujitsu Technology Park. Adjusted operating profit was up margin was 7.0%, up 2.3%. Next page shows the overview of the results of each segment. I will go through the results of each segment in detail. As I mentioned, Service Solutions growth driver continued to record higher revenue and profit. Hardware Solutions revenue increased mainly due to the effect of foreign exchange movement in business in Japan. This was despite the decline in revenue in Japan due to pullback of large volume business deals last year.

Profit declined due to lower profitability resulting from the changes in revenue composition and the slight delay in passing the cost pass-through. Below that, RIKEN Solutions recorded lower revenue and profit because of the absence of the demand from a discontinuation of support for Windows SE. Intersegment elimination and corporate was a significant improvement from the previous year. And this was mainly because of the development of Fujitsu Kawasaki office area.

The next page shows consolidated P&L, the adjusted consolidated results. As I explained already, but there is one point I'd like to mention. In the first quarter of fiscal '25, we recorded a gain of approximately JPY 140 billion from the sale of shares of Shinko Electric and also absence of onetime gain resulted in a significant decline in net profit.

Page 7 on the Service Solutions. I will go over Service Solutions. Revenue was JPY 548.9 billion, up 6.7%. As in the previous year, [indiscernible] and modernization continued to drive growth. Revenue in the Enterprise subsegment was mainly driven by the manufacturing industry, public subsegment saw revenue growth across a wide range of areas, including finance, local government, public rating and the defense. Adjusted operating profit, JPY 62.8 billion, up JPY 14.9 billion. Adjusted operating margin was 11.4%.

Next page shows the factors behind the changes in adjusted operating profit. Page 8 shows the breakdown of the changes since last year in adjusted operating profit for Service Solutions. On the left-hand side, adjusted operating profit for the first quarter '25 was JPY 47.8 billion. And this is a starting point. As you see on the right-hand side, first of all, there are several factors, but the first factor is the profit increase by JPY 9.9 billion from the benefit of higher revenue. This was mainly due to strong revenue growth in Enterprise and public.

The second profit increased by JPY 7.8 billion in profitability improvement. This was a result of the advancement of One Delivery model. And gross margin improved by 1.5 percentage points. Third, profit decreased by JPY 2.8 billion because of the increase in investment and expenses as well as increase in spending on the enhancement of our AI delivery platform.

Combining all these profit increased by JPY 14.9 billion. Adjusted operating profit in the first quarter '26 for Service Solutions was JPY 62.8 billion. As shown on the far right, adjusted profit margin was 11.4%, improvement of 2.1 percentage points.

Now I will give you some additional information about the waterfall chart. First of all, status of orders in Japan. Total orders for the first quarter '26 in Japan were up 10% from year-on-year. Looking at the trends for orders that will contribute to revenue this fiscal year, which we calculated by replacing full order value of large-scale deals spanning several years with the amount delivered over the most recent 1-year period, orders increased by 8%.

First of all, segment basis, enterprise subsegment overall orders were up 1%. Out of this manufacturing industry were up 6% the automotive assembly and chemical fields show strong demand. Growth was mainly driven by digital transformation and modernization projects, but there were increasing number of high value-added projects like AI and orders for sovereign cloud as a next-generation system platform.

On the other hand, orders in distribution and retail fell below year-on-year level due to the pullback from large-scale deals recorded last year. But despite of this, demand and order intake remained strong. There are some unevenness among the order situation, but in both manufacturing and distribution retail industry, we saw strong double-digit growth. And the next public subsegment, overall orders were up 14%. Adjusted full year basis, it was up 11%. Finance industry, the order was down 9%. This is because of the pullback from mission-critical system projects.

In public and health care, up 15% on a full year basis, they were up 14%. Local government standardization projects and the digital transformation initiatives for academic institutions were strong and particularly in the health care and health care digital transformation initiative is the reason. In the mission-critical and national security and others, the orders were up 39%. We won large-scale deal in defense-related sector. We posted double-digit growth last year, but we also exceeded that level this year.

The Page 10 shows the status of Uvance, which is the main driver of the business. The figures on top, fiscal 2026 first quarter order, JPY 193.3 billion, up 51% year-on-year. The Uvance for Finance and Uvance for Retail, which we launched last year and the laid foundation for the strong order situation. And the bar graph below shows the revenue, JPY 192.2 billion for first quarter fiscal '26, up 31%. The factors behind this is mostly the same as the order increase. This pie chart shows the ratio of Uvance revenue in Service Solutions, it increased from 29% to 35%. And our annual plan is shown here, JPY 840 billion, an increase of 18% year-on-year, but we expect further step up in the growth beyond this level.

Page 11 shows modernization, which is another growth pillar. Orders in the first quarter were JPY 1.6 billion, 23% up year-on-year, continuing strong growth trend. Below that, revenue was JPY 94.9 billion, up 29% year-on-year. Right-hand side shows our annual plan. Our revenue target for fiscal '26 is JPY 470 billion, an increase of 20% year-on-year. And we will expand AI-driven modernization to further improve quality and to shorten system migration times, we will leverage these capabilities, not only for our own modernization, but also to expand our modernization business.

Page 12 shows the status of improvements to profitability. Improvements in profitability led to the positive effect of adjusted operating profit increasing by JPY 7.8 billion. The gross margin was 37.2%, an improvement of 1.5 percentage points from the prior year. As shown on the graph, we're making steady progress in achieving sustainable improvements in profitability. There are 3 specific initiatives that have led to this improvement. Through the evolution of our One Delivery model and AI-driven delivery, we are accelerating the standardization, automation of development processes and enhancing value-based pricing. These efforts will enable us to provide services in a way that delivers greater satisfaction for both Fujitsu and our customers.

Among these efforts, AI-driven delivery is a key measure that will significantly contribute to shorter delivery times and improve service quality. So we are accelerating our initiatives in this area. We have already expanded AI utilization across a broad range of areas, and we are now at the stage of deepening its application in individual projects.

To do so, we are expanding AI adoption across departments and have also launched the AI Top Gun project in which we identify large-scale projects with significant potential for productivity improvements and concentrate personnel with advanced AI application skills on those projects to maximize the impact of AI.

Leveraging agentic AI and development will enable us to achieve significant productivity improvements. By applying this expertise to other projects, we can create value with greater speed and at greater scale. The One Delivery model, AI-driven delivery and our pricing strategy are the 3 pillars that will enable us to achieve sustainable profitability improvement. While all 3 areas are essential, AI-driven delivery has the greatest potential, and we are focusing on it as our highest priority initiative.

Page 13 provides an overview of each subsegment in Service Solutions. As previously announced, until FY '25, the subsegments of Service Solutions were divided into regions. We essentially manage these subsegments with a region-centered approach. From FY '26, this has changed to an industry-centered management approach that positions knowledge of industry domains at the core of our competitive advantage.

As a result, these subsegments have now been divided into enterprise and public. We have also changed our management approach to a global industry-centric approach that is not broken up by region. The enterprise subsegment includes such industries such as automotive, manufacturing and distribution retail. The public subsegment includes such industries as government agencies and local government, defense, finance and health care.

Next are the results for each of the subsegments of Service Solutions. First, Enterprise. Revenue in the subsegment was JPY 213 billion, up 7.8% year-on-year. In Japan, there was broad growth in the manufacturing industry, including in the automotive assembly and chemical fields. The positive effects of the integration of BrainPad and GK Software also contributed to the increase in revenue.

In terms of profit, in addition to the effects of higher revenue, progress was also made in profitability improvements. Due to this, adjusted operating profit was JPY 19.3 billion, up 12% year-on-year. Revenue in public was JPY 335.9 billion, up 6% year-on-year. In Japan, revenue grew by 7.5%, and there was growth across nearly all industries, including finance, local government, public racing and defense.

Outside of Japan, revenue was essentially at the same level as the prior year. The increase was primarily due to the effect of foreign exchange movements. In terms of profit, there were the effects of higher revenue along with profitability improvements. Due to this, adjusted operating profit was JPY 43.4 billion, up 42% year-on-year.

Page 14, I will now talk about the other segments besides Service Solutions. First is Hardware Solutions. Revenue was JPY 211.2 billion, up 4.5% year-on-year. There was an adjusted operating loss of JPY 3.7 billion, a deterioration of JPY 5 billion from the prior year. In System Products, revenue increased by 4.7%. The increase in revenue outside of Japan was mainly due to movements in foreign exchange. Revenue in Japan decreased due to pullback from large-scale business deals in the prior year. Although profit outside of Japan increased. There was a decline in profitability in Japan due to changes in revenue composition, including pullback from highly profitable large-scale business deals and a delay in passing the cost increase of memory chips and other components on to customers. These factors resulted in a decrease in profit.

For fluctuations in the cost of components, we have made changes to contracts and able to promptly pass price increase along to customers after new orders are received. There was a portion of past orders in which this mechanism was not implemented, which had a negative impact on results in Japan for the first quarter. This measure is progressing as expected and the negative impact of the first quarter is also expected. We believe that we will catch up in the second quarter onwards with the cost reduction and negative impact is minimal.

Network products saw an increase in revenue mainly from base stations in Japan. However, even though the first quarter results tend to be lower than the other quarters, the level of revenue in the segment was still low. As a result, it posted a loss in the first quarter and only showed slight improvement from the prior year. Both system products and network products are progressing in line with our plan.

Page 15, the top part of the page shows Ubiquitous Solutions. Revenue was down by 28.1%, adjusted operating profit was JPY 4.4 billion, representing a decrease in profit of JPY 3.7 billion year-on-year. This is the result of pullback from the update-related demand and a large volume business deal for a financial institution in the prior year.

On the bottom half of the page, the intersegment elimination corporate and operating loss of JPY 8.6 billion was recorded. This was an improvement from the prior year, represented JPY 13.6 billion reduction in expenses. We're currently making progress on the redevelopment project of Q2 Technology Park project Japan, which is where our headquarters is located. As part of the project, we sold a portion of the land and record gain on its site. Development of such technology as fiscal AI, next-generation CPUs and quantum computers is also progressing according to plan. I will now talk about the status of cash flows and balance sheet.

Page 17, first is cash flows. Excluding onetime inflows and outflows Corp, free cash flow was JPY 217.7 billion. Although there was the inflow from the sale of properties assets that I mentioned earlier, there was also a higher amount of tax payout and bonus payout due to increased profits. Due to this, there was a decrease in inflows of JPY 12.5 billion in the first quarter. Towards the bottom of the table, free cash flow, including onetime inflows or outflow was JPY 214.4 billion, a decrease in inflows of JPY 187.3 billion from the prior year. This is due to the pullback from inflows from the sale of Shinko Electric Industries in the first quarter of FY '25.

Page 18 shows the status of assets, liabilities and equity. Although I will not explain special items, the figures for the end of FY '25 have been revised due to finalization of intangible assets from the allocation of the acquisition costs related to BrainPad Inc., which we acquired last year. More details about this can be found in the consolidated financial results. So please refer to if necessary -- we refer to them if necessary.

This concludes my overview of our first quarter results. The gains and losses in each segment that I shared with you were largely in line with our expectations and the progress made in them aligned with our internal plan. With Service Solutions, in particular, we were able to confirm that the sustainability of growth in demand across each market is as we anticipated. For productivity improvements, we kept up the pace of the optimizations that we have maintained until now, and we're able to make progress in line with our plan.

Of course, the uncertainty around the broader business environment outlook has not changed significantly. So we are trying to take a realistic view. We will continue to closely watch the business environment and make progress toward achieving our plan.

Page 19, I will talk about our financial forecast for FY '26. Page 20 shows our adjusted financial forecast. As I mentioned earlier, the actual results for the first quarter and all future indices are progressing in line with our plan. As such, our revenue forecast remains unchanged. Our full year revenue forecast for FY '26 is the following: Revenue is projected to be JPY 3.510 trillion, an increase of JPY 7 billion. Adjusted operating profit is projected to be JPY 425 billion, an increase of JPY 34.4 billion. Adjusted net profit is projected to be JPY 320 billion, an increase of JPY 21.7 billion. All of these figures remain unchanged. We will continue working hard to ensure to achieve another fiscal year of record high profits.

The figures from Page 21 onwards also remain unchanged from our prior announcement. This page shows adjusted consolidated results, adjusted items and the results part adjustment. This page shows, Page 22, the information by business segments. Page 23 is the breakdown by subsegment. Page 24, our projection for cash flows. All of these figures remain unchanged from our prior announcement.

Lastly, I would like to inform all of you about Fujitsu IR Day 2026. On September 16, we plan to set up an opportunity to explain our growth strategy to achieve the management Vision 2035 we recently announced. During the event, you will be able to speak directly with senior Fujitsu executives. We believe it will be a valuable opportunity to understand Fujitsu's path to sustainable growth. We will share further information regarding the details of the event in a separate announcement. We look forward to seeing you there. This concludes my presentation.

Thank you for waiting, everyone. As it is now the scheduled time, we will begin Fujitsu Limited's briefing on its mid- to long-term management Vision 2035.

Good afternoon. I am Tokita of Fujitsu. Thank you very much for taking the time out of your busy schedules to join us here in our briefing. At our financial results announcement on April 28, I shared an overview of our management vision. But today, I would like to outline the specific initiatives underpinning our mid- to long-term management Vision 2035. I am given 40 minutes. It's a rather long time, but I would like to walk you through our initiatives. I would like to start with the strategic positioning of our Management Vision 2035. I will discuss the creation of new technology-powered business domains and the further evolution of service solutions. I will also cover Fujitsu's transformation, and I will also explain the management indicators following this agenda.

First, I would like to briefly share our thinking as we look ahead to the world of 2035. As you know, today's world faces a wide range of challenges, including geopolitical fragmentation and climate change. The rapid evolution of technologies, including AI, is driving disruptive changes in industrial structures and has the potential to fundamentally reshape existing industry rules and value creation models. Against this backdrop, Fujitsu has established its management Vision 2035, centered on technology-driven value creation and setting our direction towards 2035. We will unlock new markets through trustworthy technology and drive innovation that transforms industries through Customer Zero AI-driven management in which we implement technologies ourselves before providing them to customers. We will provide our customers with practical insights. And together with our many stakeholders, we will help build a safer, more secure and more prosperous world.

This was previously shown during our earnings announcement, and I would like to set out the strategic positioning of our mid- to long-term management vision. Until now, we have worked through 3-year mid-term management plan cycles to achieve our targets. From this fiscal year 2026, however, we have established a 10-year management vision through to fiscal 2035, under which we will set out our strategies and execute them. We believe that AI will spread across all aspects of society and daily life as rules and values evolve through this period, we believe technology will play an even more important role. Against this backdrop, we have positioned the 10 years through fiscal 2035 as a period of technology-driven value creation. We will focus on providing trusted technologies and advancing AI-driven business in order to achieve sustained growth. We have grouped the major impacts that the changes of the next decade will have on our lives into five categories: Society, Environment, Industry, National Security and Technology.

Labor shortages driven by a declining birth rate and an aging population will remain pressing issues, while the importance of securing resources such as water and energy will continue to grow. At the same time, while rapid technological change will bring benefits through higher productivity, growing geopolitical fragmentation and multipolarity will also give rise to new digital threats and forms of conflict. Against this backdrop, we believe trusted technologies can help identify and deliver solutions. Against the backdrop of this situation, our society is now set to face a new wave of challenges. First, the rapid increase in AI utilization will drive a significant rise in electricity demand, while greater reliance on AI and cloud providers will heighten risks to technological sovereignty.

In addition, as the population ages and the labor force shrinks, productivity and industrial competitiveness will come under pressure. In manufacturing, in particular, the loss of know-how and knowledge in addition to lower productivity among skilled workers is already a major concern. At the same time, more frequent and severe natural disasters are causing greater damage across society, while aging populations and fiscal constraints are making societal operations more complex. Fujitsu is developing and delivering solutions to these challenges across three domains. We are building a sovereign platform to provide safe, secure and highly energy-efficient computing infrastructure. We are also advancing physical AI where robots collaborate with people and evolve autonomously. In addition, we are helping to build an intelligent society in which large-scale data sets are analyzed using digital twin technology to optimize societal operations. All three of these new business creation domains will be driven by AI. We will also embed AI across our existing business expansion domains, including services, applications, platforms and modernization to support further growth. By 2035, we expect these new business creation domains to reach a market size of approximately JPY 30 trillion. With the advancement and broader adoption of AI, we expect the AI services market to expand to approximately JPY 200 trillion.

I would now like to explain Fujitsu's strategy and advantages. As the next driver of growth, Fujitsu will pursue technology-driven business creation while further evolving service solutions, which remains our existing core growth pillar. We believe we have three key advantages that will enable us to achieve this. The first is our customer base. Over many years, Fujitsu has supported customers across a wide range of industries, including the public sector through hardware, system integration, maintenance, consulting and other services. We serve everyone from frontline workers to senior executives. Across this broad customer base, our combined end-to-end capabilities from R&D through to service delivery differentiate us and enable us to deliver value where it matters most for our customers. The second is our industry domain expertise. By engaging deeply in our customers' businesses and embedding our accumulated expertise into technology, we support the next stage of our customers' growth. The third is our trusted technology foundation. We continue to advance our world-leading technologies such as the next-generation CPU Fujitsu-MONAKA, enabling us to provide a sophisticated platform that ensures secure technological sovereignty. Amid rising geopolitical tensions and the increasing need for data sovereignty, Fujitsu continues to advance proprietary technologies from Fujitsu-MONAKA to the Fujitsu Kozuchi AI platform and quantum computing across our entire stack. We aim to deliver trusted technologies to our customers while securing technological sovereignty.

On this foundation, we will provide end-to-end solutions to customers through applications powered by industry-specific AI agents as well as through consulting and other professional services. In addition to these strengths, we work with global technology companies to deliver optimal value quickly and to clearly differentiate ourselves from our competitors. Yesterday, we made two announcements regarding partnerships within our AI platform. One of these is regarding the strategic collaboration with Anthropic. The second announcement is about our collaboration with OpenAI. By combining globally leading technologies with Fujitsu's strengths, our deep industry expertise as well as our system integration and operational capabilities, we will continue to deliver differentiated and unique value to our customers.

Next, I will explain our creation of technology for the business. As I mentioned earlier, Fujitsu will generate new business across the three domains of sovereign platform, Physical AI and intelligent society. By 2035, we expect these new business domains to reach a market size of approximately JPY 30 trillion, and we aim to capture a 10% share of that market. First, I will discuss sovereign platform. The core of this domain will be the Fujitsu-MONAKA CPU, which has high performance and high energy efficiency together with our quantum computers. We are leveraging technologies we have cultivated through the development of world-class computers such as the supercomputer Fugaku to develop Fujitsu-MONAKA. We plan to begin offering Fujitsu-MONAKA in 2027. At launch, we expect it to deliver twice the application execution performance and energy efficiency of computing CPUs. We already foresee business opportunities with approximately 30 companies across a range of industries in Japan. Of these prospective customers, we plan to begin verification trials using prototypes with 15 companies, including companies in the financial, communications, maturing and services sectors. We will handle all technology layers of quantum computing from hardware and software through to applications.

In 2026, we will develop a 1,024 qubit quantum computer, which will be installed in a quantum computing facility here at Fujitsu Technology Park. We plan to work with various customers and research institutions to advance the development of applications for this quantum computer. We are also planning to develop a 10,000 cubic quantum computer and 250 logical bit in 2030 as well as 1,000 logical qubit quantum computer in 2035. We believe the following two points will give us a competitive edge in quantum computing. The first point is our ability to use proprietary technology to build hybrid computing infrastructure that combines quantum computing, high-performance computing, and AI. The second point is Fujitsu proprietary STAR architecture, which enables quantum calculations to be performed with fewer qubits and at incredible speed. By reducing the number of qubits required, this architecture makes it possible to perform quantum computing calculations that will theoretically have required millions of qubits using only 100,000 to 300,000 qubits. In addition, this technology enables specialized computational processing to perform calculations at 100x conventional speed. Our STAR architecture has increased the potential for quantum scientific computing on smaller-scale quantum computers. Fujitsu will bring together the technologies it possesses to create optimal computing solutions, spanning everything from devices to applications.

As industrial robots become more widely adopted, we expect demand to grow for advanced platforms that not only maintain high performance, but also deliver greater energy efficiency. In addition to the role as social and industrial infrastructure, we also anticipate expanding demand in the field of national security. Against this backdrop, we estimate that by 2035, the market in Japan and Europe, our primary target regions will reach approximately JPY 8 trillion. In line with this growth, we aim to achieve revenue of JPY 150 billion through our sovereign platform.

Next, I will discuss our approach to Physical AI. Fujitsu is building a collaborative control platform that seamlessly connects the digital and physical worlds from infrastructure to applications based on our proprietary technologies. Through this, we aim to enable autonomous collaboration between humans and robots. Today, industrial robots operate with different control systems and data specifications depending on the manufacturer. The ability to efficiently orchestrate multiple robots in a coordinated environment will be crucial or critical to widespread adoption going forward. To address this, we are developing Physical OS as part of our AI platform, Fujitsu Kozitsu (sic) [ Kozuchi ]. This platform enables integrated analysis and utilization of both environmental data across a given space and the operational data of individual robots. As a result, robots can interpret their surroundings holistically and act autonomously based on all available data within that environment. In this domain, partnerships with organizations that bring diverse strengths are essential. We are advancing strategic collaboration with NVIDIA as well as joint research with Carnegie Mellon University.

Looking ahead, we will further expand partnerships with robot manufacturers and others to accelerate commercialization. At the same time, we are positioning ourselves as a user of this technology to build practical expertise. At Kasajima facility in Ishikawa, where we manufacture mission-critical systems such as the Fugaku, supercomputer and quantum computing equipment, we have begun deploying robots powered by Physical OS.

Now let me share a video that illustrates our vision for physical AI.

[Presentation]

In this way, we aim to create an environment where humans and robots from multiple manufacturers can collaborate autonomously without interfering with one another. At our Kasajima facility featured in the video, we have already begun manufacturing sovereign AI servers critical to mission-critical systems as made-in-Japan product with production commencing in March 2026. Next, I will discuss our vision for an intelligent society as computing platforms and AI continue to evolve, and as industrial robots become increasingly embedded across both industry and everyday life, the volume of data can be collected and analyzed will expand dramatically. This will enable the development and use of a global-scale digital twin, leveraging diverse data on activities across the planet to deliver faster and more accurate predictions. For example, by using real-time data within this type of digital twin, AI can continuously simulate and evaluate the impacts of climate and ocean changes as well as the geopolitical events such as political instability and conflicts on society and industry. By applying these insights in the real world, we can achieve more efficient and resilient societal operations.

In addition, by integrating personal data with data held by enterprises and public institutions, we can deliver highly personalized services that are more closely aligned with the individual needs and lifestyles while ensuring data security and trust. As one example of our intelligent society initiatives, let me highlight our efforts in health care, where we are advancing collaboration with IBM Japan. Together, we have announced initiatives to build a sovereign cloud platform for health care and promote the mutual use of medical AI solutions. Furthermore, in collaboration with Sumitomo Financial Group and SoftBank, we are building a Japan-made health care platform to realize a more sustainable and resilient health care ecosystem. We aim to enable the use of medical data such as clinical records alongside personal lifestyle data such as diet and exercise across a wide range of health care-related stakeholders based on individual consent. By doing so, we will support the advancement of drug discovery and clinical trials while enabling more personalized patient-centric health care services tailored to individual needs.

I will now explain how we will further evolve service solutions in the future. Fujitsu will continue to expand its service solutions business centered on Uvance. From fiscal 2026, we have begun integrating AI to power all our services, accelerating the shift from a labor-intensive system integration business model to one based on value and outcomes. Uvance will evolve by combining our industry domain expertise with industry-specific AI agents. We will expand the scale of our modernization business, including the replacement of third-party assets. In addition to technological capabilities, our deep understanding of industries and business operations will give us a key competitive advantage in delivering AI services. The customer industries and business domains Fujitsu has cultivated over many years will provide a significant advantage, sustain and strengthen this competitive edge. We are shifting from a region-based management structure to a global management structure that enables us to drive industry-centric business optimally across all regions. In 2025, we shifted to an industry-centered organizational management structure in Japan.

From fiscal 2026, we will expand this structure globally. As a result, we will manage the business in each industry segment across all regions. We will also establish a management structure that enables us to manage each business consistently from revenue through to profit, increasing the speed of execution across each business. Through Uvance, we will continue to evolve our proprietary AI capabilities, including LLM, Takane and Fujitsu Kozuchi into industry and function-specific AI platforms and models. In parallel, we will advance our strategic partnerships with global leaders such as Anthropic and OpenAI, which provide cutting-edge foundation models. At the same time, we will further strengthen our forward-deployed engineer or FTE model, leveraging our core strengths in deep industry domain expertise, advanced on-site engineering capabilities and dynamic problem solving to address continuously evolving challenges. Through these efforts, we will support our customers in solving complex structural issues and driving sustainable transformation. As part of our initiatives to embed generative AI into business operations, we are strengthening our strategic global partnership with Palantir. Through this collaboration, we will incorporate Palantir AIP, a platform designed to operationalize generative AI into our Uvance offerings, accelerating the deployment of AI-driven solutions in real-world business environments.

Next, I will discuss our defense business. Fujitsu has a long history of engagement in defense-related technology development and operations. And this is the first time we are sharing details of this area with you. Against the backdrop of an increasingly complex global security environment, the importance of the defense domain continues to grow. As a technology company, we believe it is our responsibility to contribute to this field by providing trusted advanced technologies, and we will further expand our initiatives in this area. Geographically, our defense business is primarily focused on Japan, the United Kingdom and Australia. In Japan, we provide a range of solutions. We provide a wide range of solutions, including defense information infrastructure such as communications and cloud systems, command and control systems for the self-defense forces, onboard computing for aircraft and space situational awareness systems. In addition, under a commissioned research program by Japan's Acquisition, Technology and Logistics Agency, we have launched the Fujitsu Accelerator program for Defense Tech, Japan's first open innovation program in the defense technology field. Through the use of multi-AI agents, we aim to improve both the speed and sophistication of information delivery for decision-making, ultimately building AI-enabled staff capabilities to support commanders.

In the United Kingdom, we provide ICT solutions for Ministry of Defense personnel as well as AI and data-driven decision support solutions. In Australia, we support the Australian Defense Force with ICT and digital infrastructure as well as systems for managing inventories of munitions and explosives and pharmaceutical management. We have also been selected as a supplier under one of NATO's procurement frameworks and signed a contract in January 2025. Looking ahead, we possess advanced and sovereign technologies that will be indispensable for national security. By leveraging these strengths, we will further expand our defense business while also driving innovation in dual-use technologies.

Let me highlight a few examples of our progress in the defense domain. First, we are advancing our collaboration with Lockheed Martin to drive technological innovation in dual use areas, strengthening our capabilities at the intersection of civilian and defense applications. In addition, leveraging the hands-on expertise gained through our own ERP transformation, we have developed and are delivering a system based on SAP's ERP solution that enables the real-time management of all material information for the Japan Maritime Self-Defense Force.

Next, I will discuss our modernization business. The next stage of Fujitsu's growth will be built on the expertise we have gained through modernizing our own assets, our human resources, including Fujitsu-certified modernization Meister engineers and our AI-powered development tools such as Fujitsu application Transform powered by Kozuchi. On this foundation, we will continue to expand the business, including by replacing third-party assets with Fujitsu assets. In addition, we will continue to advance modernization with the understanding that AI will autonomously perform tasks in the future. We recently announced our AI-driven software development platform, which uses AI to automate the entire software development process from requirements definition to design, implementation and integration testing.

Until now, the mainstream approach has been to use AI to improve human efficiency. Going forward, we will shift to a development model in which multiple AI agents collaborate to autonomously drive the process, aiming for significant productivity improvements. Through our own internal testing of this platform, we validated productivity improvements of up to 100-fold for some tasks in productivity. By incorporating our recently announced self-evolving multi-AI agent, we aim to further increase productivity and achieve continuous gross margin improvement of more than two percentage points each year. As AI continues to evolve, it has become essential to advance both its utilization and security measures in parallel.

In addition, with the emergence of Anthropic AI model MTO, it is becoming increasingly difficult for existing security measures to counter AI-assisted cyberattacks such as the discovery and exploitation of unknown vulnerabilities and the generation of malware. Security measures are no longer simply an investment or an optional measure. They have become a prerequisite for doing business. At Fujitsu, we have built deep expertise through supporting the security needs of more than 2,500 clients, leveraging this experience, we are accelerating R&D to protect our customers' operations in an AI-driven world from emerging and evolving threats. Specifically, we are advancing initiatives such as automation of security operations through multi-AI agent frameworks, mitigation of vulnerabilities inherent in generative AI and realization of sovereign secure AI collaboration across organizational boundaries.

Looking ahead, we will continue to further strengthen our technological capabilities while actively participating in international consortia. Through these efforts, we aim to promote co-creation driven by advanced technologies and contribute to a globally coordinated approach to cybersecurity risks.

Next, I will talk about Fujitsu's transformation. Until now, we have worked on strengthening our management foundation through efforts such as HR reforms, including the adoption of a job-based personnel system and job posting system as well as introducing the One Fujitsu Program for practicing data-driven management. From fiscal 2026 onwards, as Fujitsu intends to utilize AI in every aspect of our activities going forward, we will advance initiatives under the key themes of Human capital, Data and AI-driven management; and Trust. For Human capital, we will advance the transformation of our talent portfolio, which is linked to the business portfolio transformation that we have carried out until now. We will also continue to optimize our talent portfolio based on the premise of AI utilization. We will redefine the roles and skills required of our personnel and allocate talent to areas that contribute to Fujitsu's growth and the creation of high added value such as consulting, data and AI and advanced technology research. In addition, as we believe that employees should take ownership of their own careers, we will continue to establish systems and mechanisms to support their autonomy in career development.

The second key theme is Data and AI-driven management. Up until now, we have built a globally standardized data platform through our One Fujitsu Program. From fiscal 2026 onwards, based on this data platform, we will move towards fully AI-driven management that leverages our proprietary AI. In doing so, we will improve the speed and quality of decision-making and management judgments. The third key theme is Trust. As I explained earlier, in this era of AI, security is not simply an expense, but rather a prerequisite for corporate activities. Within Fujitsu, we will enhance predictive risk management and establish a security platform and governance that are suited to the AI era with the aim of achieving sustainable management. In addition, we will use these initiatives as reference models and integrate them into the value we provide to our customers.

Finally, I will explain the management indicators we aim to achieve based on what we have covered so far. At the core is the evolution of our Service Solutions business. Uvance and modernization will continue to serve as our key growth drivers. Uvance will evolve by combining industry domain expertise with specialized AI agents. We aim for Uvance to account for 50% of service revenue by FY 2030 and over 70% by FY 2035. Powered by the growth of these two businesses, we plan for Service Solutions revenue to grow at a CAGR of 6% to 8%, exceeding market growth.

Next is our productivity improvement plan. Through AI-driven delivery, we will achieve sustained improvements in our gross margin. This chart shows the trajectory of our gross margin. Since 2020, we have steadily improved margin through standardization and efficiency in development. Looking ahead, we will further enhance performance by advancing autonomous system development using multi-AI agents. Under this management Vision 2035, we plan to deliver sustained annual improvements of over 2 percentage points. By expanding the use of AI-driven development across projects and development phases, we are aiming to double overall productivity compared with FY 2025. At the same time, we will transform our pricing model. We will shift from the traditional time and materials model toward a value-based model. We will use the cash flow generated from the evolution of our Service Solutions business as the foundation to create new business domains. Over the 10 years through FY 2035, we will secure an investment capacity of approximately JPY 3 trillion. By expanding into newly created markets, we aim to establish new business areas that are distinct from Service Solutions, capturing approximately JPY 3 trillion in revenue by 2035. This represents our overall growth trajectory toward FY 2035. We aim to achieve strong growth in revenue, adjusted operating profit and cash flow.

Revenue is expected to expand steadily at a CAGR of 6% to 9%, driven by sustainable growth in Service Solutions, combined with contributions from new businesses. Through high-quality business expansion and sustained productivity improvement, we aim to achieve an adjusted operating profit margin of 25% to 30%, delivering significant growth in both profit and profitability. In addition to profitability improvements, by further enhancing business and capital efficiency, we will strengthen our cash generation capabilities and expect core free cash flow to increase to 4 to 5x FY 2025 levels.

Next, I will explain our capital allocation policy, which supports this growth trajectory. Let me first outline the underlying dynamics driven by the growth of our Service Solutions business. On the left, base cash flow, our primary source for allocation will grow ahead of profit expansion, supported not only by business growth, but also by improvements in operational and capital efficiency. On the right, we will allocate this capital to growth investments, focusing on Uvance modernization and the expansion of AI-driven delivery, which are key drivers of our business growth. At the same time, with respect to shareholder returns, we will steadily increase dividends in line with profit growth. Building on this foundation, we will drive further growth by creating new businesses. To support business creation, we are planning an investment capacity of approximately JPY 3 trillion over the next 10 years. Funding for these investments will come not only from internally generated cash flow, but also from external financing. To accelerate our growth, we will also make appropriate use of financial leverage. At the same time, by generating returns and additional cash flows from these investments, we will enhance capital efficiency and total shareholder returns, including the flexible execution of share buybacks. This represents the overall framework of our capital allocation policy.

By combining strong cash flow generation from sustainable business growth with the appropriate use of leverage, we will actively pursue growth investments while expanding shareholder returns. Let me explain our approach to shareholder returns. We have consistently implemented an expanded shareholder returns, and there is no change in this policy. We view a total payout ratio of 60% as a key benchmark. Regarding dividends, we implemented a setup increase last year in line with the earnings growth, and we will continue to deliver stable and progressive dividend increases. As for share buybacks, we increased the pace to an annual average of approximately JPY 150 billion during the previous mid-term management plan. We will continue to execute buybacks flexibly with a focus on enhancing capital efficiency. Guided by our capital allocation policy, we will actively pursue growth investments that support business expansion while enhancing shareholder returns. Through this, we will continue to drive a virtuous cycle that enables sustainable growth of corporate value.

Based on growth of these businesses and our capital allocation strategy, Fujitsu has established the following financial targets: an adjusted EPS CAGR of over 15% and an adjusted ROE of over 20%. By expanding our business scale, improving productivity, strengthening cash generation and enhancing capital efficiency, we aim to achieve these targets and drive further increases in corporate value.

Finally, I would share the purpose of the Fujitsu Group. Today, we have shared our management vision toward FY 2035. This vision outlines the path by which we will realize our purpose. The rapid advancement of generative AI is driving profound transformation across society and industry and its impact will only continue to grow. Looking ahead, I believe that competitive advantage will no longer be defined by the scale of our company's resources, but by how effectively it can integrate the latest AI technologies into its management and operations. As a company that has long supported customers across a wide range of industries, we are convinced that trusted technology is essential to achieving both sustainable business growth and a sustainable society. Fujitsu will leverage all the capabilities we have built today to contribute to this vision and in doing so, deliver on our purpose. This concludes my presentation. Thank you very much for your attention.

[Statements in English on this transcript were

spoken by an interpreter present on the live call.]

Without further ado, I will ask CFO, Isobe, to start your presentation.

Hello. This is Isobe. I would like to give you the outline of the financial results. First of all, the overview of the financial results for fiscal '25, starting with Service Solutions. Revenue for fiscal '25 was JPY 2,346.9 billion, up 4.5% from the previous year. Excluding the impact from the business restructuring, actual revenue was up 5.6%, and from business in Japan, it was up 8.3%. This growth was mainly driven by Uvance and modernization business. Revenue in Uvance was up 47%. Revenue in modernization was up 24% from the previous year. This surpassed the Mid-Term Management Plan goals.

Adjusted operating profit was JPY 361.4 billion, up 25% year-on-year. Adjusted operating profit margin was 15.4%, improvement of 2.5 percentage points. And in addition to benefit of the higher revenue, we also made steady progress in improving the profitability. As a result, adjusted operating profit was mostly in line with the plan. This shows the overview of the consolidated total results. Revenue was JPY 3,502.9 billion, down 1.3% from the previous year. Excluding the business restructuring impact, it was up 0.9%. Revenue in Service Solutions increased, but the revenue in Hardware Solutions and Ubiquitous Solutions declined.

Adjusted operating profit was JPY 390.5 billion, up 27%. Each business segment posted higher profits, up JPY 10.5 billion from the prior year announcement in January. Consolidated total adjusted profit was also surpassed last year's record high -- record high profit. Net profit prior to adjustment was JPY 449.4 billion, up JPY 229.6 billion year-on-year. In addition to increasing profit in the main business, gains from the sale of Shinko Electric and General also contributed significantly. And this shows the cash flows and the cash generation both increased steadily, excluding onetime cash flow inflows and outflows. Core cash flow was JPY 289.9 billion, an increase in inflows of JPY 56.2 billion, up 24%. This was due to increase in profit in our main business as well as improvement in working capital efficiency. Free cash flow, JPY 482.6 billion, increase of inflow in the JPY 267.9 billion year-on-year. And this shows the improvement of core cash flow as well as the proceeds from the Shinko Electric Industries and the general.

Next, I will provide an overview of the results of each segment. Each segment review will be explained in the following page. This shows the adjusted operating profit and the consolidated results prior to adjustment, which includes onetime gains and losses. At the top is the adjusted consolidated results, which reflect our main business, which achieved a record high. At the bottom is the consolidated results prior to adjustment and the operating profit was JPY 348.3 billion. Net profit was JPY 449.4 billion. As for operating profit, although we recorded adjustment items such as the business restructuring expenses and the PPA, there were gains from the sale of Shinko Electric and General that contributed to this number.

Next, I will provide the breakdown of the results for each segment. First of all, Service Solutions. I omit the explanation of the figures because I already mentioned them. But starting from the next page, I will provide an overview of the segment's results. Service Solutions, this shows a breakdown of the changes in the adjusted operating profit of Service Solutions. The fiscal 2024, the adjusted operating profit for the Service Solution was JPY 289.9 billion. This is the starting point. And then the profit increased by JPY 41 billion from the benefit of higher revenue, and this was mainly due to revenue growth in Japan.

Secondly, profit increased by JPY 43.7 billion, profitability improvement contributes to this. And the standardization and automation of development work as well as the benefits of using AI in the development of the process beginning to emerge, and this led to the 2 percentage point improvement of gross margin. Next, profit decreased by JPY 13.2 billion because of the accelerating investment, which is directly linked to business growth, such as developing new offerings, bringing together expertise regarding modernization and the consulting and bringing them together, profit increased by JPY 71.4 billion. As a result, adjusted operating profit in fiscal '25 for Service Solutions was JPY 361.4 billion, up 15.4%, an improvement of 2.5 percentage points from the previous year.

I will explain the waterfall chart. We will look at the status of orders, which is -- shows orders in Japan. Total orders in fiscal '25 in Japan were up 2%. Excluding large-scale deals that have contracts spanning several years, orders were up 8%. Demand remains robust, mainly because of the digital transformation projects. I will explain on each industry segment.

Enterprise segment, almost the same level as last year, excluding large-scale multiyear deals, orders were up 6%. Manufacturing-related demand, there were some cases in which individual customers narrowed down their IT investment due to uncertainty, but demand related to DX and continue to experience strong growth. We also made progress in expanding our market share, and there was an overall trend of growth throughout the entire year.

The finance business -- finance segment, orders were down 6% year-on-year, or the orders were up, excluding the impact of large-scale multiyear business deals. We were able to increase orders by systematically organizing the offerings and -- at accelerating DX at the financial institutions, introducing new offerings for both accounting processing and branch solutions and public health care orders were up 5%. Excluding large-scale multiyear deals, orders were up 8%. And the mission-critical orders were up 2% from the previous year. Excluding large-scale multiyear deals, orders were up 13%, mainly orders in national security related to defense projects saw strong growth. Overall, Japan business continued to experience favorable conditions with a particularly strong demand for DX sustainability transformation. And going forward, we will continue to propose higher -- highly value-added offerings under the guidance of Uvance Wayfinders and would like to make the reliable productive delivery team efforts.

This shows the order backlog in Japan. And the 2025 total order backlog was JPY 1,127 billion, up 7% year-on-year. Out of this expected growth revenue for fiscal 2026 is JPY 1,033 billion, up 10%. Given these orders and the condition of our pipeline, 2026 revenue is projected to be JPY 1,960 billion, up 11%. The order backlog coverage ratio is 53%, which represents progress that is almost on par with previous years. The remaining revenue that is not covered by our existing order backlog will need to be secured by winning new orders in fiscal 2026. It is not shown on this slide, but the numbers of deals in the pipeline at the end of '25, well, there are some potential that lead to orders, which is 6% higher year-on-year, and we have sufficient resources to achieve our target.

Next, I will go to overseas orders. In Europe, fluctuations in deals are seen, but the orders for full year were on par with the previous year. Americas and Asia Pacific region, orders were down due to large-scale multiyear business deals, but mainly for public sectors. This shows the Uvance, which is the main driver. At the top is the -- shows the orders in fiscal '25, JPY 727.5 billion, increase of 33% and the graph at the bottom shows the revenue. Revenue in '25 was JPY 709.3 billion, up sharply by 47%. Vertical areas, mainly data and AI rose very sharply, up 69%, exceeded our target level of JPY 700 billion.

And within Service Solutions, the revenue from Uvance increased from 21% in the previous year to 30%. And another pillar is modernization. Our orders in fiscal '25 were JPY 399.2 billion, increase of 4% year-on-year. There were some large-scale multiyear contracts, but we were still able to exceed that level in fiscal '25.

Overall revenue in fiscal '25 was JPY 392.1 billion, increase of 32% year-on-year. Demand for modernization business was very strong, clearly exceeding our target level of JPY 330 billion. Excluding the overlap from Uvance, revenue from services was JPY 249.7 billion, increase of 24% year-on-year. Within Service Solutions, composition of revenue from modernization increased to 11%. This shows the status of improvement to profitability and gross margin. Improvement in profitability led to a positive effect of adjusted operating profit increasing by JPY 43.7 billion. Gross margin saw improvement of 2 percentage point improvement in fiscal 2025. There were also improvements in the standardization of development process automation and expansion of the standardization of delivery model and the use of AI in the delivery process, we are making progress on expanding our generative AI development environment, which enables the use under secure conditions in Japan and the 36 other countries.

There is still only a limited number of projects for which entire development process is carried out on our AI-driven development platform. So only a portion of projects have benefited from productivity improvement by expanding the usage of AI and extent to which it is incorporated, we believe that we will be able to improve productivity going forward. By providing higher value-added services through improved service quality and speeding up our delivery, we will continue to achieve sustainable improvement in productivity.

So next page shows the overview of each subsegment in Service Solutions. Each subsegment posted higher profit year-on-year. First of all, Global Solutions. Excluding the impact of restructuring, actual revenue was up 9.9%. Adjusted operating profit, JPY 33.3 billion, up JPY 27.6 billion year-on-year. Main driver behind this is the -- was the growth of Uvance. The adjusted operating profit margin was 6.2%. We will continue to further improve this figure by increasing revenue. Regions, Japan revenue was up 4.3%. Adjusted operating profit, JPY 293.9 billion, up JPY 33.6 billion from the previous year.

Business increased due to the demand for DX and modernization. The business is growing and also we made progress on profitability improvement. We're able to secure the significant increase in profit while also increasing our investment. The adjusted operating profit margin here was 21.5% rather, improvement of 1.6 percentage points.

International regions revenue declined by 2.5%. This was mainly due to the prior year's large-scale contracts in public sector in Oceania. Adjusted operating profit was JPY 34.1 billion, up JPY 10.1 billion year-on-year. The adjusted operating profit margin was 5.9%. These numbers are still low, but our portfolio transformation and restructuring efforts have allowed us to improve this much.

Next, I will talk about the other segments other than Service Solutions. First of all, Hardware Solutions. Excluding the impact of changes in accounting, the revenue declined by 5%. Adjusted operating profit was JPY 67 billion, up JPY 5.7 billion year-on-year. System Products, excluding the impact of changes in accounting, revenue declined by 7.3%. This was due to large-scale business deals in the public sector and scaling down in the scale of -- sale of third-party products as well as downsizing in the unprofitable business in Asia.

Profitability improved as a result of changes to our revenue structure and also the integration of production and sales of [ Fsas ] Technologies improved efficiency. Network products revenue increased by 6.6%, and this was partly due to recording earlier-than-expected revenue from our base station business. 1FINITY also contributed to business efficiency.

The top part of this page shows the Ubiquitous Solutions. Revenue declined by 8.7%, but adjusted operating profit was JPY 38.8 billion, up JPY 7.4 billion. Although demand because of the end of support for Windows 10 had wound down, we succeeded in our efforts to increase the sales in high value-added business. The bottom shows the Inter-Segment eliminations. And the R&D areas such as AI, quantum computing and next generation are moving forward.

Now I'd like to talk about the cash flows. Well, excluding onetime factor, the core cash flow was JPY 289.9 billion, increase of inflow of JPY 56.2 billion. In addition to growth in profit, progress was made in bringing the higher efficiency to working capital and cash generation. At the bottom, free cash flow was JPY 482.6 billion, up JPY 267.9 billion in inflow. Core cash flow improved and also from Shinko Electric and General, the sale of these companies made significant contribution. This shows the adjustment items from cash flow and the onetime factors. I omit the explanation of this page.

Next shows the assets, liabilities and the equity. I skip the explanation of this page.

From now on, I'd like to talk about the review of our Mid-Term Management Plan. First, I will talk about the trends in consolidated adjusted operating profit. At the top is the revenue, the dotted line shows the adjusted operating profit margin and the bar graph shows adjusted operating profit. And then at the very bottom is the core cash flow. We made progress in transformation and human resource portfolio, and we made improvement in profitability and cash generation. This shows the consolidated nonfinancial indicators. We are also making progress here, but I skip the explanation on each of these indicators.

Like the prior page, this slide shows the trend in actual results for Service Solutions. Revenue in the segment grew in Japan. This increase was mainly due to Uvance and modernization. In addition to the positive effects of higher revenue, we have made continued and sustainable progress and we were able to achieve the significant increase in revenue, adjusted operating profit and adjusted operating profit margin. And this shows the portfolio transformation and the status of our Uvance and modernization. Well, as I mentioned at the beginning, the segment was able to achieve strong growth and that exceeded our plan. This shows the summary of the revenue portfolio transformation.

The growth in Uvance and modernization drove the growth in revenue percentage of our Service Solutions revenue that came from Uvance and modernization increase from 14% in fiscal '22 to 41% in fiscal 2025. And one of the factors behind this improvement was the expansion of the offering business. The gross margin achieved a 2 percentage point improvement in the period of Mid-Term Management Plan. Now here, it shows the quarterly changes to the segment's adjusted operating profit. Adjusted operating profit has always been heavily skewed to being higher in the fourth quarter, but we have made significant improvements to this imbalance. The pie chart shows the quarterly composition of profit. On the far left, 67% of adjusted OP in fiscal '22 was concentrated in the fourth quarter. In fiscal 2025, however, this decreased to 40%, improving the balance of adjusted OP over the 4 quarters.

Through our efforts to expand our offering business, increase recurring contracts and smooth out delivery schedules as well as improved productivity and in-sourcing, we made progress in gradually evening out the trend of adjusted OP being skewed toward the end of the fiscal year. Evening out the workload of systems integrators as well as sales and support staff, will rectify the discrepancies between peak and off-peak season as well as increased business efficiency. Needless to say, this will have a positive effect on productivity improvements as a whole as well as on our efforts to improve adjusted gross profit margin. Most importantly, it has become much easier to create a forecast for our annual profit.

And now cash flows and capital allocation. I will now talk about cash flow generation. Core free cash flow, which is essentially the cash generation from our main business, increased 1.8-fold during our fiscal '23-'25 Medium-Term Management Plan. Adjusted operating profit also saw a 1.6-fold increase. In addition to this, in our main business, we also made progress in improving working capital efficiency. Free cash flow increased 2.7-fold. This was a result of the sale of non-core business, including Shinko Electric, General and FDK, and making progress to reduce cross shareholdings.

Core cash flows, free cash flows and base cash flows. To put it simply, base cash flow referred to cash that has yet to be put towards growth investment. It is cash generated from our existing business and the source from which capital is allocated. I will omit the explanation.

Now capital allocation during the Medium-Term Management Plan period. Left-hand side shows the base cash flows. In addition to growth in revenue and improved capital efficiency, there was also an inflow of cash from the sale of non-core businesses. Due to these factors, base cash flow was JPY 1,349.1 billion, more than twofold increase from the previous MTMP. We use this as a source of capital from which to allocate JPY 672.3 billion to growth investment and JPY 639.3 billion to shareholder returns for a total allocation of JPY 1,311.6 billion.

In the original plan, we expected to allocate JPY 1,300 billion, but as a result of the cash inflows increasing by approximately JPY 50 billion, an increase of approximately JPY 10 billion in capital to be allocated, we achieved a surplus of about JPY 40 billion. We will allocate this capital in fiscal '26.

This shows the allocated -- capital allocated for investment for business growth. Investments for growth during the MTMP totaled JPY 672.3 billion. Of these, JPY 174 billion was spent on investment related to acquisitions and capital alliances. This mainly consisted of acquisition of GK Software and BrainPad as well as AI-related investments in Cohere and Rapidus.

On the bottom half, we outlined the four main investment areas. We made well-balanced investments in areas directly linked to our current business expansion, including Uvance and modernization, the area of advanced R&D, including quantum computing, physical AI and our next-generation process, strengthening our management foundation and the area of strength and quality and security. We have established in advance these areas as growth investment areas and implementing investment and monitoring the impact from a company-wide perspective.

Next, shareholder returns. Dividend first. Dividends were stably distributed in accordance with profit growth. As a result of profit growth during this Medium-Term Management Plan period, the distribution of dividends in fiscal '25 greatly increased with an allocation of JPY 50 per share.

This shows the share buyback. Share buybacks were flexibly implemented with a focus on higher capital efficiency. The share buyback amount for fiscal '25 was JPY 170 billion and JPY 453.1 billion across the entire period of MTMP, which was in line with our plan.

In addition, as planned, all shares held as treasury stocks at the end of fiscal '25 were canceled. The graph on the right shows total shareholder returns. The total amount over a 3-year period from '23 to '25 was JPY 639.3 billion with a total return ratio of 69%. We made a firm progress on this through a good balance of increasing cash generation, investing in our next area of growth, implementing shareholder returns with a focus on capital efficiency.

I will talk about fiscal 2026 forecast. This shows the financial forecast for '26. Revenue is projected to be JPY 3,510 billion, up JPY 7 billion from a year earlier. Adjusted OP is projected to be JPY 425 billion, up JPY 34.4 billion from the prior year. Adjusted net profit is projected to be JPY 320 billion, up JPY 21.7 billion from the previous year. We plan to continue to surpassed our record high profits.

Here, I would like to talk about adjusted items and consolidated results prior to adjustments. The forecast for fiscal '26 shown in the center box. Under adjusted items, we project a loss of JPY 10 billion from acquisition-related PPA.

This shows an overview of our forecast for business -- each business segment. We project a strong increase in revenue and adjusted OP in Service Solutions. On the other hand, we anticipate a decline in revenue and OP in Hardware Solutions and Ubiquitous Solutions. Also plan to increase our advanced R&D investment Inter-Segment Elimination/Corporate. And the following pages will provide figures.

And Service Solutions revenues are expected to continue to be driven by Uvance and modernization with double-digit growth expected in Japan of 11% with continued productivity improvements in the delivery of service. Adjusted OP is expected to increase by 2 percentage points from prior year, to 17.4%.

Changes in the service solution from prior year. On the left, adjusted OP for fiscal '25 is JPY 361.4 billion. On the right, for the first change, we expect to increase in profit of JPY 48.5 billion, we expect an increase in revenue in Japan of 11% against the backdrop of an order backlog and deal pipeline, we expect continued growth -- strong growth in Uvance and modernization.

Secondly, we anticipate JPY 50 billion in profitability improvements. We expect to continue improvements in the gross margin of 2 percentage points through an acceleration in the productivity gains from generative AI in the development process, such as standardization and automation of the development process.

Thirdly, we expect a decline in profit of JPY 30 billion because of higher spending in the growth of our businesses. We will invest more in the growth of Uvance, modernization and our consulting business. Adding these together, adjusted OP is expected to be JPY 430 billion. The adjusted OP is expected to improve by 2 percentage points over the previous year to 17.4%.

Now the revenue portfolio and gross margin. In fiscal '26, we expect services overall to account for 46% of revenue, mainly from growth in Uvance and modernization. We seek to achieve a growth in the gross margin of 2 percentage points to 40.7% from change in our business portfolio productivity improvements.

Now adjusted OP. And we expect growth in -- mainly in Japan and Uvance and modernization along with the increase in profitability in operating margin and operating profit for the year. We will again seek to achieve another record high in profit in fiscal '26.

Now subsegments. I will now explain the changes in our subsegments. Up until now, our subsegments were composed of global solutions, which was globally delivered value in common and regionally delivered services in Japan region and international region. However, with the growth in Uvance, we will move away from a conventional management approach based on a mix of products and services by region and further strengthen management with a focus on business sectors, gaining a deeper understanding of our customers' industries and business operations. With this in mind, we have changed from subsegments of Service Solutions and regional subsegments to Enterprise and Public subsegments, and we manage business inside and outside on a global basis.

This list shows the changes of -- from the old and the new subsegments. Please refer to the details of the figures.

The Enterprise subsegment includes automobile, manufacturing, distribution and retailing, while the Public subsegment includes national and local government, defense, finance and health care.

This is our financial forecast for the subsegments in fiscal 2026. Within revenues for Service Solutions, we expect the Enterprise subsegment to comprise roughly 40% and Public to comprise roughly 60%. In the Enterprise subsegment, we expect revenue to increase mainly in manufacturing and retailing and the OP margin to be 13.1%, an improvement of 1.4 percentage points from the prior year. While we continue to pursue higher profitability, we are developing offerings tailored to specific industries and enhancing our consulting capabilities for continued growth.

In the Public subsegment, we expect revenues to mainly increase in the finance and defense areas and an OP margin to be 20.1%, an improvement of 2.5 percentage points from the previous year. In addition to focusing on productivity improvements, we will focus on more profitable markets.

From now on, I will talk about the segment other than Service Solutions. Revenue in Hardware Solutions is expected to fall by 4.9% to JPY 960 billion, with the decline in revenue and adjusted OP is expected to fall by JPY 5 billion to JPY 62 billion.

In System Products, revenue is expected to fall because of a decline in scale of low value-added business involving a sale of third-party products and the restructuring of Fujitsu Frontech. In Network Products, revenue is expected to increase on sales outside of Japan of optical transmission equipment and higher investment spending by telecommunication carriers amid higher AI spending.

Ubiquitous Solutions, revenue is projected to be JPY 160 billion, a sharp fall because of the pullback in demand from the discontinuation of support for Windows 10. Profit is expected to drop on the lower volume of sales with adjusted OP of JPY 28 billion.

In Inter-Segment Eliminations and Corporate segment, adjusted OP is expected to show a loss of JPY 95 billion with higher expenses by JPY 18.2 billion from the prior year. Investment spending in advanced R&D is planned to be higher for business growth over the medium to long term. Fujitsu will retain its global competitiveness and actively invest in new business areas such as AI technology, including physical AI, the FUJITSU-MONAKA next-generation processor and quantum computing.

Next, I will talk about the cash flow and capital allocation. First is cash flow. Forecast free cash flow is expected to increase by JPY 10 billion to JPY 300 billion. The increase is from higher profits in our main business and the checks on outflows of cash from the development of Fujitsu Technology Park. Free cash flow is expected to decline by JPY 272.6 billion to JPY 210 billion because of the decline in cash flow -- inflows from the sales of non-core business in fiscal '25.

On this page, we derive base cash flow, the key source for cash flow allocation from core free cash flow. In fiscal '26, we expect the base cash flow to be JPY 450 billion prior to growth investments.

This shows the planned allocation in fiscal '26. Because of higher profit and a more efficient use of funds, base cash flow, the source for funds allocation is increasing year-by-year and is expected to be JPY 450 billion in fiscal '26. From this amount, we expect to allocate JPY 280 billion to gross investment and JPY 240 billion to shareholder returns.

In growth investment, the keys are AI-driven and technology-driven, and we will actively promote these areas. We are also increasing shareholder returns from the average of JPY 210 billion over the 3-year period of previous MTMP. Base cash flow is JPY 450 billion, but the distribution is higher with an allocation of JPY 520 billion. So we will include funds from the expansion of cash flow in fiscal '25. There is no change in our allocation policy. Rather than holding on to funds, we will allocate funds in ways that will lead to higher corporate value.

Within the shareholder returns, the focus is on this page is dividends. Our dividend policy is to distribute stable dividends in accordance with our profit growth. In fiscal '26, we expect to increase our dividend by JPY 5 per share from the prior year to an annual dividend of JPY 55 per share. Dividends have increased for 11 consecutive periods and the dividend payout ratio for the fiscal year is 30%.

Share buybacks. We have a flexible policy on share buybacks with a focus on improvement in capital efficiency.

Fiscal 2026, we plan share buybacks of JPY 150 billion. The right-hand side shows total shareholder returns. The per-year average for the prior MTMP was JPY 210 billion, but we are planning for total shareholder returns of JPY 243 billion in fiscal '26 for a total return ratio of 78%. By increasing the generation of cash and solidly distributing the cash we earn towards growth investments and shareholder returns, it will lead to the next phase of growth and an improvement in capital efficiency. We will also be focused on the next cycle of higher corporate value.

In summary, this slide shows our major financial indicators. Each category is calculated by excluding transitory profits or losses. The average growth rate in earnings per share is 14% with a favorable trend in both higher profits and capital efficiency. The return on equity has increased to 15.8%. By further accelerating profit growth, we seek to achieve an ROE of over 20% over the medium-term horizon. We similarly seek to increase our return on invested capital to 13.3%.

The last slide shows the market evaluation of Fujitsu in terms of share price. Against the backdrop of a change in our business portfolio and the growth in profits, we have been able to achieve growth over the previous 2 Medium-Term Management Plans. Our goal is to achieve sustainable growth in our corporate value, first by achieving our targets for fiscal 2026 and then by continuing to demonstrate growth beyond then. We will work to continue the trends shown on this graph.

This concludes my presentation today.

Thank you very much. Now we would like to ask CEO, Tokita, to talk about the review of the Mid-Term Management Plan and the future directions.

Thank you very much. I would like to mainly talk about the direction, primarily focusing upon the period from our fiscal year 2026 onwards. I will briefly summarize the result of the Mid-Term Management Plan and share our future direction and time line. While our CFO, Isobe, has already provided a detailed explanation regarding the achievement of our previous midterm management plan, I would also like to share my own reflections on our accomplishments to date.

Over the 6 years from fiscal 2020 to fiscal 2025, we steadily enhanced our profitability by transforming our business portfolio towards a high-margin service solutions business, strengthening our management foundations, including talent and advancing standardization and efficiency across areas such as development and delivery. And the fact that our adjusted operating profit margin nearly doubled compared with fiscal 2020. Back in 2020, the margin was 6.6%, but it grew up to 11.2% in fiscal 2025. It has doubled, which was a major achievement. And when it comes to core free cash flow, it has also continued steadily, and that gave us the basic strength to grow the future business.

For our core Service Solutions business, we achieved both scale expansion and improved profitability with adjusted operating profit margin of more than doubled compared with fiscal 2020. It was a little higher than 10% back in 2020, but it grew to -- from 6.0%, it grew to 15.4% by 2025. And looking at the group as a whole, while some challenges remain, we believe that we have established a solid foundation for our next phase for growth.

Since I became the President of the company in 2019, I took up various challenges to dispose of the non-core businesses, introducing the new HR system, which was based upon job type HR programs as well as the carving out of the nonprofitable businesses and the region countries and the was closed in some places. It was a very difficult challenge, but we were able to achieve all these, thanks to the cooperation by the employees and the customers, partners and shareholders.

Through the Uvance, we announced it back in 2021. And now it accounts for 30% of the Service Solutions business and the revenue reached up to JPY 700 billion or even higher. And the modernization revenue will also grow up to the level of JPY 400 billion. With these two combined, they now account for 40% of the total service solution. And the so-called system integration based on the [ man-month's ] business from that the profit structure, we are making the shift to the new profit structure, which is based upon the value and the deliverables basis. Uvance and modernization will continue to grow steadily, and they will remain at the core of our businesses. And the solutions that we provide going forward will be driven by AI.

Now I'd like to explain our future direction. First of all, I'd like to explain the positioning of our new Mid-to-long-term Management Plan beginning in fiscal 2026. To date, we have formulated management plans on a 3-year cycle, and we have shared progress towards achieving those targets. From fiscal year 2026, we will establish a Mid-to-long-term Management Vision with 2035 as a target year and work steadily towards its realization. Today, I will outline the overall direction with further details to be shared at a later date.

From fiscal year 2026 onwards, we will enter a new phase with technology at the core. By fully leveraging the enterprise, we have already transformed. We will accelerate both the speed and scale of growth while further enhancing corporate value. In today's rapidly changing business environment, we have reconsidered our long-standing approach of formulating and executing management plans on a 3-year cycle. There is a growing risk that the business assumption underlying our plan can shift significantly between the time it is formulated and its 3-year target, resulting in misalignment with actual growth conditions. So we are going to -- for these reasons, our new management plan is formulated as a 10-year Mid-to-long-term Management Vision 2035.

As we work towards the desired state of the company, 10 years from now, we will set initiative-based goals on an annual basis and drive their realization while adjusting our course as needed along the way. Once again, we have defined Fujitsu's core strength of the technology capabilities. From fiscal '26, we will develop and deliver solutions that contribute to solving challenges for our customers and for society. And by combining this industry expertise, business knowledge and AI capability, all built on sovereign technology. But the technology is changing quite rapidly. And it is quite difficult to predict what's going to happen to the society. Now we are not able to manage the business by just following the changes. And these changes are driven by technologies, and that is what many of you have already noticed.

We also bear an extremely significant responsibility in terms of national security. CPU development and optical network technologies and a very unique technology company in the world. HPC, supercomputer or quantum computing and the actual machines can be developed only by us. We have such technology capabilities and also from the national security, we have a very significant presence. And furthermore, customer base spans all industry sectors, including public sector. We have been involved in the development, operation and maintenance of business application for over 50 years. For the effective social implementation of cutting-edge technologies like AI, it is crucial to redesign existing operations and apply and implement new technologies grounded in the deep understanding of current business process and IT supporting them.

With our on-site knowledge and response capabilities that reach the last mile, we will lead the technology-driven transformation of customer operations and society. As outlined, we consistently cover the entire spectrum, from developing and providing fundamental technologies critical for business and management to delivering and consulting on-site implementation and management reform. Once again, we have reaffirmed Fujitsu's strength as a unique proprietary technologies and our extensive experience and knowledge across various industries and business operations. Leveraging these strengths, combined with advanced AI, we will develop and provide solutions that contribute to solving challenges for our customers and society.

As the use of AI expands across all industries and throughout daily life and the volume and the importance of data increase dramatically, it will become indispensable for the platforms that support mission-critical operations to respect to data sovereignty while ensuring security and reliability. Leveraging highly reliable technologies developed in Japan such as FUJITSU-MONAKA, for high-performance next-generation CPU; computing technologies, including quantum computers, the large language model, Takane, and the AI platform, Kozuchi, and combining them with leading technologies from our global partners, we will provide a sovereign technology platform that ensures not only functionality, but also quality and safety.

As the international security environment undergoes major change, we believe Japan's role in the world is also evolving. For the processing of data, data is extremely important to national security and sovereignty perspective is indispensable.

We are a company that contributes not only to Japan's defense, but also to the defense of Japan's allied nations. We believe our responsibilities and role in defense will expand even further than before. By combining industry-specific AI agents infused with the deep industry knowledge, we have accumulated over many years and our broad expertise spanning both business operations and technology, with consulting that works alongside customers to identify challenges to their growth and to a healthy society. And to formulate and execute measures to address them, we will deliver trusted technology solutions end-to-end and contribute to our customers and society as well as to the world's peaceful order.

We will focus on four priority areas: Physical AI, Social Resilience, Digital Twins and Computing. And in particular, will support mission-critical businesses and activities for our customers and society. In these areas, we will create and scale new business opportunities by leveraging our strengths. For example, in the area of Physical AI, we will further strengthen Japan's manufacturing front lines by providing a platform that aggregates and shares high-quality on-site expertise while also enabling participating companies to mutually enhance their competitiveness.

In the domain of Social Resilience, we will leverage AI agents to support healthcare systems from a management perspective, addressing critical societal issues. We will also enhance electronic health record systems and personal applications to further promote data utilization, thereby creating a healthcare environment that is more patient focused.

Finally, I would like to explain the transformation Fujitsu itself must undertake to become a company capable of executing these initiatives. To begin with, we will embed AI across all our corporate activities and advance AI-driven management. To do so, we will focus on three key initiatives. The first -- so that we will be able to support the customers in the transformation. The first is scaling our AI-driven development. From January this year, we began operating a development platform that uses AI to automate processes from requirements definition through implementation and testing. We will progressively expand this platform to eligible projects. At the same time, by making greater use of generative AI, we will work to accelerate our customers' business execution while also improving our own sustained profitability.

The second is evolving our talent portfolio. Building on the business portfolio transformation we have pursued today, we will advance the upskilling of our people on the premise of a collaboration between humans and AI. We will focus talent investment on areas that drive growth and high value creation, including consulting, data and AI and advanced technology research.

The third is advancing our management foundation. Through the OneFujitsu program, we have already established a globally standardized data foundation. Starting this fiscal year, building on this foundation, we will fully scale AI-driven management by leveraging our own AI. This will enhance both the speed and quality of decision-making and enable management decision that anticipate change. Furthermore, as a technology company, we will put these initiatives into practice ourselves and actively offer them to customers as reference cases. Specifically in AI-driven management, Fujitsu itself will serve as a reference model and deploy this approach to our customers.

Finally, this is the schedule. Let me outline the upcoming time line. Further details on the growth trajectory we are targeting towards fiscal year 2035 will be shared with you on 28th of May. In addition, we are planning to hold an IR Day in September. We will provide further details in due course.

This concludes my presentation. Thank you for your kind attention.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Thank you all for waiting. We will now begin the press briefing on AI-driven development that will transform system development. The first presenter is Mr. Hideto Okada, Head of AI Strategy and Business Development Unit, Fujitsu Limited.

Hello, everyone. Today, we are pleased to announce the completion of a new technology that will transform the entire system development process. This achievement is the fruit of our efforts over the past year built through repeated trial and era. Fujitsu was founded in 1935 as a telephone switching equipment manufacturer. In the 1950s, it succeeded in developing computers and has been developing system together with customers ever since.

And over a long period of time, we have thoroughly learned our customers' operations and refined our system development technologies. System development business is one of the pillars supporting Fujitsu's business today. Meanwhile, with the evolution of generative AI, automation of certain system development tasks such as source code generation has already become a reality. The current challenges are how to enable AI to understand tacit knowledge and how to transform old, complex large-scale systems into AI-driven ones.

Furthermore, as experts, when it becomes AI-driven, what kind of roles should we play is where the discussion has shifted now. In other words, what the industry is truly being challenged is for AI to understand complex massive legacy systems that have been in use for years and to transform the entire system development process.

Fiscal year 2025, we referred to as the year 1 of AI agents. By leveraging Fujitsu's proprietary AI, Kozuchi and Takane, we announced use cases for multi-AI agents such as supply chain enhancement or about a year ago to all of you, through co-creation with start-ups, new AI agent businesses are emerging is what we have announced to you. Over this past year, the societal atmosphere has also changed significantly. At the beginning, there was AI. What is AI? What can be done with AI? We were searching for answers. But now we have shifted to an era of achieving astonishing results with AI.

So given this environment, which unresolved areas should Fujitsu tackle? Where is the unsolved area? What we have to do after all is transforming the entire system development process. Specifically speaking, we will take on the challenge that AI still cannot solve, understanding and automatically modifying complex existing systems.

Takane-driven initiative. A special team was formed in April 2025 under the top-down leadership of our CEO, Tokita and targeting Fujitsu's health care and government packaged products and leveraging all Fujitsu's assets and capabilities, including proprietary AI technologies like Kozuchi and Takane, we launched Takane-driven initiative to transform system development into an AI-driven process by utilizing all the assets and all of what we have done up till now. And this time, we have completed technology that automates the entire process from a requirements definition to integration texting for complex existing systems. Today, we announced this achievement to all of you.

We declared this year's year 1 for AI agents. However, we now report that this year has become the year AI agents actually began powerfully driving system development. That is for sure. That is what we want to report to you.

Now let me introduce Mr. Kokubu, who has led the Takane-driven initiative, who is a responsible person of this business to present the specific details.

Next, Mr. Izuru Kokubu, Head of Measures for Specific Projects Unit at Fujitsu Japan Limited, will introduce the Takane-driven initiative.

Hello, everyone. My name is Kokubu from Fujitsu Japan. Today, I will explain the initiatives we have been developing over the past year in the health care and government domains. Let me now introduce the Takane-driven initiative. Why do we choose to begin with the health care and government domains?

First, I would like to emphasize that regulatory reforms are positive initiatives that address social challenges and improve people's lives. We have consistently engaged with these positive changes in earnest and have continuously pursued improvements in operational convenience at the front line. These accumulated efforts have resulted in an extremely large and complex package software portfolio, 67 packages totaling 150 mega steps.

In the recent direction, the consumption tax cut was a major topic and continuous regulatory changes require repeated modifications to these large and complex package software systems within a single year. Each time, our customers are also required to change their operational processes. This creates a significant burden for municipalities and hospitals as well as for us system vendors. We regard this as one of the most challenging domains. That is precisely why we must reduce the burden on the front line and ensure that systems continue to evolve along with social progress. We concluded that this is exactly where the power of AI is most needed.

So what fundamentally differentiates TDI from conventional AI-assisted development? Today, most AI use in system development takes the form of human AI interaction, often referred to as vibe coding. However, TDI aims to achieve end-to-end automation where development proceeds without human intervention. Once regulatory changes are input, the process runs from requirements definition to integration testing with no human involvement. Each agent automatically triggers the next stage, connecting the development process like a relay. System modification shifts from continuous human AI interaction to fully autonomous nonstop AI execution. This is the fundamental difference from conventional AI utilization.

Now let us show you a demo to see what this actually looks like. When a regulatory document is specified and the command is issued, execution begins automatically. What you are seeing now normally takes about 4 hours, but we are showing it at 20x speed. The AI regulatory document identifies the 10 programs requiring modification from approximately 68,000 program assets and applies the necessary changes. As you can see, multiple AI agents advance through requirements definition, design, modification and testing in relay sequence.

There are no additional human instructions or approvals. The AI autonomously connects the workflow and completes development. It is an outstanding performance and under optimal conditions, work that would normally take 3 person months was completed in about 4 hours. This is an extraordinary result. This is not merely efficiency improvement. It was the moment when system modification driven by regulatory change shifted from human work to AI work. This is how we interpret this transformation.

Let me now introduce the 3 technological breakthroughs that made this overwhelming performance possible. The first is AI-driven regulatory interpretation through requirements definition. As shown on this slide, the 2024 medical fee revision exceeded 700 pages. For health care professionals and system engineers alike, interpreting such documents and translating them into operational and system changes is an enormous burden. However, this AI agent extracts the required changes from regulatory documents and cross-references them with package software design documents and source code, systematically identifying modification points such as screen displays, decision logic, report layouts and data updates and automatically generates requirements at the external specification level. This is a critical breakthrough, translating complex legal text into actionable system change requirements.

At this point, you may feel that AI can do anything. However, in reality, there are many things AI appears to know, but actually does not. What AI particularly struggles with are the things not written in specifications or people on the ground take for granted, in other words, tacit knowledge. For example, a registration application system. This is a nationwide system, so the specification required the same functions. However, the actual system design needed in a major city with millions of residents is completely different from that of a town with only tens of thousands. Large cities must handle massive simultaneous submissions requiring batch processing, distributed processing and complex workflows.

In contrast, for smaller municipalities, simple online processing is enough. This design considerations are not written in the documents that have already been completed. They are implemented based on the experience of SEs who understand the field. Without this classic knowledge, AI would apply the same design to every municipality. That is why a mechanism to structure system engineers tacit knowledge and teach it to AI in a form you can understand is required.

The second breakthrough is the mechanism we call multilayer quality control. When AI encounters ambiguous instructions or tacit knowledge, it inevitably generates plausible answers called hallucination. This is an unavoidable challenge for even the most advanced LLM. Therefore, we created -- recreated real-world development environments and the behaviors of veteran SE professionals within the AI. Autonomous design layer repeatedly observes things and acts autonomously, continuously materializing and detailing the target to be developed.

Next is Guardian layer. Like a real-world quality audit expert, it audits the results produced by the autonomous design layer. If it finds deficiencies, ambiguities or contradictions, it instructs to redo. However, it doesn't stop there. It also points out exactly why it's inadequate, helping the autonomous design layer redo it correctly. Next, the knowledge layer systemizes and accumulates knowledge about the business, knowledge about program development and even test knowledge, the unspoken norms of the field.

Next or lastly is information access layer without compromising accuracy, extracts the information necessary for AI thinking from vast amounts of documentation and millions of lines of codes. Through these layers, the AI continuously learns on its own, builds on its own and evaluates on its own, then completes the system.

Now let's revisit the demo to see how this multilayer quality control operates in practice. After receiving legal amendment requirements, observe health design and implementation proceeds autonomously. Please look at the demo.

The requirements definition set document is now being imported. This is a medical pad to actually shifted to prescribed medicine. And based on this requirement, the design has started and the analyzed content of this design is shown here with the cycle of observation, instruction and action and design, this is made. And now the layer is being confirmed, and there is a point that needs to be corrected and that is done. And they are specifying the non-embodied area within this system. So this agent is redoing the design, accumulating the pointed out content and designing the next content. At the third design, all the findings have been corrected and has decided that it has reached a level of acceptance and then the source code part will start.

So the logic of the medication has been correctly modified. This is the second breakthrough that the output of the AI is brought up to the expert level.

And the third breakthrough is an autonomous relay type architecture that keeps the development process running without interruption. As explained earlier, once you input the content of legal revisions from requirements definition to the completion of integration and testing without human intervention, AI agents will run the development process repeatedly, reading steps until they achieve human SE level quality. It even automates failure causes analysis and modifications ensuring developed never faults. Just as if human SE engineers are working, development progresses 24 hours a day.

We have received significant anticipation for this initiative from our frontline customers. It holds the potential to transform the very structure that has exhausted both frontline staff and systems with every policy revision. That is the evaluation we have received. This is the feedback from Shimane Prefectural Central Hospital, a practical reliable approach addressing long-standing challenges faced by our medical institution, highly commendable for being designed with a deep understanding of frontline operations. Strongly feel it holds significant potential to contribute to overall hospital operational efficiency in the future, a promising initiative that should be positively considered for implementation. We believe such feedback is proof that this initiative holds real meaning for the frontline sites.

This fiscal year, we have advanced technical verification. And in fiscal year 2026, we will deploy it across all 57 health care and government administration packages. This will dramatically accelerate the pace of service evolution and significantly shorten time to market. Furthermore, through the evolution of packaged software, the accumulated domain knowledge will lead to solving our customers' more advanced management challenges.

This is the closing part. Takane-driven initiative is not simply about improving development efficiency. It is a challenge to create a world where systems keep pace with societal changes. We will extend this practice company-wide and to our customer site. From here, we will begin full-scale deployment.

Thank you very much.

How did you enjoy the demo? Takane-driven initiative transforms Fujitsu system modification in health care and government into AI-driven operations. However, these results are not confined to the health care or government domains. We intend to extend these outcomes to all system development. System that continuously evolve are precisely where an AI-driven development platform fits best.

For example, so within health care and government, there are regulatory changes that happen on a regular basis, and we need to keep pace with them. We also need frequent updates to continue delivering value to customers. In addition, rapid modification and release directly generates business impact.

Above all, modification requires accurate understanding of large and complex system assets. These conditions exist across industries such as health care and government, but also in finance, telecommunication, retail, logistics, manufacturing and beyond. We call this achievement, the AI-driven software development platform. The AI-driven software development platform combines Fujitsu's research technologies and domain expertise to orchestrate multiple AI agents and automate the entire process end-to-end from requirements definition through integration testing, as you can see here.

In this initiative, we have built the technology primarily around Fujitsu Kozuchi and Takane, while also testing technologies from Microsoft and Google to further enhance accuracy. That said, however, we will continue to work on the evolution of this AI-driven development platform, of course, centering around Fujitsu's technology, but integrating other available technologies. As Kokubu-san mentioned, we were able to enhance productivity 100-fold. This will change how the engineers work.

On the left-hand side, we have typical generative AI tools, which are interactive and they can automate tasks. Of course, these carry highly expected performance, which can increase expert productivity twofold, threefold or tenfold. They support you during your 8 working hours for sure. And that is a traditional setup. However, our AI-driven development platform is fundamentally different. Once a task is assigned, AI autonomously executes the workflow through to completion of integration testing. So after you assign a task, it continues running after you go home while at sleep, 24 hours a day, 365 days a year, it works nonstop. This overwhelming productivity frees engineers from a routine modification work, allowing them to focus on evaluating AI outputs, engaging with customers and create new value.

So the experienced engineers will make sure that they conduct evaluation and thereby including humans in the loop. However, we need to go into new territories as well. We need to reengage with customers and deepen our dialogue. We can create new value by doing so. So we want the engineers to be spending more time on these creative tasks. In addition, I want them to be using AI to their own advantage. That is where we would like to head. So in other words, we are talking about AI that executes on its own, not AI that supports.

Now let me ask you, what determines a truly delicious bowl of ramen noodle? Many of you would likely answer the broth or some kind of taste that has been handed down to them over generations. However, think about it, preparing the broth can take more than 24 hours in some cases. It takes a long time. Yet finishing a single bowl of ramen takes only about 5 or 10 minutes, which means that the finished bowl is prepared quickly, but its flavor is determined almost entirely by the preparation beforehand.

Our AI-driven system development shares the same characteristic. The moment when code is modified and tests are executed, I did mention that we can do it in 4 hours. This is just the final 5 minutes of the ramen preparation. But what determines the quality is preparation, organizing assets and knowledge so that AI can operate correctly, and they need to be updated. So preparation matters, and that is the core of AI-ready engineering. AI-ready engineering is a process of establishing a state in which AI can correctly understand existing systems and execute viable automation.

Specifically, I have listed many, but let me mention just 4. Structuring system assets and design rules. So what you already have needs to be learned by the AI. And you need to evaluate whether the AI output is actually correct. So preparing accurate data is key. We need the information about the 2024 medical fee revision. You need that data so that you can cross-reference that to check for accuracy. And you need to automate the testing as well. If we can get this preparation work done in a proper manner, you can have a situation in which system assets can be traced accurately and monitored.

As Kokubu-san mentioned, what happened when AI gets the information? Well, it doesn't work as it should all the time, unlike the expert system engineers because they don't have the asset knowledge that these engineers have. And in this fitting phase, you could figure out we are lacking assets or we are not having sufficient development rules. These are pet knowledge that can be documented and learned by AI. And this type of learning process needs to be repeatedly conducted in order for the AI to work autonomously and be fully automated. So the maturity of this preparation determines the accuracy of automation. This repeated process is key. That is what we are going after.

Fujitsu holds a strong competitive advantage in AI-ready engineering. We are confident in saying so. This is because what is required for this preparation is not merely AI technology or the expert use of the technology, but practical knowledge of system development itself. the on-site experience and expertise accumulated from supporting complex large-scale systems over many years that we have. And as Kokubu-san mentioned, the execution capability of AI demonstrated through TDI, that is our strength. The ability to integrate human practical knowledge with AI execution capability is Fujitsu's strength and AI-ready engineering is an area that cannot be easily replicated.

Thus, to automate large-scale system development, 2 elements are required, AI-ready engineering as a preparation and the AI-driven development platform as the execution engine. Only when these 2 work together, we can truly realize end-to-end automation. Right now, one of Fujitsu's core business pillars, system development is now at a turning point. As generative AI becomes widespread, the value of simple development is rapidly declining, driving waves of price competition and in-house development on the customer side. That's the direction we believe it is going to go towards.

More specifically speaking, by using generative AI, all our competitors' productivity will improve and the price competition will accelerate. The democratization of generative AI is expanding customer-driven in-house development. And maybe system development might disappear. However, with this fast speed AI evolution, how can we catch up with that speed? What is necessary for AI is not just technology. Business knowledge is also necessary at the same time. How are you going to maintain that?

So when you think it in that way, the AI-driven system development moving forward, which is a new domain is not basing it on simply the number of people or man hours and sell the product. That is not going to exist anymore. The technology will run the system and the system will continuously evolve the system. That is the key point. The speed and the capability of adapting to that. That is going to become the value. AI-ready engineering and AI-driven development platform and the capability to implement that. These 2 will be the competitive edge. And Fujitsu would like to change the system development business itself.

This AI-driven system software platform for all system development, it will be started to be available in fiscal year 2026, not just Japan. We will transform the entire system development process worldwide. This is what we are aiming for.

Before this announcement, we have conducted activities to receive some expectation voices from our customers. So Kawasaki Heavy Industry, the business knowledge that the company has accumulated for a long time and that technology itself, not passing it on to the next generation, but in order to evolve it in the future, it is an important challenge to take on is what they have said.

Furthermore, Sumishin SI Network last fiscal year, within the Uvance update with Sumishin AI Network with the executive, Mr. Aikawa, we got on stage and we received the voices that you really can realize this. And since then, we've been working together up to now. Furthermore, Panasonic from the requirement definition to modification, that done in one stop and that being done autonomously, this approach is going to become an effective answer to the challenges that all the legacy systems have in the Japanese corporations. So the preparation work by setting up the domain knowledge, the customers have expectations beyond that point for us. And this initiative is not -- we have no intention to confine this just inside Fujitsu.

Our policy and direction is totally opened. We want to foster this new standard for AI-driven development platforms across the entire industry. And as the first step of this, after this explanation session to all of you, starting next fiscal year, the target once a month, we will launch an open development communities or event so that we can establish this open development communities, so all of us can participate in cultivating this.

And furthermore, in 6 months of time, how far have we progressed? This is just a starting point. It is going to evolve more and more. So in about 6 months' time, we would like to share with you how far we have come to. The new system development standard is what we will continuously share actively.

Now through these open initiatives, we aim to build the next growth model together, not just within Fujitsu, but with our customers and partners. Customers gain the speed to keep pace with change and the certainty of execution through this. And Fujitsu Engineers will shift into new specialized domains where Fujitsu excels, such as AI-ready engineering and for deployed engineer by utilizing resources that have opened up. So the new service such as for deployed engineering, the new service area is where they should head to. This is not just for Fujitsu, but with our partners, we would like to grow by having the same new roles and same new growth opportunities.

As you can see, for us, customers, partners and Fujitsu, we will build a new ecosystem where everyone continues to evolve. And today, we share the technology that will allow us to take the first step towards that. As explained to you now, this technology that we have explained to you today, this is not the goal. This is the starting point.

The transformation towards AI-driven system development is for sure a turning point, but apologies to repeat myself. But still, we are at the starting point, meaning that what we are aiming is not only to improve development efficiency. Our aim is the very mechanism itself that enables system to continuously keep pace with ever-changing business operations and society. To achieve this, we will continue to evolve our technology and transform our own business.

We will continue to support the sustainability of our customers and society through technology. This vision, there are no changes to it. The AI era has already started. Fujitsu's business transformation today is going to start. Together with the AI-driven software development platform, from here, we will fully deploy the transformation of system development processes worldwide. This concludes my presentation. Thank you very much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Allow me to explain about the earnings results. I will follow the slides. Page 3 shows an overview of our results for the first 9 months of fiscal 2025. On the top half of the slide is Service Solutions, our most important segment, Revenue for the first 9 months was JPY 1,657.7 billion, up 6.1% from the prior year. Excluding impact from business restructurings that took place during the prior fiscal year, revenue was up 7.5%.

In business in Japan, in particular, there was continued strong growth in demand for DX and modernization and revenue was up 10.4% from the prior year. Adjusted operating profit was JPY 216.1 billion, up JPY 54.5 billion from the prior year, an increase of 33.8%. The adjusted operating profit margin was 13%, an improvement of 2.7 percentage points from the prior year due to the benefit of higher revenue in addition to continued steady progress in profitability improvement. Looking at the trends per quarter, the third quarter saw both revenue and profit increase even further than in the first half of the year. In the lower box, total revenue for the first 9 months was JPY 2,451.1 billion, up 1.8% from the prior year.

Looking at this figure, excluding the impact of business restructuring, it is up 4.4%. Adjusted operating profit was JPY 229.1 billion, and each business segment posted higher profit compared to the prior year. The total increase was JPY 92 billion, up by 67%. The adjusted operating profit margin was 9.3%, an improvement of 3.6 percentage points from the prior year. At the very bottom, net profit was JPY 343.6 billion, up JPY 255.6 billion from the prior year. In addition to the higher profits in our major business areas, recording of a gain on the sale of shares in Shinko Electric and General in the first half of the year also contributed to the higher figure, both operating profit and net profit reached a new record.

Page 4 shows the progress we have made in consolidated adjusted operating profit. The result for the first 9 months was JPY 229.1 billion. The progress towards the profit plan for the year is shown on the pie chart, 64%. This is an improvement of 19 percentage points from 45% in prior year. We will aim to make steady progress toward the profit plan for the year as well as to achieve further increase in profit. Page 5 gives an overview of the results for each segment. In the following pages, I will go through the results for each segment separately. But at the outset, let me note that all segments recorded increased profits.

Revenue in Service Solutions, our growth driver was up 7.5%, excluding the effect of the sale of the contact center business in the prior fiscal year. Profitability also continued to see a steady improvement. Below that is Hardware Solutions. Revenue declined in the segment from the large negative impact of the change from using the gross sales standard to a net sales standard when recording low added value sales from software from other companies that took place this fiscal year. Excluding this change, revenue was the same level as the prior year. As for profitability, progress was made on cost optimization, resulting in a significant increase in profit.

In Ubiquitous Solutions, there was a slight decline in revenue due to the impact of a pullback from large-scale business deals in the prior year. Despite this, the segment recorded a profit in the 2-digit billions of yen from shifting to high value-added products and the cost improvements. From Page 6, we show the trend in profit or losses for each segment by quarter. The increase in revenue and profit has continued to grow obviously each quarter. If you take a look at the results of each quarter compared to the prior year in Service Solutions at the very top of the box, you will see that this segment, in particular, has expanded its increases in revenue and profit. This improvement in its profit margin has also gone up.

Starting from Slide 7 is breakdown of the results for each segment. First is Service Solutions. Revenue was JPY 1,657.7 billion, up 7.5%, excluding the impact of restructuring. There was continued strong demand for DX and modernization deals, primarily in the Japanese marketplace. Revenue from business in Japan was up 10.4% from the prior year. Adjusted operating profit was JPY 216.1 billion, up JPY 54.5 billion from the prior year. The adjusted operating profit margin was 13%, an improvement of 2.7 percentage points from the prior year. Later on, I will explain the increase in profit using the waterfall chart.

Page 9 shows the segment business trends by quarter. This -- the line graph on top shows revenue and the bar graph below shows adjusted operating profit. The increase in revenue compared to the prior year expand with each quarter. This is driven by business in Japan, which in the third quarter was up 13% compared to the prior year. The adjusted operating profit shown in the bar graph as well as the increase in profit has also gone up with each quarter by expanding the amount of quality projects for the segment, we have also increased improvements to adjusted operating profit margin. In Service Solutions, revenue growth is not necessarily tied to operating expense increase. By expanding quality revenue, adjusted operating profit margin will increase. The sustained productivity improvements in delivery operations also, of course, contribute to this. Looking at each quarter, its business trends have been steady up to this point.

Page 10 shows a breakdown of the changes since last year in adjusted operating profit for Service Solutions. On the very left, adjusted operating profit for the first 9 months of fiscal 2024 was JPY 161.5 billion, and that will be starting point for the factors on the right that impacted the result for the first 9 months of fiscal 2025. First, the profit increased by JPY 34.6 billion from the impact of higher revenue. The main factor was increase in the gross margin because of higher revenue margin. revenue in Japan. Second, profit increased by JPY 31.1 billion from profitability improvement. This is the result of steady progress being made on initiative to improve productivity, such as standardization of processes for development, work and automation. In addition, in regions outside of Japan, we started to steadily see the results of our portfolio transformation. Overall, gross margin improved by 1.9 percentage points from the prior year. Third, profit decreased by JPY 11.2 billion because of an increase in business growth investments. We proactively made progress on expanding investments directly linked to business growth, including enhancements in Uvance's modernization business consulting and security.

Next is Page 11. I will now provide some additional information on each of the item in the previous waterfall chart. First, we look at the status of orders, which leads to sales. This page shows orders in Japan. Overall, the growth rate for orders was up from the prior year in each quarter and the orders for the first 9 months were up 4% from the prior year. Each quarter included large-scale deals that have a contract term spanning several years. Although winning new projects is a good thing, it makes a bit difficult to see trends. Due to this, we have listed the growth rate, excluding these large-scale business deals in brackets. Orders in Japan were up by 7%, and we perceive this to be cruising speed for demand. Incidentally, large-scale deals are shown beneath the box to each have on average contract period of more than 5 years and the contract amount exceeding JPY 5 billion.

I will now comment on each industry segment. Orders in Enterprise segment for the first 9 months were at the same level as the prior year. Excluding the impact of large-scale business deals for multiyear contracts, orders were up by 6%. There was a particular increase in orders in the third quarter. Orders in retailing and distribution held firm. And looking at the orders in the manufacturing industry by customer, although there were some cases in which IT investment was scaled back from concerns regarding uncertainty about the future. This continues to be a strong flow of inquiries overall, particularly for Uvance and DX-related projects. In finance segment, orders were down 5% compared to the prior year, excluding the impact of large-scale multi-business deals. For finance, orders were up 1%.

In the Public and Healthcare segment, orders were up 4% compared to the prior year. We perceive 8% to be cruising speed for demand and notably we were able to win public sector large-scale system upgrade projects in the second quarter. Mission-critical and other orders were up 25% from the prior year and were up 15%, excluding large-scale business deals. In the third quarter, there was a large-scale national security-related orders in business in Japan, inquiries remain robust for digital transformation and sustainability transformation projects. due to uncertainty from international affairs and the changes in the economic environment, we have seen cases in Fitch.

Individual customers are currently reviewing the priority levels of their investments in the fourth quarter. We will look -- we will work to secure solid business yields continuing efforts into the next fiscal year to further increase our business Page 12 shows the revenue and order backlog from business in Japan. The left side of the page shows the revenue target of JPY 1,800 billion for the full year against this in the light blue color column, that is the fourth column from the left, the total revenue for the first 9 months and the backlog of orders planned for fiscal 2025 is shown to be JPY 1,657.3 billion. This covers 92% of the revenue for the full year. The coverage ratio is at the same level as the prior year, and we consider this to be strong progress. The amount needed to achieve the revenue target from orders and the sales in the fourth quarter from the deal pipeline is the figure on the right side of the page, JPY 142.6 billion. For reference on the bottom of the slide, we list the orders. Order backlog for sales exceeded expected from fiscal 2026. As of third quarter for sales from fiscal 2026, there is approximately JPY 730 billion in completed contracts.

Page 13 shows orders from outside of Japan. Orders in Europe were up 40% from the prior year. Growth is from winning a multiyear contract for data center-related large-scale renewal projects. Orders in Americas and Asia Pacific were down due to pullback from multiyear business deals in the prior year, mainly public sector projects. Page 14 shows the progress of Uvance, which is positioned at the heart of our business portfolio transformation. Overall orders for the first 9 months was -- were JPY 504.8 billion, up 45% from the prior year. The bar graph below shows the revenue, which was JPY 492.7 billion for the first 9 months, up 53% from the prior year. Of this, revenue in the vertical areas grew by 77% the share of revenue from Uvance in the total revenue of Service Solutions grew from 21% last year to 30%. Our revenue target for fiscal 2025, the final year of the current medium-term management plan is JPY 700 billion, as shown on the graph on the far right, representing a target growth rate of 45%.

Page 15 shows the status of modernization business, another pillar of our growth. The level of orders in the first 9 months was JPY 260.4 billion, down 6% from the prior year, the main reason for the decline in orders was pull back from the series of large-scale projects won in the prior year. As shown on the right-hand side, actual orders for last year were up sharply by 65% over the previous year with multiple overlap in large-scale business deals for multiyear contracts won in the public sector. We have built up a significant backlog of orders and managing to ensure the delivery system, but system engineers will continue to have a high level of workload. In the bar graph below that, revenue in the first 9 months was JPY 266.5 billion, up 43% the prior year. The graph -- on the right side shows the fiscal year's revenue target, which is JPY 330 billion. We are on track to exceed this target.

With Page 16, I would like to provide additional information on improvements on profitability. With improvements in profitability, the impact on the increase in profit was JPY 31.1 billion. The gross margin is up by 1.9 percentage points from the prior year. In addition to standardizing and automating development through the utilization of Japan Global Gateway, we are accelerating the use of generative AI in the development process. We started to deploy generative AI development environment, which enables use under secure conditions in 36 countries outside of Japan during the third quarter. We are looking -- working to expand the range of uses of Gen AI in Japan. Currently, among over 20,000 development projects, we have increased proportion using Gen AI to 60%. The scope of usage on each project is still limited to a portion of processes. So the impact has also been limited, but the proportion of projects using Gen AI at the end of the fiscal half was 30%. So use is expanding at a rapid pace that was exceeded our expectations. There are some hurdles, including cases in which we need the customers' consent to use Gen AI, but we want to further expand its use and widen the range of processes where it can be applied.

So through improvements in service quality and faster delivery, we aim to provide a service with even higher value added. And we think that by accomplishing this, it will lead to an improvement in profitability. We also continue to work on optimizing our personnel portfolio. In October, we launched a globally standardized human resources platform called One People in Japan, and we plan for a phased rollout of it globally. We are working to make further improvements, including optimizing the allocation of resources and accelerating resource assignment and development projects.

Page 17 provides an overview of each subsegment in Service Solutions. All subsegments achieved a well-balanced profit growth. First, Global Solutions. Revenue was JPY 379.8 billion, up 3.5% year-on-year. Excluding the impact of restructuring, actual revenue was up 8.7%. Adjusted operating profit was JPY 13.1 billion, an improvement of JPY 17.9 billion from the prior year. The main factor behind the increase in revenue was the growth of Uvance. In terms of profit, in addition to the benefit of higher revenue, being more discerning on development expenses for each offering had a positive impact. Looking at the operating profit margin, only in the third quarter, it was just above 7%. So there is still room to grow, but we will continue to make necessary investments to develop offerings and upgrade our modernization knowledge center as we work to further increase revenue and improve profitability.

In Regions Japan, revenue was JPY 953 billion, up 5.3% from the prior year. Adjusted operating profit was JPY 179.9 billion, up JPY 25.9 billion from the prior year. The demand for modernization-related projects such as CX and upgrades of mission-critical systems led to higher revenue in a wide range of public sector areas, in particular, including sports competitions from by public sector organizations, local governments and national security. As for profits, in addition to benefits of higher revenue, there was continued improvement in profitability. And while making growth investments in such areas consulting, we were able to generate higher profits. Adjusted OP margin was 18.9%, an improvement of 1.9 percentage points year-on-year.

In Regions International, revenue was JPY 417.6 billion, down 1% year-on-year, a slight decline. Adjusted operating profit was JPY 23 billion, up JPY 10.6 billion from the prior year. The effects of business and personnel portfolio transformation had a significant impact and led to profitability improvements. Operating profit margin was 5.5%. Page 18. I will now talk about the other segments besides Surface Solutions. First, Hardware Solutions. Revenue was JPY 672.9 billion, down 5.6% from the prior year. Excluding the impact of the change in the way revenue is recorded, revenue was essentially unchanged. Adjusted operating profit was JPY 37 billion, up JPY 22.9 billion from the prior year. In system products, revenue in Japan was essentially unchanged from the prior year.

Outside of Japan, in addition to changes in the way revenue is recorded, revenue declined because of reforms to businesses and in areas in Asia with smaller scale and low profitability. Operating profit increased because of the impact of an improvement in business efficiency from the integration of manufacturing and sales at Fasa Technologies, which was launched last fiscal year, leading to higher profitability. In addition, mainframe upgrade deals contributed to higher profit. In Network Products, while revenue was still sluggish, it increased by 9.2% over the prior year, in part because of an earlier delivery schedule for base stations. Profit increased because of higher revenue and business efficiency improvements from 1FINITY. Page 19. The top part of the page is Ubiquitous Solutions. Revenue was JPY 177.9 billion, down 1.9% from the prior year. Adjusted operating profit was JPY 31.4 billion, up JPY 11.1 billion year-on-year. Adjusted operating profit margin was 17.7%, an improvement of 6.5 percentage points year-on-year. The higher demand previously generated from engine support for Windows 10 essentially wound down in the first half. In addition, while revenues led to a decline in part because of a pullback from large volume deal in the prior year, profit significantly improved because of a shift in sales towards higher value-added products.

At the bottom is intersegment eliminations and corporate. There was an operating loss of JPY 55.5 billion, with a decline in expenses of JPY 3.4 billion compared to the previous year. We are moving forward in advanced R&D areas, primarily in the field of computing AI-related projects, quantum computing and next-generation CPUs. While systematically making investments in medium- to long-term business growth and enhancing management systems for data-driven management, we are also continuing to work to achieve greater efficiencies in corporate costs. Page 20. I will now talk about the status of cash flows and the balance sheet. Page 21, cash flows. Excluding onetime cash inflows or outflows, core free cash flow was JPY 175.7 billion, a significant increase in inflows of JPY 133.2 billion from the prior year.

In addition to higher profits, progress was made on bringing greater efficiencies to working capital, including holding down inventory assets. In addition, the carve-out of Shinko Electric also led to a reduction in capital expenditures. Toward the bottom of the table, free cash flow, including onetime inflows or outflows was JPY 390.3 billion, an increase in inflows of JPY 413.4 billion from the prior year. In addition to the improvement in core free cash flow, there were inflows from the sale of shares in Shinko Electric in general, resulting in a significant increase. Also in Q3, there was an outflow of cash from the acquisition of BrainPad.

Page 22 shows the status of assets, liabilities and equity. I will admit explanation for this page. From Page 23, I will discuss our forecast for fiscal year 2025. Page 24 is our consolidated financial forecast. As explaining our performance in the first 9 months exceeded our initial targets with both a very solid expansion in revenue and very solid improvements in profitability. In light of this, we are upwardly revising our consolidated financial forecast. Our revised forecast for fiscal year 2025 is as follows: revenue of JPY 3,530 billion, up JPY 80 billion from our previous forecast. Adjusted operating profit of JPY 380 billion, up JPY 20 billion from our previous forecast. Adjusted operating profit margin of 10.8% adjusted net profit of JPY 275 billion, up JPY 25 billion from our previous forecast.

Page 25 shows revisions to our forecast for each segment. We have made upward revisions to our forecast for all business segments. Service Solutions, our revenue forecast is now JPY 2.350 billion, up JPY 20 billion from our previous forecast. This is mainly the result of the impact of foreign exchange movements in Regions International. Our forecast for adjusted operating profit is JPY 365 billion, up JPY 5 billion from our previous forecast. The projected increase in profit is from higher profitability from delivery improvements in Japan and higher profits outside of Japan from our continued progress in structural reforms. Hardware Solutions, our revenue forecast is JPY 1.030 billion, up JPY 65 billion from our previous forecast.

For system products, it is mainly from the impact of exchange rate movements. For network products, it reflects earlier-than-anticipated demand for base stations. Adjusted operating profit forecast is JPY 60 billion, up JPY 5 billion from our previous forecast because of higher projected revenue. Ubiquitous Solutions, our revenue forecast is JPY 225 billion, unchanged from our previous forecast. Adjusted operating profit forecast is JPY 30 billion, up JPY 10 billion from our previous forecast. In the revised forecast, we incorporated progress in profitability improvements from cost reductions and higher projected sales of higher value-added products. Page 26 shows comparisons in quarterly performance with the prior year's performance.

For the fourth quarter, we project consolidated adjusted operating profit to be JPY 150.8 billion. While that figure represents a continued quarterly scale expansion, it also represents a decline compared to the prior year. Service Solutions, we project the fourth quarter will continue to demonstrate strong increase in operating profit, but we project lower profit in Hardware Solutions from a pullback from the prior year's large-scale projects, and we also project a significant pullback in ubiquity Solutions from the demand that had previously been generated in relation to the switchover from Windows 10, resulting in an expected decline in both revenue and profit in the fourth quarter.

Please note that this quarterly volatility was anticipated in our original forecast and is not the result of any recent market changes. Page 27 shows the trend in adjusted operating profit since fiscal year 2019. The bar graph shows the total consolidated adjusted operating profit, while the group portion represents the contribution from Surface Solutions. The line graph on the top shows the adjusted operating profit margin.

For this fiscal year, the final year of our medium-term management plan, adjusted operating profit is projected to be a record JPY 380 billion with an adjusted operating profit margin of 10.8%, also a new record. As you can clearly see from the trend, we have made progress in expanding our profit by transforming our business portfolio and raising profitability while ensuring that we achieve our fiscal year 2025 performance targets. We will continue to take measures to realize improvements in our corporate value in the future. Page 28 shows the subsegment components within Service Solutions. In Global Solutions, adjusted operating profit is projected to be JPY 28 billion with a profit margin of 5.3%. This represents an increase in profit of JPY 1 billion from the previous forecast from productivity improvements and greater scrutiny of investment spending.

For Regions Japan, adjusted operating profit is projected to be JPY 306 billion with a profit margin of 21.4%. Progress has been according to plan with no changes to the previous projection. Regions International, adjusted operating profit is projected to be JPY 31 billion with a profit margin of 5.6% as foreign exchange movements increased revenue by JPY 20 billion. In addition from profitability improvement expense, reform projected adjusted operating profit is up JPY 4 billion from the previous forecast. Page 29 shows the trends in adjusted operating profit from fiscal year 2019. The bar graph shows the total figure and the line graph represents the adjusted operating profit margin. With the expansion of our events offerings business and our modernization business, along with continued productivity improvements from standardization of automation in our delivery operations, including in our systems integration business, we can see improvements in our revenue, profit and profit margin.

In the current fiscal year, the final year of our medium-term management plan, we are seeking to achieve a profit of JPY 365 billion and an operating profit margin of 15.5% Page 30 shows our forecast for adjusted consolidated results and adjusted items. First, starting on the left, adjusted operating profit is projected to be JPY 380 billion, an upward revision of JPY 20 billion from our previous forecast as previously explained. Adjusted net income is projected to be JPY 275 billion, an upward revision of JPY 25 billion compared to the previous forecast because in addition to the increase in operating income, there were contributions from foreign exchange movements and an increase in income from investments accounted for using the equity method. The adjusted items on the right side show onetime gains or losses for operating profit, although there were losses mainly associated with approximately JPY 20 billion in structural transformation expenses for the European hardware business recorded in the first half.

The net profit for the period, there were significant gains of JPY 150 billion from the sale of Shinko Electric and General, resulting in an upward revision of JPY 10 billion from the previous forecast. As a result, operating profit prior to adjustments is projected to be JPY 360 billion, unchanged from the prior forecast. And net income prior to adjustments is projected to be JPY 425 billion, representing an upward revision of JPY 35 billion from the previous forecast. Page 31 shows our forecast for cash flows. With the upward revision in our forecast for profit, we also expect an improvement in cash flows. We project cash flow -- core free cash flow to be JPY 260 billion, up JPY 25 billion from our previous forecast in line with the amount of improvement in adjusted net income. Free cash flow is projected to be JPY 415 billion, up JPY 35 billion from the previous forecast, in line with the same amount and the improvement to projected net income prior to adjustments.

Page 32 shows revisions to shareholder returns in light of the projected increase in profit and cash flow. In fiscal year 2025, the final year of our medium-term management plan as well as the final year in our capital allocation plan. Regarding the projected JPY 35 billion by which our cash flow is projected to exceed our previous forecast, the full amount will be allocated to shareholder returns, including higher dividends. Specifically, the year-end dividend for fiscal year 2025 will be raised by JPY 20 from JPY 15 per share to JPY 35 per share. As a result, the full year dividend will be raised from the initial forecast of JPY 30 per share to JPY 50 per share. Payment of dividends are expected to be a total of JPY 87.3 billion, an increase of JPY 35 billion from our original forecast. As shown in the graph on the right, dividends have increased for 10 straight years. Furthermore, in accordance with the growth of -- in profit level, we plan to increase the level of dividend this fiscal year. We will continue to work on achieving the growth in profits and in accordance with that growth, implement a dividend policy that is stable and effective.

Page 33 shows total shareholder returns. For fiscal year 2025, we will implement share buybacks of JPY 170 billion in accordance with our plan. The bottom graph shows the trend in total shareholder returns. The 3 columns on the right show our current medium-term management plan. In fiscal year 2025 on the far right with the dividends discussed previously, total shareholder return is projected to be JPY 257.3 billion with total returns during the current medium-term management plan of JPY 639.3 billion with a shareholder return of 71%. In terms of our allocation plan of JPY 600 billion in shareholder returns over the 3-year period in light of higher cash flow generation, we are increasing it by JPY 39.3 billion.

These are my comments about our third quarter results and our forecast for fiscal year 2025. For this fiscal year, with every segment achieving solid growth in profits, we are expecting to achieve record full year results in profits, cash flows and shareholder returns. We cannot let down our guard with respect to changes in international circumstances or our business environment, but we will continue to be agile in the transformation of our business. Beyond meeting our targets for fiscal year 2025, we will also continue to work to raise our corporate value going forward. This concludes my presentation.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good morning. Hello. My name is Yamanishi from Fujitsu. So first of all, thank you very much for attending sustainability briefing by Fujitsu Limited.

First of all, I would like to talk about the entire picture of the Fujitsu Sustainability Management. To introduce myself, I'm CSSO. In April last year, I became Chief Sustainability and Supply Chain Officer, so about a year ago. When I joined the Fujitsu, when I started my career, I was in charge of the procurement logistics, and that's my area of specialty. So my title is CSSO, and I'm the first CSSO at Fujitsu.

In the area of sustainability, the Chief Sustainability Officer was my -- the preceding officer. So the S was added to my position. So this is described in a way that we may transition from a principle to action. Purpose was set by my predecessor and materialities were also set. So the philosophies, concepts were introduced by my predecessor, CSO. And now it is time to bring principles to action.

There are several challenges related to sustainability, and supply chain is one of the major area and issues in the field of sustainability. So S was added. And supply chain -- in the area of supply chain, I built my career. And in that process, so-called green procurement that we were engaged, CSR, sustainability that we talk about today.

The topics related to sustainability was also important to supply chain, and its importance has been growing. So that is the reason why we introduced this notion of CSSO globally, driving the notion of sustainability.

So this is our purpose. Once again, make the world more sustainable by building trust in society through innovation. So throughout our activities at Fujitsu, this is our starting point, our purpose.

Two years ago, we introduced and formulated this vision for 2030, a technology company that realizes net positive through digital services. So this is our vision. For this net positive, as we work on our efforts on vision, the growth as a company and the enhancement of the corporate value will be realized. That is our view.

In that area, the important theme is identified as materiality and social contributions to have impact in that area. And as you can see at the very bottom of this slide, the foundation for achieving this, we have 2-phased approach as a structure.

With respect to this materiality, I would like to introduce further. As I mentioned, the blue part, the foundation. And with that foundation, there is foundation, and against the pink parts, the contributions will be made. On the top, you have 3 areas of contributions: planet, solving global environmental issues; prosperity, developing a digital society; and people, improving people's well-being these areas. And as the foundation, technology, management foundation and human capital, it consists of 3. And today, on people, Mr. Hiramatsu will address to you. And actually, there are 3 on the top and 3 on the bottom, and we have subcategory, and we have a total of 25. That is our materiality.

In those areas, mainly in business, technology, digital service, will be provided to customers and to the society to bring about impact, not only business, not only commerce, but the initiative to community, supply chain and to employees, we will continue to yield impact. When we say impact, social impact is what we are trying to deliver. At the same time, we will achieve financial performance and financial impact. That is our materiality and what we are trying to aim for with net positive.

As we go through these activities, the so-called financial KPIs and nonfinancial KPIs, how are we organizing them? I would like to briefly talk about that. Through business activities, revenue and operating profit margin will improve. Of course, we do have such financial indicators. But in order to enhance corporate value, as you can see at the bottom green part, nonfinancial indicators are also raised. And by achieving both, we are going to enhance corporate value. That is our aim.

The nonfinancial indicators we have at the moment include greenhouse gas emission reduction and customer net promoting score, productivity enhancement, employee engagement and diversity leadership. We have the numerical targets to address them, and this is the final year, and that is the current midterm business plan. These nonfinancial indicators are laid out, but with these indicators, we are trying to deliver results to lead to financial performance.

As you can see at the very bottom, the human resources management may have some impact. And by leveraging digital tools, these KPIs will be boosted. And how are we going to change the approach to customers? And those would work effectively to the top. The causal relationship and correlations of them, our R&D by using our exploration technology for causal relationship, we are about to work on improvement. That is our current position.

Our efforts on sustainability are disclosed on our website. In our integrated report this year, you see the message of our CEO as a short video. Please take a look at this when you have time.

That concludes my presentation. Thank you very much for your attention.

Thank you very much. Now let us move on to the next presentation about the Fujitsu Human Capital Strategy by CHRO, Hiramatsu.

Thank you very much for taking the time to join us today. I'm Hiramatsu, CHRO of Fujitsu Limited. Today, I will be explaining our human capital management efforts to increase our corporate value and the growth in our business titled Enhancing Corporate Value: Fujitsu's Human Capital Strategy.

First, allow me to introduce myself. I joined Fujitsu in 1989 and have consistently built my career in the human resources area. In particular, in 2019, when Tokita became the President, I became responsible for human resources, implementing work-style reforms such as transition to job-based human resources management and work-life shift and carrying out human resources reforms that support the company's management strategy and business portfolio reforms. And outside the company, I participate in various expert meetings, including cabinet office council for realizing new form of capitalism in order to contribute to the total transformation of Japanese companies as a whole.

Now I'd like to explain our HR transformation, along with the history of our business structure transformation. This slide shows the evolution of business structure reforms and the trend in market capitalization. Since President Tokita took office in 2019, our company has transitioned into a DX promotion period. During this period, we advocated purpose-driven management and pursued fundamental qualitative transformation from IT company to DX company. The foundation for this is our company-wide DX FUJITRA and personal reform. As a result, our market capitalization reached JPY 8.73 trillion as of December 12, 2025, and our corporate value is steadily increasing.

President Tokita strongly believes that the people are the core of the transformation. He says, the business will follow. People are the driving force. These words demonstrate our unwavering determination to first embark upon HR reform and increase the growth and engagement of each employee, which will ultimately lead to the successful reform of our business portfolio and increased corporate value.

Fujitsu does not simply respond to changes in the VUCA era, we aim to be a company that contributes to the sustainability of society by working with our employees to develop the ability to create changes ourselves to achieve our purpose of make the world more sustainable. By building trust in society through innovation, we have defined our HR vision as DX company where diverse talents gather to create innovation everywhere in the society. And we introduced various HR initiatives.

Our human capital management is based upon this framework, the human capital value enhancement model. Starting from our corporate philosophy and the purpose, we began by drawing up vision, business strategy and the future human resources portfolio required for that. As initiatives for generating results, we clarify the assets to the gap of the human resources portfolio and formulate an action plan that involves investment, consistently capturing everything from defining the necessary human resources requirement to acquiring, allocating and developing their capabilities. And at the same time, for initiatives for sustainable impact, we have drawn up a structure that ultimately lead to revenue generation and increased profits.

To realize this framework, we have made the bold move to a full model change to job-based HR management. This is because a personnel system without consistency will not resonate with employees or lead to changes. First, we design organizations and positions based upon business strategy and then clarify responsibilities, authority and the personnel requirement through job description, job-based compensation system and a remuneration for highly skilled professionals, encouraging employees to take on greater responsibilities. We also delegate authority for recruiting, posting and other matters to the field, achieving optimal resource management initiated by the business division. And also, we strongly support autonomous learning and growth by introducing on-demand education and one-on-one meetings.

The picture on the left depicts our HR reforms to a tree with job-based HR management as a foundation. We aim to improve an organizational culture while improving our financial and nonfinancial indicators as outcomes. Today, I will talk about the 4 initiatives that form the foundation: Job-based HR management; career ownership; diversity and inclusion; and employee engagement and the nonfinancial indicators that are linked to them together with the specific data.

Fujitsu's traditional human resource management approach was based upon assigning the right person to the right position. We designed the organization on the assumption that existing human resources would not change significantly and formulated business strategies to maximize the performance. However, today, where are -- where the market conditions are changing and the global competition is intense, this approach is not enough. We formulate strategies by predicting changes in the market and competitors, and envision the organization and HR needed to realize those strategies. From there, we clarify gaps with the existing human resources and implement specific measures to fill these gaps. And this has led to job-based HR resource management that select the right person to the right role. This will more strongly align management strategies with human resource strategies, ensuring business growth.

From a human perspective, the core of this system is the significant expansion of postings. Whereas previously, the transfers, rotations and promotion funds were led by the organization, but the job-based model marks a major shift in the way each employee independently consider their own career path and aims for transfers and promotions to managerial positions through postings. This allows employees to take a more proactive role in seizing opportunities for their own growth, and each organization can also assign the best possible persons to the right positions, creating a system that benefits both parties.

Since the introduction of the internal posting system, its use has expanded dramatically. As this graph shows, we have significantly expanded posting since fiscal 2020, creating an environment where employees can actively develop their careers on their own volition through the year. Of approximately 70,000 employees in Japan, about 35,000 have applied for internal posting over the past 5 years, and 13,000 of them have been successful and transferred. This data clearly shows the employees have a growing sense of career ownership, and this led to actual action. We believe this will contribute to the revitalization of the organization and more strategic allocation of personnel, ultimately leading to productivity enhancement and growth across the company.

In the traditional Japanese employment system, it was common to hire new graduates all at once. But with the introduction of job-based HR management, hiring methods have also undergone major changes. We are no longer bound by the distinction between the new graduates and mid-career hires and flexibly hiring throughout the year without setting fund numbers. We will fully transition to this way of thinking from the 2026 hiring year. And by acquiring diverse talent at optimal time, we will always pursue talent portfolio that is in line with our strategy. This will enable us to realize a talent strategy that can respond quickly to the changes in the market, contributing to our securing a competitive advantage.

Next, I will explain about career ownership. Career ownership by each employee is essential for job-based HR management to take root. We have made a major shift from the previous style in which the company takes a lead on careers to a style in which the company provides career opportunities, which cultivates the ability for employees to think about and shape their own careers independently. This means that the employees are no longer passive, but rather seek out opportunities to take on challenges and receive specialized education tailored to the careers they are aiming for. By improving employee motivation and encouraging autonomous growth, this will become the foundation for supporting the sustainable growth of the entire company.

As a specific measure, we offer various programs. Firstly, in understanding and penetration, we offer career cafe, a workshop, to reflect on one's own career in the workshop; career counseling to allow consultation with experts; and career ownership to get insights into current situation and actions.

Secondly, in learning opportunities, Fujitsu Learning Experience, offering diverse learning options; ex Practice, acquiring essential mindsets for DX professionals; and reskilling and upskilling, learning to adapt to business changes are available.

Furthermore, on challenge opportunities, expanded posting system, taking on new roles; Job Challe!!, internal internship; and Assign Me, as internal site jobs are deployed.

Lastly, as fostering an autonomous work culture and organization; work life shift, expanding work style options; through one-on-one meeting, promoting communication for growth support; and management transformation, eliciting empathy from -- and encouraging challenges from employees -- employees' initiatives and engagements are enhanced.

The symbolic measure of understanding and penetration, Career Cafe is an interactive participation-based workshop designed to broaden perspectives through conversations with various individuals offering him to autonomously consider and act on one's career. From 2021 to 2024, on a cumulative basis, 25,638 employees participated, demonstrating steady penetration of career partnership, culture and strong needs for our support measures.

Another important measure is the career ownership assessment supervised by Professor Kennosuke Tanaka of Hosei University. This is an app which diagnoses employees' current career ownership status and provides tips for action by answering 16 questions. From FY 2022 to 2024, a cumulative total of 36,979 have used to objectively review their careers, becoming a powerful tool to promote actions towards future creation. This diagnosis serves as a tremendous support to grasp one's career phase and to consider specific next steps from both identity and adaptability of employees themselves.

The core of the learning opportunities is Fujitsu Learning Experience, on-demand educational platform where each employee sets goals and learns autonomously according to their career aspirations and strength. The use of this platform is astonishing. In comparison to FY 2020, the participants of Udemy and LIL increased 5.2-fold to 68,000 and the study hours increased to 5.9-fold to 950,000 hours. This demonstrates that the employees learn proactively according to their own will and commit to reskilling and upskilling. The autonomous study culture strongly promotes our DX talent development and nurture expertise essential to business growth.

Next is diversity and inclusion. We believe that building organization where diverse talent can be active as the source of innovation and directly links to the strengthening of corporate competitiveness. We have set specific nonfinancial indicators in women's empowerment and committed to achieve that as a company. As the graph on the slide shows, the ratio of female employees, ratio of newly appointed female managers and the ratio of female managers all improved steadily, achieving 31.1% in the ratio of female employees and 21.4% in the ratio of female managers in FY 2024. These indicators are set in STI indicators for directors and senior managers and linked to midterm management plan.

Furthermore, through initiatives such as open-call career workshops for female employees, female organizational leader development programs at each business group and Work Life Shift, company-wide support is provided to women's growth and empowerment.

Also, the employee engagement. We value engagement where each employee works lively and wishes to contribute to the company. If you take a look at the engagement score trend, it steadily improved from 61 in FY 2019 to 69 in FY 2024. This indicates the enhancement of employees' motivation and company engagement driven by our human capital management efforts, especially job type, talent management and career partnership support and DE&I promotion. Enhancement of engagement is viewed as a pivotal indicator directly connecting to employees' performance, improvement, attrition rate decline and corporate value enhancement.

As an essential tool supporting enhancement of engagement score, we use Microsoft Viva Glint globally. The survey results visualize each manager's strength and areas for improvement. It represents the most suitable recommended actions for each manager to promote behavioral change in the management. As a result, utilization of Glint action registration is approximately 90%. When action taking scores improve, engagement score improves too. Strong correlation is shown as a data. This effort is expected to improve the attrition rate of 2.72% in FY 2019 to 2.55% in FY 2024 and contribution to engagement enhancement, attrition rate improvement and contribution to productivity enhancements are shown in specific figures.

To maximize business growth, people portfolio is deeply linked with business strategy. In the next section, I will explain the specific ideas and how they are linked to financial impact. Human capital management is not mere implementation of human resource measures. This slide is quoted from talent version ITO Report 2.0 from May 2022, but we totally concur with it. Closely aligned management strategy and human resource strategy clearly visualize and communicate human capital information to stakeholders proactively. That is the essence of human capital management Fujitsu is driving at.

Our people portfolio formulation process begins from the clarification of our business portfolio, clear growth simulation of which business, which area and how much growth is conducted. On top of that, using the framework in this figure, people portfolio aligned with business portfolio is formulated. In other words, the number of headcount required by roles such as sales, consulting, delivery, R&D will be mapped by growth and downsized businesses, clarify roles to be strengthened and roles to be streamlined. Furthermore, headcount plan by role is formulated by region, considering each region's market characteristics, talent market situation and gap from the current talent portfolio. Lastly, specific measures and investment plans are formulated to achieve talent portfolios and regular monitoring will be conducted by setting KPI. In this fashion, not only quantitative change, but qualitative requirements such as skills held are captured to promote human capital management through data-driven approach.

This slide shows the changes in financial figures and employee numbers in our Service Solutions business, our main growth driver. While the number of employees decreased from 129,000 to 106,000 from fiscal 2019 to fiscal 2024, revenue grew steadily, and adjusted operating profit margin improved significantly from 8.2% to 15.5%. This is the result of optimal personnel allocation such as posting and reskilling based upon job-based HR management and improved productivity through the use of AI and other measures. In particular, operating profit per employee has more than doubled from JPY 1.74 million in fiscal 2019 to JPY 3.6 million in fiscal 2024, demonstrating that shifting our business and human resource portfolio to higher profit margin areas is leading to financial return.

In fiscal 2023, we raised the average annual salary of all employees by about 7%, up to a maximum of 24%. And furthermore, in fiscal 2024, we are investing approximately JPY 40 billion in HR reform, aiming to optimize personnel allocation and improve productivity through posting, reskilling and external transfers. This is not simply a cost but a strategic investment that encourages the concentration of human resources in growth business. This investment has led to significant growth in key areas such as 31% increase in Uvance sales and 70% increase in modernization sales and financial impact of approximately 5% increase in consolidated sales and 22% increase in operating profit. This data demonstrates that the investing in human capital, along with the transformation of talent portfolio, is directly linked to future growth and corporate value creation.

Uvance's business, which is driving our high growth, is further strengthening its alignment with our HR strategy. In fiscal '24, sales grew 31% year-on-year to JPY 482.5 billion. We forecast the fiscal '25 sales to grow 45% to JPY 700 billion. To accelerate this, we have increased the compensation levels of core Uvance personnel by a cumulative 15% over the 2-year period from 2023 to 2024, in line with the market rates and strengthened our range of specialist positions. We are also shifting personnel to priority areas through internal postings and strategic personnel allocation. In addition, we have strengthened the investment in skills, including those in 3S, SAP, ServiceNow and Salesforce and have seen more than 1,000 employees acquire these qualifications. By applying these skills to Uvance projects, we are further accelerating business growth.

Modernizing existing assets is the gateway to Uvance and the driver of improved profitability. In fiscal '24, sales increased 70% year-on-year to JPY 296.9 billion, and we are forecasting JPY 330 billion for fiscal 2025, demonstrating strong growth. In this area, we integrated our engineering companies and reorganized them into advanced engineering organization and established a new modernization knowledge center. Furthermore, we will expand our Modernization Meisters, our modernization specialists, from about 100 in fiscal '24 to 500 by fiscal '26. In the mid- to long term, we plan to reduce all process man hours by 20% to 50% through code conversion and test automation using Gen AI, allowing us to shift resources to high value-added areas such as Uvance and consulting. This will not only improve efficiency, but also create an environment where employees can focus upon high value-added work.

This consulting division operating as Uvance Wayfinders is also an important engine for growth. In fiscal 2024, we established a full region business structure of Japan, U.S., Europe and Australia and expanded our human resources through in-house reskilling. Fiscal '25 onwards, we will spread out consulting capabilities throughout the company, create examples of end-to-end support for client transformation. In terms of evaluation, appraisal and compensation, we have defined jobs, grades and compensation ranges in line with role standards based upon global common evaluation system and have created a system that made it easy for people with background in consulting firms to work at Fujitsu. In terms of in-house development, 1,666 people have taken training since 2024. And we are revamping our company-wide rollout of -- and rolling out the training programs company-wide.

AI business is also the core of our growth strategy. In fiscal '24, Uvance group 31% and UI -- rather, AI-related projects and services contributing both vertically and horizontally. In fiscal '25, we set the goal of Uvance 2.0 is data and AI-centric and promote an expansion of proportion of solutions centered on AI and data as well as productivity improvement across the company. We have rolled out our in-house AI platform, Kozuchi, across the company, achieving 69,000 monthly active users and about 380,000 total daily usages. We are promoting the transformation of all employees into AI users so that they use AI and data tools, thereby improving productivity across the company. At the same time, we have defined specialized jobs such as data scientists and AI architects and accelerating acquisition of external AI data talent, including acquisition of BrainPad.

The various human capital management initiatives I have explained so far are all based upon data. From formulating strategies to implementing measures and verifying the effectiveness, we pursue a thoroughly data-driven HR approach. This is an example of how we conduct data-driven HR. We conduct people analytics by integrating quantitative data such as sales, operating profit, engagement, transfer rates, ratio of female executives with qualitative data such as employee feedback, including text, comments and testimonials. As a result, we have confirmed a clear correlation. For example, that the greater the use of internal posting, the higher the sales revenue of the entire company and the sales organization. Furthermore, a survey of employees who transferred through internal posting revealed that 50% felt they were able to utilize their strengths and 80% felt they had grown. In this way, through ongoing hypothesis testing, we believe that the increased proactive human resource mobility brought about by posting leads to a more active organization, improved engagement, which had a positive impact on business performance.

For deeper analysis, we also conduct a causal analysis of engagement scores using our people analytics platform, Fujitsu Intelligence PaaS. This slide shows that the factors that directly affect engagement scores differ depending upon gender. For example, for men, initiative and displaying individual strengths influence pride, recommendation and ultimately satisfaction leading to engagement score improvement. On the other hand, for women, discretion, teamwork significantly contribute to pride, fulfillment and satisfaction. In this way, by gaining a deeper understanding of the mechanisms of engagement based upon data, we can develop more precise personalized measures and maximize the engagement of all employees, thereby improving overall corporate performance.

Finally, I will explain the direction and the measures for our next midterm management plan. Fujitsu has set the goal of creating value through AI coexistence, human-centric organizational transformation and data-driven HR. Specifically, by improving productivity through collaboration between people and AI and promoting organizational and management transformation, we will enable people to focus upon more creative work through coexistence and collaboration with AI. Next, we will promote optimizing our talent portfolio at a global level, leveraging agile team formation and the diverse values to create value creation on a global scale. And through solving social issues and contributing to industry through data-driven HR, we will use advanced data utilization and scientific knowledge to lead the way in resolving human resource issues across the society and developing industry. I'm convinced that these initiatives are essential for our sustainable growth and for providing value to our investors.

There are 2 keys to implementing human capital management, picturing the ideal future and clarify the gap between the ideal and the current situation. And then to close the gap, we need to build an organization with a mobile workforce where individuals can exercise career ownership and take on challenges autonomously. By implementing these 2 pillars, Fujitsu will maximize its human capital and accelerate creation of corporate value.

Thank you very much for your attention. Human capital management is the most important strategy for creating Fujitsu's future, and we will continue to work hard to meet the expectation of investors. Thank you very much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

[Interpreted] Thank you very much for your patience. It is now the scheduled time, so we will begin our Fujitsu technology strategy update. Thank you very much for taking the time to join us today.

I would like to explain the flow for today's presentation. Today's presenters are Fujitsu Limited Corporate Executive Officer, Corporate Vice President, CTO in charge of System Platform, Vivek Mahajan; and also Fujitsu Limited Corporate Executive Officer, EVP, Head of Fujitsu Research, Seishi Okamoto.

First, Vivek Mahajan will explain Fujitsu's technology strategy, followed by Okamoto's explanation of Fujitsu's research strategy. After the total 35-minute presentations, there will be about 25 minutes for Q&A. And the update is scheduled to end around 11 a.m., followed by a demo tour at a separate venue. Regarding our investors and analysts, you will proceed to the demo tour venue after the Q&A session has concluded around 11:00 a.m. For the media participants, you will move to the demo venue after the photo session post briefing.

The event will be moderated by myself, [ Saito ], from the Public Relations and IR office.

Vivek will now first present on Fujitsu's technology strategy. Vivek, the floor is yours.

[Interpreted] Good morning, everybody. This is Vivek Mahajan, CTO at Fujitsu, and welcome to our technology update. For myself, what I would like to do is to explain the overview of our technology strategy and provide updates. And after that, I will pass it over to Okamoto to explain the overall Fujitsu research strategy and its details.

So first of all, at the IR Day in September, I provided some brief updates. But there is one thing where I'd like to ask for your understanding where, as part of our technological strategy, basically speaking, similar for this year and also for the past 5 years, we've been focused on AI. And the reason why is the software and AI platform and the sovereign infrastructure supporting this. The reason why we say sovereign is because we are in the B2B business, working with enterprise companies and targeting these clients and their customers and to address their needs, sovereign is especially important. And for this, for the platform overall, from network to the software stack, to be responsible for this end-to-end, this has been our core strategy.

And now to the question of what is sovereign. There are many different definitions depending on the person. But what's most important for us is security. When it comes to enterprise companies, security and data security, as I'm sure you're all aware, the corporate data as well as the AI models and agents, security becomes very important. For example, taking defense businesses, 99% of data is not on the cloud. And the other thing is flexibility, corresponding to the customers' needs, having the platform and also infrastructure and also on-premise, cloud, hybrid environments, infrastructure, software stack that can support all of this as needed. And the other point is domain specific, which aligns with the customers' needs and demands specific to their domains. A platform that supports this becomes important.

And for this, on the right-hand side, we have our Fujitsu sovereign platform that we've defined here. At the very top, we have the AI software stack, Takane AI model, which we have been sharing with you, and the Kozuchi AI platform. We have these two. And Okamoto will be explaining the details later on. And the security stack is very important to support this. Fujitsu has been investing in this primarily, and we have many innovations thus far. So AI LLMs as well as the Kozuchi and Kozuchi security, we have our security stack that is supporting all of this for our software stack.

And supporting this too is computing. I'm often questioned, Fujitsu, are you in software or hardware or network? We see this as a comprehensive solution. So it doesn't matter, hardware or software. In this era and time, we must cover everything, which means, for us, in Japan, we're very unique in the CPU, MONAKA, MONAKA-X as well as quantum and the hybrid environment as well with HPC, which we will touch on later, which is made in Japan. These made technologies in Japan is really important.

And also the network stack. In order to realize this AI world, software, computing, network, we need these three. As you are very well aware, NVIDIA has invested in Nokia. And as we heard in today's announcement as well and their investments, we see all of this happening. Therefore, we have been investing in this strategy for a while.

Now regarding Fujitsu's AI strategy. I'm often questioned, what are we going to do in AI. Obviously, we have the AI Kozuchi platform, which we have explained from before. But there are two points. One, the enterprise generative AI framework.

Within this, we have the generative AI reconstruction. The other day, the AI single-bit quantization, we've announced this, first time in the world. And this is really important to us where the LLM model, in a very small computing power, it's still operable; and being domain specific, where it's specific distillation to create a specific AI model, which means on edges and also in a private environment too, we will be able to address the customers' needs and create AI models very easily and we don't need large computing power and a low cost. And Fujitsu's customers who are enterprise companies, they are in high demand of this.

And the other thing is the knowledge graph. The unstructured data, we need to be able to use this. Within the enterprise companies, 80% is unstructured data, which means we need to be able to have the LLMs read the data which is unstructured. And to enable this is the knowledge graph technology. Therefore, the sovereign AI platform for us, it is important to be the leader not just in Japan but in global as well. So we want the world in defense, health care, finance, manufacturing, government to become known for our sovereign AI platform.

So this is our Fujitsu road map. It's unique for companies to have a 5-year road map. But we have announced this with solid steps and with details that will be coming up every single year. And we have the larger milestones here. And for the AI platform, for Kozuchi, which includes AI and security, also Takane as well as the AI agent, the yearly evolution as well as the AI security stack evolution is noted here.

And the other point here is on the bottom, we have physical AI. In October, Jensen, Tokita and myself, we've announced this. Fujitsu, NVIDIA, Yaskawa as the first stage. We have signed the partnership for robotics. And Fujitsu physical AI, we see this as the robots' brain as well as the sensing and the robot motions. On this, the software stack, network and computing, we will provide to support all of this. So we will be moving forward with the various partnerships in this area.

And computing, supporting the AI stack is -- this is just a reminder where this will be launched next year, which is completely a 2-nanometer CPU, Japan-made, 144 cores and dual sockets in the CPU. And on this, in the future, the CPU lineup, this will become the foundation, the A64FX and Fugaku. Since then, we've been incorporating many different technologies, but this is going to be very versatile and open in the chiplet. So I hope you will look forward to this launch next year.

And for the MONAKA road map, I mentioned the 2-nanometer. But in August, with RIKEN and NVIDIA and ourselves, Professor Matsuoka and Gonokami, we talked about the FugakuNEXT basis, MONAKA-X 1.4. And the biggest difference here is -- MONAKA A64FX, the biggest difference here is the versatile chip. Even in general companies as well as servers, this is usable. And the 1.4 nanometers will be 256 and 128 and NPU will be added in this new version. And in that world, we will aim to become market leaders.

In August, we mentioned this as well. In the world of AI, the strongest CPU is what we're trying to achieve. And AI GPU with CPU combined together, we want to be able to provide the overall media platform. And so the AI supercomputer will be based upon this.

And of course, quantum. Quantum, for Fujitsu, we want to aim to become a global leader. This is made in Japan. It's a completely made in Japan technology, [ electronic control ] and everything. In a concluded approach, we're going to make this all entirely made in Japan. And this will be launched in March. This 250 logical qubits, this is the most important. There's still a lot of technology that we need to work on, but we want to make sure that software stack and control electronics and keys all are included in our approach to become a global leader.

This would be the road map. And for quantum, we have 256 qubits that we will be launching in March. And in 2030, 10,000. In 2035, we are targeting for 1,000 logical qubits. And what I would like all of you to understand is HPC and quantum, if we add these two together, there will be many things that we will be able to do. And HPC and quantum, I think Fujitsu is the only company that is working on both. And so I hope that you can be noted at that point.

And last but not least, what I want to talk about is network, Fujitsu's network technology. I would like all of you to understand that without network, the world of AI cannot be realized. This is an area that we want to be ahead of the curve around, photonics, mobile system, network orchestration and data-centric infrastructure, the software stack. What we're developing today is photonics and optic, and we want to have a single software stack that has all that in DCI, data-centric infrastructure. We want to be able to connect that through our software and hardware technology.

We also will have a road map for all of these initiatives. And 1.6 terabyte, this is an area that we definitely would like to acquire global leadership position around. And AI-RAN is also a very important technology. We have been announcing this with SoftBank and NVIDIA. This is a technology that we jointly developed. We are working to deploy this with many customers. If this is achieved, then even at edge, we will be able to realize AI. So for Fujitsu, software stack, computing and network, with all of these combined, we want to be able to establish these three pillars.

In summary, this strategy is centered around AI. And I think from about 1.5 or 2 years ago, a lot of the companies have this as a strategy. But we have had this for 5 years. It has not changed. Our initiatives are centered around AI, network, computing, security and converging technology. These five technologies are areas that we will continue to work on, and I hope you can look forward to our efforts.

Thank you very much. That's it from me.

[Interpreted] Mr. Mahajan, thank you very much for your presentation. Next, I would like to have Mr. Okamoto talk about the Fujitsu research strategy. Okamoto-san, the floor is yours.

[Interpreted] Good morning, everybody. My name is Okamoto from Fujitsu. I would like to explain our research strategy. Starting with our five key technology areas that Fujitsu is involved in. We want to reinforce each of the technology areas. In addition to that, we want to fuse on the technology centered around AI. This is our big approach.

And as you can see on the bottom of the slide, we are forecasting the medium- to long-term technology trends to develop technologies that pave the way for next-generation: physical AI, space, defense and next-generation communications. Today, I would like to explain the technology update in each of these fields.

Starting with the AI research strategy. We have our R&D activities based on two areas. First is Takane. This would be GenAI for enterprise. And the other would be Kozuchi, Fujitsu's AI platform. With these two axes, we are working on research so that sovereign AI, a strong version of this, can be established. This would be the essentials of our research and development activity.

Today, I would like to talk about our involvement around Takane and how we have reinforced Kozuchi. Starting with Takane. The large-sized language model, I think there are three key challenges. One is that the development and operation cost is increasing, and the power consumption is increasing, and the third is the need to address edge AI. To solve these challenges, it will be a requirement for us to achieve a very strong sovereign AI. We have been working on technology to be able to address these challenges.

Today, I would like to talk about the generative AI reconstruction technology. One is quantization and the other specialized AI distillation. The GenAI that is generally used is expressed with 16 bits. That's what we can say in general. And the 16 bits, if we lower this to 1 bit, we have been able to achieve this 1-bit quantization. This is what we call the single-bit quantization technology. The GenAI model, when we compare with the one using 16 bits, the accuracy retention rate for the single-bit quantization is 89%, the processing speed is 3x faster and 98% of power consumption can be reduced as well as the GPU cost.

The other aspect of this AI reconstruction technology is the upstream technology. It's not just about making the parameter smaller. But this upstream technology, when we compare it with that, the speed of inference is 11x higher and the accuracy has improved by 43% and memory usage is reduced by 70%. So the accuracy is elevated through the reduction of parameter size of 1/100. And this quantum technology can be used not only in a limited area, but it is very versatile. And so we would like to release the single-bit quantization technology as OSS.

Next, I would like to talk about the knowledge graph enhanced RAG. This is what we have created. This is not Internet data. This is using work data or enterprise data or domain data. And it's really about embedding this into generative AI. This is becoming a key issue. As you can see here, we are #1 in document search with charts and tables. And as a graph RAG, Microsoft's graph RAG, if we compare it to them, the speed is 50x higher. And the knowledge graph itself is operated, and we're also making self-improvements through context and execution results.

We are trying to deploy this in various areas. For example, in the manufacturing sector, we have maintenance and incident documents or components documents that we can capture. For the finance sector, we have a source code and we can also confirm the specification. And for health care, we can create a knowledge graph based on electronic health records. So these are deployments that we are working on at the moment.

Next, I would like to talk about the enhancement of our Kozuchi AI platform. What I would like to talk about are two points. One is by working with NVIDIA, we will be enhancing Kozuchi. As you can see here, NVIDIA NeMo or NIM, these are the software stacks that NVIDIA has. We're going to integrate this into Kozuchi so that we can enhance the accuracy as well as enhance automation. FUJITSU-MONAKA can also be combined so that NVIDIA GPU and NVLink Fusion can provide global standard secure AI platform.

Regarding Kozuchi, there's one more point, and that it is strengthening Fujitsu's IP. The first is on the AI security area, addressing vulnerabilities in the LLM, 7,700 vulnerabilities. This is the strongest in the industry using scanner technology. And also the attacks to RAG, risks around information leakage, to address this at 98% accuracy, we have developed risk countermeasures. And this year, in October, the Fujitsu cloud generative AI platform, we have onboarded this commercially as well as with Cohere, the AI services security enhancement. We have already started a partnership with them.

Regarding Fujitsu's strong IP, the next point is on causal AI. And regarding causal AI, not correlation but accurate measures and initiatives. To give a more accurate cause-and-effect relationship, this is a hot topic in AI. And Fujitsu's causal AI unique points are the following. The first is scalability. And this is 1,000x faster processing than conventional methods. And the other is estimating causal effects. So using the technology that is able to give causal effects from a large amount of data, we are able to apply this to many different areas. So Uvance and Fujitsu's data-driven technology, as part of the core for this, we are planning for commercialization for next year.

Lastly, this is agent. And Fujitsu's multi-AI agent, we have announced this as of December of last year. And within the respective companies, it's not just creating the agent systems. But our target for R&D is cross-industry, which means between different industries, how to operate these multi-AI agents. So this is a technology to support that.

Largely speaking, there are two here. Agent communication between different companies is what we are talking about. So incomplete data, using this type of data, how are we really going to be able to operate these AI agents. And the second is within the AI communication, the vulnerabilities and using the secure inter-agent gateway to prohibit sharing of sensitive information, we are introducing guardrails for this.

And we are going to start the supply chain verification at Rohto. And also the COCN organization, we are implementing this to promote policy recommendations. So we are starting on these initiatives. And also, we are planning to offer this through Uvance's Dynamic Supply Chain business from next year.

Regarding security, I would like to provide some input on digital fakes. In the explosive evolution of GenAI, there are obviously many benefits. But on the back end, the content generated by AI, we've seen a lot of misinformation and disinformation which is posing many risks both socially and economically. So at Fujitsu Research, as you can see here on the bottom, the technologies for detecting disinformation with high accuracy as well as the LLMs that are specific for this for detecting the misinformation as well. So we have been developing many different applications.

At Fujitsu, what we are promoting primarily, the NEDO K Program. We've applied some technologies to this program already. And the K program, what this is able to do is -- primarily, this is Japanese innovative technology. But we are announcing today the international consortium, Frontria, which is not just in Japan but globally. The AI governance and misinformation/disinformation, to counter many different risks, we have created this international consortium. And the unique characteristics of this is we're able to create new markets by globally combining various IPs through this platform.

We have 57 members who are participating in this consortium, and you can see the starting members here on the slide. And today, we've received many different endorsements thus far. But especially, one of Italy's largest banking groups, Intesa Sanpaolo; as well as Comprehensive Financial Services Group, the core business of non-life insurance, MS&AD, we received endorsement videos from the two. So we would like you to take a look.

As a financial institution, we operate in an environment shaped by evolving risks, complex regulatory demands and the growing impact of news information. We view this consortium as a valuable opportunity to advance shared standards and foster responsible innovation. Through our participation, we aim to continue with our expertise, strengthen collective safeguards, and then we shape solutions which promote trust, resilience and long-term societal benefit.

[Interpreted] At MS&AD Insurance Group Holdings, I am the General Manager of the Innovation Planning Department, and my name is Komatsuzaki. I am involved in the testing of new technologies such as AI and business development in our company. Congratulations to Fujitsu on the establishment of the international consortium, Frontria.

In the non-life insurance business, accurate information, particularly images and videos of the damage, is crucial for making appropriate liability determinations in the event of an accident. And measures to prevent fraudulent claims are becoming increasingly important. Through collaborative technology development with cutting-edge companies from around the world, we will strive to maintain and grow a healthy non-life insurance system, and we appreciate your support.

[Interpreted] Regarding Frontria, at the exhibit corner, we have a specific booth which we will be providing demos and showing our technology.

So the next area is quantum. As you're already aware, 64- and 256-qubit superconducting computers, together with Professor Nakamura's team at RIKEN, we've jointly developed this. And also, the G-QuAT of AIST, we've introduced this to them already. And the 1,024-qubit superconducting quantum computer, which is the world's largest class, we will be announcing this more formally next year.

And FTP, Fujitsu Technology Park, which you are visiting here today, within this property next door, we have the quantum building, where within the headquarters, the 1,024-qubit superconducting quantum computer will be operational. And also with FUJITSU-MONAKA, the hybrid HPC environment, by creating this, we will be able to use this as a test bed for quantum.

Regarding the qubits, making this more large scale, what is really important in the commercialization is, as you're aware, the quantum error correction technology. So between the logical qubits and the operations between the qubits, through a unique gateway, becomes very efficient, using the evolution of the STAR Architecture, which we have announced. And as one of the biggest updates recently, we have two. One, which is with comparison with more standard technology, we're able to succeed in the computation speed by more than double and reduce error occurrence probability to 1/6 or less.

And also in the quantum area, breakthroughs in quantum technology, to pursue these breakthroughs, the crucial part is developing use cases. And this is a very big theme for us. And as you can see here, we have materials, drug discovery, finance, manufacturing and robotics-included machines. And we are aiming for many different use cases to seek breakthroughs. So at the demo booth, we have in the materials area as well as on machines related to robotics, we have a demo that we can provide to you. So we encourage you to take a look.

And FUJITSU-MONAKA, we are currently in development. And FUJITSU-MONAKA-X 1.4 nanometers using this semiconductor, CPU and NPU, as you can see here, FUJITSU-MONAKA-X CPU version, what this is, is the MONAKA that we have developed so far. The confidential computing technology as well as the super low energy version, especially on edge computing and uses on those, energy efficiency as well as response times, it's very strong on these points in the CPU that we have developed.

And then furthermore, in addition to this, we have the MONAKA-X CPU + NPU. The MONAKA-X inference speed has further been elevated, and it also contributes to low power usage. Furthermore, for MONAKA-X CPU, by combining this with GPU, we will be able to have a large-sized scaled LLM training. As you can see on the right, we have a real-time multi-model AI, edge cloud integrated inference and confidential data AI analysis. All of these AI workloads, out of this, we can offer the best option for the customers.

The FugakuNEXT that we announced the other day, the MONAKA-X only CPU and the NVIDIA so-called GPU are combined together so that FugakuNEXT basic specification has been awarded. So we've been able to acquire the order from this. The CPU technology will not only accelerate Japan's technology, but the next-generation AI-HPC platform can be realized. And also around 2030, we should be able to operate with the computational problem-solving technology.

Next, I would like to talk about the converging technologies. Digital technology and policy twin can be combined together in this. As you can see, we have the urban transportation, regional transportation gap, environmental measures, EV promotion and rising medical costs that we face as challenges. And we can create the so-called social digital twin and do a digital rehearsal. As you can see here, there are various regions that have already implemented this.

Social digital twin and digital rehearsal. At Uvance, the trusted offering in society, has already embedded this technology. And as a new technology, we have what we call a policy twin. This automatically creates policies. And through the development of the technology, we have some demonstrations that I hope you can take a look at afterwards.

Next is the ocean digital twin. For ocean digital twin, as you can see, there are key social challenges. We first want to update the technology, especially the automatic control of underwater drone. In the conventional technology, the positioning accuracy was 1 meters of a gap, but we've been able to narrow that down to 50 centimeters. Last year, when we made this announcement we were only able to apply this to approximately 50% of Japan's maritime area, but now it has been raised to 80%.

The certification rate is 95%, and so we have been able to win the top-class certification of J-Blue Credit. Furthermore, not only do we want to see and observe, we want to be able to figure out the seagrass bed creation so that we can help reduce CO2 emission. As you can see here, we are deploying this in various areas to fully make use of this technology.

Next, I would like to talk about the physical AI area, spatial robotics. As all of you know, not only in the industrial sector, there are human robotic co-existence and scientific experiments where robotics are hoping to be adopted. We're not going to target just single robots, but we want to control multiple robots. The conventional world model will now turn into a spatial world model, and so we are working on developing this as well. We have sent out a press release today. And I think seeing is believing, and so we would like to encourage you to take a look at this at the exhibition corner.

In the area of space, on the left, we hear that there are a lot of private companies that are launching these satellites. And we would like to contribute in the spatial area as well satellite data platform technology. So it's about processing data with satellite edge computing. This is very important to have the data processing speed. And we have been able to reduce the power load to 1/3 and data transmission can be done within 10 minutes. This was the targeted time in the industry, and the near real-time has been achieved through our technology.

Another point that I would like to mention is the resolution issue of the images. We have an AI technology of high precision and we have a technology to sharpen the image by 225-fold. Not only satellite data, but we also want to integrate that to the industrial data to generate new value. This becomes key. We have the large-scale geographic information processing infrastructure to realize this in the future. This also is available for you to see at the demonstration corner, so please take a look at this.

The last field that I would like to talk about is the defense and next-generation communications. The so-called material science and device technology are to be combined so that we can aim to realize a safe, secure and sustainable society.

One is continuous wide-area monitoring system for defense and disaster prevention. Fujitsu's so-called two-wavelength infrared sensor is to be developed for early social implementation. We would like to provide the world's top-class high-sensitivity, high-resolution infrared sensor to ATLA. The other area is power-saving wireless communication technology. 50% of the powers in base stations are amp. And so we would like to use our own technology to be able to reduce the environmental impact.

In the demonstration corner, we have these 12 booths for you to take a look at. As I mentioned in my presentation, the international consortium, Frontria, we have a special booth aside from these five key technology areas. We also have new fields for exploration. One is the spatial world model as well as the satellite data utilization. So please make use of the time to be able to take a look at our demonstration.

And that is the end of my presentation.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

To start the FY 2025 second quarter consolidated financial results briefing. Please look at the materials. Page 3 shows an overview of our financial results for the first half. First, Service Solutions, our main segment had strong performance with higher revenue and adjusted operating profit. Revenue for the first half was JPY 1,066.5 billion from the prior year, excluding the impact from restructuring that took place during the prior fiscal year, revenue was up 6.4% and revenue was up 4.8%.

In businesses in Japan, in particular, there was a strong continued growth in demand for digital transformation and modernization and revenue was up 9% year-on-year. Adjusted operating profit was JPY 119.6 billion, up JPY 3.9 billion from the prior year, an increase of 34.8%.

The adjusted operating profit margin was 11.2%, an improvement of 2.5 percentage points from the prior year due to the benefits of higher revenue in addition to increased profitability. In the lower box, consolidated total revenue was JPY 1,566.5 billion, up 0.9% from the prior year. Looking at this figure, excluding the impact of restructuring, it is up 3.6%.

Adjusted operating profit was JPY 121.3 billion, up JPY 55.2 billion year-on-year, an increase of 83.6%. The adjusted operating profit margin was 7.7%, an improvement of 3.4 percentage points from the prior year. Each business segment posted higher profits and adjusted operating profit for the first half reached a new record.

At the very bottom, net profit was JPY 262 billion, a new record. In addition to profit from business operations, we recorded a gain on the sale of shares in Fujitsu General Limited and Shinko Electric Industries Company Limited. Page 4 shows the progress we have made in consolidated adjusted operating profit. The result for the first half was JPY 121.3 billion, up JPY 55.2 billion from JPY 66 billion in the prior year. The rate of progress made over the year against our target operating profit is shown in the pie charts. It improved from 22% in the prior year to 34%, an increase of 12 percentage points, representing solid progress.

On the right-hand side of the page, operating profit for the second half of the fiscal year is forecast to be JPY 238.6 billion and at the same level as prior. For the full year, we are targeting an operating profit of JPY 360 billion, an increase of JPY 32.7 billion year-on-year. Page 5 gives an overview of profit and loss for each segment. In the following pages, I will go through the results for each segment separately, but let me know outright that each segment reported a profit.

Service Solutions, our growth driver had higher revenue and higher profit. Steady progress is also being made on improving profitability as planned. The far right column shows the percentage increase or decrease from prior year, excluding the effect of restructuring. There was an increase in sales revenue using the same conditions as FY 2025, excluding last year's sale of the contact center business. Below that is Hardware Solutions. Although revenue declined due to small scale, low profitability businesses in the Asia Pacific region, progress was made on cost efficiencies, resulting in significantly higher profit.

From fiscal year 2025, we have changed from using the gross sales standard for recording revenue from software from the other companies to a net sales standard. In short, we have made this revision to better reflect the scale of revenue from the profitable portion of actual business, extracting revenue from low value-added products from outside companies. In Ubiquitous Solutions, revenue and profit increased due to consolidating our businesses in Japan and cost improvements.

On Page 6, I will show a breakdown of results for each segment. Starting from Page 7 is Service Solutions. Revenue was JPY 1,066.5 billion, up 6.4%, excluding the impact of restructuring. There is continued strong demand for DX and modernization deals, primarily in the Japanese marketplace. Revenue from business in Japan was up 8.9% from the prior year. Adjusted operating profit was JPY 119.6 billion, up JPY 30.9 billion from the prior year. The adjusted operating profit margin was 11.2%, an improvement of 2.5 percentage points from the prior year.

On the next page, I will explain the factors behind the change in adjusted operating profit using the waterfall chart. Page 8 is a breakdown of the changes since last year and adjusted operating profit for Service Solutions. On the very left, adjusted operating profit for the first half fiscal 2024 was JPY 88.7 billion, and that will be the starting point for the factors on the right that impact the results in the first half of this fiscal year. First profit increased by JPY 18.8 billion from the impact of higher revenue. The main factor was the increase in the gross margin because of higher revenue in Japan.

Second, profit increased by JPY 21.2 billion from profitability improvements. This is the result of continuous initiatives to improve productivity, such as standardization process since for development work and automation. In addition, outside of Japan, we started to steadily see the results restructuring. Overall, the gross margin improved by 2 percentage points.

Third, profit decreased by JPY 9.2 billion because of higher expenses. We proactively made progress on expanding new investments directly linked to business growth, including enhancements in new bounds, the modernization business, consulting and security. Bringing this together, adjusted operating profit for the fiscal -- first half of fiscal 2025 for Service Solutions was JPY 119.6 billion. The operating profit margin was 11.2%, an improvement of 2.5 percentage points year-on-year.

Next is Page 9. I will now provide some additional information on each of the items in the previous waterfall chart. First, we look at the status of orders, which led to sales. This page shows orders in Japan. Orders in the first half rose by 3% compared to the prior year, while the growth rate may appear a bit weak. If you look at the growth, excluding the multiyear contracts and large-scale deals that were won in the prior year, growth was up 6%. We perceive this to be the increasing speed for demand in each fiscal year.

We will now comment on each industry segment. Orders in the Enterprise segment was down 3% from the prior year. Excluding the impact of large-scale business deals for multiple years contracts, orders were up by 4%. Looking at the first half by industry, order in the retailing and distribution industry held firm and orders in the manufacturing industry was strong. There continues to be a strong flow of inquiries on DX, SX related projects and modernization projects. In the Finance segment, orders were up 1% compared to the prior year. This is mainly because there were large-scale contracts for financial institutions the first half of the prior year, but orders continued to remain at a high level in the first half of fiscal year 2025 as well.

In Public and Healthcare segment, orders were up 8% compared to the prior year. The main reason for this is that we won large-scale system and new projects in the public sector. Mission critical orders were up 8% year-on-year. The main reason for this was the system renewal projects for Japan and its governor directed sports competition. There's also continued high level of orders in the national security field, specifically from the Japanese Minister of Defense.

In business in Japan, currently, looking at individual customers, one can see some unevenness from the impact of changes in economic environment. However, gross volume of the deals in our pipeline is continuing to expand across all segments. In the second half, we will continue to make progress and steadily winning deals for further expansion in the volume of deals.

Page 10 shows our order backlog in Japan. The left side of the page shows the revenue target of JPY 1.8 trillion for the full year against this in the light blue colored column that is the fourth column from the left, the total actual revenue from the first half and backlog of orders planned for fiscal 2025 is shown to be JPY 1,479.1 billion. This covers 82% of the revenue for the full year.

This cover ratio is the same level as prior year, and we consider this to be strong progress. To achieve our full year target, we made JPY 320.8 billion in orders from our pipeline to be converted into sales in the second half. While it is not shown quantitatively, the gross volume for deal pipeline is expanding, and we believe there is a sufficient probability of achieving it. We will continue to work to achieve the full year target.

Page 11 shows orders from outside of Japan. Orders in Europe were up 28% from the prior year. The growth is from winning a multiyear contract of data center-related large-scale renewal projects. Orders in the Americas were down from the prior year due to a pullback from multiyear deals in the first quarter of the prior year. Because the region's overall scale of business is small, quarterly fluctuations can be large.

Orders in Asia Pacific were up 8% from the prior year. The step-up in growth was because we were able to win a retail industry-related multiyear renewal project contract in Oceania.

Page 12 shows the progress of Uvance, which is positioned as a cornerstone of our business portfolio transformation. Overall orders in the first half were JPY 318.6 billion, up 43% from the prior year. The bar graphs below show revenue, which was JPY 311.0 billion for the first half, representing very strong growth of 55% from the prior year. The Vertical areas grew by 94%, roughly double the amount from the prior year.

The share of revenue from Uvance and the total revenue of Service Solutions grew from 20% last year to 29%. Our revenue target for fiscal 2025, the final year of our Medium-Term Management Plan, is JPY 700.0 billion, as shown on the graph on the far right, representing a target growth rate of 45%. Our actual revenue in the first half is only 44% of that amount, less than half of the absolute value of that target, but our growth rate is trending above our target level for the full year, so we are on a solid trajectory to achieve our revenue target.

Page 13 shows the status of our modernization business, another pillar of our growth. The level of orders in the first half was JPY 154.1 billion, up 3% year-on-year. As shown on the right side, actual orders last year were up sharply by 65% over the previous year, which was driven by the acquisition of large public sector deals, among other factors.

Looking at this year's first half, growth appears weak in comparison with fiscal year 2024 because of the pullback, but we are receiving even more orders than last year's high level, with solid growth in line with our plan. In the bar graphs below that, revenue in the first half was JPY 161.3 billion, up 38% from the prior year. The graph on the right side shows this fiscal year's revenue target, which is JPY 330 billion. Actual results in the first half were nearly half of that amount, with the growth rate trending above our target.

With page 14, I would like to provide additional information on improvements in profitability. There have been continued improvements in profitability, boosting profits by JPY 21.2 billion, with the gross margin up 2 percentage points from the prior year. There has been no change in our key initiatives to strengthen our delivery performance. Mainly, they are standardization and automation. The utilization rate of the Japan Global Gateway or JGG is 48%, so nearly half of all projects are using it.

In addition, the use of generative AI in development processes is rapidly expanding. Already, we are providing a usage environment to securely use generative AI tools to 30,000 system engineers in Japan and to partner companies. Of our current level of over 20,000 projects, generative AI tools are being used in some way in roughly 1/3 of the projects.

The actual usage of each project is still just for a portion of the processes, and the effect is limited. But first we want to expand the range of applications, and then we seek to deepen the usage in a wide range of processes. There are some hurdles, including cases in which we need the customers' consent to use generative AI, but by the end of this fiscal year we seek to expand usage of generative AI tools to 50% to 60% of all projects, even if it just for a portion of processes.

The usage of generative AI for delivery is not just to generate cost efficiencies. We also see it as an important way to raise the value we provide to customers in the need to broaden demand for DX and modernization. Initiatives to standardize and automate delivery are directly linked to higher service quality and a higher speed at which we provide services. We believe that providing high value-added services will also lead to an improvement in profitability.

Page 15 provides an overview of each sub-segment in Service Solutions. First, we were able to increase the profit with a good balance among all subsegments. First is Global Solutions. Revenue was JPY 249.3 billion, up 1.1% over the prior year. Excluding the impact of restructuring, actual revenue was up 6.1%. Adjusted operating profit was JPY 3.8 billion, an improvement of JPY 9.9 billion from the prior year.

The main factors behind the increase in revenue was the growth of Uvance. In terms of profits, in addition to the benefit of higher revenue, being more discerning on development expenses for each offering had a positive impact. Although profitability is still low, it has led to an improvement in profits. While continuing to make necessary investments in such areas as the development of offerings and upgrades to our Modernization Knowledge Center, we will work to further increase revenue and improve profitability.

In international regions, revenue was JPY 271.2 billion, down 1. 6% compared to the prior year. Compared to the prior year, there was a negative impact from exchange rate improvements. Excluding that impact, revenue was essentially unchanged from the prior year. Adjusted operating profit was JPY 16.7 billion, up JPY 13.5 billion from the prior year. The effects of the business portfolio transformation had a significant impact and led to profitability improvements. Adjusted operating profit margin was 16.3%, 0.6% improvement against the previous year.

In Regions International, revenue was JPY 271.2 billion, down 1. 6% compared to the prior year. Compared to the prior year, there was a negative impact from exchange rate movements. Excluding that impact, revenue was essentially unchanged from the prior year. Adjusted operating profit was JPY 16.7 billion, up JPY 13.5 billion from the prior year. The effects of the business portfolio transformation had a significant impact and led to profitability improvements.

Moving onto page 16. I would like to talk about things other than Service Solutions. First, I would like to talk about Hardware Solutions. Revenue was JPY 424.8 billion, down 7% from the prior year. Excluding the impact of the change in the way revenue is recorded, revenue declined by 1.2%. Adjusted operating profit was JPY 12.5 billion, up JPY 9.4 billion from the prior year.

In System Products, revenue in Japan was essentially unchanged from the prior year. Outside of Japan, in addition to changes in the way revenue is recorded, revenue declined because of reforms to businesses and areas in Asia with smaller scale and low profitability. Adjusted operating profit increased because of the impact of an improvement in business efficiency from the integration of manufacturing and sales at Fsas Technologies, which launched last year. Revenue in Network Products was still sluggish, but increased by 6.7% over the prior year. Profit increased due to an increase in sales of higher margin products and cost-cutting efforts.

Page 17. The top part of this page is Ubiquitous Solutions. Revenue was JPY 113.1 billion, up 4.2% from the prior year. Adjusted operating profit was JPY 21.7 billion, up JPY 10.3 billion from the prior year. The adjusted operating profit margin was 19.2%, an improvement of 8.7 percentage points from the prior year. Revenue increased mainly because of higher demand generated from the ending of support for Windows 10.

Profits significantly improved because of lower component costs due to exchange rate movements and a shift in sales to a focus on profitability. Toward the bottom is Inter-Segment Eliminations and Corporate. There was an operating loss of JPY 32.5 billion, with a decline in expenses of JPY 4.5 billion compared to the prior year. We are moving forward in advanced R&D areas, primarily in the field of computing, including AI-related projects, quantum computing, and next-generation CPUs. While systematically making investments in medium- to long-term business growth and enhancing management systems for data-driven management, we are also continuing to work to achieve greater efficiencies in corporate costs.

Page 18. I will now talk about the status of the cash flows and the balance sheet. Page 19. Cash flows. Excluding one-time cash inflows and outflows, core free cash flow was JPY 164.2 billion, a significant increase in inflows of JPY 70.4 billion from the prior year. In addition to higher profits, progress was made on bringing greater efficiencies to working capital, including inventory assets. In addition, there was the carve-out of Shinko Electric Industries as well as a reduction in capital expenditures.

Toward the bottom of the table, free cash flow including one-time inflows or outflows was JPY 426.7 billion, an increase in inflows of JPY 378.5 billion from the prior year. In addition to the improvement in core cash flow, there were inflows from the sales of shares in Shinko Electric Industries and Fujitsu General Limited, resulting in a significant increase.

Page 20 shows the status of assets, liabilities and equity. I will omit an explanation for this page. It's not on the slide, but this concludes my explanation of the financial results of fiscal 2025. I would like to comment on our progress in relation to our internal forecast. The results of the first half were roughly in line with our expectations, slightly exceeding our internal forecast. In terms of segments, results in Service Solutions were as planned, while results in Hardware Solutions and Ubiquitous Solutions slightly exceeded our internal forecast, primarily because of cost improvements.

We made steady progress in our results in the first half, without any major deviations from our plan, either positive or negative. Market demand for Service Solutions was roughly as expected. Looking at individual customers, one can see slightly stronger or weaker demand as we progressed in the first half, but, given the total volume of the pipeline of deals, no significant changes were apparent in the expansion of overall demand. We will continue to pursue revenue growth and profitability improvements as we work to achieve our full year targets.

Page 22. This is the financial results forecast for fiscal 2025. Revenue is projected to be JPY 3,450 billion. Adjusted operating profit is projected to be JPY 360 billion. Adjusted net profit is projected to be JPY 250 billion. All of these figures remain unchanged. On page 23, there have also been no changes to our forecasts for each segment.

Page 24 shows our forecast for adjusted consolidated results and adjustment items. There have been no changes to our forecasts for adjusted consolidated results, adjustment items, or consolidated results. Page 25, likewise no changes on our cash flow forecasts.

Page 26 shows the trend of adjusted operating profit on a consolidated basis since fiscal 2019. The bar graph shows the total consolidated profit, with the blue portion representing Service Solutions. This fiscal year, the final year of our mid-term management plan, we are seeking to achieve a record level of profit of JPY 360 billion and a record-high adjusted operating profit margin of over 10%.

As I explained, we made progress in the first half toward these targets. While progressing on our business portfolio transformation, we will continue to work to achieve improvements in our consolidated profit and profitability, primarily with Service Solutions, to meet our mid-term management plan targets, of course, but also, beyond that, to sustainably improve our corporate value.

Next, while this is not directly related to this first half's financial results, I would like to bring to your attention to the timely disclosure we made today regarding an investment aimed at accelerating our business growth. As I noted in my remarks today, Fujitsu positions Uvance as a cornerstone of business growth. Today, we announced the implementation of a tender offer to acquire shares of BrainPad Inc and the conclusion of a business integration agreement, with the purpose of further strengthening the Data & AI business, which is one of Uvance's focus areas.

BrainPad Inc is one of Japan's trailblazers in the field of data science and digital marketing and has a very strong competitive advantage in these areas. The rapidly growing Data & AI market is a crucial area that forms the core of Fujitsu's sustainable growth. Through this acquisition, we will further enhance the value we provide and accelerate sustainable growth by leveraging the synergistic strengths of both companies. For further details, please refer to the timely disclosure materials.

Moving forward, we will continue to make investments that contribute to the growth of our corporate value while exercising appropriate discipline. That concludes my presentation for today, but I would like to close with some announcements.

We recently uploaded our Integrated Report and Sustainability Data Book 2025 to our website. These materials introduce our overall initiatives to create value, please take a look. That concludes my presentation. Thank you very much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]