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I'm Taguchi, General Manager in charge of Finance and Investor Relations. I will present the outline of financial results. Please turn to Page 3 for highlights. In the Total Engineering business, we strengthened project execution capabilities and overall profitability improved due to steady progress in large-scale EPC projects, both domestic and overseas, while certain projects continue to be challenging in the fourth quarter. Operating profit exceeded expectation, though the financial results reflected the potential risks of project cost increase arising from armed conflicts in the Middle East starting from February.

In addition, the dollar-yen exchange rate at the end of the fiscal year settled in JPY 159 range, significantly weaker than our forecast of JPY 150 and higher nonoperating income, including foreign exchange gains contributed to increased net profit exceeding our forecast. Regarding the dividends, we had previously forecasted a minimum dividend of JPY 40, but based on the increase in net profit, we applied a 30% payout ratio under our shareholder return policy and plan to increase the dividend by JPY 12 to JPY 52 per share. We plan to revise our dividend policy from FY 2026, and I will explain it at the end of the presentation.

Please turn to Page 4. I will explain the Middle East situation. First, let me start with the business impact. In the total engineering business, the Middle East accounted for 45% of the order backlog as of the end of March 2026 and multiple large-scale projects are under execution. Under close coordination between headquarters and construction sites, we are working with careful measures to ensure the safety of all stakeholders, while none of the construction sites has suffered the direct damages from the armed conflict. We observed some impact toward the end of the fourth quarter, including slowdown in operations due to temporary vacations and site access restrictions.

In addition, the continued personnel movement and logistics constraints are expected to remain as challenges in project. Consequently, various costs which were not estimated at the planning stage may arise, and we will ensure appropriate cost sharing management with clients, while contractual treatment varies by project and may require negotiation in some cases. We think that we need to take a conservative view of these risks to some extent. In the Functional Materials Manufacturing business, uncertainty has been increasing regarding the future procurement of certain raw materials at domestic manufacturing sites.

Next, financial performance impact. On accounting, we estimate additional cost on a project-by-project basis related to safety measures, schedule delays and restrictions on personnel movement and logistics. After considering contractual terms with clients, including the possibility that the company may bear a portion of these costs, we recorded these costs for risks conservatively. These estimates assume that tensions, including the closure of the Strait of Hormuz will be eased in the first half of this year and that there will be no material impediments to project execution. As a result, profit margins for FY 2025 declined by approximately 1 percentage point.

Turning to FY 2026 forecast. In addition to this impact, we have factored in the decrease in net sales of approximately JPY 60 billion, reflecting slower progress on certain projects in the Middle East. This decrease in net sales is expected to be recognized from FY 2027 onwards. We have also incorporated a certain level of potential impact of insufficient procurement of raw materials in the Functional Materials Manufacturing business. It is also based on the assumption of normalization in the first half of this year. Accordingly, if the closure of Strait of Hormuz is prolonged or military conflict escalates, it is possible to suffer further impact through additional responses and schedule delays.

Please turn to Page 6 for consolidated income statement. Net sales were JPY 745.2 billion, down JPY 112.8 billion year-on-year. Gross profit was JPY 64.1 billion with profit ratio of 8.6%. It exceeded the forecast, mainly driven by improved profitability in EPC project in Japan and overseas. Operating profit was JPY 35.3 billion. Ordinary profit was JPY 58.1 billion, and profit attributable to owners of parent was JPY 41.8 billion. As a result, return on equity reached 10.2%.

Page 7 shows segment information. Net sales of the Total Engineering business was JPY 679.5 billion, close to the full year forecast revised in the third quarter following the review of the project progress. They decreased by JPY 115.3 billion year-on-year due to the postponement of new project awards. Segment profit was JPY 33.6 billion, overall profitability improved, supported by steady execution and risk reductions across multiple large-scale overseas projects.

Accordingly, results exceeded the forecast despite reflecting the negative impact such as additional costs related to risks in the Middle East situation. In the Functional Materials Manufacturing business, net sales were JPY 56.9 billion, and the segment profit was JPY 7.6 billion, which were almost in line with the forecast. Others and adjustments were also in line with the forecast.

Page 8 shows outline of contracts in the Total Engineering business. New contracts in FY 2025 were JPY 250.4 billion for Overseas, JPY 158.7 billion for Domestic and JPY 409.2 billion in total. Domestic new contracts were steady, while overseas new contracts were weaker than the forecast due to the deferral of clients' investment decision on large-scale LNG project to the next fiscal year. Major new contracts in the fourth quarter included additional FLNG preliminary contract overseas as well as food-related factories in Japan.

Turning to Slide 9. This shows the outstanding contracts for the Total Engineering business. As of the end of March, outstanding contracts stood at JPY 1,155.5 billion. The Middle East accounted for 45% of the total, with 5 of our major projects located in the region. Including these projects, none of the projects currently underway in the Middle East have been suspended, and all the projects are progressing with appropriate safety measures in place. Of these, the two projects in the UAE and Saudi Arabia with outstanding contracts exceeding JPY 100 billion are still in the early stages, primarily focused on engineering work. For these projects, Transportation of equipment and materials as well as construction activities are expected to ramp up going forward. And therefore, the impact of the current Middle East situation has so far been limited.

Our current budget assumptions are based on the premise that there will be no disruption to project execution during the first half of the year. However, prolonged closure of the Strait of Hormuz and similar developments remain risk factors. In addition, 2 projects with the backlog exceeding JPY 50 billion and 1 project exceeding JPY 30 billion are already in their final stages. Although materials and equipment have already been delivered, the outbreak of armed conflicts affected project progress between March and April, including our efforts to enhance safety measures at construction sites and to revisit execution frameworks. Nevertheless, work is currently continuing under structures tailored to conditions at each site. And even if the current situation persists, we believe the impact going forward will remain limited.

Turning to Slide 10. This shows our consolidated financial position and cash flows. Total assets increased by JPY 54.6 billion from the beginning of the fiscal year to JPY 838.7 billion. Net assets increased by JPY 38.9 billion to JPY 431.1 billion and the equity ratio was 51.2%. Our share of cash held by the joint ventures that is not recorded on the balance sheet increased by JPY 16.2 billion from the beginning of the fiscal year to JPY 109.8 billion. Operating cash flow was a positive JPY 79.8 billion, mainly due to an increase in advanced payments received for overseas projects in their early stages. Investing cash flow was negative JPY 14.8 billion, primarily due to the acquisition of tangible fixed assets, including business sites and manufacturing equipment for the Functional Materials Manufacturing business. Cash flow from financing activities turned negative JPY 10.9 billion, mainly due to dividend payments.

Turning to Slide 12. This shows our earnings forecast. We expect new orders in the Total Engineering business to reach JPY 1.74 trillion. Net sales is projected to decline 10% year-on-year to JPY 670 billion. Gross profit is expected to increase 14% year-on-year to JPY 73 billion, with the gross profit margin improving 2.3 percentage points year-on-year to 10.9%. We expect profitability in the Total Engineering business to improve due to factors, including the resolution of underperforming projects.

Operating profit is forecast to increase 13% year-on-year to JPY 40 billion. Ordinary profit is projected to decline 20% year-on-year to JPY 46 billion. Our assumptions are based on the stronger yen at JPY 150 to the U.S. dollar, and we expect the nonoperating foreign exchange gains recorded in the previous fiscal year to reverse into losses. Profit attributable to owners of the parent is projected to increase 10% year-on-year to JPY 46 billion, reflecting approximately JPY 20 billion in extraordinary gains from the sales of equity method affiliates. These forecasts are based on the assumption that sanctions, including the closure of the Strait of Hormuz will ease during the first half of this year and will no longer disrupt project execution.

Turning to Slide 13. This shows our segment outlook. In the Total Engineering business, we forecast net sales of JPY 606 billion, segment profit being JPY 41.4 billion and the profit margin being 6.8%. We have factored in approximately JPY 60 billion in net sales downside risk associated with the slower project progress resulting from the Middle East situation. Since the majority of the Middle East-related risks assumed this time were already reflected in FY 2025 results and because negative factors are expected to decline as underperforming projects are resolved, we expect profitability to recover.

In the Functional Materials Manufacturing business, we forecast net sales of JPY 55.5 billion and segment profit of JPY 6.6 billion, representing declines in both revenue and profit. On a baseline basis, performance comparable to the previous fiscal year is achievable. However, we have factored in approximately JPY 1 billion in revenue downside risk related to raw materials procurement disruptions stemming from the Middle East situation. Other businesses are expected to remain largely flat. Adjustment expenses are expected to increase by approximately JPY 2 billion due to the high R&D investments and increased digital-related investment.

Now Slide 15. Finally, I would like to explain our efforts to enhance shareholder returns. In the new 5-year medium-term business plan announced today, beginning in FY 2026, we have established a new shareholder return policy. Previously, our dividend policy targeted a payout ratio of 30% with a minimum annual dividend of JPY 40 per share. We have now changed this framework to one based on dividend on equity or DOE. Through this approach, we aim to provide stable dividends regardless of fluctuations in profits while also pursuing dividend growth in line with business growth.

For FY 2026, the first year of the new plan, we forecast an annual dividend of JPY 52 per share based on a DOE of approximately 3%. We aim to raise DOE to 4% by the final year of the medium-term business plan for the fiscal year ending March 2031. Regarding the share buybacks, we will continue to consider them flexibly and appropriately based not only on earnings forecast and cash flow conditions, but also from the standpoint of capital efficiency. This concludes the overview of financial results. Thank you indeed.

This is Sato. I will now present the business overview for FY 2026 and the summary of the new medium-term business plan. Please turn to Page 4. I will explain orders target of the Total Engineering business. We set FY 2026 order target at JPY 1.74 trillion with JPY 1.6 trillion overseas and JPY 140 billion domestic. Overseas major projects include Mozambique FLNG, Papua New Guinea LNG, which were postponed from FY 2025 and LNG Canada Phase 2. While the overseas order of JPY 1.6 trillion may seem large as the major projects are ones where we can leverage our past EPC execution expertise, and we have been involved from the FEED, the risk is limited. We have already secured internal resources.

In Japan, in addition to SAF project for oil companies, we focus on EPC orders for pharmaceutical plants, food-related factories and nuclear-related plants, while also steadily working on our baseload maintenance business.

Please turn to Page 5. I will explain the current market environment of the Total Engineering business, which is related to orders mentioned earlier. Overseas, following 2025, demand for natural gas and LNG remains solid, driven by energy security and the realistic transition to decarbonization. A large number of LNG projects across North America, Asia and East Africa exist. While in sustainability area, projects exist at the study and the planning stages, but many remain at the demonstration phase due to regulatory implementation and project economics. And the project where capital investment is realized is limited.

In general industry sector, the investment plans for semiconductor-related facilities, data centers are making steady progress in Southeast Asia. In Japan, the postponement trend of investment plans for sustainability projects, including SAF continues. The government has set a target to replace 10% of aviation fuel in Japan with SAF by 2030. We expect that the framework for achieving this target will be clarified in this fiscal year, leading to the realization of EPC for SAF project.

In the life science sector, food sector and the nuclear sector plans and studies are progressing. Maintenance services also see a steady level of demand each year. While no major changes in the market environment are currently observed, we need to closely monitor the impact should tensions in the Middle East persist over the long term.

For EPC project currently ongoing, we will closely watch the potential impact from rising prices of materials and equipment transportation costs as well as procurement shortage and longer lead time. Regarding projects under active pursuit, including those in FY 2026, the projects covered in the previous slide will proceed as planned as of today, but we need to be watchful for potential delays in clients' final investment decisions depending on the changes in macro environment.

Please turn to Page 7. I will explain the business environment and outlook of Functional Materials Manufacturing business. Results were as Taguchi explained earlier. Regarding market environment, demand for catalyst -- for petroleum refining catalysts overseas, in particular, remains strong. In fine chemical, the semiconductor and electronics markets are on the recovery track and the demand remains strong for fine chemical product in general, particularly hard disk drives and silica sol.

In fine ceramics, demand for semiconductor manufacturing equipment and electronic materials for generative AI and data center is increasing, while demand for high thermal conductivity silicon nitride substrate for EVs in Europe and the U.S. temporarily declined. It will partially recover in FY 2026. We will closely monitor the situation and expand into Chinese market where demand remains strong.

In Functional Materials Manufacturing business, amid prolonged Middle East tensions, the risk of raw material shortage, which will lead to procurement difficulty or longer lead time and price increase is also anticipated. We will implement countermeasures such as diversifying suppliers and purchasing alternative products.

Next, I will explain the summary of the new medium-term business plan. At 3:30 p.m. today, we announced the JGC Group's new medium-term business plan, BSP 2030, which covers from FY 2026 to FY 2030. For further details, we will provide an explanation using the presentation materials for BSP 2030 at the investors meeting scheduled on May 27, Wednesday. Today, I will briefly explain the basic concept and overview behind the formulation of BSP 2030.

Please turn to Page 9. First, I would like to share the thoughts and intentions I believe in creating our new medium-term business plan, BSP 2030. The business environment remains extremely uncertain. And most recently, the situation in the Middle East is having a significant impact on the global economy and the stable supply of energy. However, it is precisely during times of such change that we believe it is essential to stay close to our clients, anticipate challenges ahead of time and work together to solve them. This mindset forms the foundation of BSP 2030, our new medium-term business plan.

We are a corporate group possessing a broad range of technologies across diverse business domains. By connecting and integrating technologies and expertise, both inside and outside the company, we have developed a strong ability to adapt and create new value amid changing circumstances. To achieve sustainable growth, we must leverage this strength and continue transforming our portfolio in line with our 2040 vision. Over the next 5 years, we are determined to build a solid foundation by taking on the challenge of establishing promising businesses that can succeed LNG as our next core growth driver while also strengthening our human capital.

Please turn to Page 10. As stated at the beginning of the executive summary on Page 10, while reaffirming the strength I have just described, we have defined the vision we aspire to achieve by 2030 as a collaborative partner that connects technologies and tackles global challenges with anticipatory solutions. To realize this vision, BSP 2030 identifies 3 key strategic priorities. The first is continuously enhancing the competitiveness of the Total Engineering business. Here, the Total Engineering business should be understood to include not only EPC, but also upstream businesses such as FS and FEED as well as downstream businesses such as O&M and plant modification services.

As the core business of our group, the total engineering business will continue to serve as an extremely important earnings pillar. However, in order to achieve sustainable growth, we believe it is first and foremost, critical to sincerely reflect on the lessons learned over the past 5 years and reestablish this business as a strong and stable source of earnings. In addition, to respond to changes surrounding the EPC supply chain environment, we will continue taking on the challenge of enhancing EPC execution methods through the utilization of digital technologies, modularization technologies and other innovations.

Furthermore, by flexibly adapting our approach in accordance with changes in the business environment, market maturity and our competitive positioning, we will identify promising business domains within the Total Engineering business and strategically cultivate them into future earnings pillars.

The second key strategy is accelerating growth in the Functional Materials Manufacturing business. Through BSP 2025, the Functional Materials Manufacturing business has established itself as our second core pillar. Under BSP 2030, we will further accelerate its growth by promoting the 3 priority initiatives shown here. Specifically, we will position in the semiconductor-related market, which continues to enjoy strong market growth as a key target area. By strengthening our development and marketing capabilities, we aim to generate high-margin proposal-based projects while actively expanding into overseas markets.

The third key strategy is expanding the solution-based business. By solutions-based business, we refer to scalable and versatile business models that can be provided to multiple clients. As mentioned earlier, in a highly uncertain business environment, identifying and anticipating client challenges through close engagement with clients will lead directly to the creation and expansion of business opportunities. As a wide range of new technologies continue to emerge, we will develop such solutions ourselves, including through alliances with technology partners and deliver them by leveraging our group's client base. Through these efforts, we will pursue diversification of our business model and profit growth.

As part of these initiatives, we are currently taking on the challenges of establishing a new business field known as biomanufacturing. Biomanufacturing aims to produce materials and products using underutilized resources such as CO2 and woody biomass as feedstocks, and we are currently engaged in related research and development activities. At present, we are participating in a national project focused on developing microorganisms required for such manufacturing processes as well as the cultivation and the scale-up while continuing our efforts toward medium- to long-term social implementations.

This business represents an innovative initiative utilizing nonfossil resources as feedstocks at a time when the society is increasingly demanding the realization of a circular economy and enhanced energy security. By proactively focusing on this field ahead of others, we aim to create future business opportunities that will support our long-term growth. These are our 3 key strategies. And alongside them, we will continue strengthening the management foundation that supports their execution.

Finally, as the outcome of these initiatives under BSP 2030, we aim to achieve operating profit of JPY 60 billion, net profit of JPY 50 billion and ROE of 10% or higher by 2030. We will provide more detailed explanations at our investor briefing scheduled for May 27. This concludes my presentation. Thank you indeed for your kind attention.

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

I am Masayuki Sato, CEO of JGC Holdings Corporation. I would like to begin by sharing my perspective on formulation of this medium-term business plan, BSP 2030.

The global economic environment remains highly uncertain. The current armed conflict in the Middle East and development surrounding the Strait of Hormuz are having a significant impact on both the global economy and energy supply.

It is exactly because we are in the midst of changes that we must be there for our clients, pinpoint potential issues and actively push forth solutions to tackle issues together. This is the fundamental stance of BSP 2030.

JGC Group possesses a diverse portfolio of technologies across multiple business areas. By synergizing the best technologies and insights from both inside and outside the group, we have achieved a high degree of adaptability, a strength that enables us to generate new value in the face of unyielding change.

Looking ahead, we will continue to transform our portfolio in keeping with our 2040 vision to achieve sustainable growth. This new medium-term business plan reflects our commitment to laying a solid foundation through the pursuit of new growth businesses that extend beyond our core LNG business and by enhancing our human capital.

On that note, I would like to present the contents of this plan. This presentation is divided into 2 parts: a review and assessment of the past, followed by strategies and plans for the future.

First, let's look at the history of the JGC Group. Since its founding in 1928, the JGC Group has worked to meet the needs of society and diversify its business regardless of how markets and the times have changed.

This lies at the heart of who we are. Fiscal year 2028 will mark the group's 100th anniversary but the same founding spirit to support the foundations of industry and society regardless of the year remains unchanged. A notable milestone in this journey was 2021 when we established our long-term management vision, 2040 Vision, which serves as a guidepost for achieving sustainable corporate growth even in the face of future uncertainty.

Since then, our purpose, enhancing planetary health, which embodies our commitment to contribute to a healthy future for people and the earth and the 3 directions as shown on this slide remain unchanged. Maintaining our focus on 5 business areas, we will respond flexibly to ever-changing social issues, continuing our progress as we work to resolve these issues and pursue our own growth.

On the next slide, we will look at our previous medium-term business plan, BSP 2025, positioned as the first phase of the 2040 Vision, the 5 years of challenge and review it from both a quantitative and qualitative perspective. First, let's discuss it from a quantitative perspective. Under BSP 2025, we undertook a variety of efforts aiming to achieve our target of JPY 800 billion in net sales, JPY 60 billion in operating profit, JPY 45 billion in net profit and ROE of 10%.

Over the 5 period of BSP 2025, net sales increased steadily and achieved the target. However, we fell short of our profit targets, largely due to some unprofitable EPC projects overseas. That being said, in fiscal year 2025, we improved our profitability significantly by ongoing efforts to strengthen our EPC execution structure. As a result of these efforts, we also achieved our target for ROE, which improved to 10.2%. Next, let us review BSP 2025 qualitatively by key strategy. The first was transformation of EPC operations.

During the 5 years, we secured stable earnings, particularly in LNG projects by maximizing our competitive strengths such as development of joint ventures and application of modular construction methods. In domestic business, we made steady progress toward expanding the scale of our business and enhancing competitiveness as outlined on this slide.

However, an accelerated push to diversify across markets and sectors led to a dispersal of resources and a less than optimal allocation, particularly in overseas business, undermining profitability of some projects. This experience reaffirmed the need for more advanced integration of human and technological resources, including methods for assigning personnel and for accumulating and utilizing know-how acquired by individuals as organizational knowledge.

Under the second key strategy, expansion of manufacturing business for high-performance functional materials, we achieved growth in line with our original plan. Specifically, we largely achieved our sales targets by rolling out our products in semiconductor-related markets where strong growth is expected. We also increased production capacity through business integration and establishment of a new manufacturing factory, enabling us to lay the groundwork for further acceleration of growth. The third key strategy was establishment of future engines of growth.

In the low carbon and decarbonization market, we built up a track record in design work and EPC operations centered on ammonia and sustainable aviation fuel or SAF. In SAF, in particular, we gained experience in commercialization, gathering insights that will be highly valuable in the future.

In terms of operation and maintenance, O&M, success stories are starting to emerge such as the launch of Brown River Sink, which specializes in digital twins. However, we were unable to establish a clear growth trajectory in offshore wind power, railways and water treatment, which is an issue to resolve going forward.

With respect to strategic growth investments, we spent about JPY 100 billion given changes in the business conditions. This compares to the initially planned JPY 200 billion, primarily as a result of more careful and disciplined review for M&As. That concludes the review of BSP 2025. Let's now move to the new medium-term business plan. I will start with our outlook for the business conditions for the next 5 years from these 3 perspectives. First, in terms of the market, with geopolitical risks continuing to undermine the stability and affordability of energy supply and social infrastructure, LNG has now been recognized again for its importance as a relatively clean and economically viable solution.

In light of our competitive strengths, we continue to view LNG as a key growth market. At the same time, we will work to stay abreast of latest trends and anticipate client needs in other markets and actively create business opportunities. As for supply chains, we are currently witnessing more fragmentation and restructuring due to a convergence of multiple factors. This is affecting the sustainability of existing business models, making it necessary to enhance resilience throughout the entire supply chain.

Closer collaboration with supply chain partners, standardization and leveraging modular construction methods and digital technologies will become crucial for increasing competitiveness. Lastly, on technology and digital transformation. Advances in digital technologies, especially AI have been remarkable. The incorporation has become a critical driver with a direct impact on competitiveness rather than a mere tool for raising efficiency. It is vital to leverage them in all aspects of operations, such as improving quality, reducing risks, developing human resources and facilitating the transfer of technical expertise as senior personnel retire.

Using digital technologies across all business areas, including decarbonization and biomanufacturing, which will be explained later, to reinforce our technological capabilities will be an important factor in providing value to clients and creating growth opportunities for the JGC Group.

BSP 2030 is a medium-term plan positioned as the second phase of our 2040 Vision. However, after reviewing the previous plan and assessing the business condition, we have changed the framing of this phase from 5 years of harvest to 5 years of cultivating our growth foundation. This change reflects our commitment to continue pursuing future-oriented initiatives and taking on challenges while working diligently to stabilize earnings and build a solid foundation for future growth.

Also, as noted at the outset, we have shifted our policy to flexibly and strategically cultivate our businesses in line with changes in the market and business conditions as we move forward. Accordingly, we have revised our operating profit target to JPY 60 billion for fiscal year 2030 and JPY 100 billion or higher for fiscal year 2040. Put succinctly, BSP 2030 is positioned as an important period for building a foundation that will ensure growth in the next phase.

For the second part of this presentation, I will explain our strategies and plans. As I mentioned in our assessment of the business conditions, as uncertainty continues to grow, the solutions needed for removing uncertainty are not always obvious, and we cannot afford to remain passive. Therefore, we will work to become a collaborative partner who connects technologies and tackles global challenges with anticipatory solutions.

This is the ideal state that we will aim to achieve through BSP 2030, reflecting our resolve to keep closely attuned to issues facing our clients and society and tackle them hand-in-hand with a diverse range of partners. We will focus on 3 key strategies to realize this ideal state. First, continuously enhancing the competitiveness of the total engineering business; second, accelerating the growth of the functional materials manufacturing business; and third, expanding the solution-based business.

At the same time, we'll work to further strengthen our management foundation that supports these efforts. As a result, we seek to achieve our quantitative management indicators by fiscal year 2030, JPY 60 billion in operating profit, JPY 50 billion in net profit and an ROE of 10% or higher. Let me explain each key strategy in more detail.

The first one, continuously enhancing the competitiveness of the total engineering business. Please note that the total engineering business mentioned here encompasses a broad range of business models, covering not only EPC, but also upstream services such as an FS, feasibility studies and feed, front-end engineering design and downstream such as O&M and plant modification.

To achieve sustainable growth, we must take lessons learned from the previous 5 years seriously and reestablish the total engineering business as a solid and stable source of earnings. As the business conditions undergo such drastic changes, we need to harness digital technologies to upgrade our EPC project execution structure. By adopting a flexible approach in line with these changes and the level of market maturity, we will identify promising business areas within the total engineering business.

Next, we will look at each of those key initiatives.

Let's begin with the first initiative, stabilizing our earnings base by strengthening our project execution structure. Initiatives in this category will be guided by 2 policies: strengthening our lump-sum business model and providing value across the entire plant life cycle.

The lump-sum business model, whereby we execute EPC projects, a core strength of the JGC Group is one of our key delivery tools for meeting client needs across multiple sectors and areas. It is a model that enables us to fully leverage competitive advantages built and refined over many years. To secure reliable earnings, the group will move swiftly to strengthen this model, but there is no single measure that will do so in one fell swoop.

Instead, we will continue with the steady rollout and development of initiatives listed in the left column. Let's look at the second policy, providing value across the entire plant life cycle. Promoting initiatives across the life cycle relating to EPC ranging from upstream services such as FS and feed to downstream, such as modification and O&M will allow us to pinpoint the latest market and technology trends.

In addition, this approach will not only help reduce EPC-related risks, but also contribute to lowering volatility across the business as a whole while creating a virtuous cycle in which the information, insight and know-how we gain are translated back into value. Next, we will look at the second initiative, pursuing challenges to evolve the EPC business.

In response to the changes in the external conditions and the issues facing clients that are shown on the left, we need to strengthen EPC execution across the entire value chain by leveraging digital technologies to better link engineering, fabrication, construction and everything in between.

Although EPC projects have traditionally been highly customized and undertaken on a project-by-project basis, going forward, we will actively promote the standardization and digitalization of design and execution procedures by making full use of digital tools. As part of this effort, we will proceed with the development of the configurator and automated engineering tool that turns the knowledge of experienced engineers into digital assets. The configurator breaks down clients' requirements into discrete components, enables them to be combined by function and then automatically outputs the optimal configuration.

Use of the configurator will allow us to assure a high level of engineering quality on a consistent basis while facilitating advanced execution capabilities regardless of an individual engineer's level of experience. These initiatives also support the development of optimized fabrication processes which in turn makes it possible to reduce costs and shorten project time lines.

Our modular construction method, a core strength of the group, has historically delivered strong results in large-scale plants. Going forward, we will combine such initiatives relating to standardization and digitalization with our modular technology, extending its benefits to the execution of small- and medium-scale projects as well as to new business areas.

These efforts will evolve our EPC business via a more flexible and robust model and lay a firm foundation for sustainable future growth. The third initiative under this strategy is achieving adaptability to markets and strategic business cultivation. Business areas under the total engineering business have the potential for further expansion but this requires a flexible market approach in line with the level of market maturity and our own position.

To be more specific, we intend to start with FS and other soft services rather than EPC in markets at the introduction or growth stage as a way to increase our number of client contact points, which we can then use to capture market shifts and client needs. This approach is illustrated on the left of the slide with more concrete examples shown on the following slide. Of the business areas described on the following slide, we will promote efforts in food factories, LNG and nonferrous metal refining with EPC as our primary model.

For semiconductors and data centers, however, we will take a more flexible approach that is not confined solely to EPC. By capturing early insight into market shifts and winning strategies and by systematically accumulating and leveraging the insight we gain as organizational knowledge, we aim to identify high potential business areas even amid high uncertainty and strategically develop them into new pillars of earnings. Now let's turn to the next key strategy, accelerating the growth of the Functional Materials Manufacturing business. The Functional Materials Manufacturing business has grown steadily, becoming our second core pillar.

To accelerate the growth of this business further, we have defined 3 key initiatives, which are shown here. To summarize, we will position the semiconductor-related markets as a clear target for our efforts, strengthen our development capabilities to create high-profit proposal-based projects and drive growth by actively expanding into overseas markets as well. The Functional Materials business office, which we established in April 2025 within JGC Holdings will serve as an in-house central hub for driving these initiatives and enhancing group-wide collaboration.

As mentioned, we have positioned the semiconductor-related markets as a clear target, and we thus have a robust product portfolio in this area. We will bolster initiatives carried out to date and adopt a deeper approach by approaching the market as a whole rather than in isolation. As our second initiative, in addition to our existing contract-based production business, we will continue to enhance our development capabilities and marketing functions, enabling us to connect our technological proposals to the creation of proposal-based business that offers higher added value. In light of the shrinking of the domestic market, which centers on domestic refineries and chemical manufacturers as its primary clients, the JGC Group will ramp up expansion into overseas markets.

We will implement this initiative flexibly with consideration given to the characteristics of markets and clients in each region, establishing local basis and performing other actions with a view looking ahead to 5 years from now and beyond. This is our overall strategy in terms of the functional materials manufacturing business. To give some context for the third key strategy, expanding the solution-based business, I will first outline the concept behind this initiative, after which I will introduce a representative example in the form of a new business, biomanufacturing.

When we speak of a solution-based business, we are referring to a business model designed to be broadly applicable and deliverable to a diverse range of clients. As business conditions become increasingly uncertain, we will adopt a proactive approach whereby we gain a deep understanding of our clients, anticipate their needs before they materialize and develop solutions to address them. To achieve this in an environment where a wide range of new technologies is emerging, it's essential that we build solid alliances with technology partners. We will then deploy the solutions we create at scale, leveraging the group's existing client base.

Such endeavors will spur the medium- to long-term transformation of our business portfolio and together with our other key strategies, will reduce earnings volatility and generate stable growth. You can find examples of the solution-based business already in effect on Slide 27. In addition, building on our technological capabilities developed over the course of many years, we are promoting the creation of biomanufacturing business. Biomanufacturing involves the production of materials and products using underutilized resources, including CO2 and woody biomass, and we are at present conducting R&D efforts in this area.

Currently, we are in the phase of developing the microorganisms required to produce these products and advancing cultivation and upscaling efforts. At the same time, we're taking part in national projects in Japan with a view towards medium- to long-term commercialization and social implementation. This business is an innovative undertaking that utilizes nonfossil resources as raw materials, addressing the social demand for circular economy and energy security.

By getting an early start and focusing on this area, we aim to create new business opportunities that will drive our future growth. On Slide 29, you'll find details on the 2 Japanese government projects mentioned earlier. Finally, I would like to explain 2 key initiatives aimed at further strengthening our management foundation. First, let us look at the first initiative, enhancing human capital. Under current business conditions, which are right with uncertainty, we see a significant shift in the value expected of people.

Accordingly, organizational management that relies on allocating human resources to fixed and specific roles or on passive knowledge inherent to individuals is reaching the limits of what it can deliver. Moreover, as I alluded to earlier, we recognize the importance of strategic talent management and the accumulation and succession of technical expertise and know-how, particularly as projects grow in scale and complexity and the labor market becomes increasingly mobile.

For this reason, we believe that it is necessary to reframe our people as versatile contributors who can respond flexibly to changes in the business conditions and expand the scope of their impact rather than viewing personnel as performance of single fixed functions. In the same vein, it's just as vital that we convert [indiscernible] knowledge and experience acquired by individuals into explicit organizational knowledge that can be shared and used by all.

With these 2 principles in mind, we will work over the course of BSP 2030 to enhance our human capital with the goal of advancing the circulation of knowledge and know-how through the linking of individual and organizational learning. Specifically, we will promote a variety of measures based on key policies which include transforming experience and know-how possessed by individuals into digital assets and providing a wide range of learning and growth opportunities such as work assignments across the group.

We believe that these initiatives will also deliver meaningful results in terms of optimizing human resource allocation. Lastly, I would like to explain our thoughts behind investment and capital policies over BSP 2030, aiming to deliver on the key strategies described earlier in this presentation. Our first policy is to maintain a strong financial foundation. This is a critical prerequisite for ensuring stable operations and supporting our future growth.

Accordingly, we will maintain a 50% equity ratio and secure sufficient liquidity to withstand changes in the external environment as part of this policy. Our second policy is to execute growth investments, which I will explain in further detail on the following slide.

Our third policy is to enhance shareholder returns which will be changed to a DOE or dividend on equity-based approach. This policy is intended to ensure stable dividends that are resilient to short-term earnings volatility while also enabling continuous dividend increases in line with business expansion. Starting from a DOE of 3% in fiscal 2026, we seek to achieve DOE of 4% by fiscal year 2030, increased incrementally over that period. With regard to growth investments, we plan to invest a cumulative total of about JPY 280 billion over 5 years.

As shown on the slide, we will focus on M&As and capital investments in the Functional Materials Manufacturing business. Priority will be given to investments that are in strong strategic alignment with BSP 2030 and which can contribute to earnings within a relatively short time frame. We will finance these investments with a close and constant eye on cash flow and adjust our approach accordingly, making selective use of interest-bearing debt when necessary. This concludes my presentation on the medium-term business plan, BSP 2030, formulated as the second phase of the 2040 Vision, which is guided by the corporate purpose of enhancing planetary health. Thank you very much.

This is Taguchi from the Finance unit. I would like to provide an outline of financial results. Please turn to Slide 4. We have highlighted three key points for the first half of the fiscal year.

First, in Total Engineering business, large-scale projects, both in Japan and overseas have been progressing steadily. Although now we are faced with the challenges with one overseas project, our strengthening EPC execution framework has helped us to lower overall risk and profitability is gradually improving.

Functional Materials Manufacturing business has maintained a stable performance. Reflecting these factors, we have revised our full year earnings forecast upward.

Please move on to Slide 5, which shows the consolidated income statement. Net sales for the first half of FY 2025 were JPY 381.2 billion, down year-on-year basis. However, gross profit was up JPY 2.9 billion to JPY 30.2 billion. Profit ratio was 7.9%, up 1.2 points.

Operating profit was up JPY 3.3 billion to JPY 15.7 billion, and ordinary profit was up JPY 1.7 billion to JPY 21.1 billion. Profit attributable to owners of the parent was down JPY 1.1 billion to JPY 11.6 billion, mainly due to higher tax expenses.

Please turn to Slide 6 for segment information. Total Engineering business net sales down JPY 27.8 billion year-on-year to JPY 350.4 billion. As both domestic and overseas large-scale projects were nearing completion, the delay in receiving new orders resulted in lower sales. Segment profit, however, increased by JPY 3 billion to JPY 14.8 billion, reflecting the positive effects of strengthened project execution with profit margin improving by 1.1 points to 4.2%.

Functional Materials Manufacturing business posted both higher sales and profits compared with the previous year. Sales of catalysts increased, thanks to petroleum refining, and sales of fine ceramics grew, thanks to semiconductor manufacturing equipment. Though profit margin went down slightly due mainly to deterioration expenses and others, it is still in line with our initial plan.

Page 7 shows the outline of contracts of Total Engineering business. New contracts in the first half stood at JPY 102 billion. The main components were FEED for future EPC and preliminary contracts, while EPC contracts with significant value are expected to be awarded in the second half.

Page 8 shows outstanding contracts. The outstanding contract as of the end of September were JPY 1.1136 trillion. Large-scale projects have been smoothly progressing, generating sales, resulting in a decrease of JPY 291 billion from the end of the previous fiscal year. The breakdown by business area and region has not changed significantly from the end of the previous year, and the lineup of major project remains unchanged.

Turning to Page 9 for consolidated financial position and cash flows. Total assets increased by JPY 7.5 billion from the end of the previous fiscal year to JPY 791.7 billion as investment securities rose due to valuation gains on stockholdings despite decrease in cash and cash equivalent. Net assets also increased by JPY 20.2 billion to JPY 412.5 billion, mainly reflecting valuation gains of stocks with the equity ratio of 51.9%.

Operating cash flow was negative JPY 7.5 billion, mainly due to the payments on large-scale projects in their final stages and investing cash flow was negative JPY 7.9 billion, mainly due to the acquisition of property and equipment. Financing cash flow was negative JPY 10.3 billion, mainly due to dividend payment. As a result, the balance of cash and cash equivalent at the end of September decreased by JPY 51.9 billion year-on-year to JPY 304.1 billion.

Finally, turning to Page 11. I will explain the full year forecast for FY 2025. We revised the forecast upward due to steady progress in project in the Total Engineering business and the change in the assumed exchange rate from JPY 140 to JPY 145 to $1. Net sales are revised up by JPY 80 billion from the previous forecast to JPY 770 billion.

Gross profit is up by JPY 7 billion to JPY 59 billion. Operating profit is up by JPY 7 billion to JPY 28 billion. Ordinary profit is up by JPY 16 billion to JPY 38 billion with foreign exchange gains in nonoperating income and loss and high interest income and dividend income.

Profit attributable to owners of parent is up by JPY 13 billion to JPY 28 billion. The dividend per share remains unchanged at JPY 40. This concludes my presentation on outline.

This is Sato. I will cover business overview. Please turn to Slide 4. First, let me explain the current market environment for Total Engineering business. Overseas for the real estate transition, demand for transition energy sources, particularly natural gas and LNG continues to show a medium- to long-term growth trend with plenty of investment plans centering around LNG, and it is progressing steadily.

On the other hand, in sustainable fuels such as hydrogen, ammonia and SAF, while investment plans do exist, the overall pace of project development has been delayed due to factors such as uncertainty in securing offtakers and weakening project economics.

In high-technology industry sectors, in Southeast Asia, investment plans for semiconductor-related facilities and data centers are moving forward. In Japan, like overseas, investment plans in the sustainable area are generally being postponed.

Meanwhile, life sciences and food sectors continue to show progress in the project planning. In addition, plant maintenance activities from routine maintenance to large-scale shutdown maintenance continue to generate stable annual demand.

Please turn to Slide 5. I will now discuss the order performance for the first half and expected orders for the second half in Total Engineering business. For this fiscal year, against our order target, JPY 650 billion, the first half orders totaled approximately JPY 102 billion.

Although the progress rate against the full year target stands at about 15%, as we mentioned at the beginning of the fiscal year, in this fiscal year, major overseas project decisions are expected to be concentrated in the second half. We are, therefore, actively pursuing business development activities toward achieving our full year target.

Key orders received during the first half are listed on the slide. A notable feature is that we secured multiple FEED contracts overseas. These FEED projects are expected to lead to large-scale EPC orders in FY 2026 and FY 2027. By engaging from the FEED stage, we can better assess project risks, secure resources and ensure profitability.

In the second half, we are expecting large overseas EPC orders, including Coral Norte FLNG project in Mozambique and LNG plant expansion project in Papua New Guinea. For the Coral Norte FLNG project for Mozambique, our group is currently performing preliminary work. The client made the final investment decision in early October.

This is joint venture consortium consisting of multiple companies, and each is now progressing with the internal procedures towards signing the EPC contract. In Japan, we expect to receive orders for chemical plants and food-related factories as well as continued steady orders in the maintenance business.

Please turn to Slide 6. Let me now provide an update on the progress of our major ongoing projects, beginning with the LNG Canada project. In June this year, we achieved the first LNG shipment from Train 1. And on October 30, we successfully completed and handed over Train 2.

This project represents one of the largest contracts ever awarded to our group. And since the EPC contract took effect in October 2018, we have successfully overcome numerous challenges, including the global COVID-19 pandemic, over a period of approximately 7 years, culminating in the safe delivery of the facilities to our clients.

For this project, our group adopted our unique innovative and integrated modular fabrication method. We delivered and installed more than 215 modules at the construction site in Canada. The largest module measured approximately 45 meters wide, approximately 75 meters deep and approximately 47 meters high.

Successfully completing such complex and massive modular structure is something that we believe only our group could achieve, and we have received high appreciation from our client. In addition, regarding the expansion plan currently under consideration by the client, our group and Fluor Corporation are now executing a FEED update and are working towards securing the EPC contract for the second phase.

Please turn to Slide 7. Here are an update on our other major ongoing projects. As Taguchi mentioned earlier, overall, both domestic and overseas projects are progressing largely as planned. For the Basrah refinery upgrading project in Iraq, commissioning work is currently underway, targeting project handover within this fiscal year.

As for the chemical plant project in Thailand, for which additional costs were recognized in FY 2023, all units have now been completed and operations have commenced under the client's management.

Please turn to Slide 8. So far, I have focused on our current business conditions. Now I'd like to briefly touch upon mid- to long-term global energy trends. Although not shown on this slide, we continue to see a clear outlook that global energy demand will expand in the medium to long term, driven by the population growth and economic development in emerging and developing countries.

According to outlook which was raised by the Institute of Energy Economics Japan last month, global electricity demand will increase 66% in 2050 compared to 2023. Though power generation by solar and wind power generation will increase, due to location constraint and cost increase to complement the fluctuation of renewable energy generation, investment for thermal and nuclear energy and other renewable energy will be indispensable.

In this overview, as shown on the slide, natural gas and LNG will continue to play important roles as transition energy sources and their demands will continue to be robust over the medium to long term.

Supported by such robust demand, LNG plant, our core business in the group will have demand for new construction and expansion as well as modification of existing plants, including the low-end decarbonization measures such as electrification of new plants and CCS. Investments by clients are expected to continue over the mid- to long term.

Please turn to Page 9. Regions targeted for future LNG plant investment are located globally as shown on this slide, with new construction and expansion of existing facilities of onshore and offshore LNG plants. However, depending on LNG demand, the time span varies and not all the plans will be realized. Therefore, we will select the projects that are highly feasible and lead to secure profit while securing internal resources.

As one of the few lump-sum EPC contractors with a strong financial foundation in the world, we continue to contribute to stable supply of LNG and low and decarbonization society, leveraging extensive track record in LNG, high execution capability and technological expertise.

That said, there remain uncertainties over the sustainability of investment for LNG project over the long run and as to whether it will be able to support our profit. So we will continue to explore the next volume zone to support our profit.

Please turn to Page 10. This slide shows initiatives for future growth opportunities that were press released recently. Due to time constraints today, I will skip the explanation of each initiative. For more detail, please refer to the press release.

In fusion energy sector among them, our group invested in Commonwealth Fusion Systems with other Japanese companies. Based on the technological capabilities that we developed in the nuclear power domain, we are promoting partnership with Kyoto Fusioneering through the investment via corporate venture capital.

This company has innovative technologies in heating system of nuclear fusion reactor and breathing basket for heat extraction, and MiRESSO, which has low-cost and energy-saving technology for refining fuels for nuclear fusion reactor as well as cooperation in international project.

It is said that fusion energy power generation will be realized in 2040s. But by involving from the POC phase of various technologies, we'd like to contribute to the early commercialization of fusion energy power generation.

Please turn to Page 12. I will explain the business environment and the outlook of Functional Materials Manufacturing business. Results were already explained by Taguchi. In catalyst business, demand for petroleum refining catalysts overseas remains strong.

In fine chemical business, semiconductors and electronics markets show recovery trend and with customers' production adjustment moving toward the end, demand remains robust across the board for fine chemical products, particularly silica sol.

In fine ceramics business, demand for electronic materials-related products increased for generative AI and data centers, but demand for high thermal conductivity silicon nitride substrate for EVs in the United States and European markets showed a temporary slowdown. Monitoring the situation closely, we'll develop further for Chinese market where robust demand is sustained.

Please turn to Page 13. I'll explain the progress in capital investment of each Functional Materials Manufacturing business company.

In JGC Catalysts and Chemicals Limited, which covers the catalyst and fine chemicals business, consideration of new CapEx plan is progressing toward the catalyst for high-performance chemicals, along with the progress in decarbonation and DX as well as increasing demand for fine chemicals product for high-speed communication. Concurrently, it started to install infrastructure and utility facilities in the business site that was acquired in 2023.

In Japan Fine Ceramics Company Limited, which covers fine ceramics business, new plan to respond to demand for higher production of high thermal conductivity silicon nitride substrate was completed and the completion ceremony was held in this July.

As mentioned earlier, temporary decline in EV demand started to affect the sales of their silicon nitride substrates. But Chinese market is still robust. And in the mid- to long term, global EV demand is expected to recover. In line with the recovery in demand, the new plant will shift to the full operation.

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.]