Fujitsu Aktie

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.]

So altogether, this is going to be 2-hour and 30-minute session. To introduce the speakers today, Takeshi Isobe, Corporate Vice President, CFO; Corporate Executive Officer, Corporate Vice President, CRO Shunsuke Onishi; Corporate Executive Officer, Corporate Vice President, COO Yoshinami Takahashi; Corporate Executive Officer, Corporate Vice President, COO Megumi Shimazu; Corporate Executive Officer, Corporate Vice President, CTO, Vivek Mahajan.

So these are the 5 speakers for today. And my name is [indiscernible] from PR and IR office, I'd like to moderate -- serve as a moderator for this session. Thank you very much for your cooperation.

First of all, Mr. Isobe, over to you.

Hello, ladies and gentlemen. My name is Isobe, CFO. First of all, thank you very much for taking the time out of your busy schedule to attend today's Fujitsu IR Day. I will report to you the progress on our midterm management plan and our growth strategy. So this year is the last year of the current midterm management plan. I will talk about the progress towards the targets of midterm management plan and also the growth driver beyond the period of current MTMP. These are the topics I'd like to cover.

First of all, I'd like to confirm the positioning of the current midterm management plan as part of our opening session. So this is what I repeat always, but this is our purpose to make the world more sustainable by building trust in society through innovation. This is our purpose. Once again, all of our corporate activities are conducted in order to realize this purpose. So putting this purpose in the center, this is our Fujitsu way or the basic principles of the company. Our values are aspiration, trust and empathy. These are 3 values we cherish. And from this point onward, I'd like to talk about the progress against our midterm management plan.

So first of all, we have vision for 2030 and backcast that to the current midterm management plan. And our vision for 2030 is being a technology company that realizes net positive through digital services. And based upon this vision, our current midterm management plan is an important period to prepare for the realization of this vision to achieve the business model and business portfolio transformation, support to customers' modernization efforts and to enhance our international business profitability. This shows the overall performance.

Here, including the period of the previous midterm management plan, we have the profit situation for 7 years. And we excluded Device Solutions results, which turn out to be a discontinued business. So while working on the business portfolio transformation, the profitability has increased steadily. On the right-hand side, you see 3-year period starting from 2023, which is the period of the midterm management plan. For the 2 years up to 2024, our revenue and adjusted operating profit has grown steadily, and we are making progress steadily towards the targets of 2025. Consolidated numbers and Service Solutions, so these are the results so far. As I explained so far, the business drivers and the drivers of revenue and profitability is Service Solutions business.

At the bottom of the bar graph, you see the annual increment in the profitability, JPY 120 billion altogether over the 3-year period, plus JPY 20 billion, plus JPY 40 billion, plus JPY 50 billion, as you see. And for 3-year period, Service Solutions has a plan to achieve JPY 200 billion increase in profitability. For a single year, plus JPY 70 billion, plus JPY 50 billion, and this year, 2025, we try to achieve JPY 70 billion increase in the profitability. So while achieving the growth through the driving force of Service Solutions, we have made steady progress as compared to the profit midterm management plan.

And I'd like to talk about the key strategies here. On the left-hand side, the revenue growth for the domestic service solution. Domestic IT service market is growing, thanks to the increase in the demand for digital transformation and modernization. The CAGR between 2023 through 2028 is supposed to be 6.5% for the general market, but ours is 9%, which is outpacing the market growth. What is driving this growth is, as you see on the right-hand side, Uvance and modernization. In 2022, combining both Uvance and modernization sales together was JPY 280 billion, but it increased up to JPY 680 billion in the past 2 years, 2.5x. Service Solutions accounts for 30%. In 2025, we plan to achieve 36% increase altogether and 40% of the total. Uvance modernization are indeed the key to our growth.

Profitability remained quite strong during the period of the current midterm management plan. On the left-hand side, the gross margin ratio in the past 3 years, it has remained at the level of 1% to 2% growth. And there are mainly 3 points here. Number one is the transformation of delivery. As I discussed earlier, standardization and automation of delivery is the key activities. And also, we are paying attention to the utilization of AI. This has just started recently. But at the same time, this means that this shows the growth potential for the future improvement in our profitability going forward. And the value-based pricing strategy and optimization of the human resources portfolio are the important driving force for the improvement of profitability.

On the right-hand side, from a different perspective, international regions performance, low profitability in international regions used to be a major issue, but we went ahead with the carve-out of low-profit businesses and transformation. It is not sufficient, but we are getting healthier through these activities. In fiscal 2024, adjusted operating margin was higher than 4%. This year, we have a plan to achieve 5% this year. And of course, we would like to achieve further growth going forward.

Now up to this point, I talked mainly about the Service Solutions, but I'm supposed to talk about the other areas that are also related to midterm management plan. On the left-hand side, business transformation. System products business, we have the [ FSAS ] Technologies and the network of businesses, we established [ 1Finity ]. And to make them as the independent entity with the production and sales activities combined, we are trying to speed up the decision-making by the business and to achieve higher efficiency. Right-hand side shows the transformation of the business portfolio carve-out of noncore businesses, Fujitsu general transfer and other activities. Major activities have been completed. It took some time, but we spent sufficient time to identify the best partner and optimal partnering was achieved.

Once again, I will come back to the business of Service Solutions. Once again, based upon the annual steps and the targets, I would like to talk a little bit about the goal of 2025. You see on the left-hand side, adjusted operating profit in the 3-year period is indicated. It used to be JPY 160 billion in 2022. And in 2025, it went up to JPY 360 billion, increase of JPY 200 billion. And the breakdown is JPY 155 billion by revenue growth and JPY 120 billion through profitability improvement and the negative JPY 75 billion because of the investment.

And the right-hand side shows the progress so far every year. So looking at the total for each year, as you see at the bottom, JPY 75 billion in fiscal 2023, JPY 55 billion in fiscal '24 and JPY 70 billion positive in fiscal '25. Looking at the different elements and factors, year-by-year, we have made steady progress so far, increasing the revenue and the improvement of profitability for both of them in 2025. If we continue the momentum in the past 2 years, we will be able to achieve the target of 2025. And the growth investment is continuing and of course, in 2025 as well. So we are making steady progress in order to achieve the targets.

Lastly, I would like to talk about the achievement of the plan as well as the mid- to long-term growth drivers, which are the key points of today's presentation. Well, key to the growth in revenue and profitability are naturally Uvance and modernization, which are in the middle. And what raises the probability of success for these activities is the consulting and also the technology is our competitive edge, which is the driver for acceleration of the growth. Each of these topics will be explained by the business leaders in charge.

So to generate the cash through these activities and continuously conduct the capital allocation in an optimal manner will enhance the corporate value of Fujitsu. And this is the management team to realize the growth. There is no change in the membership. To achieve the target of midterm management plan and beyond under the leadership of President and CEO, Takahito, 5 Corporate Vice Presidents will lead and show the initiatives. And these 5 members are the presenters for today. And the major gist of today's presentations and the roles and responsibilities are shown. So how to expand the business based upon consulting and Uvance and modernization and their growth strategy technologies and strategy to support all these activities and also to -- through the profit and growth and the business efficiency, the cash generation and the optimal allocation of capital. So these are the points to be explained by the Corporate Vice Presidents. So so much for my opening remarks. And now we would like to introduce the first speaker to talk about the first driver.

For business expansion and based upon consulting, Oni-san, over to you.

Thank you very much. Now we would like to start the presentation on business expansion driven by consulting. Over to you, Mr. Onishi.

Hello, everyone. I am Onishi, Corporate Vice President and CRO. Thank you very much for having me. In my part, following Isobe's presentation, I would like to explain how Fujitsu, especially in the domestic market is on the strong growth track. And also to further scale up the growth, we have that -- there are various opportunities. And by improving the consulting capability of Fujitsu as a whole, how we hope to accelerate the growth is something I would like to cover in my presentation.

I became the first CRO in 2023. I don't know how much longer I will stay here, but I have been focusing on 6 agendas so far. Isobe touched on this a little bit, pricing strategy is part of this. In spring, we published a book putting together what we have achieved in the past 6 years, the six agenda, how we have been working on these. Of course, there are not always successes, but I would like you to refer to that book for your reference.

So what I have focused on as was not always just to sell, but to maximize the value proposition to our customers, which means clarify the portfolio and offer tactics based on scientific data to the team with consulting capabilities and people skills to maximize the value to our customers and as a result, deliver the maximum profit, which means that technology, delivery, service, we have to make sure that there is a consistency with those strategies.

Now first of all, I would like to explain how we have realized a strong growth and how we expect to continue such growth. I would like to talk about the Japanese market, which is the majority of our business. As was shown in Isobe-san's slide, the domestic IT market in Japan, the growth rate between 2023 and 2028 is set to be 6.5%. And if you overlay our growth in order intake for whole Fujitsu 10.2%. And if you look at it by sector, financial, manufacturing, automotive, public and defense sector in those sectors, between 2022 and 2024, we have been significantly outperforming the market.

This year, we have concerns about the impact of Trump tariff. And with Fujitsu, in automotive manufacturing companies as well as some of the manufacturing customers have being impacted. But our client base in diversified sectors and also those sectors who are impacted, there are different levels of impact. And considering all of these factors, we will be able to offset the impact of Trump tariff. So what has supported the growth is, I am repeating myself once again. But is the business portfolio transformation we have been working on as a whole, which are -- which is modernization. The DX market growth rate in Japan is 17.1%, but these 2 businesses significantly outperformed the market growth. And if you look at each segment, we have been able to deliver good results.

In terms of modernization 64%, in Uvance 55%. So we have been able to deliver big results. So going forward, modernization peak is going to continue and Uvance and based on the scenario, Uvance is something that would follow modernization, realization of DX and so on. So therefore, we have a very strong growth trajectory. This is something I believe as CRO of the company. One point I would like to add to that. The CRO mission is not only focusing on solutions, products and network business is something that we -- I need to look at. So new network service, strategic partnership with [ Arrcus ], which was announced last week on Friday, we are working on collaboration with the team. So we would like to achieve a big growth in a comprehensive manner as a group.

Now -- so what are new business opportunities? Is there room to grow further? So from here, I would like to talk about the initiatives on how we can scale up the growth, which I believe is enhancing the consulting capability of the company as a whole. And the key will be Wayfinders. So if you look at CRM data, there are some interesting points that we'll be able to identify. We are focusing 2. First is new opportunities, whether it's existing clients or new logo, new area, business area or new proposals where we are requested to provide such proposals. What is the average size of deal, which -- by which I mean deal size?

I think there is a room to increase our deal size. On average, with the existing focus customers around 500,000, a little short of 500,000 in terms of overseas customers, almost the same level. However, if it's a new customer, it will be even lower than that. So if we take an average, it will be around 500,000. However, the ratio of deals less than 10 million, it is actually over 30% in some cases. Another point is conversion rate. In pipeline management, we register a project in Stage 2, as we call it, and they're finalized in Stage 7. And when we look at it in an accumulated basis, we would like to increase the conversion rate.

Existing customers, contract renewals, the conversion rate is over 60%. But even with existing customers, with the new business line customers, we -- our conversion rate is only 40%. And new logos, new customers, conversion rate is 20% in Japan and less than 10% in overseas. So therefore, conversion rate. So if you take out this number from 100, are we losing in all of the opportunities, but that is not the case. The loss rate is actually in the background with existing customers, it is around 10% with the new logos between 15% and 20%.

What we need to focus on more is from Stage 2 to Stage 7, there are cases where customers would decide to withdraw or where the project is terminated or we lose the opportunity to offer proposals, for example, due to lack of resources, which accounts for about 30%. So losing and winning is one thing, but we have to make sure that we'll be able to increase the motivation for the customers to transform. And as a result, we'll be able to increase the conversion rate.

In Japan, retention rate is high in Japan, means that we have high share as Fujitsu. But from a customer portfolio perspective, we need to increase the wallet share of existing customers and also to increase the number of new logos, which matches our strategies, which would result in further growth opportunities. Japanese companies are right now going through a reform, comprehensive and composite reform. For companies who are struggling with legacy assets -- huge legacy assets, they would need to start from modernization, but they need to be able to come up with a vision beyond that, which -- for which we can provide Uvance.

We have to make sure that this pathway is convincing for the companies and to maintain the motivation for transformation, we have to make sure that there is a storyteller and they need a change agent who will be responsible for the change, which role can be played by consultant. This further growth opportunity to be delivered, there are 3 points that we need to focus on. First point is to build a relationship with a key person for management transformation. And the second is to be able to navigate transformation as a story, which means that we have -- we need to make sure that we maintain the motivation of the customers on transformation.

And the third point, I believe this is a very big point. We have to make sure that we have solutions or options backed by technologies so that we can make proposals to the customers. So we have had various discussions on the theme of consulting, but the final objective is to be able to play the role of the company as a whole and enhance the consulting capability as a whole company. And the key to that is Wayfinders and needless to say.

And this slide shows the update of Wayfinders, which is the core. We -- some of these contents include what we announced in the press conference, which was held in June, as shown on the left-hand side, Japan, U.S., EU and Oceania. We have highly experienced members joining us who have served as partners in global firms. So we have started the operations globally.

On the right-hand side shows the areas that we would like to focus on. It's not fully aligned with our headcount, but what we would like to focus on is the knowledge rooted in each business domain, data and AI with which we will be able to solve issues based on technology. So we did say our strategy to start by gathering captains. And we are now increasing the depth of Wayfinders, and we are providing training and OJT to increase the capability in the sales and delivery departments, which is now ongoing.

How are we going to change the project programs and the outputs of the customers. From the perspective of purchased programs and projects, we need to become partners of key persons who are leading the corporate transformation and business transformation, which are mainly executive officers through which we'll be able to be involved in various programs. And Fujitsu has been implementing business transformation and different projects in parallel. So there is a need to implement such transformation scenarios in parallel. And we also need to navigate, and we will be adding technology so we can scale up.

On the right hand side, shows our approach for business transformation. In June, we talked about Agentic business foundation. So business foundation, which is output of transformation uses AI. AI Agentic Foundation is not business as usual. Business process need to be aligned with the use of AI. IT architecture, the same thing. Human transaction-based system structure need to be changed. IT architecture need to be established so that agent can be utilized. So for example, cyberattacks are done by AI, human capability is not sufficient. In all domains, AI need to monitor such kind of business foundation needs to be established. And that can only be realized when business and technologies are vertically integrated. The consultants who have such knowledge are the only ones who are able to provide such proposals.

In terms of consulting approach, for example, AI should -- are used as bodies to create -- to do researches and create outputs. But in addition to that, analyze challenges to organize the consequences and to come up with prescriptions is something that's often used as an approach by consultants. By utilizing Fujitsu's AI strategy and utilizing our technology, we'll be able to data-driven, realistic output can be provided utilizing AI, which will be incorporated.

I would like to share with you 2 examples. The one on the left is a case of new logo, a U.S. automotive manufacturer. We started off with a deal of Palantir, but we -- it ended up being even more than that. We started off with extracting challenges of SCM and we started proposing concepts, and we ended up providing proposals on work application. And the deal size was about 2.5x bigger than the usual deal.

And the second is a case of a Japanese major manufacturing -- equipment manufacturer. In the past, this customer is a good customer of Fujitsu of mainframe. But over time, our relationship became weaker and it was taken by a competitor, and we were only working with them in IT and infrastructure services. And with this customer, we established the relationship between the top managements of the 2 companies, and we started off by creating a scenario and transformation on production, procurement and logistics. And we were able to be participate in the program to realize that. This program is ongoing, but this program is not only implemented in Japan, but also in U.S. and Asia. Initial phase was -- deal size was increased to twofolds. And we have seen a number of cases where our gross margin is over 60%.

As you can see, consulting capability enhancement focusing on Wayfinders will be pushing the growth of Fujitsu. Conversion rate and also deal size expansion is something that we would like to achieve. For example, conversion rate, even with the existing customer in Japan, we would like to achieve 50% and with new logos, 40% is the ultimate target. Same thing for deal size.

And behind this, we have been working to enhance the consulting capability of Fujitsu as a whole. As I have written in the books, the global account leaders, global account directors and AGM they are the people who are working in the front line of sales. They themselves have a certification of Wayfinders, and they are educated by Wayfinders. And in delivery department, SAP service providing leaders are given consulting-related education as well. So they are not working to provide paid consulting services in consulting projects, but including Wayfinders by increasing the number of skilled people will be able to increase the conversion rate and also be able to increase the deal size. So having 500 to 1,000 consultants, if we are able to increase the number to 5,000, we will not be able to achieve a significant growth of Fujitsu.

So this is my final slide. To put it in one word, consulting main dish is Uvance's modernization. So therefore, consulting services is actually a spice or a catalyst, I would say. So enhancement of consulting capabilities would not just promote the business portfolio, but it has a role of driving the growth of the company as a whole. The peak of monetization is about to come. And according to the scenario, Uvance would follow. And new technologies would come out as well. And we would like to make best use of the growth driver to achieve big results.

With this, I would like to conclude my presentation. Thank you very much for your kind attention. Thank you.

Thank you very much, Mr. Onishi. Now for the growth of Uvance, Mr. Takashi Yoshinami, Corporate Executive Officer, will speak on this topic.

Good afternoon. Hello. My name is Takahashi as was introduced. So I would like to talk about the progress of Uvance's business as well as the outlook for the future. For fiscal '24, this is the review of fiscal '24. Talking about the fiscal '24, the revenue -- overall Uvance revenue was JPY 482.8 billion, 31% higher than the previous year, which outperformed the target of JPY 450 billion. And the major driver here is the SAP, ServiceNow and Salesforce, in other words, horizontal. We were able to capture the demand for them and also data-driven business and the intelligence and the demonstration is where we see increase in the demand.

R&D horizontal business, we grew by -- and the vertical also grew at a rate of 51%, even though the size is not as big as the horizontal. JPY 700 billion is the target we would like to achieve 45% higher than the previous year, particularly 60% increase from vertical and 37% increase in the horizontal. So these are the major challenges we'd like to take up. But the current -- for the first quarter, I'd like to explain about the first quarter results against this overwhelmingly large number, how are we performing in the first quarter? That is what I'd like to explain.

First of all, vertical and horizontal for both of them, the growth rate is higher year-on-year. So they are growing steadily, as you see here. As for the total numbers, the growth rate in the first quarter against the target of 45%, actually, it was 52%, so 7% higher than the plan, particularly for vertical, 60% to 69% horizontal, 37% to 44%. So this is an important point. Actual results and also including the order backlog, already now the first quarter is over, and that accounts for 60% of the annual planned volume of the business. It used to be 53% in the fiscal -- previous fiscal year. So in that sense, we are higher by 7%.

And on the right-hand side, you see recurring revenue. Last year, the same time last year, it was 32%, but it went up to 44%. Recurring revenue, why is it important? Because this is a stock type business. So stable and in order to achieve the stable revenue and profit, and we should continuously invest so that we can continue providing value to the customers. So in that sense, recurring revenue is important. And also standardization ratio, currently 63%, as you see at the right bottom. And this is what we achieved in the vertical domain. So the one-to-one business onetime is not what this means. Standardized offering is to be provided because we can offer this to multiple customers. This improves time to market and also to capture the scalability of the business. Standardization is what we are focusing upon in Uvance as well.

Next point is -- so we are on the solid path for the future growth. And I'd like to talk about the future opportunities. So the organic value creation between vertical and horizontal is what I'd like to explain. For horizontal, vertical application is supported by horizontal. It is a base. 3S, SAP premium supplier, for example, by utilizing that, SAP ERP data is to be used on the ontology, connecting them and analyzing them to get the output. So from horizontal to vertical application deployment, is possible. For business application, the strategic partners with multiple partners is what we formulated. So by using the horizontal framework, we can connect the vertical and digital shift for DS data path is provided.

Fujitsu's IP Kozuchi Takane can be provided on part so that the customers can freely utilize the technology. So this is the nature of the service we provide. By using them, customers will be able to use technologies as their parts and also by the vertical products. It is increasing. So from horizontal to vertical, the coordination between these 2 is important.

Now I would like to talk a little bit about the verticals business. Vertical, as you see here, it is growing steadily as you see, particularly in CX. GK Software, we acquired last year, its growth is 33% year-on-year. And also to new customers, we have captured the new customers as well. So stand-alone performance as well as the Fujitsu IP integrated will capture new customers. As for trusted society, City security is the area domain where our R&D image analysis engine can be fully utilized to generate new needs and also the logistics and the optimization. The logistics and the optimization engine can be fully utilized, so that the customers can enjoy the value.

As for health care, electronic and medical record on the cloud and also turning the knowledge into the IP and also the providers and the business transformation, these are what we are working on. So these are the projects emerging. So for verticals business, they are growing quite steadily. And as for Uvance solutions, as you know, on cloud application is the main under offerings, to facilitate the expansion of the function and to enhance the value and also one to multiple parties, time to market can be improved. So it is not the one-on-one relationship, but the basic architecture is to be deployed to cover multiple customers in a quick manner so that we'll be able to offer new functions to the multiple customers in a quick manner.

Now I will talk about the GK and its growth driver. As I mentioned earlier, 33% on the stand-alone growth of GK year-on-year is what I mentioned. And starting from May this year, we have completed 100% integration. So the utilization of IP will be starting soon. But already in 2024, through Fujitsu collaboration, the GK has captured a new customer base. On the left-hand side, the global apparel brand is one case study. Well, in addition to GK POS, Fujitsu's managed service is provided. Our security and other functions are to be purchased by the customers so that the full values will be enjoyed by the customer.

In the middle, this is a case study of Canadian food retailer, Metro. Our image analysis and the fraud detection function will be introduced together with GK's capability. So cross-sell is possible. On the right-hand side, European company, Popken Fashion Group is another example. For GK, the most leading edge which is the POS and the price optimization is another function. Real-time price optimization is introduced to enhance the retention. So now these solutions, it is the time that we can introduce these functions to Japanese customers as well. And the multiple customers have shown interest and place inquiry to us. So by using GK's function, Fujitsu IP is to be integrated to offer higher value so that in the global market, we will be able to make inroad into the global market as well.

Next topic is a little conceptual, but by using the -- to enhance the scope of Uvance by utilizing our comprehensive capabilities. Now we have Wayfinders, so we can identify opportunities which can be connected to Uvance. And modernization, it is not just the TCO lifting, but the full shift, the vertical applications to be utilized so that the DX will be promoted. So this is the entry point. And the modernization is the entry point and connecting this to Uvance is one way. And also [ VTEX ] area, technologies, various technology feeds and from the research institute, we get them and embed them into solutions. Takane AI-related guardrail, Agent AI guardrails, these are major technologies are to be incorporated into Uvance to enhance the added value. So that's what is happening. So for the entire company, we are working together so that we will be able to deploy Uvance to as many customers as possible.

Next, I would like to talk about the Agentic AI. At the Uvance update the other day, we already explained this, but this is the AI agents and they are specific to business applications and the international R&D organizations have rated highly. From a research analyst, Fujitsu's Agentic AI's top-tier provider, so we are top tier provider in Agentic AI, that is what they recognized. What is important about this is that the market is moving towards AI. And based upon our business and the know-how and expertise, we will be able to work on the Agentic AI, not only on business and experience, but the prompt and the -- so the injection to host nation technology to abate the fraudulent utilized. So the guardrail is to be introduced so that the safer utilization of the agent will be possible.

In the field of business expertise, based upon our business expertise, this is the specified AI and the technology with the guardrailing function is to be incorporated. And within the company enterprise, well, not just the AI utilization within the company, but the among or between the company's AI is to be utilized. 3S, SAP, ServiceNow, we're working together with our partners, agent-to-agent collaboration or the coordination is something that we would like to look into.

Next, I'd like to give you some of the specific examples. This is the example. Last year, I already indicated this and used this, but this is the utilization of AI agent for disaster response, light-sized earthquake and other disasters. And we will be able to forecast the potential damage at the customers' sites and integrate such information to the procurement data and visualize the vulnerability of entire supply chain, not just visualization, but actionability, how to evade such potential risks. That is what we are also offering. So the parts to be supplied by some other suppliers potentially in order to evade the impact of such a disaster. So that is what we can offer. So Agentic AI is actually being used for this purpose. So this is the most leading -edge example of the customers utilizing this function. So the seamless connection via Agentic AI and get the information, visualize them and make output. This is one example.

As for next example, this is on the health care case I'd like to introduce to you. Annual medical expense is to be JPY 47 trillion in Japan annually and 1/2 of that expenses are personnel expenses and the P&L for the hospitals and the medical institutions, actually, nearly 70% of the hospitals are suffering from the fiscal deficit losses. So the -- unless the business process is improved and the turnaround, the medical institutions of Japan will face difficulty. And so recently, we made announcement of our work with NVIDIA. So it is shown here. So whether it is the medical examinations, the diagnosis and the prescriptions. So aside from these core medical activities, all the other hospital operation related processes are to be turned into AI. So to multiple hospitals, we would like to introduce specific proposals like this, not only this, but the telemedicine at the remote islands, for example, for the medical care transformation is what we'd like to offer.

Lastly, I'd like to talk about the future outlook. First of all, by the penetration of AI agent, new market of services and software is expected to emerge. So from a fiscal '25 to '35 for 10-year period, JPY 300 trillion will be the size of such market emerging right now. So the high-level services, which were carried out by the human beings, are to be offered by AI through automation and software. So this is a new model. Software as a Service, which is a traditional services to be used by operators. Of course, that part of the market will remain, but that will become smaller and the AI doing the implementation to create the output, that is expected to emerge. And the conventional IT services, the labor-intensive services are to be replaced by Agentic AI. That's what is said generally.

So to us, Agentic AI, based upon our technologies, and working together with our partners, we would like to accomplish the perfection of this approach. So to create the market and become the leader by fully utilizing AI to create the Uvance solution, that's what we aspire to do. And ultimately, our target is a service solution. This shall -- the Uvance shall account for 50% of our service solution and for gross margin vertical 50% horizontal, the 40%. That's what we try to achieve.

And another important point is recurring ratio. Currently, it is around 40%. By raising this to 70%, stable revenue and profitability are to be secured. And by working on this cycle in an effective way, we will be able to enhance the value that we can offer to the customers. So the -- and the recurring nature of this business shall be maintained in Uvance.

Lastly, going forward, we would like to continue introducing innovation and leading-edge technologies in order to solve the societal and the technological issues. So the AI, how to offer AI as well as quantum computing, these are leading-edge technologies. By offering them, utilizing them, we would like to achieve the sustainable evolution of industry society and the planet earth. People progress, AI progress together so that we will be able to create the new world, new society.

Thank you very much so much for my part. Thank you.

Now on the next presentation, the expansion of the modernization. Our presenter is Ms. Shimazu. Ms. Shimazu over to you, please.

Hello everyone. I am Shimazu, CEO of Fujitsu in charge of Service Delivery. I would like to thank our shareholders and investors for your continued support to Fujitsu. I will talk about expansion of modernization, further delivery transformation. I joined Fujitsu in 1987 as a system engineer and I have been working and serving customers in the field for a long period of time. I continue to be responsible for service delivery in this fiscal year.

First, I would like to talk about our business progress towards achieving the current midterm plan. I would like to take a little time to talk about the definition of modernization. There are different definitions for modernization, simple upgrading of infrastructure or infrastructure migration. But Fujitsu defines modernization as moving away from legacy assets. The market surrounding modernization since Fujitsu's full-fledged rollout of the business has grown in size to over JPY 1 trillion with new players coming into the market. Furthermore, many companies started active use of generative AI and their legacy systems are the bottlenecks for AI use and to achieve data-driven businesses. To overcome this challenge, customers are accelerating their initiatives on modernization.

Fujitsu announced its termination of legacy platform in 2022 and the entire company is promoting modernization business. The consulting business that Onishi talked about and Uvance that Takashi talked about will be linked with modernization to approach the market and our proprietary generative AI that Mahajan will explain after this is implemented to modernization to improve productivity and competitiveness.

I would now like to talk about the performance in FY '24. In FY '24, our revenue was an increase of 86% against the previous year. Our gross margin was 38%, achieving our initial target. We are leading the legacy modernization market in Japan and our market share increased from 22% in FY '23 to 26% in FY '24. Furthermore, we are also making a steady progress in terminating our legacy platform. And now here is the plan for FY '25. We are expecting another strong year with revenue target of JPY 330 billion and gross margin target of 2% increase from the previous year to 40%. As of today, the pipeline building is progressing above our target with a high probability of achieving the target. We will increase our share in Japan for legacy modernization, and we will be maintaining the #1 presence in the market. We also plan to continue to work to terminate the legacy platform.

Now I would like to talk about initiatives for further growth. Fujitsu's source of competitive advantages consists of services, engineers and knowledge, 3 elements as was explained at last year's IR Day. In FY '25, with these elements in the center, our plan is to further increase value and expand the market. In increasing our value, we'll be linking with the consulting business, strengthen engineers and use generative AI, which are our focus themes. We'll be leveraging the source of competitive advantage that we developed with our legacy modernization as a weapon to expand to non-Fujitsu legacy and open markets to capture new growth opportunities. After this, I would like to explain each theme.

First, linking with consulting to approach customers. To promote modernization, customers' IT team is struggling to work on the following with management and business perspectives, such as to create stories to convince the management, defining value in investing in modernization, also optimal modernization planning targeting data and AI. At Fujitsu, together with the consulting team, we established a methodology called modernization action planning. Ourselves, SE, who know well about our customers' IT is joined by Fujitsu Consulting to offer a proposal of a ground design that bring in management perspective where IT challenges are enhanced by business challenges. This enables acceleration of decision-making on the execution of modernization, which tends to be pushed back and promote modernization to evolve as a management project with an objective of DX.

Secondly, we are working to strengthen engineers to increase value. To avoid declining of business opportunities because of the shortage of assignment of staff needed for modernization projects, we are making monthly forecast on the number of engineers needed in the short term to midterm to -- based on information on opportunities. Engineers needed -- assigned with a group-wide approach internally and including partners. Furthermore, with productivity improvement utilizing Gen AI, we are trying to minimize the number of engineers needed.

The third point to increase value is application of Gen AI to modernization. As shown on the right-hand side, we are using generative AI technology in all of our businesses, which is also true for modernization. The challenges of legacy systems include system becoming a black box or legacy systems becoming the bottlenecks for the data-driven approach and a longer time needed for projects. We at Fujitsu have our own proprietary generative AI technology, Fujitsu Kozuchi. And together with the practical knowledge we have gained in business negotiations, we are offering new values such as more efficient and higher quality modernization projects. I would like to explain the generative AI application cases that only Fujitsu was capable of.

First is the technology to automatically generate design documents that are easy for human to understand from program. This is a payroll calculation program. But in the general auto generation, the design documents includes fixed length input files that are hard to understand for human. On the other hand, when using the knowledge graph, outputs are shown as employee number, base salary and job types in plain Japanese, which are easily understood by human. With this technology, even with the system without the design document, modernization projects can be appropriately executed. This technology enables us to work in non-Fujitsu market where we have no knowledge on the operation.

The second technology, is quite effective in modernizing. In the past, when we are to do monetization, we are to use tools after converting to Java program, we remove redundancy and complexity and this process was done manually. But on the other hand, by utilizing Fujitsu proprietary technology from the design document that I talked about using the previous slide, the challenges are extracted by AI and automatically generate program source. And with that, in a short period of time, the execution time can be shortened.

And using this slide, I would like to talk about how Fujitsu is using generative AI in the whole delivery business and not only in modernization. Already in delivery, we are utilizing generative AI, and we are trying to improve efficiency by 20% to 50% for each project. In mid- to long term, the current waterfall development will change significantly. We will come up with a new business model, assuming the use of generative AI and we will be leading the industry in transforming the delivery model. Currently, Fujitsu legacy modernization domain is JPY 130 billion, which is expected to peak out in FY '29. However, with initiatives to increase value, which I just explained and by rolling out the knowledge we will gain with Fujitsu legacy to non-Fujitsu and to the open market, we will further increase our share.

Lastly, let me explain our future outlook. Going forward, we will pursue both market share increase and profitability improvement. With the enhancement of the source of competitive advantage and expansion to non-Fujitsu legacy and open market, our target is to achieve monetization market share of 30% in Japan. And the market growth is 20%, and we would like to outperform the market and grow by 30%. On the other hand, to improve profitability, we will be utilizing generative AI and roll out our practical knowledge that we have gained to increase gross margin by 10% to 50% in mid- to long term. We started our modernization business in full scale since the announcement to end the legacy platform business in 2022 and modernization business will continue to grow and drive our next business stage. Fujitsu modernization is regarded as a starting point of innovation that will continue to transform and create the future with our customers.

This concludes my presentation on modernization business. With a short presentation, there may have been points that were not fully explained, but I sincerely hope this presentation has helped you understand better about the business. Thank you very much for your continued support. Thank you very much for listening.

Thank you very much. Now let us move on to the next part, which is about the technology strategy to support business growth and the speaker is Vivek Mahajan. Now CTO, Mr. Vivek Mahajan, over to you.

Hello. Ladies and gentlemen, my name is Mahajan, CTO of Fujitsu Limited. I would like to talk about the technology strategy to support business growth. Since 2021, I have served as CTO of the company. And what was important to me, there are 2 things that I regard important. Now we are talking about AI, but since 2020, we have already introduced and implemented strategy focusing upon AI, computing network, security, converging network related to AI. We have been working on that continuously since then.

Second point, which was important to us, is made in Japan technology. So by using made in Japan technology, and we would like to help customers' growth, customers' profit and also Fujitsu's growth shall also be supported by our technologies. Made in Japan technologies, naturally, it is to be used in Japan, naturally, but it is something that we caught attention on a global stage as well. I will touch upon this point later.

From Onishi-san, Yoshinami-san and Shimazu-san, they already explained about the consulting, U.S. and the modernization. So Fujitsu Technology supports all these activities. Fujitsu Technologies. We have 5 key technologies. We have been explaining about 5 key technologies, Fujitsu Kozuchi converging technologies, security. So combining them, these are Fujitsu AI. And what supports them is computing. Why are we working on computing? It is to support AI plus network. Last Friday, we talked about Arrcus working together with Arrcus. Next network will be created, based upon AI. That's what we have been doing. So these are the technological areas that are important to us. I do not go over everything, but the AI and computing strategy, these are points I'd like to explain today.

First of all, AI total picture. So why are we handling AI? Why Fujitsu is working on AI? Three corporate Vice Presidents have already explained about how we can offer services to the customers. Our customers, important customers are enterprise customers and what they value is data. Talking about data, naturally, the data on Open AI is one data, but there are others customers and the specific work specified data is another aspect. And also security is quite important to the customers as well.

Next third point is customers. The customers' work shall be considered in AI or the type of AI that makes customers' business easier. So our enterprise customers, and that's what they want. And Sovereign AI. Sovereign AI platform, it is what they want, Fujitsu can offer important value. Well, the financial services, administration, defense, medical services and manufacturing, Sovereign AI is what customers value in these areas. And Fujitsu Kozuchi was touched upon by the previous speakers. But the enterprise AI framework, generative AI framework and the reconstruction once the qubit, even with one quantum bit, we were able to generate this framework. Why is this important? Enterprise in the private domain, we were able to achieve a high level of performance. And also zero hallucination is what we'd like to realize.

And also, we have Takane and Gen AI technology together with Cohere since last year, it is expanding. From our customers, many customers are there, but for example, Panasonic, they are using our technology and also the Takane is also used by the agricultural customers and also the Toyota related companies using our knowledge graph and they are creating their own systems. So on the global -- these are the global customers as well. So the area of enterprise and Sovereign AI that is what we would like to offer. And this is our road map.

Certainly every year, AI milestones are defined for each year. For AI Kozuchi, first of all, we have Takane. Takane is the extension of Gen AI, which is specific to customers' business. And the second is agentic AI, and it will progress going forward. As Yoshinami-san mentioned, AI agents are being utilized and will be utilized in various industry segments and AI to AI conversation and exchanging information between AI, that is what we would like to enhance higher value. And what supports that is security, knowledge graph, LLM scanners, guardrail, hallucination. So these are where we would like to focus upon.

And one more point, which will be important is physical AI or device and AI combined to be used for robots. So this is where we would like to make progress to create the world model to be used at the customers' factories or the stores. So in a device, we would like to introduce our technologies to make this possible for the future progress. So certainly, we have already worked on this road map and the significant progress every year, and that's what we'd like to take up as a challenge. And what supports AI computing, I'd like to explain about computing.

Computing and processor technologies is what we have been worked on for many years because to support AI industry, it is computing, NVIDIA, AMD, as you know, naturally, they are supporting AI enhancement. And here in Japan, we need to support FUJITSU-MONAKA. To support AI, we have FUJITSU-MONAKA. So value here, as I mentioned, confidential computing and the power consumption is very good in this processor. This is a leading-edge technology and the CPU, GPU combined to maximize the performance. So that's what we try to do. Processor will come out the 2-nanobit chip for the first time in the world next year. It will be available. So it is totally different from the situation 5 years ago. The market is expanding and NVIDIA and Arm technology to be used for their application, NW, Graviton. So these are the cases, and we are working on FUJITSU-MONAKA.

So FUJITSU-MONAKA, how is it progressing? Is it growing? In Japan, naturally and also globally from important partners globally, they are paying attention. Supermicro, we are creating super server. The Supermicro CEO is working closely with us to create server based upon FUJITSU-MONAKA. And the AMD and the GPU and our CPU combined to work on the AI, NVIDIA as well. Jensen in Taiwan back in the April, May. He talked about the processor and he mentioned about FUJITSU-MONAKA.

And last month, on the 22nd of August, RIKEN and NVIDIA [indiscernible]. And I myself, 3 of us mentioned about the CPU to support with NVIDIA's GPU and they try to aspire in the HPC industry. So naturally in Japan, but also in the global stage, the global AI-related partners are approaching to us. And this is the road map of MONAKA and the exit point of MONAKA. Just like Sovereign AI. Sovereign AI -- Sovereign infrastructure is important. Confidentiality, high security infrastructure are important to the customers. They are going to treat them highly. And so data center business, confidential. Computing is important to the defense and the administration, financial services, life science, and they are expected to be a large targets of MONAKA.

And last month, Fugaku NEXT was announced, as I mentioned on that occasion, 2 nanobit and also the 4.7 nano and the GPU collaboration will be important. So what we would like to [indiscernible] is the reasoning and inference. So these are where we would like to focus upon. And every 2 years, the next processor of MONAKA will be launched. And what supports computing is our quantum technology, Fujitsu's quantum technology. So when it comes to quantum, digital [indiscernible] quantum simulator and quantum computing, we have looked into that. At the end of July, we announced the road map of quantum technology. 10,000 qubit, 250 logical qubits by 2030. That's what we talked about.

So this is the world-leading road map, which is a challenging road map, but these are what we aspire to do. And why? As is written at the bottom, we have a large market, and we'd like to play in the large market. Well, the process simulation, the medical care and the manufacturing, there is a high expectation to the quantum computing on a global scale. And the joint research is done, for example, the Fujifilm, Tokyo Electron and the CESGA, which is using our technology and AIST together with them, we are using the technologies. And we'd like to make a steady progress in our work with them as well. And this is the road map of quantum computing.

Naturally, we will fully utilize quantum in Japan, but it is not sufficient if we only stick to Japanese market. We'd like to do this on a global scale. As you know, Google, IBM, [ AAW ], so these companies are focusing upon quantum computing, quantum technologies. By 2030, 10,000 physical bit and 256 logical qubits and the 1,000 logical qubit is what we'd like to achieve. And the error correction and the application as well and also HPC and quantum combined so that the customers will be able to use such technologies immediately to their operations. So in HPC and quantum, we have both of these areas of technologies. So we hope to work on this road map certainly. Well, the star architecture and diamond spin technologies are our uniqueness and the high superconducting the quantum, the capability shall also be connected.

Quantum and AI to be combined and they are looking for 2035, I'd like to share with you some of the images towards 2035. Fujitsu have the quantum technology, network and computing. We have 3 of these technologies. This is quite rare that the company -- one company has all of these 3 technologies. Some companies may have 2 of them, but we have 3. Thinking about the robotics world and the future deployment of robotics, well, having these 3 technologies together is important in that regard. Fujitsu and our focus is the brain of the robot, sensory perception and security. In these areas, this is where we'd like to pay close attention to because the AI computing network -- computing and network, we have 3 of them. And with them, we would like to support the growth of our customers.

Thank you very much so much for my presentation.

Thank you. Lastly, I would like to ask Mr. Isobe to present strengthening cash generation capacity and optimizing capital allocation.

Thank you very much for being very patient. It's been over an hour, and you've been listening to different presentations. We are a little behind our schedule. However, I would like to start the final presentation. In each part, numbers, performance, growth rate that are often explained, the actual initiatives and strategies to achieve those targets were partially explained. And I hope that you were able to get the feel at least of what we are doing. So I would like to start my final session.

So in this session, I would like to try to explain how things that were explained today feed into the overall financial plan. I would like to explain the likelihood of achieving the midterm management plan, enhancement of cash generation capacity by the mid- to long-term profit growth beyond the plan and the direction for sustainable growth with optimal capital allocation.

This slide shows, I don't think I need to explain this anymore, but I've already explained this slide in the first part. And the 4 officers just explained the details of this content. In the center, we have Uvance modernization, which are accelerated by consulting to solve the challenges of the customers and the societal challenges, which supports the growth of the company and accelerated by AI and computing, the evolution of technology. And this is a profit plan in our midterm management plan, which I explained in the first part. What is driving the revenue and the profit is the service solutions and the 4 growth drivers that are key to the growth of Service Solutions, which were explained today. Overall, things are moving steadily to achieve the plan.

According to my understanding, there are various changes in the business environment, but we have been responding flexibly to those changes, and we have been shifting to high value-added services and the structural reform of the business is on track. Cash generation capacity is also strengthening. As shown on the graph on your right, the base cash flow, which is the source for capital allocation was about JPY 650 billion in the 3 years during the previous midterm plan. But in the current midterm, we are expecting JPY 930 billion, JPY 1.3 trillion growth by twofold.

We are expecting profit growth with Service Solutions business in the center and adjusted operating income in the previous 3 years was JPY 660 billion, but in the current 3 years, we are expecting to achieve JPY 930 billion. And second is improvement of business efficiency by shifting to the service business, investment returns and capital circulation have become more efficient. Thirdly, asset recycling by carving out noncore assets. With all of these initiatives, during the previous midterm, cash generated was about JPY 650 billion in 3 years, average of over JPY 200 million a year is increasing to about JPY 1 trillion in 3 years after taking out the income from the sale of noncore businesses, which is an increased generation -- cash generation capacity of over JPY 300 billion a year, although there are some ups and downs.

Cash generation capacity is steadily increasing and cash allocation is also on track. The base cash flow of about JPY 1.3 trillion to be generated during the current midterm will be JPY 700 billion allocated to business growth and JPY 600 billion to shareholder returns. The plan remains unchanged, enhance cash generation capacity and optimally allocate the generated cash to business growth investment and shareholder returns. By running this cycle, we will further increase the cash flow and achieve sustainable growth of corporate value. The progress of the current midterm plan has been explained so far. Revenue, profit plan, generation of cash flow and capital allocation, everything is in line with the plan and on track. The current midterm is approaching the final corner, but we will stay focused and make sure we achieve our targets.

And lastly, I would like to talk about the direction and the perspective for the post midterm plan period. In the previous sessions, we had corporate executive officers explain mid- to long-term revenue growth and margin improvement strategies and targets for each growth driver for sustainable profit growth. Key quantitative targets are once again shown here on the slide. Consulting will accelerate the growth of Uvance modernization business by improving the conversion rate and increasing the deal size and improve gross margin and profitability by increasing recurring business.

Modernization will increase the market share by attacking non-Fujitsu system and open markets. And through the use of generative AI and by rolling out the practical knowledge, gross margin will improve. All of these business growth will be supported by technologies, especially enhancement of one of the 5 focused technologies, AI and computing will enable competitiveness and high profitability. We believe that these growth drivers will sustainably grow the revenue, profit and gross margin of Service Solutions as shown on the graph on the right-hand side. We will achieve the midterm plan targets and also realize a higher profit business and strong growth beyond the current midterm plan.

Now about capital allocation. On the left-hand side is the -- shows the initiatives to enhance the cash flow generation capacity. As was explained earlier, the base cash flow during the previous midterm from 2020 was JPY 650 billion in 3 years, an average of over JPY 200 billion a year. During the current midterm plan, excluding the income from the sale of the noncore business like Shinko and Fujitsu General, base cash flow has increased to JPY 1 trillion in 3 years, an average of over JPY 300 billion a year. Going forward, through sustainable high profit growth, continuous business transformation and improvement of business efficiency, we will accelerate the cruising speed of cash generation to achieve an average of over JPY 400 billion a year and over JPY 500 billion beyond that. We will carefully identify investment opportunities and be flexible in using leverage if that would result in the growth of business.

On the right-hand side, we have a bar for the allocation. And there has been no major change in the approach. We will allocate appropriately the cash to investments for growth for sustainable business growth and shareholder returns considering capital efficiency. Our priority is investment in growth. We would like to be proactive in investing, focusing on further growth based on stable profit increase and strong financial base. Needless to say, execution and investment based on financial discipline and the pursuit and tracking of ROI are essential. On the other hand, we will expand the shareholder return base in the mid- to long term. Further increase in the dividend level and consider flexible share buyback while executing investments for growth. The whole cycle of strengthening of cash generation capacity and optimal cash allocation will be carefully monitored to realize sustainable growth in corporate value.

Here are the main financial KPIs where we are today and beyond the current midterm. First, the progress. And on the left is adjusted EPS. During the current midterm plan period, CAGR is double digit as we had planned. On the right-hand side is the adjusted ROE. With the profit growth and better capital efficiency, we expect ROE to be about 14% in FY 2025. And beyond the current midterm, by executing the sustainable profitability increase strategy and optimally allocating the cash generated, we believe we can continue to improve the KPIs. Adjusted EPS to grow by double digits, a CAGR of 10% to 15% to continue and adjusted ROE to be over 20% are the likely levels for our targets.

By bringing positive impacts to the society, we will realize sustainable increase in corporate value. This is what we will always keep in our minds as we operate the business. Details of quantitative targets will be disclosed in the next midterm management plan announcement. This is my final slide.

Today, we had Onishi talk about consulting business, Takahashi about Uvance, Shimazu talked about modernization and delivery transformation and Mahajan talked about technologies. We provided the updates on the future growth strategies for each. The progress of the business model and portfolio transformation that Fujitsu is working on, which are at the center of our path forward. Through these initiatives, we will increase the profit and cash generation capacity. We will allocate optimally the cash to disciplined execution of investment and further business growth and proactive shareholder returns. By running the cycle, we will realize sustainable increase in corporate value.

In our previous midterm, we worked on portfolio transformation and improved profitability as shown at the bottom. During this midterm plan period, we have completed the work and delivered results and increased profit. Going forward, we have the skeleton in place with some muscles in place, we will accelerate the strong business growth. The growth drivers will continue to be Consulting, Uvance Modernization and Technology. We will continue to refine the growth drivers, and we'll work on the transformation in response to the changes in business environment. Fujitsu will be working towards the 2030 vision and the 100th anniversary in 10 years and beyond to realize sustainable improvement of corporate value. The future vision that we shared with you today will be explained with higher resolution when we announce our next midterm management plan.

This concludes our presentation. Thank you very much for listening.

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

I would like to provide you with a briefing on FY '25 first quarter financial results.

Please turn to Slide 3. Slide 3 shows an overview of our results for the first quarter. Service Solutions, one of our most important segments, got a solid start to fiscal 2025 with higher revenue and profit. Revenue in the first quarter was JPY 514.6 billion, up 2.6% from the previous year. For business in Japan, there was continued growth in demand for digital transformation and modernization and revenue was up 6%. Adjusted operating profit was JPY 47.8 billion, up JPY 12.8 billion from the previous year, a 37% increase.

In addition to higher revenue, there was also progress in improving profitability. The adjusted operating profit margin was 9.3%, up 2.3 percentage points from the prior year. In the lower box, consolidated total revenue was JPY 749.8 billion. Consolidated revenue declined by 1.2% because of the impact of exchange rate fluctuations and due to a change in revenue reporting standards in a portion of the Hardware Solutions business in Europe. Adjusted operating profit was JPY 35.1 billion, up JPY 18.5 billion from the prior year, a 112% increase. The adjusted operating profit margin was 4.7%, an improvement of 2.5 percentage points from the prior year. Each business segment posted higher profits and adjusted operating profit was a new record level for the first quarter.

At the very bottom, profit for the period was JPY 171.7 billion. In addition to profit from operations, we recorded a gain on the sale of shares in Shinko Electric Industries, a discontinued operation. Page 4 shows consolidated profit and losses. In continuing operations, profitability improved, mainly in our core segment, Service Solutions. In addition, in discontinued operations, we recorded a gain on the sale of shares in Shinko Electric Industries of roughly JPY 140 billion. At the very bottom, we have profit for the period of JPY 171.7 billion, up JPY 154.8 billion from the prior year.

Page 5 gives an overview of profit and losses for each segment. In the following pages, I will go through results for each segment individually, and the overall view is as shown here. Service Solutions, our growth driver, continue again with higher revenue and higher profit. For Hardware Solutions, revenue declined in our European business due to exchange rate fluctuations and because the revenue reporting standard changed for a portion of revenue, but progress was made on cost efficiencies, resulting in higher profit. In Ubiquitous Solutions, profit increased because we consolidated our business in Japan.

From Page 6, we show a breakdown of results for each segment. Starting from Page 7 is Service Solutions. Revenue was JPY 514.6 billion, up 2.6% from the prior year. For business in Japan, there was continued growth in demand for DX and modernization business and revenue increased by 6% over the prior year. The decline in revenue outside Japan is primarily due to exchange rate fluctuations. Additionally, APAC, which is finalizing its structural reforms in its core business, also experienced a revenue decrease. Adjusted operating profit was JPY 47.8 billion with adjusted operating profit margin of 9.3%, up JPY 12.8 billion from the prior year.

On the next page, I will explain the factors behind the change in adjusted operating profit. Page 8 shows a breakdown of changes since last year in adjusted operating profit for Service Solutions. On the very left, adjusted operating profit for the first quarter of fiscal 2024 was JPY 34.9 billion, and that will be the starting point for factors on the right that impacted results for this fiscal year's first quarter. First, profit increased by JPY 6.4 billion from the impact of higher revenue. The main factor was the increase in gross margin because of higher revenue in Japan. Second, profit increased by JPY 7.6 billion from profitability improvements. This is a result of continuous initiatives to improve productivity, such as standardization and automation of processes for development work.

In addition, outside of Japan, there was the impact of carve-outs of low-margin business as well as structural reforms. Overall, the gross margin improved by 1.5 percentage points. Third, profit decreased by JPY 1.2 billion because of higher expenses. There was an expansion in new investments in Fujitsu Uvance modernization, consulting and security enhancement. On the other hand, we're making progress in bringing greater efficiencies to existing expenses. Bringing these together, adjusted operating profit for the first quarter of fiscal 2025 for Service Solutions was JPY 47.8 billion, as shown on the far right. The adjusted operating profit margin was 9.3%, an improvement of 2.3 percentage points from the prior year.

Next is Page 9. I will now provide some additional information on each of these factors behind the changes in adjusted operating profit. First, we will look at the status of orders, which lead to sales. This page shows orders in Japan. Compared to the previous year, orders for the first quarter rose by 1%. I will comment on each industry segment. Orders in the Enterprise segment were down 3% from the prior year. There was a pullback from large-scale multiyear contracts of the prior year. Excluding this impact, orders were up 9%. Looking at the first quarter by industry, orders in the distribution industry was especially strong.

There continues to be strong flow of inquiries on [ DX-related ] projects and modernization projects. Orders were up 19% in the finance segment. We achieved double-digit increase because we won a large upgrade project for sales location system for financial institutions. In the Public and Healthcare segment, orders were down 4% from the prior year. In the first quarter, governmental institution orders were at a low level, mainly because of a pullback from the prior year. Still, the main reason is the impact of the wide quarterly fluctuations in large-scale projects.

Already, we have a significant pipeline of large-scale project orders we expect to receive in the second and third quarters, and there is no change in our forecast of a growth pathway for the full year. Mission-critical orders were up 14% from the prior year. We continue to see a solid flow of orders, primarily in the national security field in Japan. Looking at the figures for orders in the first quarter, they may not seem very strong, but our sense is that there has been essentially no change in the strong expansion trend of our business in Japan.

From the second quarter onward, we expect the size of the pipeline of orders we seek to receive for the fiscal year will exceed the growth rate of 15% achieved during the same period in the prior year. Although we have some concerns about securing sufficient delivery resources, we will work to do so, and we expect it to lead to an expansion of orders from the second quarter onward. Page 10 shows our order backlog in Japan. As of the end of the first quarter, the order backlog of sales scheduled for fiscal 2025 was JPY 883 billion. That is JPY 101 billion higher than the same period last year, an increase of 13%. Together with the actual revenue, we are within the sight of achieving sales revenue of JPY 1,260 billion in fiscal 2025. This is JPY 120 billion higher than the same period in the prior year, an increase of 11%.

Our revenue forecast for the full year is JPY 1,800 billion, so our coverage ratio between actual sales and order backlog is 70%. To achieve our full year target, we only need approximately JPY 540 billion in orders received starting in the second quarter to be converted into sales in fiscal 2025. Considering the current status of our order backlog, along with the orders we seek to receive in the second quarter and beyond in an expanded project pipeline, we are currently making steady progress toward achieving our full year revenue target.

We will not let up in the second quarter and beyond as we move forward. Page 11 shows orders from outside of Japan. Orders in Europe are up 77% from the prior year. The growth is from large-scale data center-related multiyear contract renewals. Orders in the Americas are down 49% from the prior year. The decline is from a pullback from the prior year when there were a large-scale multiyear contracts. Because the region's overall scale of business is small, quarterly fluctuations can be large. Orders in Asia Pacific were up 17% from the prior year. The step-up in growth was from winning a retail-related multiyear upgrade project contract in Oceania.

Page 12 shows the progress of Fujitsu Uvance, which is positioned at the heart of business growth and portfolio transformation. Overall orders in the first quarter were JPY 127.6 billion, up 70% from the prior year. The bar graph shows revenue, which was JPY 146.7 billion, representing very strong growth of 52% from the prior year. Vertical areas grew by 69% and horizontal areas grew by 44%. The share of revenue from the horizontal areas has been larger since before, but revenue from offerings in the vertical areas are also growing strongly. The pie charts at the bottom show the share of revenue from Fujitsu Uvance in the total revenue of Service Solutions. It grew from 19% last year to 29%.

The graph on the right side of the page show our revenue target for fiscal year 2025. Our revenue target is JPY 700 billion, which would be up 45% from the prior year. Our progress in the first quarter was essentially in line with our plans. Page 13 shows the status of our modernization business. This business also continued to strongly expand. The level of orders at the top shows that orders declined in this fiscal year's first quarter, but this is an issue of the quarterly structure of projects. Below that, revenue was JPY 73.8 billion, up JPY 22.5 billion from the prior year, representing growth of 44%. The portion of the revenue because of overlaps with Fujitsu Uvance was up 25% from the prior year.

The graph on the right side shows this fiscal year's revenue target, which is JPY 330 billion, exceeding the revenue target of JPY 300 billion established in our medium-term management plan. In other words, our forecast calls for an increase in revenue of JPY 33 billion from the prior year, and we have already achieved an increase of JPY 22.5 billion in the first quarter. As a major trend, expansions in orders continued to exceed expansions in revenue. In other words, demand for modernization projects continues to be very strong. We expect the increase in revenue to continue next fiscal year and beyond. We will need to further strengthen our delivery capabilities.

With Page 14, I would like to provide additional information on the improvements in profitability. Adjusted operating profit increased by JPY 7.6 billion from profitability improvements. The gross margin moved up a step, improving by 1.5 percentage points from the prior year to enhance our delivery capabilities. In addition to continuing the initiatives we have taken to date, we are also promoting the wide use of AI -- in terms of application areas, of course, we can use AI to replace certain types of daily tasks, such as creating meeting minutes. In addition, we can also use it in modernization work to analyze the structure of existing applications or in overall system integration work, such as support in designing or improving applications, generating code and creating testing data and the realm of AI application is growing every day.

We have already provided usage environment of generative AI tools to our 30,000 system engineers in Japan as well as our partner companies. The objectives and effects of using AI in delivery are not limited to securing resources to meet growing demand and simply making work more efficient. The most essential part of it lies in increasing the speed in which we provide services to customers and improving the quality of our services. In other words, it is none other than increasing the value of the services we provide. In reality, the scope of applications for AI is still quite limited and AI usage is still in its early days. But on the other hand, we believe that if we are able to fully utilize the rapid evolution of AI in delivery, then there will be considerable room for increasing the value of the services we provide.

We will continue to work at an even faster pace to expand the scope of applications for AI and increase its speed. In addition, we will also continue to work to improve productivity through pricing strategies and optimizing our human resources portfolio. Page 15. I will briefly touch on the status of each subsegment in Service Solutions. First is Global Solutions. Revenue was JPY 120.7 billion, although sales were down 6.4% due to the impact of factors such as the sale of the contact center business in the fourth quarter of the prior year.

We made progress on making delivery more efficient and in the selection and the concentration of the development of offerings. Due to this, the adjusted operating loss was reduced by JPY 1.3 billion compared to the prior year. In Regions Japan, revenue was JPY 289.4 billion, up 6% from the prior year. Adjusted operating profit was JPY 41.6 billion, up 10% from the prior year. Demand for modernization-related projects such as DX and upgrades of mission-critical systems continued to increase. Due to this, revenue increased in a wide range of sectors, such as the public sector, finance, manufacturing and retailing. In addition to the impacts of higher revenue, profitability improvements also remained steady, and the adjusted operating profit margin was 14.4%, an improvement of 12.5 percentage points.

In Regions, International, revenue was JPY 133.7 billion, down 6% compared to the prior year. Adjusted operating profit was JPY 7.1 billion, up JPY 7.7 billion from the prior year. The main reason for the decline in revenue was the impact of foreign exchange movements, but there was also a decline in revenue in APAC, which is making progress on finishing up structural reforms. On the other hand, in terms of profit, the effects of the business portfolio transformation continue to improving -- contributed to improving profitability. Page 16. I will now talk about the other segments besides Service Solutions. First is Hardware Solutions. Revenue was JPY 202.1 billion, down 11.6% from the prior year. Adjusted operating profit was JPY 1.3 billion, up JPY 5 billion from the prior year.

The main reason for the decline in revenue was the European system products business. In addition to the impact of foreign exchange movements, there was also the impact of changing the reporting standard for the sales of licenses for competitors' products from gross revenue to net revenue. The change in the standard for reporting revenue did not have an impact on profit -- through progress made on cost efficiency efforts. Revenue in network products was still sluggish, but remained at the same level as the prior year. Profit increased due to an increase in sales of profitable products and cost-cutting efforts. In addition, as planned, we established a new company, 1FINITY on July 1. Through this company, we will consolidate our network-related business, improve business efficiency and globally expand our high-quality and competitive network solutions.

Page 17, Ubiquitous Solutions. Revenue was JPY 47.9 billion, down 1.8% from the previous year. Adjusted operating profit was JPY 8.2 billion, up JPY 3.7 billion from the prior year. We exited from the European business in the first quarter of last year. So there was a pullback from the final revenue of that business last year. Revenue in Japan grew by 6%. Adjusted operating profit was up by 17.2%, an improvement of 8 percentage points from the prior year due to focusing on comparatively profitable business in Japan and a decline in the cost of components due to exchange rate fluctuations.

Towards the bottom is intersegment eliminations and corporate. There was an operating loss of JPY 22.3 billion with a JPY 3.1 billion increase in costs from the prior year. We are continuing to strategically invest in medium- to long-term business growth including in advanced research for such fields as AI and quantum computing. Page 18. I will now talk about the status of the cash flows and the balance sheet. Page 19, cash flows. Excluding onetime cash inflows or outflows, core free cash flow was JPY 230.3 billion, an increase in inflows of JPY 62.5 billion from the prior year. There was a high level of sales in the fourth quarter of the prior year, and we made progress in the collections of accounts receivable.

Towards the bottom of the table, free cash flow was JPY 401.7 billion, an increase in inflows of JPY 271.3 billion from the prior year. There was a significant one-off increase in inflows due to the sale of shares in Shinko Electric Industries. Cash flow from financing activities was negative JPY 89 billion, and there was an increase in cash outflows of JPY 82.4 billion compared to the prior year. Last year, in anticipation of the cash to be received from the sale of noncore assets, we executed share buybacks in advance, and we repaid the resulting short-term borrowings in the first quarter of this fiscal year. Page 20 shows the status of assets, liabilities and equity. I will omit an explanation for this page.

This concludes my explanation of the financial results for the first quarter of fiscal 2025. The results from this first quarter progressed largely in line with our internal forecast. Although there were rapid changes to the business environment in and outside of Japan, the trends in each market did not change significantly during this first quarter and were in line with our expectations. There are, of course, some positive and negative effects with each individual customer. But as there has been little change in how certain -- uncertain the future seems, we cannot take an overly optimistic outlook.

We will closely watch the business environment and make progress towards achieving our forecast. The progress made in each of our business segment is also largely in line with our plans. Page 21. I will now talk about our projected financial results for fiscal '25. Page 22, this is the financial results forecast for fiscal '25. Revenue is projected to be JPY 450 billion. Adjusted operating profit is projected to be JPY 360 billion. Adjusted profit for the period is projected to be JPY 250 billion. All of these figures remain unchanged. Page 23 shows the results from the first quarter compared to our forecast for the full year. For the consolidated total, the target adjusted operating profit for the full year is JPY 360 billion. The results for the first quarter represented progress of about 10% towards this target.

Of this, taking a look at the Service Solutions, the segment had progress of about 13%. As always, profit is skewed towards the second half of the fiscal year, but progress on profitability improved from the previous year. We will diligently continue into the final year of our current medium-term management plan to ensure that we achieve our goal. Page 24 shows the adjusted consolidated results forecast and adjusted items as well as forecast before adjustments. As you can see, there are no changes from our previous forecast. We will steadily proceed towards the goal of achieving record high profits in the final year of the medium-term management plan, both before and after adjustment and for both operating profit and net income.

Starting from the next page, there is information regarding each business segment and the projected cash flows. There have not been any changes to our initial forecast for either. Lastly, I would like to inform all of you about Fujitsu [ IR Day 2025. ] On September 9, we will explain the status of our current progress towards our current medium-term management plan and our business strategy for sustainable growth following it. During the event, we will be able to speak directly with several senior executives of Fujitsu. We believe it will be a valuable opportunity to understand the strategy of our company. We will share further details of the event and the specifics of how it will be held in a separate announcement. We look forward to seeing you at the event. This concludes my presentation.

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

We are now beginning Fujitsu Uvance Update 2025 to introduce the business progress of Fujitsu Uvance to the media, investors and analysts.

Now let's invite our first presenter, Yoshinami Takahashi, our Corporate Executive Officer, Corporate Vice President and COO. Takahashi-san, over to you.

Hello. This is Takahashi speaking, and thank you very much for attending Uvance update today. Last year, in Uvance's update, I mentioned that in Uvance, we will utilize our strength of data and AI to aim at generating both business impact and social impact. I shared with you this commitment. One year has passed since then and through co-creation with many customers and partners under the Uvance brand, we've been working on various use cases and solutions to promote DX and SX as far as workplaces.

Last fiscal year, Uvance's revenue target was JPY 450 billion, but we were actually able to achieve JPY 482.8 billion, exceeding our target. And this fiscal year, we are aiming at JPY 700 billion. And through Uvance Service Solution, Uvance has grown to account for 30% of Fujitsu Service Solution revenue, and it has become a business that drives our own business transformation within Fujitsu.

Today, we would like to introduce the evolution of AI through examples of data and AI as well as the use of agents in various business use cases to share with you how we want to impact society.

Now during the past one year, there's been significant evolution in AI. Until last fiscal year, AI was still in the trial phase, as we understand. But we have now last transitioned to the phase to generate outcomes.

In fact, in a survey of 800 CXOs in 15 countries conducted by our company, the adoption rate of generative AI, Gen AI reached 98%. And out of which 60% of companies that have adopted it said that their productivity has increased by 10% or more. We believe that Gen AI will be promoted more. And through the collaboration of people and AI, we think we can promote this further. And according to various interviews and so forth, by 2030, more than 80% of companies predict that AI will be incorporated into more than 50% of their processes. AI is now taken for granted, management decision, automation of business. For all of this, AI can support and AI can therefore support various corporate activity. AI is now collaborating with people.

And with regards to Uvance as well, there's evolution. And during the past one year, we've been able to go through a lot. And we conducted this demo last year and global inventory can be visualized in just a few steps, and we can visualize the inventory. We can minimize CO2 emission and the supply chain can be optimized at the time of emergency. That was the kind of demonstration we showed to you last year. And we are going to evolve this further.

We will embed AI agent and from people prompting, AI agent will autonomously operate. And judgment process has been done by humans, but this will be done by AI agents, which will increase the speed and accuracy of decision. When we say AI agent, generally speaking, in meetings, that research and so forth, AI agents are now often used.

What we are aiming at with regards to AI agent is to go one step further. And for specific business issues, we want to develop a specified AI agent to solve various issues in specific workplaces.

And I think it's easiest to understand to introduce to you a specific use case. We will now introduce to you specialized agents that are being developed by Fujitsu.

Mr. [indiscernible], please.

Hello. This is [indiscernible] speaking from Fujitsu. And I want to introduce to you the AI agent. I've been responsible for developing it. And the theme for this year was the same as last year, stock-out risk. AI agent will think and make decisions instead of human beings and human judgment can be supported by AI agent. That is how we've been able to evolve.

I will now start my demonstration and the time is limited, but I hope you can get an understanding of how AI agents work. And a certain product is likely to suffer from a stock out. That is where the story starts in the demonstration and users' policy is to place emphasis on cost. And then user policy is understood by AI agent and the AI agent autonomously starts to operate.

And in order to realize this mechanism, four types of specialized AI agents and two types of comprehensive AI agents are used. Behind this screen, there's this inventory agent, production agent and sales agent. They all incorporate the necessary data and real-time calculation is made. And from various options, the best option is chosen. And these cards from left to right, they move. And once all of the proposals or options are available, as you can see in the middle of the screen, these specialized AI agents are orchestrated by team leader type of AI agent, which chooses the best option and the evaluator, as the word denotes, judges whether it can automatically be approved or whether a human judgment is necessary. And furthermore, as a result of the mechanism, conventionally, many people as well as time had to be allocated to discuss and consider. But in just a couple of seconds, in dozens of seconds, proposals can be reached using this AI agent mechanism.

Without doing anything, AI agents autonomously operate. And as you can see on the screen, and the optimum, the best option is selected. But in accordance with necessity, action required button comes up so that human beings can intervene to make further decisions. So AI moves first and the break and the handle, that's under the responsibility of the people. And I think that will be the best solution for various workplaces.

Now behind this screen, sales agent is making various considerations and time is limited today. So the stock-out alert, how it's recognized and how a judgment is made, that is what I want to show to you today. And for the stock-out risk, stock agent, inventory agent chose the best option automatically, and it's automatically approved. But that's not the end of the process. The user for each agent, what is discussed amongst various agents and why was this conclusion reached, the dialogue between among AI agents can be taken a look at over here. And the history, the record of discussion can be taken a look at and the scores and the comments can be used to feedback by human beings.

And another interesting point is user feedback appears in the top right corner. There's the governance agent. The governance agent takes a look at the feedback real time and the scoring is done for each AI agent and the procurement agent in purple. User feedback mentions that the proposal was quite ambiguous. And the governance agent not only scores or evaluates, but analyzes the weakness, tries to make improvement so that next time, better proposal can be made. The decision as well as the thinking of the AI agent, the prompt part is automatically updated.

In other words, AI is not just implemented and they continue to be trained and learn. Just like human beings, the more experience you go through, the more improvement you can achieve. And as you just saw, people and AI agents, they are collaborating, and we are now in this time. And I introduced to you today the supply chain use case, and it's a great honor for us to be able to introduce this use case. In the demonstration time later on, I can explain in more detail, and I can show to you real time how the cards moved. So please feel free to take a look at the demonstration later on as well. Thank you very much.

[indiscernible], thank you very much. The solution that you just took a look at, it was written in English and the Japanese language is also available. It's a state-of-the-art technology or solution where people and AI can collaborate. And in the World Economic Forum, AI Governance Alliance MINDS program, this solution was adopted there. And globally, only 18 companies worldwide were selected. It was highly evaluated internationally as an innovative use case that will have an impact on society.

Furthermore, in the field of generative AI, Gen AI as well, we've been recognized as a leader by global analyst firms. The first time as a Japanese company, we were recognized for implementation capabilities and reliability attracting significant attention.

These cutting-edge initiatives are not limited to the supply chain. They're also being implemented to -- in Uvance's vertical areas, which aim to solve societal issues across industries in a cross-industry manner.

We would like to introduce some cases to you today. First, last year, in Uvance's update, we announced a strategic partnership with Cohere. As a result of this joint development is Fujitsu's unique LLM, Takane. Takane's features include high accuracy, Japanese language understanding and secure private environment. Its introduction is progressing in a confidential sensitive fields such as medical care and so forth.

And we would like to highlight today the Takane use case in the medical industry. Currently, in medical settings, there is a large amount of important information such as medical records and test reports that is essential for treatment and research. And one issue is that this data and reports, they are written by physicians in free form. As a result, if we try to analyze this data, it takes a massive amount of time and effort. As a result, clinical data is not utilized to its fullest extent. As a result, Fujitsu has decided to collaborate with Tohoku University to tackle the challenge of structuring medical data.

Even with Japanese, which is difficult to understand in context, Takane achieved an accuracy rate of over 80% in verification using real data in a secure private environment, surpassing conventional generative AI and target values. 80% means that we've been able to structure medical data and side effect prediction and so forth are now possible. By utilizing data, we can realize a personalized medicine that suits the needs of each patient. And we've been able to make a significant step forward towards the realization of personalized medicine.

The next case study is in a little bit different industry centered around data scientists, we are working on the infusion of AI together with customers. That is what I would like to introduce next. This is a case study from Mazda, the automobile manufacturer. Mazda is promoting a company-wide DX-based reform of its business structure to improve business efficiency. Using our data platform in just two years, they have deployed 33 business applications in five departments. In factories, sales, purchasing and IT, our data platform is being used for data-driven decision-making.

How did they or we achieve such a company-wide transformation. For example, in the purchasing department, we normally hear that data is not centralized. So we first sort out the issues and we visualize the result. And against that integrated data, we consider how we can utilize such data. Based on such idea, the customer eventually put together a DX concept for purchasing on their own.

Currently, we discuss with customers in the field and closely support them so that they can take the lead in their own transformation. We have data scientists internally. I believe that such customer-facing data scientists are dispatched to companies to support them. And that is a critical service of Uvance. And when data and AI further penetrates, we need to accelerate the fusion of data and AI going forward.

Another case study is, well, the society or social environment around us is rapidly changing. Unexpected events such as geopolitical risks, natural disasters and recent tariffs have become a significant impact on businesses.

How quickly we can come up with countermeasures is essential, especially in supply chains, we have been seeing disruption of a global division of responsibilities. And this may lead to a rise of procurement costs as well as the end price, and this can directly affect the revenue. The ability to respond quickly to these changes and provide effective solutions is a major value proposition of Uvance, and it is the concept of Uvance.

The case study I would like to introduce next is from Adeka, a global comprehensive chemical manufacturer. In Adeka, they have established a mechanism to immediately identify the impact of external risks on earnings, such as contingencies or tariffs, enabling flexible and responsive decision-making through simulation. Furthermore, in Fujitsu, based on such solution, we are using Agentic AI so that we can make the system autonomous.

Today, we're joined by Mr. Shirozume, President of Adeka, who will introduce their initiatives through a dialogue with Fujitsu's Project Manager, Doi-san. Now Shirozume-san, Doi-san, please come to the stage.

Mr. Shirozume Mr. Doi, please come up on the stage.

Once again, I would like to introduce Mr. Hidetaka Shirozume, Representative Director, President and CEO of Adeka.

My name is Shirozume. Thank you for having me today.

Shirozume-san, thank you for taking time out of your busy schedule today to join Uvance update.

In just two weeks, we covered the supply chain data starting from the upstream to the downstream to identify the tariff impact on P&L and also to come up with actions as countermeasures. I think that was very speedy. But what was the reaction or feedback internally? And what was your impression?

Yes, it was amazing. Trump tariffs, we have been hearing about it. So for a couple of months, we spent time to prepare for the upcoming changes. But I was surprised how quickly the actions were developed through this solution.

Thank you. This is true in Fujitsu Uvance and also our Wayfinders consulting and data engineering capabilities, they are also utilized for data-driven management. What do you think about Fujitsu's ability and Uvance? And what are your future plans in utilizing them? Do you have any proposals?

Yes. Doi-san, in your family, have you ever hit your toenail with the foot of the furnitures? That is exactly what we explained -- experienced this time. I mean by we are not accurately understanding where our body part is. and we often hit our toenail because we don't know where they are.

And when we came to utilize Uvance, when we looked at our product supply chain, we needed to make an accurate input in order to precisely identify the impact of the Trump tariffs. We have thousands of products that we develop and produce, which uses tens of thousands of raw materials, which are used in plants around the world, and they are in multiple places, and we are taking a phased production approach.

Such context needs to be input accurately. Just like human body, we still had some parts that we don't know what they are and where they are. That is what we learned by utilizing Uvance. That also means if we know where the small parts of our body is, we will be able to maximize the capability of Uvance. That is the potential we felt through this journey.

Thank you. The value of Uvance has been maximized and customers who are benefiting from such strength are the customers who are having the accurate understanding of who they are and what they have.

Yes, in calculating payrolls or bonuses, I believe we'll be able to utilize the solution. So I'd like to extend our deepest gratitude.

So, recently, we finished the final report on the project, and I heard more about it today. And I have even higher expectations for future development.

I look forward to continuing to work with you.

Thank you very much for your time today.

Mr. Shirozume-san, thank you very much. Please come off the stage.

Mr. Shirozume-san, thank you very much. Well, I also hit my toe thumb recently that really hurt. So why does Uvance care so much about achieving significant change in a short period of time? When we look at social environment, there are many things that are changing very rapidly. So we need to do prototyping and achieve results promptly. And by repeating prototyping, we can create impact with speed. And in order to guarantee such speed, there are 3 Rs that we place importance on real user, real problem and real data.

First, there are real users who are facing challenges and real problem is the essential issue to be solved in the society. And normally, we use dummy data for analysis, but it isn't worth it unless we use real data. And what we tell the data scientists in the front is that they should practice these 3 Rs. We need to go to real users to solve real problems with real data. In the world of data and AI, these 3 Rs are going to be critical. So such attitude is practiced by our data scientists. We support our customers' transformations, and that is what Uvance exists for.

Now let me introduce you to our further efforts in utilizing AI agents. We are a system integrator. So in the area of AI, in system development and maintenance, we are thinking of how we can utilize AI agents in various domains. Internally, we are using business-specific agents.

Now we will introduce the project we're working on with SBI Sumishin Net Bank. First, I would like to explain the background and intent of this project, and I would like to call in Okada-san, who's responsible for the project.

Yoshinami-san, thank you for introduction. Hello, everyone. As introduced, as the evolution of AI accelerates, Fujitsu's strong area system development has reached a major turning point. For example, Gen AI is used for writing code or automatically generating macros, creating new things. The use of AI is expanding in such areas or source code generation tools. We already have such tools. In the entire system development, it's not just used for programming or code writing. That is not enough.

What we think is we shouldn't be stuck in partial optimization, but we need to not only improve but evolve system development practices. That's what the management needs to accomplish. On the other hand, many companies already have a legacy system that's been in place for 5 or 10 years, which is complicated, and they are connected to other systems. And it is their worry how they can continue using those systems and making transformation at the same time.

One of the key points is that they are not built by themselves. They may be dependent on certain people. There may be lack of documentation and huge manhours and costs are required for modification. With the evolution of AI, we want to fundamentally change these normal expectations. We worked with SBI Sumishin Net Bank to demonstrate the use of AI agents in the maintenance of their existing systems. for the sake of transformation.

I will ask Mr. Aikawa about the system that plays a central role in their business and the potential of AI.

We will get the stage prepared. If you could please wait a while. Thank you very much. Mr. Aikawa, could you please come on stage?

Aikawa-san, thank you very much indeed for coming today. We would now like to start the talk session. Joining us today is Mr. Shinichi Aikawa, Executive Officer and Head of System Division, SBI Sumishin Net Bank Limited.

This is Aikawa speaking. Thank you very much for this opportunity.

And Mr. Aikawa has a vision of fundamentally transforming system development through generative AI. He has this grand vision and towards this vision, SBI Sumishin Net Bank is working with Fujitsu. We would like to ask Mr. Aikawa today about the background and purpose of his efforts as well as future outlook. Thank you very much.

Thank you very much.

Now my first question is, and this, I think, is evolutionary. And what is the background behind starting this project?

System development, the issues there were becoming larger in scale and more complicated. These are the challenges in IT system development. As a result, it's taking more time to develop and that is impacting delivery time as well as cost. And not just such circumstances, there's lack of IT engineers. That's another challenge. And engineer unit cost is skyrocketing. There are these many challenges in the field of IT system development.

And as we face all of these challenges, how can we overcome them? We've been thinking about this from before and trying to make effort. And ever since I started working, more than 20 years of past and agile development, there's been advancement there, but there's been no fundamental improvement in the development process.

During the past two or three years, that's the advent of AI, including generative AI, and that is innovative, evolutionary. And that may fundamentally change the development process. And there's outstandingly high development speed and quality remains unchanged. That is the kind of environment that we can realize through AI. And originally, when existing systems were developed, we were consulting about the possibility of introducing the use of Gen AI in using development, but this we discovered could not lead to fundamental improvement. And we consulted with Fujitsu on this point, and Fujitsu kindly mentioned that we develop and work together.

Thank you very much for the encouraging remarks. There are goals that we have to challenge and try to achieve and overcome source code and Gen AI, there's a lot of advancements announcement about them. Complete automation, though, is still a difficult challenge. And my next question, through this initiative, I think we are in the midst of this initiative, how do you feel about co-creation with Fujitsu?

First, when we first started to collaborate with Fujitsu, we were not sure how much progress we can make. But after we started to work with Fujitsu, we are now very much looking forward to the future. And what we did this time was we input a design and we developed and we conducted test, and that was done automatically. And in the beginning, accuracy precision was not so high, we have to admit. But through trial and error, we've been able to increase accuracy. There's been improvement in input, how the design is written and RAG development was also improved and rule-based improvement was also made. And LLM, large language model itself, is becoming more clever. And this also enabled us to increase accuracy.

Going forward as well, we want to continue to collaborate with Fujitsu, and I think we can generate a significant outcome. I think there's a lot of potential in this endeavor.

In the future, various kinds of business work will utilize Gen AI. And we, as an operating company, we want to use Gen AI to define requirements and use that as input and in design, development, test and release. We want to automate this entire process in an integrated manner. We are very much looking forward to this kind of a future.

Thank you very much for indicating a very important point. The current business process can remain unchanged and automated. That cannot be done. We have to use AI. Designs have to be translated into the form that the AI can read the design. The last question is, how do you expect the automation and efficiency of the existing system maintenance to change your business?

If we're able to realize automation, the service that is offered to customers will undergo a sea change because we hope we can have this kind of a service. We hope to develop this kind of an IT system. There are various ideas in our minds. But because of many constraints of IT development costs and resources and return on investment, we have to be selective and prioritize the many ideas that we have. However, with the advent of Gen AI in an integrated manner, development can be possible.

And then cost and time-related constraints can be eliminated. And what we want to develop can be developed. I think we are entering into this kind of a world. And by releasing various services to customers and by receiving customer feedback, we want to make further improvement. And we want to run this cycle in a speedy manner. That is what we want to do in the future. And if this virtuous cycle spreads within society, I think it will lead to a significant change. And Fujitsu is working on cutting-edge technology, and we want to continue to cooperate with each other so that we can transform society.

Future system development. And beyond that, agents will become the important social infrastructure. And I think we are making a very important step towards this kind of future. In order to realize this future, let us continue to cooperate, and we're very much looking forward to the future.

Thank you very much, Mr. Aikawa and Mr. Okada. If you could please return to your seats. Thank you.

Aikawa-san and Okada-san, thank you very much. Now as Fujitsu SI is undergoing a transformation, Uvance is also exploring new value proposition. Today, we are pleased to introduce new initiatives powered by Uvance. This is the concept we have been promoting. Together with partners, companies who share common aspirations, we will combine technologies and expand solutions globally that is powered by Uvance.

When we established Uvance initially, we decided that we will not only focus on our own IPs, but we will integrate our IPs with the IPs of other partner companies. And in order to expand this ecosystem and pursue this concept, we established powered by Uvance in which we combine the technologies for the solutions for our partners.

For example, in the United States, city security, geospatial recognition technology is a strong area of Arya. And we are using video behavior analytics of Fujitsu Kozuchi, which is video analytics AI. This is used for prevention of crimes in urban areas.

Regarding the solution, this is not only used for detection of hazards, but this can also be used for evacuation guidance during disasters and safe and secure urban development.

To see how the collaboration between humans and AI will change the security field, please watch this video.

[Presentation]

Well, next is a case study of Fujitsu Kozuchi's skeletal recognition AI called Human Motion Analytics. Many of you may be aware of this because this is used as scoring aid for gymnastics competitions. It started with an intent to achieving fair scoring through the use of AI as a scoring aid which recognizes the skeletal movement of humans.

And as announced recently, it has also been introduced to the National Training Center for figure skating. It accurately analyzes high-speed complex movements such as jumps and spins to support extension of capabilities of athletes. So this is about human empowerment.

Company DX and social challenges are other areas, but this focuses on extending human capabilities through the use of technology.

This is an example that we use Uvance for. Please watch the video.

[Presentation]

In order to do quadruple jumps, she wanted to know what she needs to improve. Compared to male skaters, she lacks muscular strength. So through AI and recognition, she learned that she needs to improve her speed in jumping.

Regarding this human motion analytics, this is now extending beyond sports into the medical field. As announced today, Acer Medical in Taiwan has developed a solution to assess the risk of abnormalities in gate patterns. And this will be demonstrated in Taiwan. This is aimed at supporting early detection of various diseases such as dementia and Parkinson's disease, enabling early treatment.

Now we welcome Mr. Allen Lien, Chairman of Acer Medical from Taiwan, who will introduce their initiative. Allen, please join us on the stage.

Dr. Allen, if you please come on stage. Thank you very much. And please use the earphones to listen to simultaneous interpretation.

Good morning, everyone. distinguished guests. This is my honor. Thank you today for me to present to you on the development with Fujitsu. I'm Dr. Allen Lien, the Chairman and CEO of Acer Medical. Acer Medical is a subsidiary company under the mother company, Acer, which is a global computer brand and Acer Medical focused on AI application in health care.

What we're going to present to you is the human motion analytics for early risk detection. What does that mean? If you have the disease, you are sitting in a neurologist clinic, the doctor will tell you to do this walking test and measure the time up and go, sitting from sitting to walking out, turning, walking in and turn around and sit again. But if you are affected by different type of disease like Parkinsonism, epilepsy, frailty, stroke, the time in all these breakdowns will present differently. But it will be very difficult for doctor to really measure it.

So in the status for the current status in the clinical setting, the doctor will just use a stop watch to observe manually. And sometimes there's a lack of standardization or lack of quantifiable output. means the doctor might notice something wrong with the walking pattern, but they won't be able to quantify and measure it and put it in medical record. And if they really want to make it very, very objective, they still need to use a sensor-based capture system, which could be very composite and very difficult to scale up.

So what we are presenting today is an AI solution that can automatically analyze the time that we just mentioned. And it can -- with this HMA, human motion analytics technology, we can quantify all these indicators. And then with -- it's a mess system.

So what we're trying to do is we want to move this AI in the application of gymnastics into health. So we are moving beyond sports into health care. Like in the system of genetics, the rep would need another pair of eyes, that's the AI to help the judgment. In the clinical setting as well, the doctor will need another pair of eyes, which is our AI to help make precision -- to increase the precision of diagnosis.

So indeed, let's dive into it in detail. You can take a video using your smartphone and the video will go into the analytics, the system or the skeleton system recognition system. And with the analysis of the system, you can give you an output that's actually medically relevant to assist the doctor in making precise decision.

So let's look into a more deeper way, but I will give you a story that we took a normal person and will tell them to walk and then upload the video and in the system to measure the move of ankle -- angle of their joint, left knee, right knee. And this is experimental group is the patient with sickness. And we noticed that the sick patient have a very unstable knee when they move. So this ankle is like very, very wavy. But we realized that the right knee of the normal patient -- normal person that we pick also has some instability, which is so subtle that even the doctor or the family didn't notice, but the AI system can capture it. And the right-hand side, the central mass is also presenting the deviation of central mass of a dementia patient when they walk.

So the system will be able to summarize all these measurements into this radar chart. What does this do? This can actually help monitor the progression of the disease of the -- when you actually go through rehabilitation, actually, these different metrics can improve through time. For example, this patient, they have a lower score in cadence, which is the flow or the rhythm of their walk. But through time, it could improve after intervention.

So that create an unlimited imagination for our clinical application. For example, for orthopedics, you can use this AI system to monitor the post operation and pre-operation improvement. Or in care center, you can monitor the patient that's hospitalized or in rehabilitation, you can actually monitor the progression of the improvement of the patient.

So what we are trying to say today is that by collaborating with Fujitsu, Acer Medical is trying to implement this in clinical setting so that together, we can make people healthier, but not only living longer, but live healthier by having a healthier life longer. So that we are creating cross-industry AI collaboration for healthy longevity. Thank you.

Allen-san, thank you so much. I'm back on the stage. So before we continue our dialogue, I just want to kind of invite Oiwa-san, who is actually the project leader.

Ms. Oiwa responsible for the project will be coming on stage.

Question to you. What did you think when you first saw this human motion analytics? You thought it was kind of usable for your proposition or solution.

Yes. When I first saw the system was the application for gymnastics and the reference system and because it will give so much detailed and precise measurement of the movement of angle and that make us think of the application in health care because in health care, some measurement is based on very, very empirical, like if a doctor neurologist is trained in a very sophisticated way, they can tell the difference, but they couldn't really articulate or measure the difference of the gate.

But with this system, actually, that will give us all these quantifiable metrics that will help them actually put those metrics in the structured medical record and that can actually make the doctors actually talk to each other in a more objective way.

That's great. So there's like a common behavior pattern that for diagnosis, it's very important, right, to kind of define.

Yes, yes, yes.

Then I'm going to ask Oiwa-san. So I think not only in Japan, Asia, across the world, we have an aging society. So as a project leader, what do you think this solution, the joint solution is going to, what type of impact do you think it will bring to the society as a whole?

As the global population ages, we are facing not only the medical challenges, but also social and economic issues. And this initiative offer the meaningful value to the society by supporting healthier living for all. It helps people maintain their quality of life while also easing practical and emotional burden on families. It contribute to lowering medical and social security cost as well.

So this is not just a solution for doctors and patients, but it is a contribution to building more [ diligent ] and health-conscious society.

Thank you so much. I think this quality of life for everybody is like a very important concept through technology, right. So thank you so much, Mr. Allen, Oiwa-san. I hope that this solution is going to bring a big, big impact to the world. Thank you so much.

Thank you.

Thank you very much.

Thank you very much.

Dr. Allen and Oiwa-san. Thank you very much.

Now so far, you have seen various case studies of Uvance starting from supply chain optimization and Agentic AI is introduced to estimate P&L impact by contingencies and tariffs, and that leads to behavioral transformation. And systems development and maintenance, rationalization is carried out and also creating safe and secure communities and expanding human capabilities of athletes.

So people and AI work together in every case study. Uvance aims to leverage data and AI to solve both business and social challenges. And adding AI agents here further enhances the quality and speed of decision-making. Furthermore, what is important is we will have multiple agents collaborating across operations and departments, which enables total optimization.

In the future, agents will be able to collaborate not only within companies, but also between companies to do sophisticated decision-making across industries and ecosystems. This is our vision. This is what Uvance envisions as cross-industry problem solving independent AI agents of different companies will be linked together to collaborate to solve various challenges.

Once again, as a recap, Fujitsu's AI agent consists of three pillars. First is business-specific agents for many years, together with customers, we have been developing systems. And we have expertise in manufacturing, logistics. AI agents, in order for them to replace the work, they need to understand the business as well as or better than humans. That is how we will be preparing our AI agents based on what we have learned with our customers over many years in the past.

Another important aspect is technology. we can utilize a Japanese language enhanced LLM to accurately interpret corporate data. And we need to do structuring of data necessary for AI agents to maximize their capabilities. And we can also develop and maintain a foundation for understanding the context. We believe that we, as a technology company with a deep understanding of the field can accomplish this.

The second is the promotion of multi-agent and multi-vendor concept. For performing complex tasks, we need to collaborate with SAP, ServiceNow and Salesforce, for example, with multi-agent collaboration where agents specializing in different fields of expertise collaborate. Together with Salesforce, SAP, ServiceNow and Microsoft, we are establishing a mechanism to work with their agents.

To give a concrete example, if you want to update the business meeting information in CRM, after meeting with the customer, simply make a request via Teams chat to read the business meeting details from the minutes. And then Microsoft AI agent Copilot and Salesforce's Agentforce work together to automatically update the meeting record. We also have future visions for better transaction and conversion rate, there's much more we will be able to do.

Another aspect is supply chain. So based on demand forecasting function of Fujitsu, a supply chain agent may decide to run a promotional campaign to eliminate excess inventory. And then the best sales force agent for the task is selected and a request and content will be generated. These will work in a collaborative format. And we also have GK Software as a company, which can be combined with the dynamic pricing concept.

Different aspects in different industries will be connected eventually. In this way, what is important is rather than collecting everything on a single platform, agents specialized for each system work together in the right places and are connected in a network. And there are various AI agents developed by different companies.

The third important point is reliability, how we ensure reliability and appropriate governance. A Guardian agent is the concept that has been a buzz around the world, and this is going to be critical.

In utilizing AI agents, there is an issue of prompt injection. What kind of countermeasures we can take against hallucination is an important matter. And together with AI Act, we can handle unmasked data to connect with other data. And also in the area of AI ethics, we have been researching for over 10 years now. So based on AI ethics in the area of security and privacy, we have accumulated know-hows. So together with the reduction of hallucination, we believe we'll be able to achieve appropriate governance centered around our lab and based on our expertise of Guardian agents, we would like to develop further technologies. Safe and secure AI and solutions with such AI are going to be our important mission.

Last but not least, AI agents will be connected across different industries. Today, we have presented the evolution of Uvance over the past year, which included diverse case studies. But what was common among them was Universal, Advance, which is the foundation of Uvance.

We are trying to move forward to solve social challenges. This cannot be done alone by ourselves, but we are trying to work together with partner companies. So under the umbrella of the Uvance concept, we would like to work with companies, public sectors. And we would also like to focus on extending human capabilities. That is how we are envisioning to evolve Uvance. We are going to be having demonstrations afterwards. So you will be able to give us your feedback after looking at those demonstrations.

Thank you very much for joining us once again.

The time has come. So let us comment this briefing session on the strategy of Fujitsu's Consulting business. Thank you very much for joining us despite your busy schedule. Today's session will be held in a hybrid style.

Let me explain today's agenda. First, from the Fujitsu, Onishi, a Corporate Executive Officer, Corporate Vice President and CRO, will greet you all. Then Global CEO and Senior Managing Partner, Shuda; Head of Japan, Managing Partner, Kudo; and Head of Global Technology Practice, Mihara, our 3 Wayfinders leaders will explain about the release.

Then we will have a talk session to take a deep dive into the initiatives. And then we will move on to Q&A session. We will finish at around 11:30. My name is [indiscernible] and I belong to the IR office.

Now we would like to invite Onishi-san for greetings.

Hello, Fujitsu last week turned 90 years old. I'm not 90 years old. I'm Onishi, Corporate Executive Officer and Corporate VP, Onishi. We have this session on site as well as online, and we have many participants, including your continued support on a daily basis. Thank you very much.

FY '24, February 22, well, we don't have the Fujitsu office anymore, but at the 32nd floor of Fujitsu Shiodome Building, we explained about a Wayfinders. At the time, I believe many of you have joined that session as well. And since then about 4 months has passed, and various transformation efforts in Fujitsu, we have been working on the Wayfinders activities as well.

What I would like to convey to you as an opening speech is that I myself is responsible for this. But there are several points that I have been always following from the start. The first is what I was thinking when we established this team is that, first of all, the 110,000 employees of Fujitsu, we're going to create this team as the consulting team of this company. Specifically speaking, it is not going to be in a way like a subsidiary company but this 110,000 employees of Fujitsu, this team is going to be created. In the long-term perspective, having -- all the employees have the consulting capabilities with the customer-centered view. And from the start, taking it into the organization, we tend to say that, oh, let's start from Japan, not just Fujitsu, but mainly in other companies as well. But we didn't say that from Japan -- start from Japan. But we said then let's do Europe, Americas, Asia. It's going to be a team for all those regions and have been also taken up by the media as well.

And [indiscernible], who is the Chairperson of [indiscernible] right now, consulted in various opportunities and consulted on how we can [indiscernible]. And within those discussions, I believe, in my belief is as well as what we need to do. I myself -- there's another point that I always wanted to pursue is that in order to start this project and move it forward, we have to have the true leadership to be guiding us. There's a book titled Devil of Consulting. I believe some of you have read this book. [indiscernible] tend to come up or have and this is a job type that a lot of students aspire to become.

I myself after I left NTT DATA, just from my job, I came into this consulting world as well as Imai and this world as well. And we have been dealt with many people, and amongst those people, there are people that are considered to be a true consultants and I will be [indiscernible]. But in the past year and 4 months, together with Imai, we have been working on this project. April of 2025, we made an announcement of the new leadership. And within the leadership, we have overseas members.

Today, as announced at the start, Shuda, who will be the overall responsible person with the other members will be on stage today. And there will be an explanation provided of what kind of initiatives and work will follow from now onwards. We also have a talk session as well as a Q&A session planned for today. Therefore, we would like to provide you with various information. And we would like to share with you what Wayfinders is aiming for and how much of progress we have made. So we would like to exchange information and also have a Q&A session to answer your questions.

With this, I would like to conclude my opening remarks. Thank you for participating.

Thank you very much. Now please enjoy the brand movie, [indiscernible] Uvance Wayfinders.

[Presentation]

Uvance Wayfinders leaders will take over to give you explanation. First, positioning and purpose of Uvance Wayfinders will be explained to you from Shuda-san. Over to you.

Good morning, everyone. Thank you very much indeed for joining us despite your busy schedule and despite the bad weather. I am the Global CEO and Senior Managing Partner of the Uvance Wayfinders. My name is Shuda Shinichiro. I was in the U.S. for many years, and I came back to Japan 4 months ago. And as [indiscernible] I was assigned to this position. And many of you do not know about me, but I was serving as a consultant for many years.

So I would like to utilize such experience. And I think as to the positioning of the Uvance Wayfinders, and that was what I have been doing in the last 3 months or so, well, I would like to talk about the future of the Uvance Wayfinders based on what we have been doing in the last few months. Well, not only myself, but with the members who will come over to the stage we have been discussing this and I will briefly give you the update on the current progress or the status on that.

First and foremost, I would like to spare 10 minutes or so to provide you with overview and the purpose [indiscernible] that we would like to do. And then afterwards, the Head of Japan, Kudo is going to take over to talk about the capabilities that we would like to build. And then subsequently, Mihara is going to be more specific and provide you about the core of the jobs to be conducted as Wayfinders.

First and foremost, let's talk about the Uvance Wayfinders. What is the positioning of Uvance Wayfinders? That can be positioned in the 4 keywords, one of which [indiscernible], well, we would like to utilize the comprehensive service and [indiscernible] of the Fujitsu. We are going to be the key in doing so to provide the budgets to the customers. With our involvement into the consulting business, I think many things will be changed. And one another [indiscernible] -- one point is that the end-to-end delivery is going to be possible. Management and also the operations transformation from that all the way down to the operations, which we are good at. We are going to provide end-to-end service and the pricing of the Fujitsu.

What sort of values that we can provide? Well, we are going to do [indiscernible] things compared to the ordinary consultants. Another is the industry expertise. We are called the verticals in the U.S., but we would like to create an industrial expertise. Well, we are going to give you an information on the sort of members we have, and this is the point where we would like to focus most on to. We are gathering an expertise in working [indiscernible], and as was mentioned by Onishi just a minute ago, another one is going to be quite important. Well, we have created a global team from the scratch, including myself, the leaders who have joined us from the outside, the consulting. There are things that have worked well and things that improve the motivation of the employees. Well, we will try to organize all these things to be able to execute successfully.

And there are things that didn't work well in other consultants I think, the challenges, and we will try to eliminate those as much as possible so that all of us will be able to face the customer. We're trying to create a culture that enables us to mobilize the whole company. The culture that we have in Japan is going to be [indiscernible] not only the operating model, but the human resources evaluation system. And also the methodologies of the consulting is going to be commonly is shared amongst the world, which is going to be led by Japan, which I think is going to begin.

One Fujitsu, let's talk about the One Fujitsu that I referred to. Why is it that we believe that this actually is linked in. Of course, there is the customer to begin with, and we have to find out ourselves that includes the consultants and also the system engineers front end, the cells and Uvance will work together in order to have a conversation with the customers indeed and we are going to talk about the upstream matters as well. Many topics would be covered. Once we understand the challenges being faced by the customers, global delivery team [indiscernible]. And also not only that we have many technologies coming up from the R&D that would be adopted [indiscernible]. Fujitsu's transformation is something that we have been working on in the last 5 years. And [indiscernible] from that will be utilized for the customers, and we are basically going to utilize the whole capabilities, and we are going to be the key in doing so to deliver, achieve that -- all these to achieve that.

Well, as for the actual delivery, of course, the Uvance Wayfinders team will work on the business operation or the management all the way down, we are going to have ourselves involved. Not only that, we'll [indiscernible] the Fujitsu's delivery will be managed and also improved, which is to be led by us.

So let me summarize what I have been talking about. First, [indiscernible]. We have many insights from our own transformation. There are many challenges that we faced in the last year. We have some success, we have some failures. We have this comprehensive knowledge that we'll be able to become successful, we can provide such knowledge to the customers. As we would like to focus on to.

And second point is the step into the operation. We have many capable system engineers. But when SEs take the lead in having accommodation, as they have difficulty trying -- to try to change the way. They are good at handling the homework being given. But with the involvement, we changed that quite a lot. And then as for the latest technology, the R&D has a variety of technologies available in the treasure box. And sometimes they are stopped at the POC level, but we will take these technologies. We are trying to create the internal organization that would enable us to do that in order to make the team and also R&D and global delivery team. All these 3 teams will be collaborating to each other so that the technologies and engineering capabilities will be delivered.

And then this is quite important, which is about Fujitsu's culture. I have been in the overseas for many years. And I do believe that Fujitsu's culture is very good. We never try to put our faith, we stick to the end. We are trying to [indiscernible], which I think is the kind of culture that would have to be succeeded, not only in Japan, but in the U.S. or in Europe or elsewhere, we would like to make sure that we would expand or [indiscernible] culture, we would like to create the Wayfinders' culture.

So as I had mentioned already, there are people who are well versed in the specific industries and well versed in the technologies, we are starting together these people. For example, in the U.S., we are mainly focusing on these regions, Europe and Oceania have started recruitment processes are taking place every day in Japan. For example, the finance, we have automotive and energy and heavy industry and the people with experience on this, not only from our competitors, but even from the operating companies or the sales company, we are recruiting people. Well, instead of the employee, the pure consultants, we are trying to recruit people who are well versed in because the here 1 or 2 industries. Those are the kind of members that we are trying to get the same goes for the U.S., the finance, the manufacturing, also the retail, of course, the automotive industry as well.

So in the U.S., the members are being collected similar to that of Japan. As was mentioned earlier by Onishi-san. That this is something which -- there is something which we put a lot of attention to consultants are so-called sales reps, where we try to put that on someone. But I would like to make sure that we have the hypothesis in regards to the customer experience where we would be the kind of members that would be able to engage in conversation with the customer that can deliver and have a conversation about the future would be necessary. Of course, in the future, we are going to introduce or the employ rep type of people. But basically, the kind of people that I talked about are those who are trying to be creative.

So I rushed a bit. But the reason why I am posting this on the slide is as follows. Our purpose, yes, this is something that we would try to work on as well. And on top of that, it is not that I'm not really talking about the culture of Japan, but Fujitsu is the main body of the consulting business. So we are different from the foreign consulting service, therefore, we have to make sure that we have the discipline and integrity and so on, which is unique to Fujitsu. And that is something that we will try to address to all.

I've rushed a bit, about 10 minutes had past therefore, I will try to close my remarks but I will be joining for the Q&A session and talk session later. I look forward to receiving your [indiscernible], if any. Thank you.

Thank you very much. Next, regarding the capability of Uvance Wayfinders, Kudo will lead the explanation. Please go ahead.

Hello, everyone. My name is Kudo, who is the Head of Japan of Uvance Wayfinders. From my side, I would like to explain about the capability that we should aim for what we have right now and also the capabilities that we need to further reinforce and the capabilities, what values are we going to deliver to our customers. As Shuda mentioned, the customers' type of business and the consultants who have a deep understanding of that, the industry experts that have the industry expert will be leading this.

However, moving forward, our society will experience a large transformation as data and AI, such as we experienced when the Internet came about. And AI will be at the center of this transformation. And data and AI capability of our research, and we add the consulting capability. So data is at the center and the consultants who have so well knowledge about the businesses and industries, the operation, supply chain, engineering chain finance, depending on which industry it differs. Is it process industry? Is it an industry that assembles things? Or is it industry that orders?

So the industry expertise and consulting also together with the knowledge of the [indiscernible] operation, we will be moving this forward. And also this experience consulting part, the customers' transformation or the operations transformation to realize this, the people inside the company and the corporate culture transform as well or else a true transformation will not be realized. Therefore, the experience, we would [indiscernible] transformation of the people. And so we place importance on experience of the people and data AI industry experience operation to support all these transformations, we have the technologies team.

In the AI era, there is a new architecture. What should it be [indiscernible] transformation? What is an IT technology that will support that? In a comprehensive way, we would like to support the transformation of our customers. So in reality, what kind of project [indiscernible] very, very brief. I would like to talk about just one example. First of all, for manufacturing digital twin, starting from the design, development, procurement, manufacturing, distribution and sales, the system of manufacturing industry is the buildup of each individual application, and for the transaction by the interface.

However, when something happens, for example, political changes occurring around us, there are various challenges. For example, in the supply chain, the supplier will have to change the supply chain or the parts and components, there will be defects. And when that happen, from the development to all the way up to [indiscernible], all the data is available and that can be simulated. There are not many companies that have the capability or able to do such a thing. Therefore, digital twins, having it as a data, various challenges, natural disasters or changes of regulations and laws towards those and the impact can be analyzed and that can lead to the need for the next step.

And the [indiscernible] at the middle, the Fujitsu's practical experience to know about it are the voices that we hear quite a lot from our customers, and we go to the customers. But this is the Fujitsu way of doing things, but Fujitsu has experience of implementing, practicing this. We add objectiveness of consultants, and by looking at this case, by each customer, how we should customize this? It's not going to be something that providing, for example, sales reforms, et cetera. And the third, trusted society. This is just for example, an infrastructure area, we have a local government customer. And with those customers, the world is changing through AI. And with the vision of technology, vision of Fujitsu, can you actually draw a picture 10 years from now? Are some of the requests that we are receiving and for those requests with the technology of Fujitsu and the consultants capability to create with the customers, we also go along with the customers and provide the value from Fujitsu.

So within the various type of projects that we were handling, I just mentioned some representing cases to you right now. Japanese corporations, [indiscernible] Japan and to create a sustainable world, we would like to contribute to. So we are going to put our full efforts into to do so. This concludes my explanation. Later on, I will be back again for the Q&A session. So I'm looking forward to you again. Thank you.

Thank you very much for that. Next, we will have Mihara to talk on transforming business and IT by leveraging data and AI at its core.

Hello, everyone. My name is Mihara, I belong to Fujitsu. Within the Wayfinders, I work on global practice or should I call it the global technology practice, I serve as a leader for that. From my side, I would like to give you the talk as to what sort of services will be provided from the Wayfinders by leveraging AI at its core. Up until now, [indiscernible] and ourselves have been working on the variety of transformation, including on the IT and business operation. But what about now? A variety of technological initiatives being tackled by customers and for our company as well. But having said so, now that the AI [indiscernible] are enhanced so much, AI and also its fuel namely data, meaning the data and AI would have to be utilized for the sake of transformation that I believe is going to be at the core of the future transformation.

So the initiatives in relation to the data and AI have been worked on in a variety of companies in the last few years. This is really an old and new theme. Utilization of the data and the utilization of the AI up until now is an operation of data by people and the judgment and analysis by [indiscernible]. And then the people needed to take the action, that was what it was. But on the other hand, in the coming few years, there is this world that will come where the AI would be the one to utilize the data in order to understand the status of operation. And at the same time, the necessary information would be prepared for the judgment to be done by people and we want to make the judgment. And the system operation will be taken over by the AI in the world, which we will see.

So if that's the case, there are things would be tackled by us, which is clear. The reason is that well things such as existing operation and IT are created for the sake of people. And if we maintain that AI against it, I do believe and we do believe that, that would not be successful. Therefore, well agent AI would have to be enabled so that it would be enabled to transform the operation and the business. So that kind of an environment where the AI can be utilized autonomously is something that we call as Agentic AI, and against that backdrop, we need to work on the IP and the business transformation and that is to be done. And they're the fighters, need to take a certain approach against that.

First and foremost, our mission is it's not really about providing consulting the business to our customers. Our customers themselves utilize data and AI themselves so that their own IT and operation of the business and the ITs are being used. They have to be enabled on the transformation on their own continuously, and that's the kind of system that we would have to create. And that is indeed our final mission. And at the same time, for example, the kind of data [indiscernible] before is where the consultants need to have it. And then the engineers would take over for the implementation.

So there was such as [indiscernible] because when it comes to the Agentic AI, we're the autonomous AI [indiscernible], the sort of conventional system would not be applicable. Operation and IT will be integrated or unified. And they have to have a deep understanding about the business and operation. And at the same time, in agile and continuously all the things would have to be tackled. And there are 3 important points to be noted. One, is transformation to agent-oriented operations or we have the business into the system or the style where the AI would be able to understand or else the agent-oriented AI cannot be and not only that.

Well, AI agent, it would not be applicable for the conventional IT architecture. Therefore, to make sure that the AI agent can be utilized, we have to transform not only the business but IT-related perspective. From both perspectives, we have to think about the security. It would have to be implemented everywhere. In order to realize that, the Wayfinders themselves will utilize AI actively.

For example, let's talk about the consulting. [indiscernible] effort to analyze the business, and then after the business changes, they would have to do the same thing once again. But in the world of the data and AI style is obsolete. Therefore, while utilizing the data and AI, we will work on analysis of the business, analysis of the IT environment, and we are going to build the environment where all these would be visualized at the same time. Therefore automation of the IT environment basically is something that which we are working on within the Fujitsu. We are changing our own business model inside the Fujitsu and [indiscernible] for the customers as well.

We work on a variety of activities by leveraging the AI and that is not to be provided as a service by people, the AI will be providing such services, that's the kind of vision that we have or that are the strength of the Wayfinders. And I think there are several of them.

One, we have a work and operation of the system of a variety of customers. And through our experience that diverse industrial knowledge and the process and the data required by the AI is something that we have a deep knowledge on and we would like to utilize that. And as was mentioned earlier by people, including not only the Fujitsu transformation, but we have sort of company-wide transformation. And we know the good aspects and bad aspects of what we have worked on. And all these are reflected on to the service that we are providing to the customers and AI is part of that.

At this moment, there are mass initiatives related to the AI going on within the company, which we leverage. And in the world, AI come into play. It's not that the Python written code, that's not all. When the other agent AI starts the operation is going to be stopped, so it's really the mission-critical and we have to make sure that we create a system where it's going to be unstoppable. And Fujitsu is very good at doing that.

Furthermore, not only that we utilize a third-party solution by customizing it. We and our R&D team has the capability to create technologies, which would be used as well. For example, we have a technology that cannot be conducted by the [indiscernible]. The kind of unique technologies that cannot be made by competitors are available in relation to inference as well. We are going to utilize those approaches, enterprise agentic foundation is what we would like to create. The customers themselves would be able to autonomously and continuously transform the kind of environment that we are talking about.

With that, I would like to conclude my explanation. Thank you very much.

Thank you very. With this, we would like to conclude the presentation. Next, we would like to move on to the talk session. We will be preparing the [indiscernible] so we kindly ask you to wait for a moment please.

During the talk session, in addition to Onishi and Shuda, Yoshinami Takahashi, who is the Executive Officer, Corporate VP; and Yoshiko Furuhama, the Corporate Executive Officer, Executive VP, will join and conduct the talk session under the theme of [indiscernible], the last piece of the business transformation of Fujitsu.

The facilitator of this session will be Onishi, who is the Head officer. So please go ahead.

From here, we will start the talk session. And before the Q&A, beforehand, internally amongst the members, we have discussions -- we would like to have a discussion on the points that maybe you would like to ask about. My name is Onishi. I'm the company-wide strategy of Fujitsu. Before I ask you, as the flow of the Fujitsu's transformation, Tokita became the CEO. He started the DX initiatives. What we did there is modernization, the infrastructure layer of companies to do the DX of that and Uvance to transform the DX layer is what we have started.

The point that Fujitsu has to change is that up to now, from the content that was focused, we needed to discuss about the transformation of our company. So the person we speak to and the content we speak to will change. And we needed to build up a capability that can actually speak on that. That is the background of our initiatives. And that is why 1.5 years ago, we conducted a press release regarding Wayfinders.

Today, we had to gather so that we can share the activities up to now. Think and the [indiscernible] is being taken up quite often. And probably you're wondering about this. In the past 1.5 years, how do we build up this organization focusing on what is [indiscernible], Onishi-san first. And also today, [indiscernible] is within this book, the way of a CRO. And Onishi has been working on the transformation initiatives is also mentioned in here a bit later.

Well, thank you very much for mentioning my book. Well, I like to do this casually. I have 3 points that I focus on. World of creating a subsidiary company, but wanted to work as a company what Fujitsu embed the capability of consultation on a global basis. And we want it to do so, we needed the true leadership. And I did not want to skip that, [indiscernible] so 1 target number, there is this 10,000 number. But in the 3, what needs to be done is what I have been thinking. And within the last 1.5 years, the members are here, [ Takashi-san ], [indiscernible] as well.

That for us to -- what does the consulting business mean to us? And what is the consulting business to be [indiscernible], not the people that have a consulting background, but the internally bread directors had a discussion on this and everybody is saying that, well, consultants differ within each person. There are people who think about strategic things, other people looking for [indiscernible] type of consultation. My image of a consultant is to balance and scale. And by having these type of discussions, I thought that for leaders, we wanted to find authentic leaders, and so I met Shuda.

So we've indentified [indiscernible]. And when we made the press release last year that one of the themes that we'll be working on is reskilling, and that has not changed. And to have a certain scale, we cannot just hire from the outside. If you had up to now, the strength of the Fujitsu, if we just did that, it is not going to be effectively used. So the industry knowledge, business operation, technology, in order to utilize that fully, reskilling is sensible.

However, the insight and experience that the people who are going to be repackaged, rewrapped and that to be delivered to be a leader that has an experience or else that will not be fully conveyed. Maybe the information of department may understand it, but not the C-suite people. So when I thought about this, it's not just it's having the number ready, the necessary number of people does not suffice. But I also focus on the points that I just mentioned for the 1.5 years.

As I have already mentioned, internally, the capabilities and know-hows are being accumulated, but the people who are unable to convey the management was not sufficient. We internally, we didn't have the people. We utilized the people from the outside and to supplement, and at one point is to accelerate this.

There is one thing that I would like to ask you, Onishi-san. Well, within the Fujitsu, we have the consulting company called Ridgelinez. At this time, the Uvance Wayfinders that function for the consulting established. So well, I'm sure that everyone is interested as to these things have been positioned. The Ridgelinez had been established in 2020, we are -- that is a consulting company. We say that neutrality is core principle. Well, principle that would have to be embraced by the consulting firm as an outcome of the contribution of the IT or the transformation of the business that would have to be there. But when we realize it's not that the Fujitsu will come together as a default.

Well, what about Wayfinders...

Well, originally, as I had mentioned earlier, 10,000 employees within the Fujitsu, and we have tried to build in this function into that. So ultimately, we are going to do this in a way where we utilize the whole capabilities of the Fujitsu. So the Uvance Wayfinders team, as was mentioned by Shuda [indiscernible] global delivery team and the Uvance team and R&D team members. Together with all these members, and the Uvance Wayfinders team will utilize the whole capabilities of the Fujitsu. And so it has been established as one business, there is a big difference between the two. The Ridgelinez does not necessarily have to link the business to the Fujitsu in the end.

Of course, sometimes they do. But if they believe that solutions other than the ones from Fujitsu is the best, then they wouldn't utilize Fujitsu. But Wayfinders have been established as a function of the Fujitsu that I hope is to be understood by everyone.

So I'm sure that you have already heard of it upon joining the organization, but what sort of impression did you have?

You can share your frank opinion, I have a long time of experience overseas. So the image of Fujitsu is totally different than the current Fujitsu. At the start, I was surprised. However, I thought that this Fujitsu has been working on for the last 5 years. I was in the U.S., however, I think that was more advanced than what [indiscernible] will do. M&A and HR matters, all of that. And the company Fujitsu can do such a transformation and that company doing the consultation, I thought high potential.

Having said that, well, there's Ridgelinez, creating a totally separate team, but it's to have the consulting capability for the overall Fujitsu is the mission we have. Of course, we will be hiring from the outside because we need consulting. However, those members, the SEs or [indiscernible] in Fujitsu do exist. And these people that we hire as consultants will embed the capability of consultants to the SEs or the other salespeople in Fujitsu. And I think this has a potential. Thank you very much.

How the organization is created? you said that you are going to [indiscernible] because we have this size as a company. Several options have been considered up to now, and we've been considering M&A as well. And also other companies will add a consulting company to an IT company, there are consulting capabilities. I think there were cases as such for the company to, at this time, we're creating the organization that is different from that.

So I would like to hear a comment from [indiscernible] and Shuda-san. What do you think Onishi-san?

Well, the customers that Fujitsu has until now and the history that they have created together with them is something that can be competed against easily. So when we look at the next 10 years, how are we going to link this relationship to the future? Of course, we have a person who [indiscernible] an automotive finance manufacturer, we have the experience. And to it's not that simply conducting M&A [indiscernible]. We need to utilize what we have, including a maximum level.

Shuda-san, so you used to belong to Accenture and you have went through the transformation of the consulting business. You may have been involved with it, including integration with IT. And what we are doing and what you so before, how do you -- how can you evaluate what's going on?

As you may know, originally, [indiscernible] at a phase where everything being connected at the stage or the [indiscernible] important because the gap -- the initial gap may lead to a huge gap. First and foremost, solution, the delivery and R&D centers. In the consulting foundation is to be built in from the beginning. We have this thing that if you want to go fast and you have to -- you shouldn't go straightforward. In that sense, the building of the foundation is quite important, and there is a room for improvement there. We have a variety of customers. We have a massive relationship with the customers. And we have done so many mentioned earlier, the creation of the foundation that would enable us to capabilities of those have to be prepared at the real world or else it's going to be very difficult for us to fix that.

And we have to put lots of effort on the platform in the beginning is quite important, that was such a high-level explanation. So the speed was mentioned, if there is a gap in the beginning, then later on, we would have to spend a lot of effort. Therefore, the prioritization would be quite important, and currently that is taking the lead in working with recruitment at this moment.

With the people outside, what sort of impression do you people have? What sort of feeling? I'm sure that some are quite harsh.

Well, actually, I am having the feedback, which I'm very much surprised, not only in Japan, but outside as well, which is to be engaged in the consulting business in a way that I've just talked about. Many people hear that, many people would not be interested at all in it. Well, in the beginning, what we work on as a part of the interview and in none of the case, the project, same in the overseas. Actually, the branding capability of the Fujitsu Japan is not that strong, but many people do know about Fujitsu. And they are positive Fujitsu because we are trying to do the consulting business. And we are quite similar to [indiscernible]. What we have the strength that would enable us to create and many people are interested in joining. And so I have to -- I'm quite busy with the interview.

As I said at the start, Fujitsu itself has been working on transformation for a long time, reviewing the business portfolio from hardware to system integration is a transformation that we've been working on [indiscernible] it, the share price has increased by 4.5x since [indiscernible] became, so various things have been changing. So I always call you Yoshinami-san, but [ Taka-san ] from your side or leading the transformation, you have been leading the project Uvance leading transformation. What was lacking?

Well, I wasn't expecting that question. [indiscernible] way out of my expectation as a question. So how should I answer this? From 2021 together with Onishi-san, Onishi, we've been working on to start the Uvance, and the executives have various discussions on how we should carry this on. And now it's 4.5 years, and last year, we made JPY 480 billion, which is a 31% increase of revenue year-on-year. And we've been working [indiscernible] JPY 1 billion. But of course, the road was not smooth, it was bumpy. So the business, we thought it's going to increase a bit more.

However, the adoption, it was more mainly PC cloud migration. So after a year, for example, in Uvance, the simulation tool to reduce CO2 or the electricity consumption to optimize it, the simulation [indiscernible] solving the societal issues at the same time as resolving the company's challenges. We have these complication of Uvance that did not penetrate that well, but now we have the Uvance Wayfinders. The business models, the last one piece is now all set. So moving together with Wayfinder, I believe this is not so easy is going to be a very exciting one moving forward.

So Fujitsu has been developing that technology in cooperation with the Fujitsu Lab. But Mihara-san, as explained, they're working on AI and they have a certain level of capabilities to the customer is difficult is what Takahashi-san hardships.

May I say something? The analogy of Fujitsu is really cutting. And there are many things that we have created together with customers. [indiscernible] LLM that specifies for Japan and it does not just secure the attributes, but it's conforming most masking or they have the masking and [indiscernible] capabilities. And it's not just delivering such a technology, but also the social issues and company issues. And all that needs to be matched together and make the proposal. So it's going to be quite advanced. And so those parts in a way, not just globally need to convey such a capability. So an organization will be to do that is going to be created.

So what kind of expectations do you have?

Not to speak by [indiscernible] to speak about it. Originally, the business brand have been discussed with and Onishi-san and Tokita-san. When we announced it, [indiscernible] IP and the technologies of Fujitsu were supposed to be leveraged. We wanted with the customers IP. And the latest technologies were something that we really wanted to do, that was the ambition that we've had, not only in Japan, but as you see in the concept of the Wayfinders, the global solution and the services have been deployed throughout the world and that is quite important, not only in Japan, Europe and America. And we have the R&D data sites available the latest technologies would be from all the locations transformation.

I do have a question to you, Onishi-san as well. You mentioned that in the process of [indiscernible] in order to support customers transformation, you also have [indiscernible] paid effort on to that to make sure that the customers understand that you as well. What sort of [indiscernible] in conveying that in the world? Were there any where you were able to do that successfully?

Well, portfolio of the Fujitsu will sometimes [indiscernible] Europe, but as you may know. About the services being provided there, well, I would say that in case of Japan, we are rather focused on the business or operational application, whereas in case of the overseas, excluding the U.S. infrastructure-related services or the cloud services or the [indiscernible] related services were abundant. But globally, when we try to work together with Takahashi, it needed to be different.

For example, together with the [indiscernible] creating economy system, [indiscernible] department that would have to have a conversation with the customers in Japan and overseas, such capabilities would have to be available. And we would like to do this sort of business with the scale, the big company with a huge impact to the economy, that we are going to work on. And of course, there are -- the business is not aromatic to Japan going beyond [indiscernible].

And therefore, in the end, we would have to be enabled to do this multi-nationally. Therefore, we needed to create this in a global way, even though we are halfway through business.

So I have another question to you. [indiscernible] who is working on the lead of the enterprise field in Japan, especially in regards to distribution and retail, she has been putting the focus on to. Well, especially in the IT field, you made the contribution to the customer but now we have to engaging in conversation for the transformation of the company as a whole. What some of the challenges you are facing?

Well, honestly speaking, all Fujitsu's sales reps actually do have huge capabilities against the needs of the customers. They are able to respond appropriately. I believe that such the stance is very great, but it's not -- it's not good if we just directly try to respond or face the customer's challenges straightforward because there are unspoken challenges that customers may face. Sometimes customers are short, sometimes we have to have a longer perspective.

For example, when the customer [indiscernible] belong to the IT department, they do have the IT-related perspective. When we think about this -- what we need to do, we have to make sure that we do things we need to provide the services from the person and reskilling was necessary on our end as well. We have this target of 10,000 people and the fund and the people were serious on it because they knew that need to fill themselves. So in that sense, well, I think the way the target happens was quite unique about that. So the massive target had been set by him and everyone at the front end were not so sure whether he was serious or not, but everyone needed to work very hard [indiscernible] in 12 months that we went through.

But now that we have the new leaders, and we had established the Wayfinders brand. But because we went through we are able to proceed forward. As was mentioned by Shuda, as a basis, the people at the front knows about [indiscernible]. That's the reason why they are able to massive transformation going on, and we are facing a lot of challenges right now, but the kind of the things that I recognize.

Another thing I want to ask about is that the front sales have a deep understanding of the customers and they have the capability and culture, everything what the customer is asking for. But we're working on [indiscernible] so not hearing from the customer and boring, but if we try to lead the transformation, there are many things that the front sales need to change. But of course, the front will have to change, meaning that the salespeople, the business partners that we call them up till now, what is the expectations of how they will transform?

We've already started, but the department of the customers for the line of business sales business and approach the C-suite members of the company. So towards the management agenda of the company, how can we support them is how we would like to proceed. When we meet the executives of the customers, we look at their medium-term plan. And then based on that hypothesis and discuss it with the customers. So we need to accelerate that process. And we need to be a person or the front people need a person that can actually discuss these discussions regarding the company's midterm plan.

So within the process of transformation, there's a high [indiscernible] for the Wayfinders. But how are you going to have the connection with the front sales and have a connection with Uvance team and work on the transformation of the company, meaning and leading the transformation of the customers.

It's going to close my remarks [indiscernible] minutes. So if you can summarize, well, client first is something that I would like to place the most importance on because what kind of transformation the want to do, we need to have a thorough understanding of that at the start. And with the front sales, we have had many communications, and they understand many things. The sort of sales teams are very well talented, system engineering, knowledge and also their people can do consulting as well.

But when the question, many things change, meaning that asking the question is one of the skills. So when you ask the questions, many things come out and say, oh, are you trying to do this? The conversation will naturally flow to that point. And I think it's easy to create that flow now is how I feel. So the delivery side has been working on many things up to now, and they have the buildup of the knowledge. For example, the business operation knowledge, they have quite a lot of knowledge. So we need to systematically [indiscernible] that and utilize it. And if you're able to do that, execution and implementation and the systems that you have to work on many times and also has a capability of resolving the IT problem.

The other consulting firms don't have that capability to let the other companies do so. And I think as Mihara-san was saying, Fujitsu is such a company. So when for realizing the transformation of the customers, that way is in the minds of the consultant. So it's not a pie in the sky, but it's a [indiscernible] transformation and how it's going to be executed and how the process is going to be -- we are in a way that's easy to compile.

It's not about inside or outside the company, the people inside will experience and are going to attend the Wayfinder. And by doing so, at the front end, the people would be able to change as well. So that's the kind of transformation that we illustrate in our mind. Now would you please what we have been talking about today? If you could also share with us the future as well, that's appreciated.

In this year, we are in the final year of the current [indiscernible] management plan. Well, since the appointment of Tokita as the President, we have been working on business transformation and portfolio transformation have been tackled as well. And the critical agenda was, of course, Uvance, [indiscernible] Wayfinders team, together with Takahashi's team have been working on delivering the Wayfinders. Why this is not about the magnitude. We needed to secure the quality as well, the kind of things which we would like to contribute on to, specifically in the vertical, we would like to increase the volume so that people perceive us as a cool [indiscernible] vertical.

Now perhaps we can move on to the Q&A.

Yes, with this, we would like to close the talk session.

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