Fujitsu Ltd

I would like to explain our company progress in FY23, the status of how we are progressing against our major initiatives and our targets for FY24 with respect to the medium-term management plan, which I announced in May 2023. First, I would like to start with the Fujitsu Group purpose, which is to make the world more sustainable by building trust in society through innovation. All of our corporate activities are designed to achieve this purpose, which gives meaning to our existence and what we aim to be. The FUJITU way, which all FUJITU Group employees must abide by, sets out the three important values of aspiration, trust, and empathy, as well as the code of conduct, which are all anchored in our purpose. I would now like to explain our approach to value creation for 2030. We have established a vision for 2030, being a technology company that realizes net positive through digital services. FUJITU's vision for achieving a net positive is defined as FUJITU, which exists in society, must address the materiality of solving global environmental problems, developing a digital society, and improving people's well-being. in addition to maximizing financial returns and making a positive impact on society as a whole through technology and innovation. To realize this vision, we are focusing on four key strategies, which are business model and portfolio strategy, customer success and regional strategy, technology strategy, and people strategy. This is the management structure from fiscal year 2024. From this fiscal year, we have five corporate vice presidents. From left to right are Isobe CFO, Mahajan, CTO and CPO, Chief Technology Officer and Chief Portfolio Officer, and Takahashi, Shimazu, and Onishi, our three Chief Operating Officers, COO. Takahashi is responsible for expanding the F221's business, and Shimazu is responsible for building and strengthening the global service delivery structure, and Onishi is responsible for implementing global customer and regional strategies as COO and Chief Revenue Officer, CRO. This structure enables us to accelerate business decision-making and execution in and across each business area. Next, I will explain our company progress during FY 2023. First, I will summarize the progress status of our financial performance indicators. In FY 2023, we started transforming our business portfolio, centering our efforts on service solutions as the pillar for growth. As a result, consolidated revenue in FY 2023 was 3,756,000,000 Yen for 52 as a whole, an increase of 2.2% from the previous year. and service solutions revenue showed progressive growth, increasing by approximately 10% from the previous fiscal year to 2,137,500,000,000 yen in FY 2023. Consolidated adjusted operating profit decreased 11.6% from the previous financial year to 283.6 billion yen, largely due to the impact of business restructuring in Europe and a decline in sales demand for networks and devices. We expect device sales to recover from FY2024 and networks will remain at FY2023 levels during FY2024. As a result of our strategic initiative, Service Solutions adjusted operating profit increased 45.5% year-on-year to 237.2 billion yen in FY2023. Next is the progress status of our non-financial performance indicators. Fujitsu has set non-financial targets in the four categories of environment, customer, productivity, and people. Generally, our performance has been smoothly progressing. There are three areas I will give more details on today. We have significantly reduced our scope three greenhouse gas emissions, as shown at the bottom of the environment metrics on the far left of the slide, ahead of the 12% reduction target set for FY 2025, which was baselined against net emission volumes in FY 2020. A declining network product sales contributed to this temporary sharp drop, and we will still hold to the set target for fiscal year 2025. Secondly, third from the left on the slide is productivity per person, which has declined due to an overall reduction in company operating income. However, in service solutions, our company's growth area, productivity has increased by more than 40% compared to the previous year. Finally, on the top right-hand side of the slide, we report the employee engagement score, which remains the same as the previous year. Of the issues employees raised in the internal survey, those that are relatively easy to address have mostly been dealt with, and we are now tackling more complex issues. It will take a period of time between the issues being addressed and for employees to provide updated feedback. However, we do then expect the scores to improve. Next, I would like to give more detail on how we are progressing in the key strategic focus areas I mentioned earlier. I will focus on three specific global initiatives covering our progress during fiscal year 2023 and plans in fiscal year 2024 for each item.

First, our business model and portfolio transformation strategic initiative involves transforming both our business portfolio and our business model from traditional systems integration to an on cloud business application and cross industry businesses that is exemplified by Fujitsu events. Fujitsu Human's sales in fiscal year 2023 were 367.9 billion yen, far higher than the initial plan of 300 billion yen, and a significant increase of 84% from 200 billion yen in the previous financial year. In fiscal year 2022, sales of horizontal offerings, which provide technologies and solutions to support customer digital transformation, dominated. In fiscal year 2023, sales of vertical exceeded 30% of the U-Event's total, resulting from the strengthening of vertical cross-industry offerings in areas including sustainable manufacturing and consumer experience. Data collaboration and utilization is an important factor in cross-industry business. In fiscal year 2023, we enhanced our approach to Fujitsu U-BANs by embedding Fujitsu Kozuchi's AI engine into 22 U-BANs offerings. During fiscal year 2024, we will continue to expand our Fujitsu U-Benz offerings. In addition, as we announced in February, we will grow our business through U-Benz Wayfinders, establishing standard global consulting services with a view to full-scale global expansion. Next, I will explain our strategic initiative offering reliable support for customers as asset modernization and how we are expanding in this growing market, particularly in Japan.

In fiscal year 2023,

we were able to start visualizing resource requirements to ensure business demands could be fulfilled. Opportunities and projects are streamlined through our Modernization Knowledge Center utilizing proven global tools and techniques in collaboration with global partners. In fiscal year 2024 and beyond, we expect demand for modernization of existing systems to continue. changes of business to support customer modernization, which includes developing cloud and DX capabilities. Next, I will explain our strategic initiative to improve our profitability of the international business. The graph on the far left of the slide shows fiscal year 2023 revenue in international regions increased nearly 4% from fiscal year 2022 to ¥604.1 billion and operating margin was 1.7%. Although profitability remains an issue, we expect a recovery through initiatives such as the transformation of our business portfolio. The status for each region is as follows. The Americas region has transformed its business portfolio to being heavily service-based, resulting in improved operating margins in fiscal year 2023. In fiscal year 2024, we aim to start scaling our business and further increase our profitability. The Europe region has implemented structural reforms, including separation of the private cloud business in Germany exiting from less profitable areas and restructuring to separate the services and hardware business, all of which completes in fiscal year 2025. As a result of these measures, we expect the adjusted operating profit to recover from 0.5% in fiscal year 2023 to 4.3% in fiscal year 2024. In the Asia-Pacific region, we are embarking on structural reforms to move away from the competitive infrastructure business to services such as business applications. and in all regions, we will continue to shift into being a service business centered on Fujitsu events. Finally, I will explain our strategic initiative to improve the overall profitability of service solutions. We are pursuing two major initiatives to improve service solutions' gross margin ratio, delivery transformation, and pricing based on value delivered to customers. Our delivery transformation includes expansion of our global delivery centers, where we will continue scaling resources, increasing the ratio of in-house work and our overall company-offshore ratio. And through Japan Global Gateway , we are standardizing and automating development work by utilizing company-wide development platforms, enabling us to reduce man-hours effort. We are moving away from traditional cost based estimations to implementing value based pricing for our offerings aligned to the value they bring to customers. Since fiscal year 23, we have established global common rate card for services such as SAP and ServiceNow, which is now being applied in all regions. These strategic initiatives resulted in a 2% gross margin improvement during fiscal year 2023. Going forward, we will invest and develop our people in areas where we can differentiate and in high-value services, enhancing the value Fujitsu offerings provide. We will also price appropriately, taking into consideration external environmental cost pressures to drive improved levels of profitability and productivity. Next, I will explain our targets for fiscal year 2024. These are the financial targets for fiscal year 2024. Consolidated revenue is 3.76 trillion yen, adjusted operating profit is 330 billion yen, and adjusted operating profit margin 8.8%. In service solutions, we are targeting 2.23 trillion yen revenue, adjusted operating profit of 280 billion yen, an increase of 18% from the last financial year, and adjusted operating margin of 12.6%. We will continue to grow Fujitsu Yuban's business and improve profit margins through delivery transformation, with profitability predominantly increasing in service solutions. Isobe, the CFO, will be providing you detailed explanation. Fujitsu is pursuing several major reforms aimed at transforming the business model from a focus on products and contract-based system integrations to becoming a business that uses technology to create ideas which result in value to customers and contributes to their business growth. The ratio of service solutions in our business is increasing year by year. Fujitsu Events, which was born from the idea of contributing to the sustainability transformation of customers from a cross-industry perspective, is now showing practical examples of adoption by customers globally. Fujitsu will continue striving to become a company that can grow sustainably while simultaneously contributing to solving global environmental issues, developing digital society, and improving people's well-being through our business activities, which are three essential contributions to our company's materiality. That concludes my update.

Thank you very much.

Next, there will be a presentation about the fiscal year 2023 financial results. Mr. Isobe, please. This is Isobe, CFO. I would like to give a presentation on the fiscal year 2023 consolidated financial results. Please take a look at this page. This is the financial overview. Our most important segment is service solutions, which had a strongly higher revenue and operating profit. The revenue for fiscal year 2023 was 2 trillion 137 billion 500 million yen, an increase of 9.9%, excluding the impact of PFU restructuring. Business was especially strong in Japan. Adjusted operating profit was 237.2 billion yen, an increase of 74.2 billion yen year on year. In addition to the impact of higher revenue, profitability improved. Adjusting operating profit, the margin improved significantly to 11.1%, an increase of 3 percentage points year on year. Total consolidated revenue was 3,756,000,000 yen, an increase of 2.2% year-on-year. Higher revenue was primarily from service solutions, for which performance in Japan was very strong. Profit for the year was 254.4 billion, an increase of 39.2 billion year-on-year. This represented a record profit for Fujitsu for the second year in a row. In addition to the impact of higher revenue, results benefited from decrease in tax expense due to progress in business structure reforms. Page 4 shows an overview of the financial results for each business segment. I will discuss the results for each segment starting with the next slide, but this slide gives you an overview of the segments. At the very top is service solutions, our most important segment, which continue to increase in size while also improving Profitability, excluding PFU, which had been included in consolidated results through the first half of the previous year, total revenue from continuing operations increased by 9.9%. In addition, adjusted operating margin improved significantly from 8.2% last year to 11.1% in fiscal year 2023. On the other hand, revenue and profit hardware solutions, which includes network products and device solutions, decreased. Both segments had performed well in the prior year, and we will concentrate on growth investment over the medium and long-term horizon. From page five, we show results for each segment. First, I will talk about our company's main business service solutions. Revenue was $2 trillion 137,500,000,000 yen, which on a continual operations basis represented an increase of 9.9%. Business in Japan grew 12% as there was a strong increase in DX and modernization deals. With strong demand in such areas, sustainable transformation revenue for 52 year funds was sharply higher, rising 84%. Adjusted operating profit was 237.2 billion yen, up 74.2 billion yen year-on-year. Although we increased growth investments related to Fujita Yuvan's operating profit rose significantly because of the impact of strongly higher revenue and measures to improve profitability. Adjusted operating profit margin rose 3 percentage points to exceed 11%. I will now explain the components of this increase in profits with the waterfall chart. This chart shows the factors that caused increases or decreases in adjusted operating profit in several solutions compared to the previous year. On the far left, adjusted operating profit in fiscal year 2022 was 162.9 billion yen. The first factor is an increase of 60.2 billion yen in adjusted operating profit from the impact of higher revenue. Overall revenue rose by 10% primarily in Japan. The second factor is an increase of $35.3 billion from improved profitability. We continue to make progress on initiatives to improve productivity, such as the expanded use of global delivery centers and standardization in development work, and the gross margin improved by 2 percentage points. Results were also impacted by higher personnel costs, but these were totally covered by improved profitability. The third factor is a decline of ¥21.4 billion from higher expenses, primarily investments in growth areas. As we projected, we actively made growth investments, such as the development of fiduciary bonds offerings, investment in employee training and development, and enhanced security. Adding these up, adjusted operating profit for Service Solutions in FY2023 was ¥237.2 billion. Adjusted operating profit margin exceeded 10%, rising to 11.1%. I will now provide supplemental information on each of the factors in the previous waterfall chart. First is the status of orders which led to the increase in revenue. This page shows orders in Japan. Orders in Japan remained solid, rising by double digit every quarter and increasing in Japan by 16% compared to the prior year. I will comment on each industry segment. First is private enterprise business segment, in which orders were up 7% year-on-year, primarily for modernization projects. Growth was driven by customers in the manufacturing, mobility, and retail and distribution sectors. Orders were up 15% in the finance business segment. In addition to deals to upgrade mission-critical systems for megabank and insurance institutions, we also won many modernization project deals. In the public and healthcare, segment orders were up 19%. In the third quarter, we received multiple orders for system upgrades from government agencies and ministries, resulting in solid growth. Among customers in the healthcare industry as well, we are seeing strong investments in electronic medical record systems and healthcare information systems. In the mission-critical and other segments, orders were up 27% year-on-year. Orders benefited by multiple major projects in the national security field and even exceeded the prior year's high level. Our business in Japan continued to be very strong. In addition to mission-critical system upgrades and modernization deals, we were able to launch new 52 events offerings aimed at solving issues across industries, such as sustainable transformation. The next page shows orders in regions international. Orders for the Europe region were impacted by the carve-out of the German private cloud business but still only declined by 8%. Orders in the Americas region increased by double-digit to 27 percent. We won multiple private sector business application deals. The 42U Vans business is subtly expanding as well. Orders for Asia-Pacific region were down by 17 percent. There was a pullback from the large-scale public sector deal in the prior year, resulting in the decline. Page 10 shows the progress of 42U Vans, which we are positioning as the most vital area for the growth of our business and the transformation of our business portfolio. a total of seven key focus areas, including four vertical area depicted in the graph in deep blue, which are cross-industry areas that solve societal issues, and three horizontal areas between light blue, which are technical platforms that support the vertical areas. In fiscal year 2023, we fully It launched offerings in the vertical areas and the ratio of revenue from the vertical areas in deep blue significantly increased. Centered on sustainable manufacturing, we also launched offerings in such other areas as healthy living and trusted society. As a result, revenue increased by 84% year-on-year to 367.9 billion yen. It significantly exceeded our target of 300 billion yen. The ratio of revenue from service solutions rose from 10% in the prior year to 17% in FY2023. We are also making progress in changing our business portfolio. Orders leading to sales revenue are now ¥449.3 billion, an increase of 80% from the prior year. We are seeking to achieve Yvon's revenue of ¥700 billion in FY2025, representing 30% of total revenue. This page It shows a profitability improvement and the status of growth investments. The effect of profitability improvement efforts was a 35.3 billion and the gross margin improved by two percentage points. Utilization of offshoring through global delivery centers increased from 11% in the prior year to 14% in fiscal year 2023. We are making steady progress and standardization automation in the delivery of services and the expansion of in-house work. Growth investments and expenses increased by 21.4 billion yen. We continue to proactively invest in areas directly related to business growth, such as the development of 32 events offerings, investments needed to develop specialist human resources and employee reskilling, and investments to strengthen our security. This concludes my supplemental explanation of the increases and decreases in profit outlined in the chart on page seven. I will now briefly touch on the status of each sub-segment in Service Solutions. First, Global Solutions revenue was 480.3 billion yen of 17.9% year-on-year. On an adjusted basis, the sub-segment posted an operating profit of 13.7 billion yen up 8.6 billion from the prior year. Fujitsu Yuvance experienced faster-than-anticipated growth and sales of software supporting modernization, growth, revenue growth. In regions Japan, revenue from continuing operations was 1.2621 trillion yen, up 9.2% from the previous year. Adjusted operating profit was 213.1 billion yen, an increase of 65.4 billion yen. The number of DX business deals and upgrades of mission-critical systems is increasing in a wide range of sectors, primarily in the finance, public, and healthcare sectors. In addition to the impact of higher revenue, we made significant progress in improving profitability. In regions, international revenue was 604.1 billion up 3.9 against the backdrop of an expansion of 32 months and the impact of foreign exchange movements on adjusted basis the segment had an operating profit of 10.3 billion roughly the same as the previous year in terms of profitability conditions continue to be difficult primarily in europe we will steadily transform our business portfolio to accelerate the improvement in our profitability page 13 i will not explain the performance of other segments besides service solutions first is hardware solutions Revenue was 1.108 trillion yen, a decrease of 2% for fiscal year 2023. Adjusted operating profit was 83.6 billion, down 28.9 billion year-on-year. In system products, revenue increased largely from foreign exchange movements. On the other hand, in network products, there was a large pullback from the strong demand of the previous year in both Japan and North America, resulting in a significant drop in revenue. For this fiscal year's network products, in the midst of a decrease in sales due to the large-scale demand cycle, we are expanding our development investments for the next growth cycle, including our investments to achieve high-speed, high-capacity, low-latency, and low-energy consumption networks. On the bottom of the slide is Ubiquitous Solutions. Revenue was 273.3 billion yen down 4.4% year-on-year. Adjusted operating profit was 24.2 billion yen up sharply by 15.5 billion yen year-on-year. With regards to the higher component costs, including the impact of foreign exchange movements, we are advancing efforts to cut costs and pass on higher costs to customers. Page 14, device solutions. Revenue was 286.3 billion yen, down a massive 25.2% year-on-year. Adjusted operating profit was 18.3 billion yen, down 59 billion yen from the previous year. Demand for semiconductor packaging, which have been strong through the first half of the prior year, significantly decreased in the second half of the year. In fiscal year 2023, demand levels have continued to be weak. In addition to lower capacity utilization from lower product unit volumes, there was a significant decrease in operating profit. The decline seems now to have stopped, and we anticipate a modest recovery from fiscal year 2024. On the bottom of the slide is interest segment elimination and corporate. This segment posted an operating loss of 79.7 billion, with a 38.8 billion increasing expenses for the previous year we are continuing to expand our investments in medium to long-term business growth including enhancing advanced research in cutting edge areas such as ai quantum computing and energy saving processors and promoting the one fujitsu program for enhancing our management foundation as well as enhanced global security page 15. i would now like to describe our growth investments growth investments in fiscal year 2023 company wide was 202.1 billion yen we are conducting um proactive investment it's an increase of 81.4 billion year-on-year we developed new 32 events offerings and strengthened our consulting business being strengthened cutting edge r d in five key technology areas including for technologies like ai and quantum computing we also strengthen our management foundation such as the 142 program for our own internal digital transformation we are in improving quality and strengthen security. We also invest aggressively in employee training and rescaling. Because of these investments, we have expanded equivalences I just explained and increased the profitability of service solutions. In addition, in fiscal year 2024, we plan to make one ERP plus operational for our services business in Japan to accelerate our own digital transformation DX and speed up and improve the efficiency of our business by promoting data-driven management. So far, We've talked about continuing business. From now on, I would like to describe our transformation initiatives to improve our corporate value. On profit and loss statement, most of the content will have an impact on adjusted items. First, I will describe our initiatives in regions international. We are accelerating the shift in our business portfolio to improve profitability. As we announced in the third quarter, the first initiative was to carve out a private cloud business in Germany. This is designed to narrow down low-profit traditional businesses and accelerate the focus on events as a core business area. As a result, we recorded a one-time loss of approximately 30 billion yen as part of our adjusted operating profit. That business produced an operating loss of roughly 10 billion yen in fiscal year 2023, but we expect the car van to eliminate that loss starting in fiscal year 2024. Secondly, we are exiting from low-margin regions in Europe and streamlining our corporate functions there. As a result, we recorded a one-time loss of approximately 30 billion yen as part of our adjusted operating profit. By concentrating operations and increasing business efficiency, we expect it to lower costs starting in fiscal year 2024. Thirdly, as we announced in March 2024, we are reorganizing our European sub-series to separate the service business from the hardware business in order to promote management efficiencies and strengthen governance. In accordance with the reorganization, our taxes were lowered because of tax effects by more than 130 billion yen as an adjusted operating profit item. By making these structural reforms, we plan to put our European business on a healthier footing. Next, continuing initiatives in hardware solutions. First, in April 2024, we launched FSAS Technologies Inc., a dedicated company for service and storage solutions in Japan. We will integrate product development, manufacturing, sales, and maintenance functions to build an integrated entity, accelerating management decision-making, and promoting thorough efficiencies to provide added value, total solutions with advanced technologies. There is no direct impact on our consolidated results in fiscal year 2023, but we expect to generate business efficiency starting in fiscal year 2024. Second, we reformed the cost structure of our network products business in North America, such as by reducing overhead expenses. Because of this, we expect profitability improvements starting in fiscal year 2024. This page shows ubiquitous solutions. As announced in the third quarter, the client computing devices unit in Europe, which has faced severe competition and difficulties in maintaining profitability, will be shut down in April 2024. As a result of exiting, the business, we recorded a one-time loss of approximately 30 billion yen recorded as an adjusted operating profit item. The operating loss from this business in fiscal year 2023 was roughly 2 billion yen, but as a result of exiting the business, we expect the losses to be eliminated starting in fiscal year 2024. This page shows device solutions. As mentioned in the third quarter, the first initiative concluded an agreement to sell shares of Shinko Electric Industries. After concluding various investigations and a tender offer, we plan to sell the shares in fiscal year 2024. Due to this, the sale will not impact the consolidated results for fiscal year 2023. Upon completion of the sale, however, we anticipate that we will record a one-time profit of approximately 150 billion yen from the non-continuous operation in fiscal year 2023 shinko electric recorded revenue of 209.9 billion yen and operating profit of 24.9 billion of which 9.3 billion in profit for the year was attributable to 42 as the parent company second in the network related parts manufacturing business, we reviewed the cost structure by consolidating manufacturing functions and reducing fixed costs. Accordingly, we recorded a one-time loss of nearly 10 billion yen as adjusted with item 4 operating income. By improving business efficiency, we expect cost improvement in fiscal year 2024 and beyond. Page 21. As a result of the one-time loss associated with the business transmission I previously explained, there was an operating loss of 123.4 billion yen after adjusted items. Financial income, expenses, tax expenses, etc. also recorded an increase in 142.1 billion yen after adjusted items. As a result, the total impact of adjusted items on the profit for the year was an increase of 18.6 billion yen. We will continue to make steady progress in reviewing our portfolio and transforming our business structure to achieve sustainable growth in 52's corporate value.

Page 22. This page again shows our consolidated results for fiscal 2023. Profit for the year, both before and after adjustment, exceeded our previous year's forecast and was our highest-ever profit. Next page. I will now talk about the status of cash flows and balance sheet. First is cash flow. Excluding one-time gains, core cash flow was 197.2 billion yen, up 40.1 billion yen from the previous year. In addition to an increase in revenue from trade receivables, we have made progress on shrinking inventory assets that increased the previous year and have improved their working capital. Free cash flow, the second table from the bottom, was 151.9 billion yen, up 25.5 billion yen from the previous year. While core cash flow is up from the previous year, free cash flow was down from the previous year. This is due to one-time outflows because of the loss on the sales of German private cloud business and acquisition costs for GKE software. Page 25 shows core free cash flow and adjusted items. The breakdown shows as described, and the absolute amount is mainly related to M&A expenditures and the acquisition of GKE software. The breakdown is as shown on the page. We foresee that much of the effects of the one-time loss associated with the transformation I previously explained will take place during fiscal 2024. The next page shows assets liabilities and equity. I will omit an explanation for this page. This concludes the financial results for FITSCO 2023. Sales of service solutions increased significantly, mainly in Japan, on the back of strong demand from Fujitsu events and modernization. Although we fell short of our ambitious goals, we will further accelerate this momentum towards 2024. Sales orders and expansion of the business negotiation pipeline continue to be strong in a wide range of industries, and we expect firm business growth in FY24 and beyond. We are also advancing our transformation initiatives. In FY24 and beyond, we will not only reap the benefits, but also we will continue to take decisive action to address our business issues. Starting from the next page, I will explain our financial results forecast for fiscal 2024. This is our financial forecast for fiscal 2024. Revenue is forecasted to be 3 trillion 760 billion yen, with adjusted operating profit forecast to be 330 billion yen, and adjusted profit for the year is forecast to be 226 billion yen. segment breakdown. First, I will start with service solution segment, our most important segment. We expect a steady increase in revenue and profit from fiscal 2023 to continue. In service solutions, we project revenue of 2 trillion 230 billion yen, an increase of 4% from the previous year. In Japan, we project an increase of 10%. Regions international will impact by carve-outs, so we project revenue to fall. and our projected adjusted operating profit per service solution is 280 billion yen and we project operating profit for the segment will rise by 1.5%. I will explain our forecast for hardware and other business segment in the next page. On the far left, the figures for fiscal 2023 operating profit was 337.2 billion yen with an operating profit margin of 11.1%. I will use this as a starting point to comment on the increases and decreases. First, we project the operating profit will increase by 50 billion yen due to impact of higher revenue, which is projected to rise by 92.4 billion yen. In regions international, we anticipate temporary loss of revenue from carving out of low-margin businesses. We project revenue in Japan will grow by 10%. We project this will lead to an overall growth in revenue of 4%. Second, we will project profitability improvements will increase revenue by 45 billion yen. And the effects of profitability improvements for our business transformation included in this figure of 2% improvement in gross margin. Third, we projected investment for growth will expand by 52 billion yen. In addition to developing Fujitsu events, we anticipate that there will be significant increase in investment to expand our consulting capabilities. On the far right are projected figures for fiscal 2024. We project the adjusted operating profit will be 280 billion yen and operating profit margin will be 12.6%. We will uniformly advance our efforts to expand our scale, improve profitability, and expand investments for growth. We are working to expand our Fujitsu U-Benz business, consulting business, and modernization business. I will be explaining the service solution sub-segments. For global solutions, we project revenue of 530 billion yen, up 10% year-on-year. We anticipate double-digit growth centered on expanding Fujitsu events. We project adjusted operating profit of 20 billion yen, an increase of 6.2 billion yen from fiscal 23. We will also expand the profit margin through further promoting our vertical offerings. In regions Japan, we project revenue of 1 trillion 370 billion yen, up 9% year-on-year. We will continue to bring demand for Fujitsu events and modernization and grow. We project the sub-segment suggested operating profit will be 240 billion yen, an increase of 26.8 billion yen from fiscal 23. We are making aggressive investments in Fujitsu events and modernization, as well as to increase our consulting capabilities. We will accelerate our productivity improvement initiatives to date and aim to improve our profitability even further. In regions international, we project a revenue of 540 billion yen. Due to carve-out of low-margin businesses, we project the revenue will be down by 11%. We project the sub-segments adjusted operating profit will be 20 billion yen, an increase of 19.6 billion yen in fiscal 23. We anticipate that we will reap the benefits of the business transformation we worked last year, and we will strive to establish a healthy profit. This page shows the trends and projects for Service Solutions business results. In addition to expanding revenue, we have advanced business efficiency improvements and are steadily improving the segments in operating profit margin to 11%. In fiscal 2024, we will continue to steadily work toward achieving the fiscal 2025 target, which is the final year of the current midterm plan, by further improving profits while expanding investments for further growth. Page 33. I will now briefly comment on our forecast for hardware and other business segments. First is hardware solutions. We project revenue of 1 trillion 30 billion yen, down 7% from the previous year. We also project an adjusted operating profit of 70 billion yen, which, in line with a decrease in revenue, will result in an operating loss of 13.6 billion yen. For system products, we anticipate loss of revenue due to a pullback from large-scale server and storage deals, as well as end of adjustments for new backnotes. We project that the demand for network products will remain at the same level it was in fiscal 23 into fiscal 24. We anticipate that there will be growth internationally and in Open RAN. In Ubiquita Solutions, we project revenue of 220 billion yen. Due to the impact of existing European businesses, we anticipate 20% decrease in revenue. We project the adjusted operating profit of 20 billion yen and operating loss of 4.2 billion yen year-on-year. In device solutions, we project a revenue of 335 billion yen and increase of 17% year-on-year. Low demand in the semiconductor packages has continued from the second half of fiscal 22, but we expect the demand will recover in fiscal 24. we also project adjusted op of 40 billion yen an increase of 21.6 billion from from last year we also anticipate improvement of capacity utilization as a result of increase in product unit volumes in interest segment elimination corporate we forecast adjusted operating loss of 80 billion yen this is this is because we are planning to continue aggressive investment in ai cutting edge r d and strengthening our management foundation through such things on one fujitsu at the same level as the previous fiscal year We project the core cash flow will be 220 billion yen, up 22.7 billion yen year-on-year. On page 35, you see trend of financial indicators for last five years. On the upper left is adjusted EPS. In addition to steadily realizing profit growth on core business basis, we are also improving capital efficiency through acquisition of treasury stock and adjusted EPS is steadily increasing. On the upper right, ROE was 15.2% in fiscal 2023. We operate our business with focus on balancing profit growth and capacity of capital efficiency. The share price and PBR in the lower part of the page are results of the evaluation by the capital market. The share price has increased by 2.5 times in the past five years, and the PBR has increased by 2.6 times at the end of fiscal 2023. Starting from the next page, I will explain our capital allocation and shareholder returns. This is the status of capital allocations in fiscal 23. Base cash flows for fiscal 23 were 303 billion yen. The relationship between cash flows is briefly described at the bottom of the page. Base cash flow are pre-growth free cash flow plus lease payments to fund capital allocations. In fiscal year 23, we allocated approximately ¥200 billion to business growth investments and ¥150 billion to shareholder returns, mainly funded by ¥303 billion base cash flows. Although the total allocation exceeds the cash flow in a single year, the allocation is based on the assumption that the cash can be earned during the current medium-term management plan. of the shareholder returns we initially planned to acquire 150 billion yen of treasury stock but due to insider information and other factors the acquisition date was delayed resulting in 103.1 billion yen in fiscal 2023 Page 38 shows the progress on capital allocation made during the current mid-term plan. The graph on the left-hand side is the base cash flow. We will achieve a base cash flow of 1 trillion 300 billion yen during the next three years. The graph to the right of this shows our allocation. We plan to make growth investment of 700 billion yen and generate shareholder returns of 600 billion yen in line with our MTP. We returned approximately ¥150 billion to shareholders in 2023, but based on our three-year return plan, we plan to increase the amount of our shares acquired and return ¥230 billion in FY24. Page 39 shows shareholder returns breakdown. I will show the dividends first. Fujitsu is steadily and stably increasing her dividends, and we plan to increase dividends by ¥2 in FY24 as well. This will be the ninth consecutive dividend increase. Next is stock buybacks. As I have said, in fiscal 23, there was a delay in the start period of stock buybacks due to insider training regulations. This led to lower shareholder returns than initially planned. In fiscal 24, we plan to expand the total amount of stock buybacks, which will include making up the difference in fiscal 23. We project stock buybacks to 180 billion yen, and combined amount of the shareholder returns will be 230 billion yen in fiscal 24, no changes to our three-year shareholder return plan of 600 billion yen. By expanding cash flow and appropriately allocating it to investments that contribute to business growth and shareholder returns, we will lead to a sustainable increase in corporate value. This concludes my presentation on our consolidated financial results for fiscal 23 and financial forecasts for fiscal 24.