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Thank you for joining us despite your busy schedule. I'd like to start the presentation of financial results ended March 2023 as well as financial forecast for the fiscal year ending March 2024 as well as the outline of the new interim plan. which was announced today. I'll be serving as the moderator today. My name is Hanaki of IR Office. Thank you so much for your cooperation. I would like to introduce the attendees from our side. First, representative member of the board and president, the CEO, Mr. Shimada. Thank you. Shimada is my name. Representative member of the board, senior executive vice president, Mr. Hirui. Hirui is my name. Thank you very much. Senior Vice President, Head of Finance and Accounting, Mr. Nakayama. Senior Vice President and Head of Corporate Strategy Planning, Mr. Taniyama. These are the attendees from our side. And today, to the beloved distribution of the video, and also at a later date, we intend to make the video available over our web as well. We would appreciate your understanding beforehand. The majorities during the press meeting today will be presentation materials that are uploaded on our IR site. Also on page one, there is a statement about forward-looking statements. We would appreciate your reading through page one. With regard to the supplementary data that's announced at $1,300 today, there was a typo on page one. So we'd like to correct the typo. On page one, there's reference to EBITDA margin. And under the column for EBITDA margin column, that projection should be corrected to 3,390 billion yen, so we would like to make the correction at this juncture. And also, we made the rectification to TSE back at 1,630 hours. Please confirm this at a later date. Thank you. So now we'd like to invite Mr. Shimada to talk about the financial highlights, after which we'll take questions from the floor. So, Mr. Shimada, the floor is yours. Thank you. I'm the President and CEO. Thank you so much for joining us. We appreciate your interest in our company. So first of all, let me share with you the financial results for fiscal year 2023. Now, we'd like to take as many questions as possible, so I will actually skip. I will be very brief in my initial presentation. So please turn to page 4. Page 4. Operating revenue and operating income profit all increased year-on-year. This is the fiscal year 2032 consultative results highlights. And all of them reached record high levels. As for operating revenue, this grew 979.7 billion yen, year-on-year, and reached 13,238.2 billion due to increase in global solution business revenue and increase in revenue from electricity business that ended. Now, the impact upon currency was roughly 280 billion yen. The operating income increased 60.4 billion euro a year, up to 829 billion, as increase in express delivery was offset by increase in operating revenue and cost reduction. As for profit, this increased 32 billion and reached 1,213.1 billion from increase in operating income. As for overseas operating income margin, this improved 0.9% up to 7.2% due to increase in profit based on increased revenue as well as cost reduction driven by structural transformation, and we achieved medium-term financial target of 7% one year ahead of the original schedule. Next, page 5. This relates to contributing factors per segment. Integrated asset business segment. There was negative impact from price reduction in consumer communication segment, but this was covered by increase in revenue in enterprise business as well as smart life business, as well as cost reduction. So this recorded increase in both operating revenue and operating income year on year. As for regional communication business, there was the one-off cost increase factor in the previous fiscal year is no longer present. But on top of more than expected increase in electricity costs and the delay in cost reduction as entity was due to large-scale malfunction in August, both operating revenue and operating income dropped year-on-year. As for global solution business segment, operating revenue and operating income increased year-on-year due to increase in revenue from robust demand for digital services as well as increase in value-added services at entity-limited. in other segment due to increase in revenue from electricity, reflecting jump in the fuel price activity and its operating revenue and operating income both increased. So let me now turn to the forecast for fiscal year 2023. Operating revenues will decrease year over year, while operating income and profit will increase year on year. That is the forecast summary for fiscal year 2023. Operating income and profit will continue to reach record high levels. and will aim to reach EPS of 370 yen, although the impact of increasing electricity costs is uncertain. As for operating revenue, it is expected to decrease year-on-year due to foreign-extended economic revenue from electricity businesses, but our plan is to aim for increasing revenue in main business segments after excluding this impact. As for operating income, while the impact from rising electricity costs is uncertain, we expect operating income will increase in 2020, 12 billion euro a year based on increase in profit in group companies such as Stockholm. As for profit, despite increasing interest payments, profit will increase 41.9 billion euro a year based on increase in operating income. Turning now to forecast summary by segment for fiscal year 2023. Let me start by mentioning integrated ICT business segment. On top of growth in enterprise business and smart life business, downward pressure on revenue was eased due to increasing the number of users signing up to medium to large data bucket plan in the consumer communication business. As well as cost efficiency, so Docomo as a whole will see increase in both operating revenue and operating income. Turning now to regional communication segment, we expect increase in both operating revenue and income as cost-efficiency measures that were delayed will now be implemented at NTT West as well as expanded growth business at NTT East and West and cost-efficiency. As for global solution business segment, while there is negative impact from currency, operating revenue and operating income is expected to grow year-on-year from robust demand for digital services and also cost reduction through structural transformation. As for the other business, operating revenue is suspected to decline year-on-year as a result from dropping revenue from exclusive business based on more appropriate sales volume at entity and it. Although the decline will be pushed down, will push the operating income, we expect operating income will increase year-on-year due to increased profit in the urban solution business. And we're making very strong progress against the medium-term plan as for EPS, this reach 248 yen as of fiscal year-over-year, which will exceed the plan of 340 yen. We aim to reach EPS of 270 yen, which is the financial target for this year, will be achieved. Now, expanding the new military management strategy, we will shift to new financial targets and the current target, excluding EPS, will all be shifting to new financial targets containing the new strategy plan. Now, this is the reference material. This is self-explanatory, so I will not explain this page. So let me now go on to talk about the new media terms management strategy, which is entitled as follows. New Value Creation and Sustainability 2027. Powered by IOWN. This is the subtitle of our new meeting term management strategy. This will be a five-year plan covering fiscal year 2023 up until fiscal year 2027. It is a five-year plan. The fundamental principles of the new plan are as follows. Innovating a sustainable future for people and planet. That will be the principle for this new strategy.

Next page, please. In order to achieve the aforementioned, we will increase our investment in growth areas. We will invest approximately 8 trillion yen in growth areas over the next five years, an increase of 50% from the previous level. Therefore, we must also generate the cash capability for the future. EBITDA, which is being planned to survive, is targeted to increase by 20%, so approximately 4 trillion yen in fiscal year 2027. Next, I'd like to talk about the various pillars. The first pillar is entity as a creator of new value and accelerator of a global sustainable society. The second and third pillars are the framework to support the first pillar. The second pillar is upgrading the customer experience and the first pillar is improving the employee experience. The nine initiatives that comprise these pillars will now be explained. First is NTT as a creator of new value and accelerator of a global sustainable society. The first initiative is creation of new value through ION. As a solution to the increasing power consumption resulting from the expanding use of AI, NTT will establish NTT Innovative Devices Corporation in June 2023. With the aim of accelerating the commercialization of photonics electronic convergence devices, the company will start with a capital injection of 30 billion yen and will consider increasing gradually. In addition, to accelerate ION R&D and commercialization including 6G, we will invest 100 billion yen in fiscal year 2023 for ION R&D as a whole. In addition, the company will continue to invest funds to accelerate the commercialization of service and digital twin computing. The second initiative is data-driven creation of new values. In order to strengthen our personal business centered on individual customers, we will strengthen Docomo's smart life business and aggressively invest more than 1 trillion yen over the next five years in growth areas. For example, we will expand and upgrade services in various fields such as finance, healthcare and medical services and analyze various data obtained through these services to provide more personalized and optimized services. Next, I would like to talk about the strengthening of the use of DX and data in society and industry. We will globally deploy solutions, services and platform services for corporate customers utilizing technologies such as AI, robotics, Ion, digital twin and security to transform the industries that support our daily lives and society. will invest more than 3 trillion yen in this field over the next five years. Next is the expansion and upgrading of data centers, which are important platforms for a data-driven society. ATG Group will further expand its data center infrastructure, which is currently the world's third largest, and introduce Ion technology to this end, will invest more than 1.5 trillion yen over the next five years. to double our data center capacity from the current 1,100 megawatt. Next stage, please. The third initiative is the realization of the Circle Economy Society. We will promote green solutions realized through the combination of green energy and ICT and invest approximately 1 trillion yen over the next five years. In addition, to expand our renewable energy power generation business, we will realize a stable supply of locally produced, optimized and efficient electricity for local consumption by utilizing solar battery CMS and other technologies.

Next, let me talk about creating circular economy-oriented business. On top of renewables, we want to pursue recycling of waste in various industries so that we'll be able to realize a sustainable society through recycling of materials. Also, based on leverage of IOM, 5G, IoT, AI, and robots, we will contribute to improved efficiency, value addition in the primary industry, as well as industrial development and regional revitalization as well. Please. We now talk about progression toward net zero. Looking ahead to 2040, with regard to anti-degree innovation toward 2040, we would like to expand this to scope three on top of expanding into scope one and two. The fourth pillar relates to further strengthening of business foundations. We would like to leverage... are reluctant from and lessons from the past failures. We will make our network systems more resilient towards large-scale failures of cyber attacks in order to strengthen local infrastructure. And also, we will be enhancing our countermeasures towards ever-intensifying severe natural disasters. We will be investing roughly $160 billion by fiscal year 2025 toward this area. Next pillar, further to relate to upgrading the customer experience. We will have to photograph fusion of research and development with a market-focused strategy. We will be combining and strengthening our R&D capabilities with our market analysis and alliance capabilities. and it will create R&D marketing strategy division under a data holding company structure. On top of product-oriented R&D reinforcement, we will also be collaborating with various customers and partners globally, and we will be covering all the way from R&D up until product delivery and also pursue alliance with various partners going forward. That is our plan. The sixth initiative relates to strengthening of services that emphasize customer experience. We will see stakeholders as potential customers, and we will be placing importance on customer experience first. So we will track customer journey. We will also be providing agile service. We will continue to improve and update services. And we would like to offer new experiences and impressions that will exceed customer expectations so that entity group will continue to be selected by the customers. Next pillar relates to improving employee experience or EF. So the seventh initiative relates to open and innovative corporate culture. We will place emphasis on customer first, but at the same time we will be pursuing a culture which is open collaboration and trial and error, and also we will continue to reinforce our initiative in relation to diversity and inclusion as well. The aid relates to supporting career growth. supporting employee career growth and increasing investment in human capital to drive business growth. For example, based on the personal system, based on expertise which was introduced in April last year or this year, we will support employee acquiring external qualifications as well as expand many of training programs in 18 areas as well as strengthen career consulting functions that provide career design advice. will also support total career development through support related to various life events, including childbirth, child-rearing and nursing as well.

Finally, the ninth initiative is to use global benefits for employees and their families. In the unfortunate event of employees' death, we will expand the program to support a portion of the educational expenses of the employees' children until they graduate from college. In Japan, we have been supporting educational expenses for children in certain events since 1988. the introduction of a similar support system for the approximately 150,000 employees working for the Group and consider the introduction from next fiscal year. Next I would like to talk about the medium term financial targets. As explained earlier, we have set a target of a 20% increase in EBITDA in fiscal year 2022. in the growth areas that will be the drivers of the growth in addition to the 40% increase in EBITDA in fiscal year 2022 we will also set a target of a 10% overseas operating margin in fiscal year 2025 for each of the global businesses that will focus on the growth areas in addition we will set a target for 10% in EBITDA versus fiscal year 2022 in In addition, we will set a target of a 10% increase in EBITDA versus fiscal 2022 and a target of a 90% ROIC to improve capital efficiency. In addition, we will set three sustainability-related indicators, percentage of newly appointed female managers in greenhouse gas emissions and employee engagement rate based on the sustainability charter. Strengthening our ability to generate cash for growth as you can see here. As you can see above we will continue to aim for sustainable growth and shareholder returns and aim for growth that is at the same level of the past. While the demand for funds will increase as we expand the scale of investments to achieve further growth, we will also pay attention to capital efficiency to maintain and lower the debt-to-ebitda ratio to two times. Regarding the fundamental policy of the shareholder returns, we will remain as we have done in the past companies and continue to increase dividends while flexibly implementing share buybacks to improve capital efficiency. This is the end of the explanation of the new medium-term management strategy. Next, I would like to talk about the shareholder returns, stock split, and organizational changes. First of all, regarding shareholder returns and stock splits, the board addresses... I've decided 125 yen per share for fiscal year 2033, an increase of 5 yen over the previous year. This will be the 13th consecutive year of dividend increase since fiscal year 2011. The board of directors also resolved today to implement a stock split. By conducting a 25-for-1 stock split effective July 1st and significantly reducing investment leverage, we hope to create an environment that makes investing in our companies share easier to expand the investor base among the wide range of generations who share NTT Group's commitment to sustainable growth. We will now proceed to talk about the new organization of the holding company. First, as I explained, under the new medium term management strategy, we will establish R&D and marketing headquarters. The R&D marketing strategy will be established under the marketing planning and analysis department and analysis alliance department will be established. And the research and planning department, in order to strengthen our research and development in order to strengthen our global marketing and promotions centered on CX. We will separate our Public Relations Office from the Corporate Strategy Planning Department to establish a Public Relations Department under direct control of the President. We will also establish a Legal Office within the General Affairs Department. In addition, a Sustainability Office will be established within the Corporate Strategy Planning Department to accelerate the implementation of the Sustainability Charter Initiative. That is all from me.

Thank you. Thank you very much, Mr. Shimada. We would now like to go on to the Q&A session. If you have any questions, we will take questions from those of you who are here on the site and also take questions from those of you who are connected to the voice system and are connected to the phone conferences beforehand. Those of you who have questions on site, please wait for the microphone to be brought over to you. So please raise your hand if you have any questions. Please state your name and affiliation and then go on to your question. For those of you who are taking part via remote video service, a phone call system, please push asterisk followed by one. If you wish to cancel your question, please push asterisk followed by two. So we'll take first questions from those of you here on site. We'd like to start with the gentleman in the front row in the center. Thank you for this opportunity. I will ask two questions, if I may. First question relates to EPS. Two questions about EPS. This fiscal year, 370 yen for this fiscal year. Well, if I do the calculation, the number of stocks are probably smaller than the number of shares right now. I think that seems to be the assumption. So if you take a look at APS growth, there's a difference in the growth of APS as well as the net growth, net profit. So I think you're probably calculating based on smaller number of shares. That is because you are envisioning share repurchase. So is the APS target based on certain level of share buyback program? That's my first question. And the other question related to EPS. So the new EPS targeting, the new median term management strategy, I think in the earlier page, I think you said that you're envisioning similar growth up until now. When you say similar growth up until now, are you talking about the growth under the current median term plan, which has just ended? Now, you're talking about a new five-year plan. And I'll do the calculation. I think in the new five-year plan, you'll be envisioning 41.6%. So can you really increase EPS by 40% over the five-year plan? Is that the message that you're trying to send? So if you could please elaborate on the EPS growth. Thank you for your question. First, with regard to EPS. So that's 70 yen, the target which we have for the fiscal year. In principle, well... As far as the standards are concerned, well, it's difficult to say, but I think we will probably carry out some level of shared buyback along the way. Now, The number, we have based our number shares in the medium, during the medium of this period. So that is where the gap lies because we are basing ourselves on number shares in the middle of the period. And as for the, it is target for the new media management strategy. As I mentioned, Mr. Kikuchi, yes, that is the level that we want to increase. Which means, well, well, around 7% or so. Up until now, I think the past EPS growth rate was hovering around 5% to 6%. So we're aiming for a similar level of growth. That is the intention. That is our wish. But this time around, though, the main indicator will be cash generation abilities. That is the main message of our plan. So that is where EPS, as far as EPS is concerned, we can do the calculation based on annual guidance. So make sure that the APS will be clear. But we have not set a long-term APS target this time around. So we have set a target that relates to EBITDA as the medium-term financial target. So that is the situation. Yes, shareholder return is very important for us. So we will continue to do very robust shareholder return program. Thank you. So I think I think the drop in share price after 1 p.m. is because of the relationship with share repurchase. But I understand the assumption now. Yes, that is an assumption. That is why we provided the caveat on this page. We talk about making, we'll continue to, with sustainable growth, and we'll continue to make shareholder return compatible, and we'll also continue with EPS growth. But again, EBITDA, as I said, is the direct target this time around. And this is linked with the bonus for the executives. Now, for this fiscal year, as far as this fiscal year is concerned, 1027 yen in the previous plan is there. So this fiscal year, within the KPI for effective boldness, EPS is included. So that is how we'll be treating EPS numbers. I say thank you. Second question. I want to talk about investment and EBITDA this time around. You're talking about investing 12 trillion yen. In particular, you want to invest a trillion yen in the new business areas. So the term new business, I think these are areas where the revenue is not all that strong at this juncture. So to what extent are you going to make an investment in advance of increasing sales? How much investment can you tolerate before you can actually generate sufficient revenue growth going forward? Take a look at the track record so far. I don't think you were involved in a pre-wielding type of investment. You did not carry out a precarious initial investment. I think you'll be focused on PLL. So can we take a look and continue to be cautious in your investment in advance of your sales growth? And also with regard to data centers, we heard the financial presentation of financial results from NTT Data yesterday. I think they're talking $350 billion now. So already they're making a very strong plan for data center growth at NTD Data. It's true that as far as data center is concerned, you're going to invest in data centers if it will be growing. But still, with regard to operating income, in the Q&A session for NTD Data, I asked them if it's really safe to give such investment. And they said that they can do so because of the operating margin. But they were very concerned about the potential increase in interest rate going forward. So on a net basis, can you really sustain profit in this sector? That is our concern. So in terms of data center investment, be it debit or be it the operating margin, should you really measure the growth of data center business based on such indicators? It should not include interest rate calculation as well. So 1.5 trillion in investment in the data center over the 12-year period, This will probably be borne by the shareholders of entity data in reality. So maybe that is going to wipe away the potential profit for entity data if the interest rate were to increase down the line. That is our concern. so eps growth you have said that as a target i think at the end of the day these narrative will be reasonable but when it comes to data center investment especially outside japan it will be dollar-based capital procurement so we're concerned about the financing of the data center business at your group so so the group finance or Docomo, they have a strong cash. Maybe you should create a mechanism whereby you'll be able to finance this type of investment through entity groups. So I'm very concerned about this matter. So how much overall investment are you going to do? And what about the investment for data centers? We're concerned about this latter. So if you could please talk about the overall investment into data center. Yeah, okay. We'll do $8 trillion investment. This will be done with capital investment. But as you are aware, network business is now part of the existing area. So in the existing area, business area, capital investment will continue to be conducted. Now data center will be included. in the growth center, but as you pointed out, yes, we do need some investments in advance in the area that you mentioned. Now, this picture, it shows the five-year plan, but this year, I think the investment will be heavily skewed toward the first couple of years so that we'll be able to generate return. As far as data center is concerned, What about investment into data center? I think that was your question. As you pointed out, the interest rate burden needs to be recouped. That is, of course, essential. as a matter of fact right now why is it that we are making such investment into data center even the previous fiscal year we have made significant investment over 80 billion into their center we include the third party investment it will exceed 200 billion but we have a lot of um orders we're getting a lot of demand for data centers we talk about construction of new data centers naturally because of interest rate burden the customers are actually paying for this we need to collect the payment from the customers so going forward we're going to establish new data centers going forward we should be doing so based on such recouping of interest. Even then, there's very strong demand for debt incentives from customers. Now, what about the interest rate payment for the past investments that we have already made? That's something that we need to consider. As far as the general financing mechanism is concerned, we'll be using entity financing. We'll be using entity group finance. That basic policy will not change. So will EntityData do direct financing? No, that is not the case. So I think we'll be very careful and we'll be making very good considerations in this matter. Thank you for that. Right now, EntityData Limited has more than $1 trillion interest-bearing burden. Interest payment is rapidly increasing. next year it could be double the current threat effectiveness so the interest rate payment at NT Limited will be very heavy. Are you going to lower this? I know you cannot talk about specifics, but are you going to make efforts to reduce interest rate payment on the part of NT Limited going forward? It depends on the situation in the marketplace. But if the interest rate payment is going to be very high going forward, Well, we need to consider how we can lower the interest rate payment for the past investments. That's something that we need to consult with data. But for the future, we should be able to recoup that through profit. That is the model, which will be viable. I still think that will be a viable model. Okay, thank you very much. That is all from my side. Thank you. If I could add further, of course, if the interest rate... would increase even further down the road, then we need to give even further consideration to possible measures. So I just wanted to add that. Thank you. But in any event, I think eventually the interest rate should plateau out eventually. The long term, it should be on the downward track. That is, so I think in principle, with regard to new investments, I think we'll be able to collect the payment of interest rates from the customers. Thank you. I just wanted to add that. Thank you. Next question. Thank you. Let me ask two questions. First relates to the medium-term financial targets. With regard to share price evaluation, yes, I think a lot of people use EPS. So that being the case, Using EBITDA and net debt control, I think that will be one indicator. But up until now, operating profit and EPS and shareholder returns, these numbers were actually followed and tracked by the participants in the marketplace. So it's not just EPS. When you invest... depreciation will increase and have an impact on operating income. That is the flow, that is the thinking on our part. So what about operating income EPS? And also if the depreciation would increase, this pushes down operating income, this will have a downward pressure on EPS. So can you share with us your thoughts about these indicators? How do you intend to address these because these are all under the EBITDA. These are indicators that have relevance to EBITDA. So if you can share with us your thoughts about the three indicators that I just mentioned. So I think I already responded to this earlier with regard to EPS. It is not part of the major indicator for the new plan. But having said that, I think we want to maintain the same level of growth in EPS that we have indicated in the past. So I think we have been able to point that out, and I'm sure that any concern about EPS should be eliminated. Mr. Hiroi, CEFO, would you like to respond? Hiroi here. Let me respond. With the EBITDA trend and operating income trend, they're not that disparate. I think they're probably not that different. So we talked about equity and investment earlier. To what extent would that be spent as capital investment? And how much of that will be done through equity investment? That breakdown will have to be considered. I cannot give you the details about the breakdown between these two elements. But as far as our thinking is concerned, we want to maintain the same level of strength. We hope that we will be able to see the same level of our trend, and that is the assumption behind our setting EPS target. Thank you. Very clear. My second question, I want to ask about the investment. That is the question that I ran out to ask. It all boils down to your investment. For example, accumulated revenue and increase were there. So if you did that over a five-year period, nine-year period, your depreciation and amortization will significantly grow because of the increase in the investment. So among the 12 trillion, I think equity investment will account for a very large part. For example, when you look at the CapEx, you're talking about 2 trillion yen for CapEx. So it's not 2.4 trillion. So if that is the case, then... The capital in CapEx will be roughly $2 trillion. At the base, you set the base assumption for CapEx or do you anticipate some change or increase in CapEx? That's my question about CapEx overall. And also with regard to data center, yes, this is a growth area. If you invest, there is return. So I think you should invest. I'm in favor of your investment in data centers. What about others such as Demart Life, Data Driven, and Green Solutions? We do not have the concrete image of projects in the three aforementioned areas. Maybe I should ask this to Docomo later on. But can you give us some concrete picture? What type of projects are you expecting? If you could share with us some concrete projects, that would be of great help. Thank you. Well, thank you as far as Docomo is concerned. I hope you will direct your questions to our colleagues from Docomo later on. But I believe as far as Tocomo is concerned, they are very trying to expand their smart life business. They're also going to be investing in smart life. I think for details, you should ask President Mr. E. As for green solutions. We have given you the energy and environmental vision. We will aim for carbon neutral in 2040. That's what we mentioned in our vision. And of this, 50% will be done through the ION project. We want to cover 50% through power saving at ION, and the remaining 50% will be done by using renewables. Well, right now, what we have in mind is as follows. We have invested in FIT power source, Fiat Interest Power System. So we've been very active in this area. So in the case of FIT power source, as you're probably familiar, the return is quite high. So after the FIT is over, what will happen? this contribution can be used to cover power consumption for entity groups. So that being the case, for the time being, we will continue with procurement of green energy source. Also, in conjunction with that, if we're able to confirm that, then we'll be able to engage in local power generation and local power consumption projects. Unless the storage battery comes down in price, it will not be viable as a business because we cannot generate high return. But over the next couple of years, I believe that storage battery will probably be coming down in prices. So in line with that, we hope that we'll be able to carry out some business opportunities there. Thank you. Is the image of CapEx to 2 trillion yen roughly accurate, or are you going to ramp up CapEx more than 2 trillion yen? Very difficult to respond, but we don't expect that rapid dynamic increase in CapEx. Thank you. Thank you for that. So if you put up the number atrinin, we associate that with atrinin and capex. So it's good to hear. Sorry, one more thing. With regard to data center, digital reality equinix, digital reality equinix, funds from operations, use the funds from operations, If you could disclose like they're doing, that would be great because we can talk about after-tax and after-interest rate. So it's not so much about that, but I think FFO4 is probably the better indicator for your disclosure. I hope that we'll be able to discuss this matter eventually. Thank you. Thank you. We take note of your suggestion, and we would like to give this matter consideration. Thank you very much. Thank you very much. We will take the next question.

The person in the middle row, please. Mitsubishi Yorkshire Morgan Stanley Securities. My name is Tanaka. Now, regarding the photonics, electronic convergence, I believe that it is electronics, and $200 billion in terms of revenues will be the target for the future. Now, when $200 billion is achieved, first of all, at what timing can it be realized? And what is going to be the impact on profits? Is there a break-even point? Please elaborate. Currently, it may be difficult to give details. But mass production going forward, is that something that is already visible? Please elaborate. $200 billion has been written by the Nikkei newspaper. in the afternoon because I received a question in a press conference and it was talking about 230, 200 billion for the period ending March of 2030. But if we just look at device, that could be the scale of revenue. However, using the device, for example, white box can be created digital twin computing can be established. If these initiatives are implemented, it would be considered a separate business. Obviously, whether we want to internalize this or are we going to be working with conventional vendors to manufacture the equipment is not being decided. But I think there is opportunity for us to be directly involved. But it is not the juncture in which we should make a decision yet. ION 2.0 is by 2025. Now, the electronic conversions in the board is what we would like to realize, first and foremost. $200 billion is inclusive of the NEL project.

revenues.

And therefore, in reality, for the photonics and electronics device, it's likely to sell from about 3.0 ion, 3.0 anomalt. So at the time of 2.0 from 2025, it is as if by 2027 period, it is not likely to be significant revenues. Now, Mass manufacturing is poised for around 2029 and onward. Therefore, at the time of 2027, we have to establish a good structure. But in terms of deployment, that is our plan. In that regard, NILS revenues, how large is that today? Do you have about 40 billion currently? All right. So it seems that in the mid-term for this business, it's not really a profit impact, so investment will have to proceed before profit can be posted. But full-fledged investment is likely to be around 2027. Therefore, up to 2026, the investment amount is likely not to be very significant for the time being. we will consider the plan going forward. Is it going to be fabulous, or are we going to have our own mine and make inroads into manufacturing is a decision that has not been made yet. It is likely that we will go fabulous under normal circumstances, but even if we go fabulous, to manufacture new devices, a certain level of investment as well as fund assistance may be required. We need to consider this further going forward. Thank you.

Thank you.

Please go ahead with your question, sir. Thank you. My name is Sando with Daiwa Securities. I would like to ask two questions, if I may. The first question is actually a confirmation as well as a request. First of all, the financial targets for the old midterm plan, You mentioned a similar level as the past. You mentioned 7%? No, no, it should be 5% or 6%. Okay. So that's, I just want to confirm, 5% or 6% in the past. Okay, that's fine. Thank you. Now, Mr. Hiroi, you mentioned that as far as operating income is concerned, you mentioned that You are making similar average growth as EBITDA. Is that what you mentioned? Could I confirm what you mentioned? Is that what you said? Okay. You're nodding. Thank you. Okay. So since you're nodding, okay, thank you. That is the case. I just wanted to confirm that. Thank you. So the growth rate is applicable for the final year of the plan. But in the meantime, along the way, are we talking about the straight line trend? Is that what you're envisioning? What type of pattern, what type of pattern for the invasion? I don't think it will be, it's not yet clear as to whether we can have a straight line trend. It will depend on the timing of investment. It will hinge on the potential timing for potential acquisitions. Next, we want to make sure that we do a very strong performance. So let me see. Again, this relates to the other parties. It's very difficult to say what type of pattern this will follow. But at the end of the day, we want to achieve that. Naturally, we want to make sure that we achieve that target at the end of the day, at the end of the plan. In terms of the middle of the plan, it's very difficult to give an accurate picture of what type of pattern this could paint. Okay, thank you. I now have a request. So the points that I just confirmed right now, if you could please kindly express that more concretely. Unless you communicate that message based on text, inclusive of myself, because we're not smart. We do not fully understand your strategy and thinking unless you explain that. So if you want to avoid a misconception, well, we understand that it is the primary indicator for your new plant. But if you could please add additional information on top of that, it could be a caveat, it could be a footnote. If you could print that, then I think this will give a sense of comfort to the investor community. So that's my request. Now, my second question. This relates to page 24, interest-bearing debt and EBITDA. Interest-bearing EBITDA, you have to make sure that it's around 2%. You want to reduce that. So if we backtrack, So interest rate-bearing debt will remain the same. Is my understanding correct? And also, furthermore, what about free cash flow? If you could give us some indicators so that we can calculate free cash flow. Okay. Yes, when we consider the potential growth trend for EBITDA going forward, as you just pointed out, the interest rate-bearing debt will not go down in absolute terms. I think the interest rate-bearing debt will probably remain flat. You talk about improved asset efficiency. Is that included? Well, in terms of asset efficiency improvement, these factors are not factored in in the calculation. Naturally, of course, this must be considered, of course. So that's a separate factor. We don't add that. It's a separate factor. Okay, thank you.

Thank you very much. I have a similar question to Ando-san's question. It's like working on a puzzle in terms of the mid-term strategy. I have three questions. First question is regarding the growth areas. ROIC, what is the outlook going forward? You said that the existing areas is around 9%. it will increase to 9%. And for the growth area, ROIC, please talk about the current level and five years down the road as well as 10 years down the road. And please elaborate further. I think I'll just ask all the questions I have. It seems that this is a mini capital intensive business, but you don't want to increase that. Then what kind of level of external financing are you going to use according to your model? Third party, joint venture funds could be utilized, for example. The third area is regarding capital intensive business to be pursued. That means that in terms of capital allocation, It seems that shareholder return ratio will be undermined, will decrease. If that is not the case, please give us your explanation. Now, the two pages after this one is showing. that the diagram looks as if the debt to EBITDA ratio is going directly from 2.5 to 2 times. But the process in between could increase. Therefore, the interest-bearing debt could increase somewhat. But ultimately, we hope to contain it to the level of 2 times, ultimately. it is a reflection of our intention but in the process in between the two for this year it's going to be around the same but for next fiscal year we could have a different plan ultimately this will have the an impact on the EBITDA growth, which will require investment. Therefore, there could be temporary increases during this journey. ROIC for the growth area and 5 years and 10 years down the road, please. It's difficult to answer. Regarding ROIC, In terms of capital, ultimately debt is not going to increase according to our plan. So EBITDA growth will be promoted. That means that the profit that we earn every year, how much can be provided as a shareholder return? You probably have an image in your mind.

And

For this area, there is no change in our posture, but in terms of the actual amount, if you ask specific numbers, it's very difficult for us to give you a clear answer. We cannot give you specifics. So that is how much we can say. Thank you.

Thank you. Thank you very much. Any other questions? We'll go to the gentleman in the front row. Thank you very much. Thank you so much for this opportunity. This is a very vague and ambiguous question. I apologize. When you call this new medium-term management strategy, what was your thinking behind this plan, Mr. Shimada? You created this new medium-term plan. Do you believe that your plan is an extension of the past strategies? Or when you consider the external environment, do you believe that you're at a turning point and that you decided to push the accelerator? So how would you characterize the new medium term management strategy? You decided to accelerate your activities because you believe that this is at a turning point. What prompted you to see this as a turning point? What changes do you see? If you could please share with us how you see the nature and the characteristics of the new plan. Thank you so much. Well, thank you for the question. Is it the same as the past plans? That's probably not the case. It's probably not identical to the past strategies and plans. So why we decided to generate cash by fiscal year 2027? Earlier we talked about the IOWN, for example. IOWN, we want to see mass production of new photo, photonics, electronics, converged devices. That will require substantial cash. So at the juncture of fiscal year 2027, we need to increase our cash generating capabilities so that we can pave the way for investment into new growth areas. So we wanted to consider creating such a cycle. If that is the case, then we needed to set such a target to enable them. Unless we set such targets, we will not be able to reach our goal and our thinking naturally. We don't want to be reckless in our activities. That's part of our management. So naturally, we'll be mindful of the prevailing circumstances and the management conditions. And based on that, we should make investment decisions. So we should not be reckless in our investment. Thank you very much for that. Thank you.

Thank you. Any other questions? Yes. people at the venue or people participating remotely. Any further questions? There seem not. Therefore, we would like to bring this meeting to a close. Thank you very much for your attendance today.